Q2 2019 Earnings Call

Operator: You will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Billy Cho from Zai Lab. Thank you, operator.

Ask the question give me the section you will need to press star one on just trying to get a life that today's conference is being recorded I would now like to head to conference over to Billy Joel Sunnyside. Thank you. Please go ahead.

Unknown Attendee: Good morning, and welcome to Zai Lab's FIRST TAP 2019 Earnings Conference. Earlier this morning, Zai Lab issued a press release providing the details of the company's financial results for the six months ended June 30, 2019, as well as a corporate and clinical update. Unsponsored ADR, at ir.zailaboratory.com.

Earlier this morning.

Issued a press release, providing the details of the company's financial results for six months.

June Thirtyth 2009, she joined by Tom.

President and Chief operating officer will provide more detail on our pipeline <unk>, including upcoming milestones and commercial progress.

Ying Du: Today's call will be led by Dr. Samantha Du, Zai Lab's Founder and Chief Executive Officer. And we'll be joined by Tao Fu, President and Chief Operating Officer, who will provide more detail on our pipeline, product highlights, including upcoming milestones and commercial progress. Dr. Yongzhang He, Chief Medical Officer for Oncology, and John Wang, Head of Business Development, will also be available to answer questions during the Q&A portion. As a reminder, during today's call, Zai Lab will be making certain forward-looking statements, to the extent that statements discussed on this call are not descriptions. Historical Facts Regarding Zai Lab. They are forward-looking statements reflecting the current beliefs and expectations of management. Such forward-looking statements involve substantial risks and uncertainties that could cause future results, performance, or achievements to differ significantly from those expressed or implied by the forward-looking statement.

Okay, Chief Medical Officer from College, and John Wayne.

Head of business development will also be available to answer questions during <unk> portion.

As a reminder, during today's call, we'll be making certain forward looking statements.

To the extent that statements discussed on this call are not descriptions.

Facts regarding <unk>.

They are forward looking statements, reflecting the current beliefs and expectations of management.

Such forward looking statements involve substantial risks and uncertainties that could cause future results performance or achievements to differ significantly from those expressed or implied by the forward looking statements.

Unknown Executive: Factors that may materially affect future results include, among other things, the scope, rate, and progress of clinical and preclinical trials and other research and development activities; timing of new clinical trials, plans to commercialize Zai Lab's product candidates, and the timing of, and ability to, obtain and maintain necessary regulatory approvals for the product; Such forward-looking statements made on this call speak only as of the date of this presentation. Zai Lab undertakes no obligation to update or revise any forward-looking statement made on this call to reflect any change in expectations or any change in events, conditions, or circumstances on which such statements are based unless required to do so by applicable law. For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to Zai Lab's business in general, please refer At this time, it is my pleasure to turn the call over to Zai Lab's Founder and Chief Executive Officer, Dr. Samantha D'Onofrio. Thank you. The first half of 2019 was an exciting period for Zai Lab.

Factors that may materially affect future results include among other things the skate rage and progress of clinical and preclinical trials and other research and development activities. The timing of new clinical trials planning a plans to commercialize dialects product candidates and the timing and ability to obtain and maintain necessary necessary regulatory approvals for product candidates.

Such forward looking statements made on this call speak only as of the date of this presentation.

<unk> undertakes no obligation to update or revise any forward looking statements made on this call to reflect any change in expectations or any change in events conditions or circumstances on which such statements are based unless required to do so by applicable law.

For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in these forward looking statements as well as risks relating to <unk> business in general please refer to <unk> annual report on form 20-F filed in March of this year with the Securities and Exchange Commission and dialogues future current and periodic reports filed with the Securities and Exchange Commission at this time. It is my pleasure to turn the call over to sign ups founder and Chief Executive Officer Dr. So method.

Thank you.

The first half of 2009.

What's most exciting purely subside life.

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Ying Du: During which we've made significant progress toward our goal of building a biotech leader in China and a global commercial safe biopharmaceutical company. Importantly, the progress we have made since the beginning of the year has set the stage for potentially transformative events to take place in the second half of 2019. Today, I'd like to comment on some key highlights from the first half of the year. And why these milestones give us such great enthusiasm about what the future holds for Thailand. Our current portfolio consists of 10 late-stage assets targeting over 20 indications across oncology and infectious disease. In the first half of 2019, we initiated our first commercial launch. Robert C. Hong Kong and McCall.

Importantly, we have made since the beginning of the year.

Let's just say potentially transformative event will take place in the second half of 2019.

Today I'd like to comment on some key highlights.

From the first half of the year.

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In the first half 2019.

We initiated our first commercial launch.

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Tony Hong Kong.

I'm pleased to report that both products.

Well I was positive.

Through the first several months of commercialization.

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Ying Du: Not only Hong Kong. I'm pleased to report that both products are outperforming our target through the first several months of commercialization, and our team is gaining real and significant market insights, which we believe will be valuable as we prepare for the anticipated launches in mainland China. Regarding the Mail-in-China opportunities for our two-week program, our MDH in Morocco has a second-line treatment for varicose veins.

Which we believe will be valuable as we could have sold on principally the lumpiness in mainland China.

Regarding the opportunities for us to be pulled one.

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Ying Du: Granted product review by MMTA in general. We have ongoing dialogue with the agency, and we are making good progress towards receiving approval from the office before the end of the year. Our partner CSK recently reported positive top-line results from Primer. A phase 3 Study of Tsutsu Law as a Maintenance Therapy in Patients with First Line Brain, Foreign Practice-Based Chemotherapy

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A phase three study of such as amended for Pete.

HM first line lung cancer.

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The study met its primary endpoint of a statistically significant improvement in progression free survival with Gardasil some mark.

I believe that's full results from the study.

Ying Du: The study met its primary endpoint of a statistically significant improvement in progression-free survival regardless of biomarker status. We expect full results from the study to be recorded as a future scientific mission. Unsponsored ADR, We recently submitted our market authorization application for Optoon, a revolutionary system that uses electric fields to disrupt central cell division, inhibiting tumor growth and causing affected cancer cells to die. Just with me, August.

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Ying Du: Obtained with Granted Innovative Medical Device Designations by NMPA. This designation will allow us to be on the foster school with the NMPA. We're working closely with the agency to potentially have opt-in approved before year-end. Simultaneously, we're encouraged by the recent approval of Measles-Lyme for this opportunity. This is the first indication approved or set up to bring. We will work closely with the agency to pursue approval of this indication quickly as well. In the first half of the year, our partner, Microgenics... Non-Progressive Top-Line Results from the Phase III SOFIA Study on March 2nd, 2019. Lapsi-Optimized Anti-Hertu Monoclonal Antibodies in Patients with Hertu-Positive Metastatic Breast Cancer

We're working closely with the agency to potentially to have opportunistically as well.

