Q3 2024 Zai Lab Ltd Earnings Call

Okay.

Speaker Change: Hello, Ladies and gentlemen, thank you for standing by and welcome to choose only labs third quarter 2020 full financial results conference call at.

Speaker Change: At this time, all participants southern Edison only mode. Later, we will conduct a question and answer session and instructions will follow at that time as a reminder, today's call is being recorded it is not my pleasure to turn the floor I bet, you Christine <unk> senior Vice President of <unk>.

Speaker Change: First a relations. Please go ahead.

Christine: Thank you operator, Hello, everyone and welcome to buy lots of third quarter of 2024 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.

Christine: President and head of global research and development and Dr. <unk> Chang Chief Financial Officer.

Christine: Jonathan Wang our Chief business Officer will also be available to answer questions. During the Q&A portion of the call.

Christine: As a reminder, during today's call, we will be making certain forward looking statements based on our current expectations.

Christine: 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.

Christine: We will also refer to adjusted loss from operations, which is a non-GAAP financial measure.

Christine: Please refer to our earnings release furnished with the SEC on November 12, 2024 for additional information on this non-GAAP financial disclosure.

Speaker Change: At this time, but it's my pleasure to turn the call over to Dr. Samantha Du.

Speaker Change: Thank you Christine and welcome everyone.

Speaker Change: This has been a tremendous year for satellite.

Speaker Change: We continue to execute our three key strategic priorities.

Speaker Change: Driving revenue growth.

Speaker Change: Funding of a global pipeline.

Speaker Change: <unk> seen appreciable efficiency.

Speaker Change: Starting with revenue growth.

Speaker Change: Total net product revenue for the third quarter grew 47% year over year.

Speaker Change: Our commercial business in China is growing rapidly.

Speaker Change: With visa card on track to become one of our potential blockbuster product. Later this year, we expect to launch multiple new products and indications, which will further grow our topline.

Speaker Change: Turning to our pipeline.

Speaker Change: We've made significant advancements in our global pipeline recently with.

Speaker Change: We presented data from <unk> 10, a potential best in class E. L. L. Three targeted ADC.

Speaker Change: At this stage small cell lung cancer. We also recently introduced our internally discovered our 13th L 31 by specific antibody for atopic dermatitis and the other immunologic diseases.

Additionally, we added 63 or one a preclinical real one ADC, which we plan to advance into phase one next year.

Speaker Change: We're expanding our global portfolio.

Only addressing pressing health care needs worldwide.

Speaker Change: But also reinforcing satellites rule.

Speaker Change: In the industry. We also made substantial progress Nevertheless, regional pipeline keeping us on course for at least five potential approvals over the next one to two years.

Speaker Change: This includes cards T, which we expect to submit to the NPA in early 2025, and bema tooth map, where enrollment has now completed in both pivotal studies, there's two products, which we believe both have blockbuster potential.

Holds significant promise for patients and providers alike.

Speaker Change: Lastly, we are operating with increased efficiency and productivity throughout the organization as a result of our effort we.

Speaker Change: We achieved a 40% improvement in net loss.

Speaker Change: Third quarter compared to the same period in the previous year.

And thrilled about the progress we have made and I want to emphasize that we're well positioned to create substantial value for our business over the next few years.

Speaker Change: You all for your continued support of our mission.

Speaker Change: I look forward to providing further updates in the coming year.

Speaker Change: Now I'll pass the call over to Josh Josh. Thank you Samantha and thank you everyone for joining the call today.

Josh Smiley: This quarter, we made great progress across our business, demonstrating strong financial performance and excellent execution across several pipeline programs.

Josh Smiley: Our third quarter net product revenue grew 47% year over year to $101 8 million.

Josh Smiley: Led by the successful launch and robust uptake of <unk> and also supported by increased sales for July and new Xyrem, starting with Viv guard the launches performed exceptionally well across all measures and we are on a clear path to exceed $80 million in sales, which is in line with our full year guidance. This would make <unk> launch in gmg.

Josh Smiley: One of the strongest ever for an immunology product in China. This achievement is driven by our team's ability to execute our strategic launch across the entire value chain.

Josh Smiley: We start with hospitals, our primary channel for expanding patient access I am pleased to share that we successfully achieved listings at all of our targeted top priority hospitals for the year covering approximately 65% of gmg market potential now we are targeting the next wave of hospitals and enhancing supplemental insurance access to.

Josh Smiley: Offer additional support for the patient community.

Josh Smiley: We place a core emphasis on physicians, where our scientific and data driven strategies have proven effective.

Josh Smiley: Physician awareness of the CRM mechanism and the antibody driven nature of Gmg is growing.

Josh Smiley: <unk> brand awareness and adoption of increased each quarter and according to a third party analysis by Bad Health <unk> is now the leading top of mind biologic therapy for Gmg alongside <unk>.

Josh Smiley: Nearly 2000 health care professionals in China have now prescribed <unk> garg with a growing percentage now at 40% being repeat prescribers.

Josh Smiley: This is a significant achievement given the early stage of the launch lots.

Josh Smiley: Lastly, patients approximately 10000 patients have now been treated with <unk> since launch and while this is an exceptional number. It is still just a fraction of the 170000 patients living with Gmg in China.

Josh Smiley: New patients continue to be added at a steady pace and in the third quarter. We saw a substantial increase in the number of patients initiating treatment in the maintenance setting, whereas previously it was predominantly acute patients. Additionally, we're also seeing a significant increase in the number of repeat patients.

Josh Smiley: Based on our estimates of the patients who initiated treatment with <unk> in June approximately one third have already returned for repeat cycles.

Josh Smiley: Physicians are beginning to realize the value of long term treatment with <unk> for their patients.

Josh Smiley: Over time, we believe patients should average five cycles of the guard each year as we have seen in the adapt clinical trials what.

Josh Smiley: What we also saw from the adapt plus trial was a distribution of patients based on the number of weeks that passed between the last infusion of the previous cycle and the first infusion of the subsequent cycle.

Josh Smiley: 36% of patients waited lessons six weeks, 37% weighted nine weeks or more and the rest are somewhere in between.

Josh Smiley: Now, while it's still too early to make any comments on the distribution in the real world setting in China based on current trends and the positive feedback from physicians. We are excited by the strong momentum thus far.

Josh Smiley: We also expect additional tailwind for launch, including an anticipated update of the national Gmg guidelines towards the end of this year or early next year, which are expected to include <unk> as an increasingly important treatment options for gmg.

Josh Smiley: We also plan to launch <unk> Gard high trullo, the subcutaneous formulation of <unk> in gmg by the end of the year.

Josh Smiley: The shorter administration time of 30 to 90 seconds as well as the possibility of self administration provides a significantly more convenient alternative to the IV formulation and will help drive further uptake demand forbid garten is robust and growing and we believe we are on our way to establishing a new standard of care for gmg patients to achieve better.

Josh Smiley: These management I'm also pleased to announce that earlier this week the NPA approved the supplemental biologics license application for <unk> for the treatment of adult patients with C. IDP only six months after the SPL a acceptance earlier this year. The IDP is a disease that affects 50000 patients in China.

Josh Smiley: There are no approved therapies for <unk> in China, and we will be working to launch in this indication as soon as possible. Our <unk> team is exemplary with best in class support for our physicians patients and other key stakeholders and this provides us with a strong footing as we look to execute on the launch of high to low for Gmg and <unk>.

Josh Smiley: There are multiple additional opportunities for <unk>, including the pre filled syringe, which we expect to submit to the NPA next year and new indications all of which Raphael will cover in his remarks.

Josh Smiley: These opportunities will help us realize the great promise of Zipcard, which we believe can exceed $1 billion in annual sales in China, and importantly improve patient lives.

Josh Smiley: Now looking at our other commercial products.

Josh Smiley: <unk> continues to be the leading PARP inhibitor for ovarian cancer in hospital sales in China.

Josh Smiley: We are seeing continued share uptake driven by increasing penetration in first line BRCA mutated patients for news IRA we continue to promote ongoing access and support for patients who rely on this important treatment.

Josh Smiley: In addition to <unk> Gard high Trullo, we're also preparing for two additional launch opportunities.

Josh Smiley: At Cairo, and Ross <unk> positive non small cell lung cancer, which comprises between 2% and 3% of the nearly 700000, new cases of non small cell lung cancer per year in China, and Zach Doro in hospital acquired and ventilator associated pneumonia caused by a Senate Baxter bahmani infections of which there are.

Josh Smiley: Approximately 300000 cases in China each year looking ahead, our late stage regional pipeline is progressing nicely and by 2026, we can see the launch of <unk> in schizophrenia and <unk> in gastric cancer. Following closely behind both of these are substantial market opportunities each of which represents at least $1 billion in <unk>.

Josh Smiley: <unk> potential. Furthermore, we expect to submit a BLA to the NPA for tip back in cervical cancer. During the first half of next year with plans to leverage our established sales force for its launch we're on track to deliver significant topline growth and in parallel. We are also focused on driving efficient operations and financial discipline.