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Patients with her two positive metastatic breast cancer.

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In the second half of this year.

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Hertwo positive gastric cancer in collaboration with satellites.

In addition to the important regulatory public.

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Ying Du: [inaudible] Prolonged Progression, Truth and Light, Microgenics plans to file a U.S. BLA. Second Hall of the, Activated the Global Fifth Wave, Mahogany 12. [inaudible] In addition to the important regulatory progress we have made, our business development efforts continue to yield impressive results, which has recently enhanced our portfolio. We are with two new partners, the decipher for their lead asset, we've partnered for the treatment of G-strain, and the Insights 4.0.12, a promising under PD-1 monoclonal antibody and the. We present a novel late-stage oncology excerpt that's highly synergistic with our current pipeline, both clinically and commercially.

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Both clinically and commercially.

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Ying Du: Licensing of recruitment is consistent with our successful fit development strategy. Current clinically de-risked assets, the best in cost potential in China's rapidly growing segment of the oncology market. Earlier this year, we said for a month positive health language. A Pivotal Study of the Presence as a Foregoing Treatment of Autism, which Paul will discuss momentarily.

She has done a major unmet medical need for therapeutics second line and beyond.

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Which results in a significantly larger patient population and time off compared to the combined markets the U.S. <unk>.

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Ying Du: GIST presents a major medical need for therapeutics in the second line and beyond, not only in China but globally. The incidence rate in China is much greater than that of the Western world, which results in a significantly larger patient population in China compared to the combined markets of the U.S. and China. There are an estimated 100,000 patients being treated currently in China with over 30,000 new cases diagnosed each year. Additionally, in July, we announced the licensing and collaboration agreement for these sites in 2012. The unsponsored ADR is a highly compelling anti-PD one that expands our oncology portfolio.

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In addition to this important clinical.

Commercial milestones.

The continued to build outs and headsets swap a global team.

I'm proud to report.

Like I said the first.

Holy comps.

So at 577.

It's roughly 250 employees.

He and his team discovered people.

Ying Du: It is expected to generate significant combination potential and synergies with our existing pipeline products. In addition to this important clinical, regulatory, and commercial milestone, we continue to build out and add steps to our global team. I'm proud to report that, as of July 31st, our employee count stood at 577.

We have quite as many news.

Hoping Quaker China, Matt I'll tell you what size.

San Francisco Boston.

Help achieve our strategic and operational objectives.

This includes the hiring of soccer.

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Leave other global discovery assets.

Ying Du: Roughly 250 employees on a commercial team and 215 discovered developers. We have recruited many new talents, both in Greater China and at our U.S. site in San Francisco, to help achieve our strategic and operational objectives.

It is a very exciting poly sion.

You have some quite good set of skills and the high ambition on a global scale.

Some have just strategy sockets.

Most importantly, the team needed to be successful.

I've always said to support.

Fourth through the many opportunities that lie ahead.

Ying Du: This includes the hiring of Dr. Valera, a seasoned oncology research scientist, to lead our Global Discovery Efforts. This is a very exciting time.

With that said.

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Tao Fu: We have an inquisitive set of ears and high ambitions on a global scale, and we have this strategy, the resources, and, most importantly, the team needed to be. As always, we thank you all for your support and look forward to the many opportunities that lie ahead. With that said, I would now like to turn the call over to our President, CEO, Tao Fu. Thank you, Samantha.

Tao Fu: As Samantha mentioned, the first half of 2019 was an extremely busy and exciting period for Zai Lab across a variety of. We became a commercial stage company with the launches of Optium and Zajula in Hong Kong. We made significant headway towards potentially getting these products approved in mainland China by securing priority review status for Zajula and innovative medical device designation for Optium. We further expanded our portfolio with two new partnerships, and we continue building out our commercial and R&D infrastructure through the recruitment of top talent. While our press release from this morning provides an update on all of our programs, we'll be happy to answer your questions on assets that are not covered in our prepared remarks. I'd like to focus my comments today on a few selected programs and related near-term capital.

Thank you Samantha.

That's a mental mention the first half of 2019 was an extremely busy and exciting period for Tyler across a variety of fronts. We became a commercial stage company with the launches of Optune under the jewelry in Hong Kong, we made significant headway towards potentially getting these products approved in the mainland China by securing priority review status for the jeweler and innovative medical device designation for our team. We further expanded our portfolio with two new partnerships and we continue building out our commercial and R&D infrastructure through the recruitment of top talent.

While our press release from this morning provides an update on all of our programs and we will be happy to answer your questions on assets that are not covered in our prepared remarks I'd like to focus my comments today on a few selected programs and related near term catalysts.

Tao Fu: I'll start with Neuroporif or Jula, a PARP inhibitor approved globally for the treatment of ovarian cancer and in the development of other solid tumors. We believe that it is a highly differentiated PARP inhibitor with excellent efficacy and safety profile without the need for blocker testing and superior pharmacological properties, including once-daily dosing, low drug-drug interactions, and ability to cross the blood-brain I'm pleased to report that our commercial launches in Hong Kong are performing ahead of our initial expectations. Based on Acuvia Formulae IMS data, Sejula is now the market-leading PARP inhibitor with market share in Hong Kong of 66% in the second quarter of 2019. This is particularly impressive given that Limpasa has been on the market in Hong Kong for more than two years.

I'll start with me refer or the jeweler, our PARP inhibitor approved globally for the treatment of ovarian cancer and in development of other solid tumors.

We believe that it is a highly differentiated PARP inhibitor with excellent efficacy and safety profile without the need for block of testing and superior pharmacological properties, including once daily dosing low drug drug interactions and ability to cross the blood brain barrier I'm pleased to report that our commercial launches in Hong Kong are performing ahead of our initial expectations.

Based on our Q via formally IMF data. The jeweler is now the market, leading PARP inhibitor with market share in Hong Kong of 66% in the second quarter of 2019.

Tao Fu: The launch curve for Jula during the first six months is significantly ahead of that of Limparga in Hong Kong, a similar figure. While it is a small market compared to mainland China, we believe our initial performance validated the compelling profile of Zerula and the capabilities of our commercial team. We're also learning valuable lessons that can be applied to the mainland launch to further position Zajula for success in our primary market. Our new drug application for Neuroperib for the second-line maintenance treatment of platinum-sensitive ovarian cancer patients was accepted by NMPA under priority review, recognizing both the urgency of the medical need and the importance of Neuroperib as a novel therapeutic option for patients. We continue to expect an approval decision from NMPA in the coming months and are prepared for our commercial launch immediately following potential approval.

This is particularly impressive given the lynparza has been on the market in Hong Kong for more than two years.

The launch curve put the jeweler during the first six months. It is significantly ahead of that of Lynparza in Hong Kong similar phase.

While it is a small market compared to mainland China. We believe our initial performance validated that the compelling profile the ruler and the capabilities of our commercial team.

We're also learning valuable lessons that can be applied to the mainland to launch to further position the jeweler for success in our primary market.

Our new drug application for Niraparib for the second line maintenance treatment of platinum sensitive ovarian cancer patients was accepted by Nm PPA under priority review recognizing both the urgency of the medical need and the importance of inoperative as a novel therapeutic option for patients.

We continue to expect an approval decision for an MPV in the coming months and are prepared for our commercial launch immediately following the potential approval.

Tao Fu: Through our ongoing clinical studies, which are not required for initial approval, we're building a robust body of clinical evidence in China that we believe will meaningfully support our planned commercial efforts and help differentiate and operate. We're very encouraged by the positive headline data released by our partner for the Prima study and are eagerly awaiting the full data. These data will be an important part of our submission for Neuroparis as a first-line, all-comers treatment for ovarian cancer.

Through our ongoing clinical studies, which are not required for the initial approval. We're building a robust body of clinical evidence in China that we believe will meaningfully support our planned commercial efforts and help differentiate and their offerings.

Tao Fu: This will be significant for us, as LIMPARVA, the only PARP inhibitor currently approved by NMPA, was only studied as a monotherapy in a first-line setting in patients with the G-BLOCKA mutation, which represents just 15% of the total patient population. We're working closely with our partner GSK to identify label expansion opportunities, including small cell and non-small cell lung cancer, gastric cancer, and other tumors. Turning to Optune, we recently received innovative medical device designations and are working closely with the NMPA to accelerate approval of the product in China. In February, we held our formal launch event for Optium in Hong Kong, following regulatory approval late last year.

We're very encouraged by the positive headline data released by our partner for the Prima study and are eagerly awaiting the full dataset. These data will be an important part of our submission from the operator of a first line all comers treatment for ovarian cancer.

This will be significant for us of Lynparza. The only PARP inhibitor currently approved by in Mph was only started as a monotherapy in the first line setting in patients with the G block a mutation, which represent just 15% of the total patient population.

We're working closely with our partner GSK identify label expansion opportunities, including small cell and non small cell lung cancer gastric cancer and other tumor types.

Turning to Optune, we recently received innovative medical device designation and are working closely with the NPK to accelerate approval of the product in China.

In February we held our formal launch event for Optune in Hong Kong following regulatory approval late last year.

Tao Fu: Similar to Joola, Optune is outperforming our expectations in Hong Kong, and the initial uptake curve in terms of patient numbers is among the best in all major market launch countries for Optune. We view this as an encouraging sign for the compelling clinical profile for Optune and the unmet medical need that it is addressing, ahead of the anticipated commercial launch in mainland China. As a reminder, we view the broader tumor-treating field technology as a potential pipeline for the product, with GBM as the first indication. In May, our partner, NovoCure, announced the U.S. FDA approval of TTF for the treatment of mesocebioma. There are a number of other solid tumor indications for which TTF is currently being evaluated, including non-small cell lung cancer, brain metastasis, pancreatic, and ovarian cancers, and we look forward to supporting these trials as well as initiating our phase 2 study in gastric cancer patients, which remains on track for the second half of this year.

Similar to the jeweler Optune is outperforming our expectations in Hong Kong and the initial uptake curve in terms of patient number is among the best in all major market launched countries for our team. We view this as an encouraging sign for a compelling clinical profile for Optune and unmet medical need bodies is addressing ahead of the anticipated commercial launch in mainland China.

As a reminder, we viewed a broader tumor treating fields technology as a potential pipeline products with GBM as the first indication.

In may our partner noble cure unallocated us at FDA approval of TTF with a treatment of Immucell TV element. There are a number of other solid tumor indications for which Tcf is currently being evaluated including non small cell lung cancer brain metastasis.

Pancreatic and ovarian cancers, and we look forward to supporting these trials as well as initiating our phase two study in gastric cancer patients, which remains on track for the second half of this year.

Now turning to market to Fanapt license from our partner Macrogenics for the treatment of Hertwo positive breast and gastric cancers for greater China.

Cement dimensions, the topline results of the Sophia trial were presented at the ASCO showing margin took them up plus chemotherapy significantly prolong progression free survival versus truck through the mud pumps chemo in a head to head comparison.

Tao Fu: Now turning to Marjit Tuktamat, licensed from our partner, Macrogenics, for the treatment of HER2-positive breast and gastric cancers for greater As Samantha mentioned, the top-line results of the SOFIA trial were presented by ASCO, showing margituximab plus chemotherapy significantly prolonged progression-free survival versus trastuzumab plus chemo in a head-to-head comparison. A Preliminary Overall Survival Analysis was also presented, and Microgenics plans to have a second look at the OS data concurrently with their BLA filing by the end of this year. We're actively pursuing the development of the breast cancer indication in China by leveraging the SOFIA data and will participate in the phase three mahogany trial in gastric cancer. Looking at recent business development initiatives, we have added two very exciting products to our portfolio in the last several months.

Oh preliminary overall survival analysis was also presented and Macrogenics plan to have a second look over the last data concurrently with their BLA filing by the end of this year.

We are actively pursuing the development of the breast cancer indication in China by leveraging the Sofia data and we will participate in the phase three mahogany trial in gastric cancer.

Looking at recent business development initiatives, we added two very exciting products to our portfolio in the last several months.

In June we announced an agreement with the separate pharmaceuticals, giving us exclusive greater China access to their lead product candidate represented a kid and PDGF, our alpha kinase switching control inhibitor in development for gastrointestinal stromal tumors or just.

Several weeks ago, you separately reported positive topline results from Invicta their phase three pivotal study of recurrent net of a fourth line treatment for Jeff.