Josh Smiley: Through our ongoing efforts on enhancing commercial efficiency optimizing resource allocation and increasing productivity throughout the entire organization. Our net loss in the third quarter declined 40% year over year. We are on track to reach profitability by the end of 2025, and a cash position of $716 million at the end of the third quarter.

Josh Smiley: Allows us to prepare for the next phase of growth for XI lab, as we drive both revenues and profitability in summary, our execution this quarter reinforces the XI labs commitment to our strategic goals with a strong product portfolio expanding global pipeline and targeted commercial efforts, we are well positioned to drive continued growth.

Speaker Change: We look forward to building on this momentum in the coming quarters and with that I will pass the call to Raphael. Thank.

Raphael: Thank you Josh.

Speaker Change: <unk> highlighted this quarter, we made significant progress in advancing our pipeline, especially on a global scale. We feel 13 10, an investigation DLL three targeted ADC.

Speaker Change: We're very excited by the preliminary clinical activity from the dose escalation portion of the ongoing phase one study of <unk> in patients with recurrent small cell lung cancer, which we presented at the OTC NCI ACR or <unk> symposium in Barcelona, Spain.

Speaker Change: Pretty intense showed a robust 74% objective response rate across all dose levels in patients with at least one post treatment evaluation.

Speaker Change: While it is premature to etc ability. The response rate is the highest observed to date in second line and beyond in extensive stage small cell lung cancer and among the highest with an ADC in any disease.

Speaker Change: The results also showed a 100% objective response rate in patients with brain metastases with all six patients achieving a partial response.

Facing with prior in Delta failure achieved a partial response with a 67% tumor reduction.

Speaker Change: Italy, CLO, 13th and demonstrated a good safety profile and also if you take those levels being well tolerated with the majority of treatment emergent adverse events or aes being off grade one or two only.

Speaker Change: Only 20% of patients has a E deemed related to <unk> 10.

Speaker Change: There has been no adverse events, leading to study drug discontinuation.

Speaker Change: Both the lung cancer, it's a highly aggressive disease affecting around 372000 patients worldwide, including over 100000 patients in the U S and Europe.

Speaker Change: Mortality rate is high with a five year survival rate of just 5% to 10% highlighting the clinical need for treatment again this aggressive upgrowing neoplasm.

Speaker Change: We have 30 intense early data demonstrating a best in class potential we have a great opportunity to significantly improve outcomes for patients with small cell lung cancer, and we will work to rapidly accelerate the development of these assets to date, we have mobile 13 turns quickly into documentation for monotherapy dose escalation in combination with <unk>.

Speaker Change: Look them up and this always not plus chemotherapy in the ongoing global phase III study for patients with extensive stage small cell lung cancer, who have received prior platinum based therapy.

Speaker Change: Loyalty is also highly expressing other neuroendocrine tumors.

Speaker Change: And we will start a global study next year to explore.

Speaker Change: <unk> in this indication.

Speaker Change: In immunology, we presented preclinical data on <unk>.

Speaker Change: At the European economy of Dermatology, and neurology Congress or <unk> this year.

This is an IL <unk> IL 31, Bispecific antibody internally discovered by XI, which we aim to develop in atopic dermatitis and other inflammatory conditions.

Speaker Change: Conditions, we continue to see promising results of these by specific preclinical model and we expect to share more details at a medical conference in 2025.

Speaker Change: We expect to submit a 90 applications to the FDA next year.

Speaker Change: Quality, we're planning to initiate a global phase III study in solid tumors next year with.

63, <unk>, our next generation <unk> ADC program, we will leverage our strong capabilities to develop this asset as quickly as possible and we anticipate continuing to expand the internal pipeline and progress other undisclosed global products into IMD, enabling into submission next year.

Speaker Change: Now moving on to our key late stage programs, starting with neuroscience last month, we announced positive topline results from the phase III bridging study evaluating the safety and efficacy of <unk> in schizophrenia.

Speaker Change: And yet in China, <unk> demonstrated a statistically significant and $9 two point reduction pans total score from baseline at week five compared to placebo with a P value of point there isn't a one for the trial also met all secondary endpoints, demonstrating statistically significant reductions in positive or negative.

Speaker Change: Of schizophrenia as measured by their parents positive for scale.

Speaker Change: So scale.

Speaker Change: Negative mother factor score XD.

Speaker Change: <unk> showed no unexpected.

Speaker Change: Bill.

Speaker Change: This followed the U S approval of <unk>.

Speaker Change: <unk> by our partner Bristol Myers Squibb in September.

Speaker Change: The United States prescribing information of <unk> are co entity, that's not lift atypical anti psychotic platforming have precautions and thats not to have a box warning in China, we will move swiftly to submit an NDA for correct.

Speaker Change: This first in class central nervous system muscarinic agonists in schizophrenia in early 2025.

Speaker Change: Moving to oncology, we're making good progress with <unk> and last month, we along with our partner Amgen completed patient enrollment in the 40 to 102 study for <unk> in combination with chemotherapy and checkpoint inhibitor, a first line treatment for <unk> positive gastric cancer.

Ahead of schedule now we await results are both pivotal studies, starting with 40 to 101, which we expect in the next few months.

Speaker Change: Next with our immunology franchise as Josh mentioned.

Speaker Change: Mentioned, we're excited about the recent NFPA approval of <unk> to the subcutaneous formulation of <unk> for the treatment of adult patients with chronic inflammatory demyelinating polyneuropathy or CIBC. This approval brings a much needed novel treatment option for patients suffering with this progressive debilitating neuro.

Speaker Change: <unk>.

Speaker Change: NFPA approval is based on the study, which we enrolled patients or greater China treatment response in these participants with consistent with global study outcomes.

Speaker Change: Subgroup analysis of Chinese participants demonstrated a 69% reduction in the risk of relapse with <unk> compared to placebo.

Speaker Change: Additionally, 78% of Chinese partner has been treated in the open label period of the study demonstrated evidence of clinical improvement.

Speaker Change: Confirming theyre all up IGD auto antibody in the underlying biology of CIBC.

Speaker Change: The favorable safety and Tolerability profile of <unk> high to low weekly dosing into Chinese patient cohort consistent with out of the global participants.

Speaker Change: We appreciate the MPA for the thorough assessment in recognition of the therapy differentiated profile and a large unmet patient medical need in China.

Speaker Change: Beyond DMD and C. IDP, we continue to work with organics to explore the potential to treat other IBD mediated autoimmune indications, including thyroid eye disease or PD.

Speaker Change: Scientists there are negative TMT ocular engie shoguns disease.

Speaker Change: Plan to participate in the global Registrational studies for this indication and we're initiating enrollment in these studies in China, starting this month.

Speaker Change: I am excited about the great progress, we're making with our regional and global pipeline. Both in terms of the potential of the products to change medical care and the speed and quality with which we are executing both in discovery and development I look forward to providing updates at our next earnings call and now <unk> will give an overview of our financial result.

Speaker Change: Yes, Jim.

Speaker Change: Thank you Rafael now I will discuss our third quarter 2024 financial results compared to the prior year period.

Speaker Change: Total net product revenues for the second quarter was $101 8 million.

Speaker Change: Compared to $69 $2 million for the same period in 2020, you see.

Speaker Change: Representing 47% year over year growth.

Speaker Change: This increase was primarily driven by increased shelf will need Scott and also supported by increased south towards the Qunar.

Speaker Change: Yes.

Speaker Change: Primarily China as of this year over year revenue growth, including the following.

Speaker Change: <unk> net product revenues grew to $27 3 million in the third quarter of 2024 <unk>.

Speaker Change: <unk> to $4 $9 million for the same period in 2020.

Speaker Change: Driven by increased sales since its launch in September 2023, and <unk> listing for the treatment of TMT effective January <unk>.

Speaker Change: 2024.

Speaker Change: <unk> net product revenue increased 16% to $48 $2 million.

Speaker Change: <unk> sales remained strong as it continued to be the leading PARP inhibitor in hospital sales for ovarian cancer in mainland China.

Speaker Change: <unk> net product revenue grew eight 2% to $10 million driven by an IPO listings for IV formulation for the treatment of adults with community acquired bacterial pneumonia or CBP and acute bacterial skin and skin structure infections ABSSI.

In the first quarter of 2023, and the oral formulation for this indication in the first quarter of 2024.

Speaker Change: Turning now to our expenses research and development expenses were $66 million.

Speaker Change: Third quarter of 2024 compared to $58 $8 million for the same period in time you can easily.

This increase was primarily due to increased upfront and milestone fees for our license and collaboration agreement, partially offset by decreased clinical trial expenses and personnel costs as a result of ongoing resource pie temptation and efficiency effort.

Speaker Change: Selling general and administrative expenses were $67 $2 million in the same quarter of 2024 compared to $68 $6 million for the same period in 2023.

Speaker Change: This decrease was primarily driven by decreased personnel cost as a result of ongoing resource prioritization and efficiency efforts, partially offset by increased general semi expenses primarily for <unk>.

Speaker Change: Loss from operations in the third quarter of 2024 was $67 $9 million.

Speaker Change: $48 $2 million on a non-GAAP basis.

Speaker Change: Adjusted to exclude non cash expenses, including depreciation amortization and share based compensation.

Speaker Change: Both narrowed by 19%, yes. Thank you.

Speaker Change: We expect our loss from operations to continue to narrow as a result of growing revenues and ongoing cost efficiency initiatives.

Speaker Change: <unk> reported a net loss of $41 $7 million in the second quarter of 2024.

Speaker Change: I lost count ordinary share attributable to common shareholders of point, $4, which improved by 40% year over year compared to a net loss of $69 2 million for the same period in 2023.

Speaker Change: Loss per ordinary share of $27.

Speaker Change: We are in a strong financial position.

Speaker Change: Ending the quarter with a cash position of $716 $1 million.

Speaker Change: <unk> $730 million as of June 32024.

Speaker Change: Based on our operating plan and our anticipated revenue growth.

Speaker Change: Expect to be able to fund our business through profitability, which we expect to achieve by the end of 2025.

Speaker Change: And with that I would now like to turn the call back over to the operator to open up lines for questions operator.

Speaker Change: Thank you we would now like to open the lines for questions. If you have a question. Please press star one one at this time.

Speaker Change: We will take our first question.

Speaker Change: First question comes from the line of Mike <unk> from Jefferies. Please go ahead. Your line is open.

Speaker Change: Great. Thanks, Congrats on the on our results and continued execution.

Speaker Change: Two questions. The first was.

Speaker Change: Just thinking about this.

Speaker Change: They've got growth.

Speaker Change: Maybe Josh could comment, but you had significant growth in the first quarter almost doubled in the second quarter and sort of more moderated in the third quarter can you just give some color about what would have driven at the third quarter growth and how to think about fourth quarter and does it have to do with the timing of when people are getting.

Speaker Change: The second cycle or how to think about the number of people coming back just maybe talk to the sequential growth that we were.

Speaker Change: Quarter over quarter and in the fourth quarter.

Speaker Change: And the second question relates to obviously your great deal all three results, which got a lot of attention.

Speaker Change: The existing approved drug can you just remind us what the immediate next steps are and when we would get the next data releases there. Thank you.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Thank you Josh I'll take the <unk> question, and then ask Rafael to comment on next steps with DLL three I think it was <unk>.

Speaker Change: Mentioned in the upfront remarks, we're really pleased with the first nine months of this year I think in Q3, we saw continued trends in terms of about 1000, new patients being initiated per month and increasingly we're seeing because of the where we are in.

Speaker Change: In the year and in the launch we're seeing patients come back for a second and third cycles. So really in line with what we would have hoped for and expected.

Speaker Change: I think in terms of sequential growth at some point you just some of it just becomes a function of the base and where we are in the cycles and otherwise.

Speaker Change: Yes, I would just say are quite pleased with Q3 performance and I think as we think about Q4.

Speaker Change: Everything we see so far we're halfway through the quarter in terms of patient metrics and otherwise.

Speaker Change: Very encouraging we continue to see.

Speaker Change: New patients come in at about 1000, a month and increasingly those patients are being.

Speaker Change: Initiated in the maintenance phase of the disease, you'll remember that we've focused in the second half of this year on really trying to get the patient started in a maintenance setting.

These are patients that we consider uncontrolled.

Speaker Change: Which is about 50% of the 170000 patients in China and.

Speaker Change: If there are initiated in the maintenance setting do you have a really good chance they get them on that.

Speaker Change: Average like five cycles per year over over a calendar year. So I think we'll see in the fourth quarter, we should see that continued.

Speaker Change: Benefit from new patients coming in and they're now building cumulative effect of patients coming back for second and third cycles I mentioned in the comments upfront.

Speaker Change: We can now looked at back to June as an example, and look at the patients who are initiated.

Speaker Change: Then and sort of track them at a high level and I think what we see as a third have already come back in for a second cycle and we should see more of that in the fourth quarter. So I think fourth quarter no reason to.

Speaker Change: Not expect continued good patient capture and sequential growth and I think because we're really thinking now about 2025, and just sort of a reminder, I think if you look at number of patients that will be initiated on <unk> by the end of the year, we would expect that to be over 12000, and if we can get some.

Speaker Change: Substantial portion of those patients into the treatment the maintenance treatment paradigm that we're focused on I think you have a pretty good base of base of sales headed into 2025, just as an example, if half of those patients are.

Speaker Change: Continuing on treatment in the maintenance phase, you're starting with a reservoir of somewhere in the range of $200 million or so of sales what you've looked at AD patients on top of that as a guidance or anything but again I think it continues.

Speaker Change: <unk> continues to emphasize.

The good launch uptake that we see and long term potential I think with that we'll turn it to Rafael to talk about the immediate next steps for DLL three.

Josh Smiley: Thanks, Josh.

Speaker Change: Final question, I think give us above.

Speaker Change: Next steps.

Speaker Change: The next set of data set our update.

Speaker Change: So.

Speaker Change: The presentation will continue to enroll patients.

Speaker Change: In other dose levels of course to capture durability.

Speaker Change: And we've talked about unconfirmed responses.

Speaker Change: <unk>.

Speaker Change: Very short follow up so.

Speaker Change: It is important for us to continue to see I'll, let the data mature.

We.

We'll continue also to.

Speaker Change: And how they're all Greg during their excellence at the same time, we've announced as I said in the prepared remarks.

Speaker Change: We've chosen a couple of doses for dose optimization, so we'll start that run limitation as well.

Speaker Change: We will decide when we have a meaningful update that may consists of.

Speaker Change: The totality of the dose escalation with confirmatory responses on every patient and decent pull off across dose cohorts and perhaps what we're starting to see in the randomization phase.

Speaker Change: So we are enrolling very fast on collecting data and we anticipate that we will make.

Speaker Change: Update sometime in the.

Speaker Change: Next year, we haven't committed to a specific time, but it will be whenever we consider that we have a meaningful update I wouldn't want to present.

Speaker Change: The <unk> data set.

Speaker Change: But.

Speaker Change: Given the fact that we're accumulating data.

Speaker Change: Toss them that we're making significant progress with the study.

It should not be very long from the left.

Speaker Change: Presentation.

Speaker Change: Thank you.

Thank you.

Speaker Change: Thank you.

Speaker Change: We'll take our next question.

Your next question comes from the line of Yigal <unk> from Citigroup. Please go ahead. Your line is open.

Speaker Change: Yes, hi, good morning. Thanks.

There was some news yesterday, obviously with regard to the schizophrenia market and the <unk>.

Speaker Change: The data.

Speaker Change: Could you comment as to how that May impact your thinking about the courage to launch given that change in the competitive landscape.

Speaker Change: And then more generally just could you comment on the commercial build out for cards T. As you proceed to launch the product. Thank you.

Josh Smiley: Thanks, Nick I'll, it's Josh I'll cover this.

Josh Smiley: First we're quite excited about the opportunity for patients and for XI for.

Josh Smiley: RFP.

Josh Smiley: And you've seen the results from the bridging study, which are very much supportive of and in line with our global registration. So we're going to move fast.

Towards submission and get ready for launch and I think for launch I think one of the things that is.

Josh Smiley: Different about China, I think versus the U S is the concentration of opportunity I think we do see about 500 hospitals.

Josh Smiley: Cross China that comprise more than 50% of the 4 million patient type of opportunity that.

Josh Smiley: That is.

Josh Smiley: Resident in China. So I think we think of this launch in terms of the cars will build out at least initially as closer to the Vim guard type of targeted approach than some of the broader launches, which you might be thinking about so somewhere in the range of a 200 person sales force at launch should be able to capture much of the APA.

Josh Smiley: <unk>, we see the opportunity here is quite significant as you know.

Josh Smiley: And it's really it's really around educating physicians getting them to try <unk>.

Josh Smiley: Car T versus the historical atypical anti psychotics.

Josh Smiley: Of course, having less potential competition long term is a good thing for our sales forecast and otherwise, but I think regardless for the first few years, where we were going to be focused on.

Josh Smiley: Educating physicians on the new mechanism and the opportunity here, so that that doesn't change, but certainly long term. It provides a more open and broader field.

Josh Smiley: For us so we've been consistent I think in saying that we do see.

Josh Smiley: Quite significant opportunity in schizophrenia for for car T.

Josh Smiley: Certainly don't have to make.

Josh Smiley: Very significant penetration types of assumptions to get to at.

Josh Smiley: At reasonable per day prices in line with what we see from post <unk>.

Josh Smiley: Branded atypical antipsychotics, you don't need to assume very high penetration rates to get to sales numbers that are in the $1 billion range. So we're we're focused on.

Josh Smiley: Capturing that opportunity and getting off to a quick start as soon as we can get submitted and approved.

Speaker Change: Okay. Thank you.

That's super helpful. And then with regard to the internal discovery efforts.

Speaker Change: You have the IL 13, and IL 31, which you briefly mentioned Im curious how youre thinking about that one in terms of internal.

Speaker Change: Discovery versus potentially partnering that one out.

Speaker Change: And then also do you have any updates on the topical IL 17.

Speaker Change: I'm curious how that one is going to evolve as far as the data.

Speaker Change: Okay, great. Thanks, I'll ask Rafael to jump in on that.

Speaker Change: That's the question.

Speaker Change: Yes. Thank you.