The study demonstrated that recruitment significantly prolonged improved progression free survival virtual for people with a median PFS in the particular arm of 6.3 month versus one month in the placebo arm and significantly reduce the risk of disease progression or death by 85% or a hazard ratio of <unk> 0.15.

Tao Fu: In June, we announced an agreement with Sephora Pharmaceuticals giving us exclusive Greater China access to their lead product candidate, Repritinib, a kinase inhibitor and a kit for PDGFR-alpha kinase switch control inhibitor in development for gastrointestinal stromal tumors, or GIST. Several weeks ago, Decartis reported positive top-line results from INVICTUS, their Phase 3 pivotal study of The study demonstrated that RIPRDNP significantly prolonged and improved progression-free survival versus placebo with a median PFS in the particulate arm of 6.3 months versus one month in the placebo arm and significantly reduced the risk of disease progression or death by 85% or had a ratio of 0.1%.

In an exploratory analysis reprint that also extended overall survival versus evil 15.1 versus 6.6 month or a hazard ratio of 0.36.

These data compare favorable with our equipment, which was only studied in a single arm trial in the fourth line setting.

Based on these impressive data you separate plans to submit an NDA to the us FDA in the first quarter of 2020.

We are prohibited also being evaluated in a phase III in Threeq trial.

The second line treatment for just which have the potential to be a first line therapy, not only in China, but globally.

Bylaws and book the separable intend to expand in Trieste study to potentially include clinical trial site in China.

So that we can concurrently submit marketing application in China, if the data is positive.

More recently in early July we announced an agreement with inside for the development and commercialization of all 12, an anti PD, one monoclonal antibody in greater China.

As we have outlined previously we believe that based on its profile. All trial has the potential to be a highly competitive PD one inhibitor.

This transaction was important for us on a number of levels, most notably for the combination potential with certain other oncology asset in our portfolio.

Tao Fu: In an exploratory analysis, recruitment also extended overall survival versus placebo, 15.1 versus 6.6 months, or a hazard ratio of 0.3%. These data compare favorably with ABAPregnate, which was only studied in a single-arm trial in a fourth-line setting. Based on these impressive data, CSEPRA plans to submit its NDA to the U.S. FDA in the first quarter of 2020. Reprinted is also being evaluated as a second-line treatment for GIST, which has the potential to be a first-line therapy not only in China but globally. Zai Lab and Book Decipherers intend to expand the intrigue study to potentially include clinical trial sites in China so that we can concurrently submit marketing applications in China if the data is positive. More recently, in early July, we announced an agreement with Insight for the development and commercialization of O-12, an anti-PD-1 monoclonal antibody, in Greater China. As we have outlined previously, we believe that, based on its profile, O-12 has the potential to be a highly competitive PD-1 interpreter.

Life partner Macrogenics original developer of IL 12 has already been evaluating the combined combination of another product candidate for which we hold greater China right margins will come out with all 12 in a global phase III mahogany trial in gastric cancer.

Owning all 12 in a greater China market will enable us to harmonize our development work and own both components of the combination.

Furthermore, we have multiple compound in our current clinical stage portfolio of Dhaka work Synergistically with an unhedged PD, one and how the resources necessary to move these programs forward.

With that I will hand, the call over to Billy Joel Our financial Chief Financial Officer, who will provide an overview of our financial highlights.

Of course, we're able available to answer questions on these and other by lot programs during the Q and a session of the call. Julie. Thanks Dough I will now review our financial results for the six months ended June Thirtyth 2019 revenues for the period were $3.4 million compared to no revenue in the first half of 2018.

Our revenues for the period were comprised of $1.9 million in sales of the jeweler and $1.5 million of auction sales in Hong Kong.

As we previously highlighted digital it's already the number one PARP inhibitor in Hong Kong with the launch curve significantly ahead of them partner in Hong Kong as similar phase.

Optum was officially launched in February of this year, and which we are showing strong initial revenue.

Both through July and auction have strong momentum for the second half of 2019, and we look forward to commercial launches in mainland China.

Tao Fu: This transaction was important for us on a number of levels, most notably for the combination potential with certain other oncology assets in our portfolio. Vice Partner Macrogenics, the original developer of O-12, has already been evaluating the combination of another product candidate for which we hold greater China rights, Marjorie Cook's map with O-12, in a global phase 3 mahogany trial in Gatwick, Canada. Owning O12 in a larger China market will enable us to harmonize our development work and own both components of the combination. Furthermore, we have multiple compounds in our current clinical stage portfolio that can work synergistically with an anti-PD-1 and have the resources necessary to move these programs forward. With that, I will hand the call over to Billy Cho, our Chief Financial Officer, who will provide an overview of our financial highlights. Of course, we're available to answer questions on these and other Zai Lab programs during the Q&A section of the call. Billy?

R&D expenses were $58.9 million for the period ended June Thirtyth 2019, compared to $34.6 million for the same period in 2018. The increase in R&D expenses were primarily attributable to an increase in licensing fees ongoing in newly initiated late stage clinical trials payroll and payroll related expenses and expansion of research efforts to develop to support internal development programs.

Selling general and administrative expenses were $29.5 million for the first half 2019 compared to $6.4 million for the same period and stuff in 18.

The increase was mainly due to the increase in payroll and payroll related expenses as Dilo have continued to expand our commercial operations in China.

For the six months ended June Thirtyth 2019, xylem reported a net loss of $83.3 million or net loss per share attributable to common stockholders of $1.37 cents compared to a net loss of $41.5 million or net loss per share attributable to common stockholders of 83 cents for the six months ended June Thirtyth 2018.

As of June 32019, cash and cash equivalents and short term investments totaled $393.2 million, which includes the net proceeds from our follow on offering in may of this year.

We would now like to turn the call back over to the operator. So we can go ahead and take your questions operator.

Unknown Attendee: Thanks, Tao. I will now review our financial results for the six-month-ended June 30th, 2009. Revenues for the period were $3.4 million, compared to no revenue in the first half of 2018. Our revenues for the period were comprised of $1.9 million in sales of Zijula and $1.5 million of opt-in sales in Hong Kong. As we previously highlighted, Dejula is already the No.

Ladies and gentlemen, you may now be can you the question and answer session to ask a question. Please press star one on Japan has the personnel and now.

If you wish to cancel your request please.

Paul I'll hash key.

Once again ask a question. Please press star one on your telephone keypad.

Okay.

Our first question comes from the line of fee gun not show movies from Citigroup. Please ask your question.