Speaker Change: With iOS 13, 31, it's actually a product.

Speaker Change: We will be at <unk>, we're pretty excited about what we're seeing pre clinically with this product.

Speaker Change: It is.

Our bi specific.

Speaker Change: Claim implies.

Speaker Change: We presented data in terms of its half life, which is quite long.

Speaker Change: Owing to.

Special design of two heavy chains.

Speaker Change: Sure.

Speaker Change: Binding site.

Speaker Change: <unk>.

Speaker Change: Also quite potent in preclinical assays and we continue to do.

Speaker Change: We continue to do this I would say is over time to look at durability of the clinical effect. So.

Speaker Change: So far we didn't get it.

Right.

Speaker Change: Again, none receptor that was chosen.

Speaker Change: We will provide kind of an optimal molecule a lease for atopic dermatitis and other inflammatory conditions look like potentially.

Speaker Change: You've seen a fairly disorders as well like its guidance et cetera, as well as predict disorders, where there is a long list.

Speaker Change: So youre right.

Speaker Change: This would be a really massive development program.

Speaker Change: Wanted to pursue other indications obviously, we will do this.

Speaker Change: Thats helpful way.

Speaker Change: Probably starting with atopic dermatitis and seeing how it performs.

Speaker Change: In terms of.

Speaker Change: Long half life potency ability too.

Speaker Change: Dose.

Speaker Change: Long term.

Speaker Change: Sure.

Speaker Change: The ability to sort of.

Speaker Change: Reiterate pruritus.

Speaker Change: And then also.

Speaker Change: Affect the biology of the Liza.

Speaker Change: Which is hopefully something that would lead to differentiation, which is terrific.

Speaker Change: Convenience.

Speaker Change: So those are my comments about these two products with regards to whether or not we will partner those are.

Speaker Change: Decisions that we havent really evaluate yet around around this product would need more data.

Speaker Change: <unk>.

Speaker Change:

Speaker Change: The other question.

Speaker Change: <unk>.

Speaker Change: Oh on the IL 17.

Speaker Change: Oh, Yes, IL 17, thanks for that.

Speaker Change: 17 is ongoing and is testing two schedules.

Speaker Change: <unk> strengths.

Speaker Change: Against placebo.

Speaker Change: Two study.

Hi, Ron.

Speaker Change: <unk>, Inc, accruing quite well.

Speaker Change: The moment, we are going to start.

Speaker Change: We'll do an interim analysis for.

Speaker Change: Utility.

Speaker Change: And we think we'll have enough patient data.

Speaker Change: But.

Speaker Change: Sometime early next year.

Speaker Change: So I think the next data milestones.

Speaker Change: We'll probably just received a recommendation from the DMC on this futility analysis.

Speaker Change: And then after that if the study continue spending will readout.

Speaker Change: We anticipate that we will complete accrual by the end of the year and then.

Speaker Change: We have subsequently so just sort of our plans.

Speaker Change: There's a second interim analysis defensible.

Speaker Change: What we are seeing.

Or what the recommendation from the DMC is but so far our bonds are two futility next year and then to continue.

Speaker Change: <unk> is not that.

Got it thanks very much.

Speaker Change: Thank you.

Speaker Change: We'll take our next question.

Speaker Change: Your next question comes from the line of <unk> Rama from Jpmorgan. Please go ahead. Your line is open.

Speaker Change: Hi, guys. This is priyanka on for auto Com, We just had a quick question you guys.

Speaker Change: From an increasingly highlighting the internal pipeline and as you guys move to a more of a global infrastructure for clinical development, how should we think about R&D spend over the next several years.

Speaker Change: Well.

Speaker Change: Ask Jim to cover that please.

Speaker Change: Hi, Yes, so Disney I can thanks for the question.

Speaker Change: On the R&D side as you know we are we have a lot of regional pipeline.

Speaker Change: Now they are approaching to the approval stage.

Speaker Change: So that's quite significant investment we made already and Thats continued to ramp up very quickly at the same time. The global pipeline is picking up so we are going to expect to extend and accelerate.

Speaker Change: Our global pipeline net position overall R&D spend.

Speaker Change: <unk> is going to remain relatively stable with modest growth next year.

Got it thank you so much.

Speaker Change: Thank you.

Speaker Change: We'll take our next question.

Speaker Change: Your next question comes from the line of Louise Chen from Cantor. Please go ahead. Your line is open.

Speaker Change: Hi team congrats on all the progress this quarter and thank you for taking our questions just as the way on for Louise.

Speaker Change: So we have a quick question what is the current competitive landscape for the L. III are there any other assets in development and how shall we think about the market opportunity in any type of ballpark potential revenue contribution. So you can think of thank you.

Speaker Change: Thanks for the question I'll ask Rafael to comment on that.

Speaker Change: Competitive dynamics in development.

Speaker Change: Small cell lung cancer here, and then I'll come back and talk about how we think about mark to market opportunity. So Raphael if you want to give a quick summary here.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Dynamic and evolving at the moment.

Speaker Change: You mentioned in development. There are two products have grown to continue the development of <unk>.

Speaker Change: Which is approved for <unk>.

Speaker Change: Progression Thats, just as platinum chemotherapy platinum therapy.

Speaker Change: In Delta, which is a T cell engagement.

Doug: Three T cell engaging both they were approved based on response rates of 35% to 40% with durability five three and nine months so Doug.

Doug: Sort of the standard goodwill contemporary standards for approval of these two drugs and they both have post marketing commitments or full approval.

Doug: Other drugs in development.

Doug: You may now about.

Doug: With.

Doug: These from Grubber T. There was actually discontinued because of toxicity. So thats not really in play at the moment there are other T cell engages.

Doug: With legal.

Doug: Alright.

The <unk> compound as well.

Doug: Yes.

Doug: That's emerging.

Doug: Robust.

Doug: Product is why up to alarm from metal, Inc, which was presented at ESMO <unk>.

Doug: ADC and you had a response rate in small cell lung cancer and stage of 68%.

Doug: Close to six months, so aggressive in our response.

Doug: About 80 basin.

Doug: So as you can see the landscape.

Doug: <unk>.

Doug: Thankfully now a robust with a number of products both at bluestone in the process of development.

Doug: As I said good thing, we don't think that these products are necessarily question.

Doug: Particularly diesel engages in agency or different.

Doug: Target <unk> 73.

Speaker Change: As Cliff mentioned in the prepared remarks or response on this one response.

Speaker Change: Delta failure patients.

Speaker Change: Our product.

Speaker Change: 13% so.

Speaker Change: And then I make landscape, but I think while there's much need in this disease that remains.

Speaker Change: Strong unmet need.

Josh Smiley: Thank you Josh.

Josh Smiley: Thanks, Raphael I mean, I think given the unmet need here, we're quite excited about the market opportunity. This is a global asset for us if we think of patients here in the west it's about 100000 patients with small cell lung cancer.

Josh Smiley: Focus my remarks on the U S, which is about 40000, because I think it can give an idea on how we see if you think about the market opportunity.

Josh Smiley: I think if we look at.

Josh Smiley: Pricing in the range and this isn't this is just looking at things like a lot of math now in price per cycle and you can extrapolate across other.

Josh Smiley: Significant tumors and otherwise, but if we use somewhere between.

50000.

Josh Smiley: <unk> per second line, given a number of cycles and maybe 250001st line again, just very rough numbers.

Josh Smiley: You can get using 40000 patients in the U S. At 25000 of them are in first line I think you've got to us again using a $250000.

Josh Smiley: Type of price you get test over $5 billion.

Josh Smiley: And the sales potential.

Josh Smiley: And then in second line, if you're at 15000 patients had fewer cycles.

Josh Smiley: You can get somewhere in the range of two five or so billion. So we do see this as a $7 5 billion dollar sort of total market opportunity in the U S alone as Raphael mentioned.

Josh Smiley: Thats.

Josh Smiley: They are not mutually exclusive opportunities here, we do see that is relevant for how we're thinking about developing DLL three and the kind of tight.

Josh Smiley: Any potential that that has.

Josh Smiley: It involved here of course, then you can extrapolate out to Europe, and China and other markets as well, but we're quite excited and of course, we will put the.

Josh Smiley: Investments in speed and execution around getting getting into markets that we can begin to tap into that opportunity.

Speaker Change: Great. Thank you so much.

Speaker Change: Thank you once again, if you wish to ask a question. Please press star one on your telephone.

Speaker Change: I am showing no further questions at this time I will now turn the call back over to <unk> CEO, Samantha Du for closing remarks.

Speaker Change: Yes.

Samantha Du: Thank you operator.

Speaker Change: I want to thank everyone for taking the time to join us on our call today.

Appreciate your support and look forward to updating you again after the fourth quarter of 2024.

Speaker Change: Operator, you may now disconnect this call.

Speaker Change: Thank you that does conclude our conference for today. Thank you for participating you may now disconnect.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

[music].

Okay.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: [music].

Speaker Change: [music].

Speaker Change: Hello, Ladies and gentlemen, thank you for standing by and welcome to choose only labs third quarter 2020 full financial results conference call.

Speaker Change: At this time, all participants southern Edison only mode. Later, we will conduct a question and answer session and instructions will follow at that time as a reminder, today's call is being recorded.

Christine <unk>: It is now my pleasure to turn the floor over to Christine <unk> Senior Vice President of Investor Relations. Please go ahead.

Christine <unk>: Thank you operator.

Speaker Change: Hello, everyone and welcome to dialogue third quarter of 2024 earnings call today's call will be led by Dr. Samantha Du <unk> 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 Research and development and Dr. Eugene Chen.

Eugene Chen: Chief Financial Officer.

Eugene Chen: Jonathan Wang our Chief business Officer will also be available to answer questions. During the Q&A portion of the call.

Eugene Chen: As a reminder, during today's call, we'll be making certain forward looking statements based on our current expectations.

Eugene Chen: 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.

Eugene Chen: We will also refer to adjusted loss from operations, which is a non-GAAP financial measure.

Eugene Chen: Please refer to our earnings release furnished with the SEC on November 12, 2024 for additional information on this non-GAAP financial disclosure.

Speaker Change: At this time, but if my pleasure to turn the call over to Dr. Samantha Du.

Samantha Du: Thank you Christine and welcome everyone.

Samantha Du: This has been a tremendous year for <unk>.

Samantha Du: We continue to execute our three key strategic priorities.

Samantha Du: Driving revenue growth.

Samantha Du: Funding our global pipeline.

Samantha Du: <unk> operational efficiency factor.

Samantha Du: Starting with revenue growth.

Samantha Du: Total net product revenue for the third quarter were 47% year over year.

Samantha Du: Our commercial business in China is growing rapidly.

Samantha Du: With <unk> on track to become one of our potential blockbuster products.

Samantha Du: This year, we expect to launch multiple new products and indications.

Samantha Du: Which will further grow our topline.

Samantha Du: Turning to our pipeline.

Samantha Du: We've made significant advancements in our global pipeline recently.

Samantha Du: We presented data from <unk> 10, a potential best in class E. L. L. Three targeted ADC extensive stage small cell lung cancer. We also recently introduced our internally discovered our 13th L 31 by specific antibody for atopic derma.

Samantha Du: And the other immunologic diseases.

Samantha Du: Additionally, we added 63 or one a preclinical real one ADC, which we plan to advance into phase one next year.

Samantha Du: Expanding our global portfolio.

Samantha Du: Only addressing pressing health care needs worldwide.

Samantha Du: But also we enforcing satellite's role I E. Those later in the.

Samantha Du: We also made substantial progress nevertheless, the regional pipeline keeping us on course for at least five potential approvals over the next one to two years.

Samantha Du: This includes cards T, which we expect to submit to the NPA in early 2025, and bema tooth map, where enrollment has now completed in both pivotal studies, there's two products, which we believe both have blockbuster potential.

Samantha Du: Holds significant promise for patients and providers alike.

Samantha Du: Lastly, we are operating with increased efficiency and productivity throughout the organization.

Samantha Du: Result of our efforts.

Samantha Du: We achieved a 40% improvement in net loss in the third quarter compared to the same period in the previous year.

Samantha Du: And thrilled about the progress we have made and I want to emphasize it will well positioned to create substantial value for our business over the next few years.

Samantha Du: Thank you all for your continued support of our mission.

Samantha Du: I look forward to providing further updates in the coming year.

Josh Josh: Now I'll pass the call over to Josh Josh. Thank you Samantha and thank you everyone for joining the call today.

Josh Josh: This quarter, we made great progress across our business, demonstrating strong financial performance and excellent execution across several pipeline programs.

Josh Josh: Our third quarter net product revenue grew 47% year over year to $101 8 million led.

Josh Josh: Led by the successful launch and robust uptake of <unk> and also supported by increased sales for July and new Xyrem, starting with Viv guard the launches performed exceptionally well across all measures and we are on a clear path to exceed $80 million in sales, which is in line with our full year guidance. This would make <unk> launch in gmg.

Josh Josh: One of the strongest ever for an immunology product in China. This achievement is driven by our team's ability to execute a strategic launch across the entire value chain.

Josh Josh: We start with hospitals, our primary channel for expanding patient access I am pleased to share that we successfully achieved listings at all of our targeted top priority hospitals for the year covering approximately 65% of gmg market potential now we are targeting the next wave of hospitals and enhancing supplemental insurance access to.

Josh Josh: Offer additional support for the patient community.

Josh Josh: Next we place a core emphasis on physicians, where our scientific and data driven strategies have proven effective.

Josh Josh: Physician awareness of the CRM mechanism and the antibody driven nature of Gmg is growing.

Josh Josh: <unk> brand awareness and adoption of increased each quarter and according to a third party analysis by band Health <unk> is now the leading top of mind biologic therapy for Gmg alongside IV.

Josh Josh: Nearly 2000 health care professionals in China have now prescribed <unk> garg with a growing percentage now at 40% being repeat prescribers.

Josh Josh: This is a significant achievement given the early stage of the launch lots.

Josh Josh: Lastly, patients approximately 10000 patients have now been treated with <unk> since launch and while this is an exceptional number. It is still just a fraction of the 170000 patients living with Gmg in China.

Josh Josh: Patients continue to be added at a steady pace and in the third quarter. We saw a substantial increase in the number of patients initiating treatment in the maintenance setting, whereas previously it was predominantly acute patients. Additionally, we are also seeing a significant increase in the number of repeat patients.

Josh Josh: Based on our estimates of the patients who initiated treatment with <unk> in June approximately one third have already returned for repeat cycle.

Josh Josh: Physicians are beginning to realize the value of long term treatment with <unk> for their patients.

Josh Josh: Overtime, we believe patient should average five cycles of their car each year as we have seen in the adapt clinical trials.

Josh Josh: We also saw from the adapt plus trial was a distribution of patients based on the number of weeks that passed between the last infusion of the previous cycle and the first infusion of the subsequent cycle around 36% of patients weighted less than six weeks, 37% weighted nine weeks or more and the rest fell somewhere in between.

Josh Josh: Now, while it's still too early to make any comments on the distribution in the real world setting in China based on current trends and the positive feedback from physicians. We are excited by the strong momentum thus far.

Josh Josh: We also expect additional tailwind for launch, including an anticipated update of the national Gmg guidelines towards the end of this year or early next year, which are expected to include <unk> as an increasingly important treatment option for gmg.

We also plan to launch <unk> Gard high trullo, the subcutaneous formulation of <unk> in gmg by the end of the year.

Josh Josh: The shorter administration time of 30 to 90 seconds as well as the possibility of self administration provides a significantly more convenient alternative to the IV formulation and will help drive further uptake.

Josh Josh: And forbid garten is robust and growing and we believe we are on our way to establishing a new standard of care for gmg patients to achieve better disease management I'm also pleased to announce that earlier. This week. The MPA approved the supplemental biologics license application for <unk> for the treatment of adult patients with <unk>.

Josh Josh: Only six months after the <unk> acceptance earlier this year. The IBP is a disease that affects 50000 patients in China. There are no approved therapies for <unk> in China, and we will be working to launch in this indication as soon as possible. Our <unk> team is exemplary with best in class support for our physicians patients and other key stakeholders.

Josh Josh: And this provides us with a strong footing as we look to execute on the launch of high to low for gmg and the IDP.

Speaker Change: There are multiple additional opportunities for <unk>, including the pre filled syringe, which we expect to submit to the NPA next year and new indications all of which Raphael will cover in his remarks.

Speaker Change: These opportunities will help us realize the great promise of Bip Guard, which we believe can exceed $1 billion in annual sales in China, and importantly improve patient lives.

Speaker Change: Now looking at our other commercial products.

Speaker Change: <unk> continues to be the leading PARP inhibitor for ovarian cancer in hospital sales in China.

Speaker Change: We are seeing continued share uptake driven by increasing penetration in first line BRCA mutated patients for news IRA we continue to promote ongoing access and support for patients who rely on this important treatment.

Speaker Change: In addition to <unk> Gard high Trullo, we're also preparing for two additional launch opportunities.

Cairo, and Ross one positive non small cell lung cancer, which comprises between 2% and 3% of the nearly 700000, new cases of non small cell lung cancer per year in China, and Zach Doro in hospital acquired and ventilator associated pneumonia caused by <unk> infections of which there are.

Speaker Change: Approximately 300000 cases in China each year looking ahead, our late stage regional pipeline is progressing nicely and by 2026, we can see the launch of <unk> in schizophrenia and <unk> in gastric cancer. Following closely behind both of these are substantial market opportunities each of which represents at least $1 billion in <unk>.

Speaker Change: <unk> potential. Furthermore, we expect to submit a BLA to the MPA for tip back in cervical cancer. During the first half of next year with plans to leverage our established sales force for its launch we're on track to deliver significant topline growth and in parallel. We are also focused on driving efficient operations and financial discipline.

Speaker Change: Through our ongoing efforts on enhancing commercial efficiency optimizing resource allocation and increasing productivity throughout the entire organization. Our net loss in the third quarter declined 40% year over year. We are on track to reach profitability by the end of 2025, and a cash position of $716 million at the end of the third quarter.