Hi, Hi, everyone. Thanks for taking the question. So you mentioned that the launching ongoing is going very well with the July with 66% share.

Unknown Attendee: 1 PARK inhibitor in Hong Kong, with the launch curve significantly ahead of Mparza in Hong Kong at a similar pace. Optum was officially launched in February this year, and we are showing strong initial. Both Zujula and Optune have strong momentum for the second half of 2019, and we look forward to commercial launches in Mainland China. R&D expenses were $58.9 million for the period ended June 30, 2019, compared to $34.6 million for the same period last year. The increase in R&D expenses was primarily attributable to an increase in licensing costs.

I Wonder if you could speak a little bit more detail as to the factors contributing to that very strong launch as well as Ah you specifically mentioned some of the lessons that you're learning in Hong Kong and I assume also in Macau that will apply to.

Your your launch and mainland China, So I'd be curious as to more specifically what those lessons or are there will you could position you even better for a successful launch in mainland China. Thank you.

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Yes, and then Mike you talked a little thing.

Yeah, Yeah, I'm online, so mostly we Hong Kong <unk> well.

Good teams so we record the best.

Unknown Attendee: Ongoing and newly initiated late-stage clinical trials, payroll and payroll-related expenses, and expansion of research efforts. Unsponsored ADR, Selling General and Administrative Expenses were $29.5 million for the first half of 2019. The increase was mainly due to the increase in payroll and payroll-related... As Zai Lab continues to expand its commercial operations. For the 6-month end of June 30, 2019, Zai Lab reported a net loss of $83.3 million, or a net loss per share attributable to common stockholders of $1.33, compared to a net loss of $41.5 million, or a net loss per share of Tribunal Tukamish stockholders of ADR, for the six-month ended June 30th, 2020.

Given the brunt of market data from this ongoing team.

So the team executed very very well good.

The other hand or to say July itself is best in class product and that is the only one.

Once daily use probably hepatitis.

And also there was a particular cadence is very good.

So the wet.

Yes.

So our medical team also did a great job for medical education. So.

We have the best people, we have the best product set and our education.

Program is so good so this kind of seeing surpassed booking the market share for our company.

I also like to add.

I had a little bit down just from my observation I think the team the Hong Kong has many years of distinguished launching successful oncology products.

And.

Operator: As of June 30, 2019, cash and cash equivalents and short-term investments totaled $393.2 million, which includes net proceeds from our follow-on offering. We would now like to turn the call back over to the operator so we can go ahead and take your questions. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the power or hash key.

Overall, our team has long eight of the top 10 on kind of the products either launched or lead those programs over the last Uh huh.

Yigal Dov Nochomovitz: Once again, to ask a question, please press star 1 on your telephone keypad. This first question comes from the line of Yigal Nochomovitz from Citigroup. Please ask your question. Hi, hi, everyone.

810 years, So I think that's number one to me on top of what well in SAP number. Two is also Oh, we do have not only the at least in China, we weight those the patients. According to you know now starting from 300 based on the small body weight, so that give us better safety profile as well as everyone knows the advocacy. So there is a superior efficacy in terms of the liver foam is once a day in terms of Ah Michael in terms of Ah you know that that meant in the pepper Lifecycles. We don't go say 56, a a sip and time is that.

Tao Fu: Thanks for taking the question. Tao, you mentioned that the launch in Hong Kong is going very well with Jula having a 66% share. I wonder if you could speak in a little bit more detail as to the factors contributing to that very strong launch, as well as you specifically mentioned some of the lessons that you're learning in Hong Kong and, I assume, also in Macau that will apply to your launch in mainland China. So I'd be curious as to more specifically what those lessons are that will position you even better for a successful launch in mainland China. Thank you. Yeah, and Yigal, it's a very good question. Our CCO, William Leung, is online. I would like him to give you the highlights. Unsponsored ADR: Yeah, yeah, I'm online.

That gives reduce the drug drug interactions as we know many on how the patients are taking multiple drops but another thing I want to highlight is that as William said. This has best in class, but also this is the only ovarian cancer drop so far proved in this part of the World I believe even globally has the threeg penetration.

And another thing I want I, just referred to as a as more and more publications came out and the doctors want to actually bring the Thrace earlier and to present the habits systems Metabolon has happened.

Thank you recall.

Okay great.

And then just more generally I was just wondering if you could speak to how you expect some of these new scientific advisory Board members to help shape. The early development pipeline you recently added Alex Ajay and we Ping Chen just curious.

How you expect them to contribute to the strategy and the earlier stage trials.

William Leung: So firstly, we in Hong Kong are a very good team. So we recruit the best talent from the market and from this Hong Kong team. So the team execution is very, very good. On the other hand, the jewelry itself is the best in class product.

That's a good question again, you call as we continuously doing.

Building, our discovery efforts and globally as Paul mentioned, we have a.

Got it.

Tao Fu: And it's the only one that's in daily use, public heritage, and also the certificate of evidence is very good. So the way, our medical team also did a great job in medical education. So, we have the best people, we have the best products, and our education program is so good. So these kinds of things help us to gain market share from our company. I also like to add a little bit on, just from my observation, I think the team in Hong Kong has many years of experience launching successful oncology products. And overall, our team has launched eight of the top ten oncology products, either launched or led those programs over the last eight, ten years. So I think that's number one for me, on top of what William said.

Already full years operation in Shanghai in discovery, but again, we added last year sites in San Francisco and in Boston, We brought in Dr. seasoned in oncology.

Hello, just a discovery from.

Inter ferociously bring her to San Francisco, and she's leaving offer discovery effort with Dr. live in trend and a new board did new upsized they'd be on board they'll help overall on the company.

You know strategy special on the on the research front, we do have lost a full for a full meetings a year with them and also AD hoc necessary meetings and I think this will be very helpful. But the don't toppled. The people will always have the advisors and also consultants in the field. We are involved and will use them at ice hockey basis as well.

Great and just one for for Billy.

Tao Fu: Number two is also we do have not only the, at least in China, we dose the patients according to, you know, now starting from 300 based on more body weight. So that gives us a better safety profile as well as everyone knows the efficacy is, this is the pure efficacy in terms of delivery form, it's once a day, in terms of, in terms of, you know, the metabolites, we don't go CYP50, CYP enzyme, it's that, that gives reduced drug-drug interaction as we know many oncology patients are taking multiple drugs. But another thing I want to highlight is, as William said, this is the best in class, but also, this is the only ovarian cancer drug so far approved in this part of the world, I believe even globally, has the brain, you know, penetration. And another thing I want to add just briefly is that more and more publications are coming out, and doctors want to actually bring the drugs earlier and prevent the metabasis, the metabasis, from happening. Thank you, Yigal.