Speaker Change: Allows us to prepare for the next phase of growth for XI lab, as we drive both revenues and profitability in summary, our execution this quarter reinforces the XI labs commitment to our strategic goals with a strong product portfolio expanding global pipeline and targeted commercial efforts, we are well positioned to drive continued growth.

Speaker Change: We look forward to building on this momentum in the coming quarters and with that I will pass the call to Raphael.

Speaker Change: Hey, Josh.

Raphael: Also highlighted this quarter, we made significant progress in advancing our pipeline, especially on a global scale. We feel 13 10, an investigational DLL three targeted ADC.

Raphael: We are very excited by the preliminary clinical activity from the dose escalation portion of the ongoing phase one study of <unk> in pain in patients with recurrent small cell lung cancer, which we presented at the ITC NCI ACR or <unk> symposium in Barcelona, Spain chemotherapy intense showed a robust 74% object.

Raphael: They've response rate across all dose levels in patients with at least one post treatment evaluation.

Raphael: It is premature to assess durability. The response rate is the highest observed to date in second line and beyond in extensive stage small cell lung cancer and among the highest within AEP in any disease.

Raphael: The results also showed a 100% objective response rate in patients with brain metastases with all six patients achieving a partial response.

Raphael: While facing with prior in Delta failure achieved a partial response.

Raphael: 67% tumor reduction at <unk>.

Raphael: Ali CLO, 13th and demonstrated a good safety profile at all therapeutic dose levels being well tolerated with the majority of treatment emergent adverse events or aes being upgraded one or two.

Raphael: Only 20% of patients has a.

Raphael: E beam related to <unk> being 10, and there has been no adverse events, leading to study drug discontinuation.

Raphael: Most of the lung cancer is a highly aggressive disease affecting around 372000 patients worldwide, including over 100000 patients in the U S and Europe.

Raphael: The mortality rate is high with a five year survival rate of just 5% to 10% highlighting the clinical need for treatment again this aggressive growing neoplasm.

Speaker Change: We have pretty intense early data demonstrating a best in class potential we have a great opportunity to significantly improve outcomes for patients with small cell lung cancer, and we will work to rapidly accelerate the development of these assets to date, we have mobile 13 quickly into documentation for monotherapy dose escalation in combination with <unk>.

Speaker Change: Linda and <unk> plus chemotherapy in the ongoing global Phase III study for patients with extensive stage small cell lung cancer, who have received prior platinum based therapy.

Speaker Change: <unk> is also a highly expressed in other neuroendocrine tumors.

Speaker Change: And we will start a global study next year to explore.

Speaker Change: <unk> 13 10 in this indication.

Speaker Change: In immunology, we presented preclinical data on <unk>.

Speaker Change: At the European unit economy of dermatology, and neurology Congress or <unk>.

Speaker Change: This is an IL 13, IL 31, bispecific antibody internally discovered by XI, which we aim to develop in atopic dermatitis and other inflammatory conditions.

Speaker Change: Conditions, we continue to see promising results are device specific preclinical model and we expect to share more details at a medical conference in 2025.

Speaker Change: We expect to submit a 90 applications to the FDA next year.

Speaker Change: In oncology, we are planning to initiate a global phase III study in solid tumors and next year with.

Speaker Change: 301, our next generation of Aurora, One agency program, we will leverage our strong capabilities to develop this asset as quickly as possible and we anticipate continuing to expand the internal pipeline.

Speaker Change: Other undisclosed global products into IMD, enabling IND submissions next year.

Speaker Change: Now moving on to our key late stage programs, starting with neuroscience last month, we announced positive topline results from the phase III bridging study evaluating the safety and efficacy of <unk> in schizophrenia in China.

<unk> demonstrated a statistically significant and $9 two point reduction pans total score from baseline at week five compared to placebo with a P value of point there are 014.

Speaker Change: There are also met all secondary endpoints, demonstrating statistically significant reductions in positive or negative.

Speaker Change: Schizophrenia as measured by their parents bucket the scale.

Speaker Change: Negative so scale and pan negative admire their factor score.

Speaker Change: <unk> showed no unexpected safety signals.

Speaker Change: <unk> followed the U S abroad.

Speaker Change: <unk> announced by our partner Bristol Myers Squibb in September.

Speaker Change: Not only the United States prescribing information of <unk> are co entity, that's not lift atypical anti psychotic class warnings and precautions and does not have a box warning in China, we will move swiftly to submit that NDA for Galaxy. This first in class central nervous system.

Speaker Change: Pennsylvania in early 2025.

Speaker Change: Moving to oncology, we're making good progress with <unk> and.

Speaker Change: Last month, we along with our partner Amgen completed patient enrollment in the 40 to 102 study for <unk> in combination with chemotherapy and checkpoint inhibitor as first line treatment for <unk> to be positive gastric cancer months ahead of schedule now we await results are both pivotal studies starting with 40.

Speaker Change: 101, which we expect in the next few months.

Speaker Change: Next with our immunology franchise as Gus mentioned, we're excited about the recent NFPA approval of <unk> I'll turn it over to subcutaneous formulation of <unk> for the treatment of adult patients with chronic inflammatory demyelinating polyneuropathy or CIBC. This approval brings a much needed novel treatment option for patients.

Speaker Change: Suffering with this progressive debilitating neurological disease the.

Speaker Change: The NFPA approval is based on the study, which we enrolled patients from greater China.

Speaker Change: In response in these participants with consistent with global study outcomes.

Speaker Change: Subgroup analysis of Chinese participants demonstrated a 69% reduction in the risk of relapse with <unk> <unk> compared to placebo.

Speaker Change: Additionally, 78% of Chinese partners has been treated in the open label period of the study demonstrated evidence of clinical improvement further confirm and Theyre all up IGD auto antibody in the underlying biology of CIBC, the favorable safety and Tolerability profile of <unk>.

Speaker Change: High to low weekly dosing in the Chinese patient cohort consistent with out of the global participants. We appreciate the MPA for the thorough assessment in recognition of the therapy differentiated profile and a lot of unmet patient medical need in China.

Speaker Change: Dnb and <unk>, we continue to work with organics to explore the potential to treat other <unk> mediated autoimmune indications, including thyroid eye disease or <unk>.

Speaker Change: D.

Speaker Change: Scientists there are negative TMT ocular LG shoguns disease.

Speaker Change: We plan to participate in the global Registrational studies for this indication and we're initiating enrollment in this seismic China starting this month.

I am excited about the great progress, we're making with our regional and global pipeline. Both in terms of the potential of the Bronx to change medical care and the speed and quality with which we are executing both in discovery and development.

Speaker Change: Look forward to providing updates at our next earnings call and now Jim will give an overview of our financial results Jim.

Thank you Rafael now I will discuss our third quarter 2020 to our financial results compared to the prior year period.

Speaker Change: Total net product revenue for the second quarter with $101 $8 million.

<unk> $69 2 million for the same period in 2020.

Speaker Change: Representing 47% year over year.

Speaker Change: The increase was primarily driven by increased shelf will need Scott and also supported by increased sales force at ULA.

Speaker Change: Yes.

Speaker Change: Primary driver of this year over year revenue growth, including the following.

<unk> net product revenues grew to $27 3 million in the third quarter of 2024.

Speaker Change: Compared to a $4 $9 million for the same period in 2020.

Speaker Change: Driven by increased sales since its launch in September 2023, and <unk> listing for the treatment of TMT effective January <unk> two.

Speaker Change: <unk> 2024.

Speaker Change: <unk> net product revenue increased 16% to $48 $2 million.

Speaker Change: Sales remained strong as it continued to be the leading PARP inhibitor in hospice out of any cancer in mainland China.

Speaker Change: <unk> net product revenue grew eight 2% to $10 million.

Speaker Change: Driven by an IPO listings for IV formulation for the treatment of adults with community acquired bacterial pneumonia or CBP and acute bacterial skin and skin structure infections or <unk> in the first quarter of 2023.

Speaker Change: And to the oral formulation for this indication in the first quarter of 2024.

Speaker Change: Turning now to our expenses research and development expenses were $66 million.

Speaker Change: Third quarter of 2024 compared to $58 $8 million for the same period in Tony can easily.

Speaker Change: This increase was primarily due to increased upfront and the milestone fee for our license and collaboration agreement, partially offset by decreased clinical trial expenses and personnel costs as a result of ongoing resource prioritization and efficiency effort.

Speaker Change: Selling general and administrative expenses were $67 $2 million in the same quarter of 2024 compared to $68 $6 million for the same period in 2023.

Speaker Change: This decrease was primarily driven by decreased personnel cost as a result of ongoing resource prioritization and efficiency efforts.

Speaker Change: Partially offset by increased general semi expenses primarily for feedstock.

Speaker Change: Loss from operations in the third quarter of 2024 was $67 $9 million.

Speaker Change: $48 $2 million on a non-GAAP basis.

Speaker Change: Adjusted to exclude non cash expenses, including depreciation amortization and share based compensation.

Speaker Change: Both narrowed by 19% year over year.

Speaker Change: We expect our lifestyle operations to continue to narrow as a result of growing revenues and ongoing cost efficiency initiatives.

Speaker Change: <unk> reported a net loss of $41 7 million third quarter of 2024.

Speaker Change: Loss per ordinary share attributable to common shareholders of points $4, which improved by 40% year over year compared to a net loss of $69 $2 million for the same period in 2023.

Speaker Change: Loss per ordinary share of $7.

Speaker Change: We are in a strong financial position.

Speaker Change: Ending the quarter with a cash position of $716 1 million.

Speaker Change: <unk> $730 million as of June 32024.

Speaker Change: Based on our operating plan and now anticipated to add new growth.

Speaker Change: Expect to be able to fund our business through profitability, which we expect to achieve by the end of 2025.

With that I would now like to turn the call back over to the operator to open up lines for questions.

Speaker Change: Operator.

Speaker Change: Thank you we would now like to open the lines for questions. If you have a question. Please press star one one at this time.

Speaker Change: We will take our first question.

Speaker Change: First question comes from the line of Mike <unk> from Jefferies. Please go ahead. Your line is open.

Speaker Change: Great. Thanks, Congrats on the on the results from continued execution.

Speaker Change: Two questions. The first was.

Speaker Change: Just thinking about.

Speaker Change: They've got growth.

Speaker Change: Maybe Josh could comment, but you had significant growth in the first quarter almost doubled in the second quarter in terms of more moderated in the third quarter can you just give some color about what would have driven third quarter growth and how to think about fourth quarter and does it have to do with the timing of when people are getting.

Speaker Change: The second cycle or how to think about the number of people coming back just maybe talk to the sequential growth.

Quarter over quarter and in the fourth quarter and.

Speaker Change: And the second question relates to obviously your great DLL three results, which got a lot of attention versus the existing approved drug can you just remind us what the immediate next steps are and when we would get the next data releases there. Thank you.

Speaker Change: Okay.

Josh Smiley: Okay, Hey, Mike. Thank you, it's Josh I'll take the <unk> question, and then ask Rafael to comment on next steps with DLL three I think with regard as.

Josh Smiley: As I mentioned in the upfront remarks, we're really pleased with the first nine months of this year I think in Q3, we saw continued trends in terms of about 1000, new patients being initiated per month.

Josh Smiley: And increasingly we're seeing because of the where we are in.

Josh Smiley: In the year and in the launch we're seeing patients come back for a second and third cycles. So really in line with what we would have hoped for and expected.

I think in terms of sequential growth at some point you just some of it just becomes a function of the base and where we are in the cycles and otherwise and we I think.

Josh Smiley: Let's say are quite pleased with Q3 performance and I think as we think about Q4.

Everything we see so far we're halfway through the quarter in terms of patient metrics and otherwise.

Josh Smiley: Very encouraging we continue to see.

Josh Smiley: New patients come in at about 1000, a month and increasingly those patients are being.

Initiated in the maintenance phase of the disease, you'll remember that we've focused in the second half of this year on really trying to get the patient started in a maintenance setting.

Josh Smiley: These are patients that we consider uncontrolled.

Josh Smiley: Which is about 50% of the 170000 patients in China and.

Josh Smiley: If there are initiated in a maintenance setting do you have a really good chance they get them on to.

Josh Smiley: On an average like five cycles per year over over a calendar year. So I think we'll see in the fourth quarter, we should see the continued.

Josh Smiley: Benefit from new patients coming in and they're now building cumulative effect of patients coming back for second and third cycles I mentioned in the comments upfront.

Josh Smiley: We can now looked at back to June as an example, and look at the patients who are initiated.

Josh Smiley: Then and sort of track them at a high level and I think what we see as a third have already come back in for a second cycle and we should see more of that in the fourth quarter. So I think fourth quarter no reason to.

Josh Smiley: Not expect continued good patient capture and sequential growth and I think because we're really thinking now about 2025, and just sort of a reminder, I think if you look at number of patients that will be initiated on <unk> by the end of the year, we'd expect that to be over 12000, and if we can get some.

Substantial portion of those patients into the treatment the maintenance treatment paradigm that we're focused on I think you have a pretty good base of base of sales headed into 2025, just as an example, if half of those patients are.

Josh Smiley: Continuing on treatment in a maintenance phase you're starting with a reservoir of.

Josh Smiley: We're in the range of $200 million or so of sales, which you've looked at AD patients on top of that as a guidance or anything but again I think it continues.

Josh Smiley: <unk> continues to emphasize.

Speaker Change: The good launch uptake that we see and long term potential I think with that we'll turn it to Rafael to talk about the immediate next steps for DLL three.

Speaker Change: Thanks, Josh.

Speaker Change: Final question, I think give us above.

Speaker Change: Next steps.

Speaker Change: The next set of data set our update.

Speaker Change: So.

Speaker Change: The presentation will continue to enroll patients.

Speaker Change: In other dose levels of course to capture durability.

Speaker Change: And we've talked about unconfirmed responses as well.

Speaker Change: <unk>.

Speaker Change: Very short follow up so.

Speaker Change: It is important for us to continue to see I'll, let the data mature.

Speaker Change: We.

Speaker Change: We'll continue also to.

Speaker Change: They are all Greg during their actual inside at the same time, we've announced as I said in the prepared remarks.

Speaker Change: We've chosen a couple of doses for.

Speaker Change: Dose optimization, so we'll start that limitation as well.

Speaker Change: And we will decide when we have a meaningful update may consist so.

Speaker Change: The totality of the dose escalation.

Speaker Change: Confirmatory responses on every basin and decent pull off across dose cohorts and perhaps what we're starting to see in the.

Speaker Change: Revenue orientations say.

Speaker Change: So we are enrolling very fast on collecting data and.

Speaker Change: We anticipate that we will make us.

Speaker Change: Update sometime in the.

Speaker Change: Next year, we haven't committed to a specific time, but it will be whenever we consider that we have a meaningful update we don't want to present.

Speaker Change: The <unk> data set.

Speaker Change: But.

Speaker Change: Given the fact that we're accumulating data.

Speaker Change: <unk> cost and that we're making significant progress with this study.

Speaker Change: It should not be very low from the left.

Speaker Change: Presentation.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: We will take our next question.

Speaker Change: Your next question comes from the line of Yigal not to move it from Citigroup. Please go ahead. Your line is open.

Speaker Change: Yes, hi, good morning. Thanks.

There was some news yesterday, obviously with regard to the schizophrenia market and the <unk>.

Speaker Change: The data.

Speaker Change: Could you comment as to how that May impact your thinking about the courage to launch given that change in the competitive landscape.

And then more generally just could you comment on the commercial build out for cards T. As you proceed to launch the product. Thank you.

Thanks, Nick I'll, let Josh I'll cover this.

First we're quite excited about the opportunity for patients and for XI for.

RFP.

Speaker Change: And you've seen the results from the bridging study, which are very much supportive of and in line with our global registration. So we are going to move fast.

Speaker Change: Towards submission and getting ready for launch and I think for launch I think one of the things that is.

Speaker Change: Different about China, I think versus the U S is the concentration of opportunity I think we do see about 500 hospitals.

Speaker Change: <unk>, China that comprise more than 50% of the 4 million patient type of opportunity that.

Speaker Change: It is.

Speaker Change: Resident in China. So I think we think of this launch in terms of the cars will build out at least initially as closer to the Vim guard type of targeted approach than some of the broader launches, which you might be thinking about so somewhere in the range of a 200 person sales force at launch should be able to capture much of the.

Speaker Change: Attunity, we see the opportunity here is quite significant as you know.

Speaker Change: And it's really it's really around educating physicians getting them to try car T versus the historical atypical anti psychotics.

Speaker Change: Of course, having less potential competition long term is a good thing for our sales forecast and otherwise, but I think regardless for the first few years, where we were going to be focused on.

Speaker Change: Educating physicians on the new mechanism and the opportunity here, so that that doesn't change, but certainly long term. It provides a more open and broader field.

Speaker Change: For us so we've been consistent I think in saying that we do see.

Speaker Change: Quite significant opportunity in schizophrenia for for car T.

Speaker Change: You certainly don't have to make.

Speaker Change: Very significant penetration types of assumptions to get to at reasonable per day prices.

Speaker Change: Your line with what we see from post <unk>.

Branded atypical antipsychotics, you don't need to assume very high penetration rates to get to sales numbers that are in the $1 billion range. So were were focused on tap.

Speaker Change: Capturing that opportunity and getting off to a quick start as soon as we can get submitted and approved.

Speaker Change: Okay. Thank you.

Speaker Change: That's super helpful. And then with regard to the internal discovery efforts. Obviously, you have the IL <unk> IL 31, which you briefly mentioned Im curious how youre thinking about that one in terms of internal.

Speaker Change: Discovery versus.

Speaker Change: <unk> partnering that one out.

Speaker Change: And then also do you have any updates on the.

Speaker Change: Topical IL 17.

Speaker Change: I'm curious how that one is going to evolve as far as the data.

Speaker Change: Okay, great. Thanks, I'll ask Rafael to jump in on that.

Speaker Change: That's the question.

Speaker Change: Yes. Thank you.

Speaker Change: With iOS 13, 31 is conceptually a product.

Speaker Change: We'll be at <unk>, we're pretty excited about what we're seeing clinically with this product.