If you wouldn't mind billing regarding the shareholder base is the expectation that you're going to remain.

An ex us.

Filer or could we see down the road that you shift to.

US filer to become more than 50% held by U.S. investors. Thanks.

Yes, Hey, you guys I'll take that question and joining this call that is a function of tougher market forces. So it's really hard to say and predict the future.

But right now we remain a foreign private issuer, but we of course have a lot of investors in the U.S.

Well just say the last fall as the lots for long way brought in more on the long only health care a reputable investors.

For example, our NASA other than for that would hit number one public investor we have.

Well I didn't pan sovereign number tool and a large number two.

Public Investor we've barely guilford's, we have older we have all the unknown unknown.

Who is pools for those kind of market size. We we can now accommodate so we were not really particularly favor one or another we're really looking for the investor base, we want the investors who are.

Unknown Executive: Okay, great. And then, just more generally, I'm just wondering if you could speak to how you expect some of these new Scientific Advisory Board members to help shape the early development pipeline. You recently added Alex Adjaye and Li-Ping Chen.

We'll have kind of girl with a company in the long term who knows the business understand what we're doing.

Got it thank you very much.

Thank you. The next question comes from the line of Unopened Rama from JP Morgan. Please ask your question.

Thanks for taking my question and congrats on all the progress.

Unknown Executive: Just curious how you expect them to contribute to the strategy in the earlier stage trials. That's a good question again, Yigal, as we are continuously building our discovery efforts globally. As Tal mentioned, we have already had four years of operation in Shanghai for discovery, but again, we added sites in San Francisco and Boston last year.

Two quick questions from me. The first question is you know you've got the potential approvals in China on the horizon for the June run up to and maybe you could walk us through sort of the the final steps in the gating factors to getting an approval for both.

And then the second question is there's been some business unrest in Hong Kong recently wondering how we should think about any potential second half.

Unknown Executive: We brought in Dr. Susan, the oncologist in discovery in San Francisco, brought her to San Francisco, and she's leading our discovery effort. With Dr. Lieping Chen and the new SAB on board, they'll help overall with the company strategy, especially on the research front. We also have four meetings a year with them and also any other necessary meetings, and I think this will be very helpful. But on top of these people, we always have advisors and also consultants in the field who are involved, and we use them on an ad hoc basis as well. Great. And just one for Billy, if you wouldn't mind.

They do Optune impact in Hong Kong, specifically, thanks, so much.

Thank you Anup home and then let me answer your second question first because that's a very easy quick answer way. This demonstration has Scott.

What's going on in China in Hong Kong for actually couple of months.

It's not just recently phenomenon and we haven't seen any impact to hover.

Unknown Attendee: Billy, regarding the shareholder base, is it the expectation that you're going to remain an ex-U.S. filer, or could we see down the road that you shift to a U.S. filer if you become more than 50% held by U.S. investors? Yeah, hey, Yigal, thanks for that question and joining this call. That is a function of capital market forces.

Commercial launch to our revenue. So we think that's more political nada this insight and so that's the answer to your second question on the first question is as we talk about in our earlier script. So July we launched we felt and.

She t. a non da last year December we got quickly club the per acceptance and also priorities.

Unknown Attendee: So it's really hard to say and predict the future. Unsponsored ADR, As the last follow-on, we brought in more long-only healthcare reputable investors. For example, other than Fidelity as our number one public investor, we have Wellington as our number two public investor. We have Bally Guilford.

We view and are currently and if you. We of course are we not see a working for the agency. So we cannot disclose loss of the details of how agency upgrades.

Unknown Attendee: We have all the known and known. Who is who for the kind of market size we can accommodate. So we don't really particularly favor one or another.

Well look at what we can tell you is we think the agency has really put a lot of efforts work closely with us since we are now the only has one medical needs I'm talking about digital but also we're talking about is a category one and this is also under lots of.

Endorsement from the cloud that works and this also brings.

Unknown Attendee: We're really looking for an investor base. We want investors who can grow with the company in the long term, who know the business, and understand what we're doing. Thank you very much. Thank you. The next question comes from the line of Anupam Rama from JP Morgan. Please ask a question. Hey guys, thanks for taking the question and congrats on all the progress. Two quick questions from me.

Basically the product to well adopted from all the characteristic as I have mentioned earlier.

And to China, because of very much needed right now so so far we haven't changed our guidance and though because as you know and we havent get told otherwise we haven't been told otherwise from the agency and.

Anupam Rama: The first question is, you know, you've got potential approvals in China on the horizon for Zhijun and Optum. Maybe you could walk us through sort of the final steps and the gating factors to getting an approval for both. And then the second question is, there's been some business unrest in Hong Kong recently, wondering how we should think about any potential second half Zhijun-Optum impact in Hong Kong specifically.

Lastly, I do want to say China does not have this is per fuel to the tupper since that date. So there's always a risk and any product. We can only company to Ahmed gave you. The best estimation, we can thank you.

Great. Thanks.

And question and congrats again on all the progress.

Thank you.

[noise].

Thank you.

The next questions comes from the line of Maury Raycroft from Jefferies. Please ask your question.

Hi, everyone. Congrats on the progress and thanks for taking my questions.

Unknown Executive: Thank you, Anupam. Let me answer your second question first, because that's a very easy, quick answer. This demonstration has been going on in China, in Hong Kong, for actually, a couple of months.

First question is just just based on the July so you've talked about some of the advantages of the drag on the call, but just wondering with Astrazenecas phase III Powell, one land parcel plus bevacizumab data that came out recently.

Just wondering how we should think about those data from lynparza in the context of phase three prima Andy eventual commercial opportunity there.

Unknown Executive: It's not just a recent phenomenon, and we haven't seen any impact on our commercial launch or on our revenue. So we think that's more political, not on the business side. And so that's the answer to your second question. The first question is, as we talked about in our earlier script, we filed an NDA last year in December. We quickly got acceptance and also priority review. Currently, of course, we are not working for the agency, so we cannot disclose lots of details about how the agency operates.

Thank you Lori will follow on with the vocal cord.

Uh huh.

We still Lee Herb Vogel presentation of our upcoming medical conferences.

Hi, Paul.

Equals a full platform.

But also keep giving full when crime I'll call. It one time and the whole model.

Just on the rightful again.

Unknown Executive: But what we can tell you is we think the agency has really put a lot of effort in, worked closely with us, since we not only have one medical need, I'm talking about Zezula, but we're also talking about Category 1, and this is also under lots of endorsement from the KOL networks, and this also brings basically the product to be well-adopted in all the characteristics I mentioned earlier to China, because they're very much needed right now So, so far, we haven't changed our guidance because, as you know, we haven't been told otherwise by the agency. And last one, I do want to say China does not have a perfused date, so there's always a risk. And any product; the company can only give you the best estimate we can.

People, which all week with well pull one competitor that combo compared and that's been part of that plan on that.

Analytics.

Well I have you know overall, we feel very confident we remain high confidence in their office competitive.

And I would with competitive advantage it not dollars.

Hi, good monotherapy, but also it's a from overall advocacy quality of life perspective, and even from Pharmaco economics, particularly China, they feel comfortable nobody products.

[noise] got it that's very helpful and.

Unknown Executive: Great, thank you for taking the question and congrats on all the progress. Thank you. The next question comes from the line of Marie Raycroft from Jefferies. Please ask the question. Hi, everyone. Congratulations on the progress and thanks for taking my questions. The first question is just based on Zajula.

And then also in the press release, you mentioned that there's going to be some prime data from prime in Nora at the upcoming as Gio meeting in a few weeks just wondering if you're talking about I'll talk more about what do you expect a at the medical conference.

Hi, first so oh that particular, one that cannot disclose you know, especially on behalf of TSK, Oh, I don't know, how many high profile than pasta humbles HM Okay. So basically Uh huh.

They have to them so they have that they can pass it.

But all from oversight.

Marie Raycroft: So you've talked about some of the advantages of the drug on the call. But just wondering with AstraZeneca's phase three, Paola, one Limparzo plus Bevacizumab data that came out recently. I'm just wondering how we should think about those data from Limparzo in the context of phase three Prima and the eventual commercial opportunity there. Thank you, Maureen, for dialing in. This is a very good question. So first, we should still wait for the actual data presentation at the upcoming medical conferences for the details of both products. But also, the key differences between Prima and PolarOne is Prima is a monotherapy, it's a neurotic against placebo, which, well, PolarOne is a combo, compared to BIMPOSA plus a vaccine, which is, as you know, overall, we feel very confident, we remain high confidence in neurotic in a competitive, with competitive advantages, not only it's a monotherapy, but also it's from overall advocacy, quality of life perspective, and even from pharmacoeconomics, particularly in China, we feel confident about this product.

See the top line from a Oh from Javier TSK pop.

Top line in that.

So with that in more details and many more decent sense. We bow. This week. So we can remain calm and Oh as I said earlier, we feel very confident about our mono crystalline sabic.

[noise], we feel is very competitive in the greater China markets.

[noise] very good I'm looking forward to the data thanks for taking my questions.

Sure. Thank you Laurie.

Thank you. Your next question comes from the line of China to Chung from SP be leaving please ask your question.

Hi, guys. This is David on for Jonathan Congrats on the progress and thanks for taking my question.

First question.

The commercial expectations, obviously noted a rapid uptake of Niraparib in Hong Kong over the first half of the year could you give investors some context on how you're thinking about benchmarking commercial sales of Niraparib in China and comparisons to Lynparza sales reported disease.

Hi, first so I think he was busy and I think you you a in joined our conference on behalf of Duncan wrong and out the Virtus question to our chief commercial Chief Commercial officer.

Dr. William down.

[noise] so.

Unknown Executive: Got it. That's very helpful. And also, in the press release, you mentioned that there's going to be some data from Prime and Nora at the upcoming SGO meeting in a few weeks. I was just wondering if you could talk more about what to expect at that medical conference. First of all, that particular one, we cannot disclose, you know, especially on behalf of GSK. No, no, no, on behalf of Limpasa Combo from CET. Basically, it's up to them. They have the data package. But from our side, we did see the top line from our GSK top line analysis.

We believe up to China alone should weekend.

And also for what were doing.

So as I said, we have the best team and the best products and also very good promotion.

So we are very confident a flawless success in China.

I have to say over the past pay on top of what William just mentioned I want to also talk about we actually not holiday had some PK, but also for a competitive market competitiveness.

We have also data from additional.

Unknown Executive: And we're getting more details, learning more details as we go this week, so we can't really comment. But all in all, as I said earlier, we feel very confident about our Mono first-line study. We feel it's very competitive in the greater China market. Very good.

You know close so beyond 250 patients.

Unknown Executive: I'm looking forward to the data. Thanks for taking my question. Sure. Thank you, Maureen.

Jonathan J. Wang: Thank you. The next question comes from the line of Jonathan Chung from SBD Leering. Please ask your question. Hi guys, this is David Ruch on behalf of Jonathan.

<unk> Donnelley in China market, and that's a that's actually going to be very hopeful to get us or get more p. eyes and also kill also aware of this product that their strong support and their strong endorsement is part of that and also with the publication coming forward. Many of the P. ice would be their apparel, they participate and needing the product they're more than 30, P. ice and a involved in this trial.

David Ruch: Congratulations on the progress and thanks for taking our questions. First question, in terms of commercial expectations, you've obviously noted the rapid uptake of Naraparib in Hong Kong over the first half of the year. Could you give investors some context on how you're thinking about benchmarking commercial sales of Naraparib in China and comparisons to Limparza sales reported to date?

And number two I want to say I want a comfort I also again as I mentioned I want to call. It a complement a williams team because they again has long.

And eight of the top either launched or these eight of the top town lungs oncology products in China.

Unknown Executive: First of all, thank you David and thank you for joining the conference on behalf of Jonathan Wang, and I will divert this question to our Chief Commercial Officer, Dr. William Leung. So we believe after the China launch, we can also perform very well than we are doing in Hong Kong. So, as I said, we have the best team and the best product and also very good promotion. So we are very confident of our success in China.

The team has lots of experience in the field and they have done the last two a few months I lots of medical education, a lot of you know reach out to the whole Ah you know, okay, well P.N. that works and so far it's terrible about it.

Yes ill so Hong Kong Lounge is also that it's been successful. So also very critical to China. So two things one internally the China team can learn they spent a lot better good hands on team on the other hand externally.

Coelce experience through.

Medical expense.

Can you know transfer to China's doctors.