It is.

Speaker Change: Our bi specific.

Speaker Change: Claim implies.

Speaker Change: We presented data in terms of its half life, which is quite long.

Oh into.

Speaker Change: So design of two heavy chains.

Speaker Change: <unk>.

Speaker Change: Binding site and.

Speaker Change: <unk>.

Speaker Change: Also quite potent in preclinical assays.

Speaker Change: We continued to.

Speaker Change: Continue to destock over time to look at durability of the clinical effect. So.

Speaker Change: So far we didn't get it.

Speaker Change: Is that right.

Speaker Change: Again on receptor that we've chosen.

Speaker Change: We will provide kind of an optimal molecule a lead for atopic dermatitis and other inflammatory conditions look like potentially.

Speaker Change: So you've seen a fairly disorders, as well like guidance et cetera.

Speaker Change: I predict disorders, where there is a long list that you are now.

Speaker Change: So youre right I mean, this would be a really massive development program.

Speaker Change: Wanted to pursue other indications obviously, we will do this.

Speaker Change: Thats helpful way.

Speaker Change: Probably starting with atopic dermatitis and seeing how it performs.

Speaker Change: In terms of.

Speaker Change: Long half life potency ability too.

Speaker Change: Dose.

Speaker Change: Long term.

Speaker Change: <unk>.

Speaker Change: The ability to sort of.

Speaker Change: Reiterate pruritus.

Speaker Change: And then also.

Speaker Change: Affect the biology of the Liza.

Speaker Change: Which is hopefully something that would lead to differentiation, which is terrific.

Speaker Change: Convenience.

Speaker Change: So those are my comments about these two products with regards to whether or not we will partner those are.

Speaker Change: Decisions that we havent really evaluate.

Speaker Change: Yet around this product would need more data.

Speaker Change: <unk>.

Speaker Change: The other question.

Speaker Change: Sure.

Speaker Change: Oh on the IL 17.

Speaker Change: Oh, Yes, IL 17, thanks for that.

Speaker Change: 17 is ongoing and is testing two schedules.

Speaker Change: <unk> strengths.

Speaker Change: Against placebo in a phase two study.

Ron.

Speaker Change: Inc, accruing quite well.

Speaker Change: The moment that we are going to start.

Speaker Change: We will do an interim analysis for <unk>.

Speaker Change: Utility.

And we think we'll have enough patient data.

Ed.

Speaker Change: Sometime early next year.

Speaker Change: So I think the next that amount.

Speaker Change: We will probably just received a recommendation from the DMC on this futility analysis.

Speaker Change: And then after that if the study continue spending will readout.

We anticipate that we will complete accrual by the end of the year and then.

Speaker Change: We have subsequently so.

Speaker Change: Some of our plans.

Speaker Change: Whether or not there's a second interim analysis defensible.

Speaker Change: What we are seeing.

Speaker Change: What the recommendation from the DMC is but so far our plans are to do a futility next year and then to continue the futility is not met.

Speaker Change: Got it thanks very much.

Thank you we will take our next question.

Speaker Change: Your next question comes from the line of <unk> Rama from Jpmorgan. Please go ahead. Your line is open.

Speaker Change: Hi, guys. This is priyanka on for Anna We just have a quick question you guys have been increasingly highlighting the internal pipeline and as you guys move to a more of a global infrastructure for clinical development, how should we think about R&D spend over the next several years.

I will.

Speaker Change: Ask Jim to cover that please.

Speaker Change: Hi, guys, So Disney Ikea and thanks for the question.

Speaker Change: On the R&D side as you know we have a lot of regional pipeline in India right now.

Speaker Change: Approaching to the approval stage.

Speaker Change: So that's quite significant.

Speaker Change: The investment we made already and Thats continued to ramp up very quickly at the same time global pipeline is picking up so we are going to extend and accelerate.

Speaker Change: Pipeline, yes, net position overall R&D spend.

It's going to remain relatively stable with modest growth.

Speaker Change: Yes.

Speaker Change: Got it thank you so much.

Speaker Change: Thank you.

Speaker Change: We will take our next question.

Speaker Change: Your next question comes from the line of Louise Chen from Cantor. Please go ahead. Your line is open.

Speaker Change: Hi team congrats on all the progress.

Speaker Change: And thank you for taking our questions just as the way on for Louise.

Speaker Change #100: So we have a quick question what is the current competitive landscape for DLL three are there any other assets in development.

Speaker Change #100: How should we think about the market opportunity and any type of ballpark potential revenue contribution. So you can think of.

Speaker Change #100: <unk>.

Speaker Change #101: Thanks for the question I'll ask Rafael to comment on the competitive.

Dynamics and development in small cell lung cancer here, and then I'll come back and talk about how we think about mark to market opportunity. So Raphael if you want to give a quick summary here.

Sure.

Speaker Change #102: Yes, it's a very dynamic and evolving field at the moment.

Speaker Change #102: You mentioned in development. There are two products have growth that continued development of <unk>.

Speaker Change #102: Which is approved for.

Speaker Change #102: Progression of Justice Flatling chemotherapy platinum therapy.

Speaker Change #102: In Delta, which is a T cell engagement.

Speaker Change #102: Three T cell engaging both though.

Speaker Change #102: Growth based on very small sets of 35% to 40% with durability five three and nine months.

Speaker Change #102: Sort of the standard will contemporary standards for approval of these two drugs and they both have post marketing commitments for full approval.

Speaker Change #102: Other drugs in development.

Speaker Change #102: You may now above <unk>.

These from Grubber T that was actually discontinued because of toxicity. So thats not really in play at the moment there are other T cell engages.

Speaker Change #102: With me going to CLO three alright.

Speaker Change #102: EBITDA compound as well.

Speaker Change #103: That's one that's emerging.

Speaker Change #103: Our robust.

Speaker Change #103: It's why up to alarm for metal, Inc, which was presented at ESMO <unk> ADC and you had a response rate in small cell lung cancers.

Speaker Change #103: 68%.

Speaker Change #103: Close to six months of aggression a response.

Speaker Change #103: About 80 basin.

Speaker Change #103: So as you can.

Speaker Change #103: See the landscape.

Speaker Change #103: <unk>.

Speaker Change #103: Thankfully now a robust with a number of products both at bluestone in the process of development.

Speaker Change #103: As I said good thing, we don't think that these products are necessarily question.

Speaker Change #104: Particularly diesel engages in agency.

Speaker Change #104: Or different.

Speaker Change #104: Targets.

Hello.

Speaker Change #104: <unk> mentioned in the prepared remarks, so the or respond on this one response.

Speaker Change #104: Delta family of patients with <unk>.

Speaker Change #104: Our product.

Speaker Change #104: 13% so.

Speaker Change #104: That make landscape, but I think while there is much needed in this disease.

Speaker Change #104: That remains.

Speaker Change #104: Strong unmet need.

Speaker Change #104: Thank you Josh.

Speaker Change #106: Thanks, Raphael I mean, I think given the unmet need here, we're quite excited about the market opportunity. This is a global asset for us if we think of patients in the west. It's about 100000 patients with small cell lung cancer and if I focus my remarks on the U S, which is about 40000, because I think it can give an idea on how we see it.

Speaker Change #106: Think about the market opportunity.

Speaker Change #106: I think if we look at.

Speaker Change #106: Pricing in the range and this isn't this is just looking at things like a lot of math now in price per cycle and you can extrapolate across other.

Speaker Change #106: Significant tumors and otherwise, but if we use somewhere between $150000.

Speaker Change #106: <unk> per second line, given a number of cycles and maybe 250001st line again, just very rough numbers.

Speaker Change #106: So you can get using 40000 patients in the U S. At 25000 of them are in first line I think you would get to.

Speaker Change #106: Again, using a $250000.

Speaker Change #106: Type of price you get test over $5 billion.

Speaker Change #106: And the sales potential.

Speaker Change #106: And then in second line. If you are at 15000 patients that fewer cycles.

Speaker Change #106: You can get somewhere in the range of two five or so billion. So we do see this as a $7 5 billion dollar sort of total market opportunity in the U S alone as Raphael mentioned.

Speaker Change #106: Thats.

Speaker Change #106: They are not mutually exclusive opportunities here, we do see that is relevant for how we're thinking about developing DLL three and the kind of exciting potential that that has.

Speaker Change #106: Involved here of course, then you can extrapolate out to Europe, and China and other markets as well, but we're quite excited and of course, we will put the.

Speaker Change #106: Investments in speed and execution around getting getting good markets. So we can begin to tap into that opportunity.

Speaker Change #107: Great. Thank you so much.

Thank you once again, if you wish to ask a question. Please press star one on your telephone.

Speaker Change #108: I am showing no further questions at this time I will now turn the call back over to sign ups CEO Samantha Du for closing remarks.

Samantha Du: Thank you operator.

Samantha Du: I want to thanks, everyone for taking the time to join us on our call today.

Samantha Du: Appreciate your support and look forward to updating you again after the fourth quarter of 2024.

Speaker Change #109: Operator, you may now disconnect gets call.

Speaker Change #110: Thank you that does conclude our conference for today. Thank you for participating you may now disconnect.