William Leung: I have to say over the past, okay, on top of what William just mentioned, I want to also talk about, we actually not only have done PK, but also for competitive, market competitiveness, we have data from additional, you know, close to 250 patients down in the Chinese market, and that's actually going to be very helpful to get more PIs and also KOLs aware of this product, get their strong support and their strong endorsement of this product. And also with the publication coming forward, many of the PIs would be very proud they participated in and led the product. There are more than 30 PIs involved in this trial.

After launch we leveraged these.

Yeah, it's a very interconnected and a community and they especially in the south east of A.S. nice, especially in the southern part of China back in the you know.

We set a Pearl Harbor area.

And your telephone by the Hum Mccall Guangdong when all those problems is dr., it's actually a very very very it's a high use high a income okay Ah area in China and they have been having a group has been highly endorsements have very good experience.

And we have been given examples so we have seen patients have the benefits from Ireland.

Unknown Executive: And number two, I want to say, I want to also again, as I mentioned, I want to compliment William's team because they again launched and eight of the top, either launched or lead, eight of the top launched oncology products in China. The team has lots of experience in the field, and they have done a lot of medical education in the last few months, and a lot of outreach to the whole KOL, and PI networks. And so far, it's been very well adopted.

However, no approved after being treated at that but our competitors drop.

[noise].

Great. Thank you.

And then second one in regard to merchandise from out of you mentioned the Sofia results and your plans to participate in the mahogany study in gastric cancer could you remind us what your current expectations are for an M. P. A submission in breast cancer and how you're thinking about a bridging study for that population.

Unknown Executive: Also, the Hong Kong launch was also very successful and also very critical for China, so two things. One, internally, the Chinese team can learn the experience from our very good Hong Kong team. On the other hand, externally, the Hong Kong KOLs' experience through a medical exchange can, you know, transfer to China's doctrine. After lunch, we can leverage this. Yeah, it's a very interconnected and community, especially in the southeast of AS, especially in the southern part of China, back in the Pearl Harbor area.

But let me start and then maybe a second question Sam details of the virtual ever CMO in oncology, a doctor or even John Hey, and just for use of the you know no indication could sell we are being good we gave a feedback before by many people talking at the same time. So let me just start with that.

And that's you know the vessel the second line and breast cancer, and we are still waiting for their interim data.

Unknown Executive: And you're talking about Hong Kong, Macau, Guangdong, and all those provinces, doctors actually are very, very, very rich. It's a high income area in China. And they have been having, as a group, have been highly endorsed and have had very good experiences. And we have been given examples, we have seen patients how they benefit from our neuropathic drugs after being treated by our competitor drugs. Unsponsored ADR, Great, thank you.

And once we got the whole package and we will follow SCPA.

And.

That's for the Mark for the second my personal gastric cancer, we are ready when you they are and to provide us a full documents doesn't to file and D.A. directly.

Unknown Executive: Then, secondly, in regard to MRT-TUXOMAB, you mentioned the SOFIA results and your plans to participate in the mahogany study in gastric cancer. Could you remind us what your current expectations are for NMPA submission in breast cancer and what you're thinking about a bridging study for that population? Let me start, and I may have certain questions, details about the virtual CMO in Oncology, Dr. Yung-Jung Hei, and just for ease of communication because we gave feedback before with many people talking at the same time, so let me just start with this.

Great. Thank you and then last one from me a one program that doesn't get discussed as often is the bone marrow choosing that program in partnership with five prime or could you give investors some context on how your assumptions on that patient population have evolved over the last couple of months and reasons for confidence in the program headed into the first half futility analysis.

First of all I want to say thank you David Okay. So another very good question first of all this is a global program. These by five prime so from <unk> perspective, and that we have to respect their news release, and we cannot separately, making you know the newest release old Discloser on the progress of how many patients being.

You know being a quoted a wide there's a photographer committed test okay put in place.

Unknown Executive: And as you know, for the second line breast cancer, we are still waiting for their interim data. And once we get the whole package, we will file CTA, and that's for the second line. But for gastric cancer, we are ready when they provide us with a full document and file MDA directly. Great, thank you.

And I think though from our understanding all the discussion a whole. We can say is our partner is making prudent decisions and because this is a you know a long it's another small trial and the even though with a large unmet medical needs.

But from our side, we have we can say we recorded the first and.

Unknown Executive: And then lastly from me, one program that doesn't get discussed as often is the Bamaratuzumab program in partnership with Five Prime. Could you give investors some context on how your assumptions on that patient population have evolved over the last couple of months and reasons for confidence in the program headed into the first half utility analysis? First of all, I want to say thank you, David.

Even though this is led by five prime we cleared the first patient from China and from offer a site. We have everything goes as planned and we're very proud of her contributions.

[noise].

Great. Thank you for the contract then congratulations on the progress.

Thank you David.

Thank you.

The next question comes from the line of Serena Shao from Credit Suisse. Please ask your question.

Unknown Executive: Okay, so another very good question. First of all, this is a global program led by five primes. So from the partner's perspective, and we have to respect their news release, and we cannot separate making a news release or disclosure on the progress of how many patients are being recruited or why there's a fertility test put in place. And I think from our understanding, our discussion, all we can say is our partner is making prudent decisions because this is, you know, it's not a small trial and even though it has large medical needs. But from our side, we have, we can say we recruited the first patient from China, and even though this is led by Spike Prime, we recruited the first patient from China, and from our side, we, everything went as planned, and we're very proud of our contribution. Great, thank you for the context and congratulations on the progress. Thank you, David.

Thank you for taking my question first of all congratulations on the successful self number for example on the opportunity.

And my first question is actually for really with the launch of our products in Hong Kong, China do you have a roughly guidance for the SGN. They are in the second half and or first half next year Bob.

<unk> expenses and my second question is actually where we live.

Yes.

Hi, Great did you want to.

Are you can ask the second question or do you want me to handle the first.

So hey, three now this is Billy.

I will answer your first question and then we can you can ask a way into commercial related question.

We are not yet providing forward looking guidance.

In addition to as today, you can see that from first half.

2019.

We did say that I see and able to 29.5 million.

That is compared to 2018 full year as soon as you may have remembered of $22 million. So we started building some of the commercial infrastructure late last year and we continue to the first half of this year.

And we have been we have made very nice progress in that effort.

Unknown Executive: Thank you. The next question comes from the line of Serena Xiao from Credit Suisse. Please ask a question. First of all, congratulations on the successful stealth number for Dezula and Optum. And my first question is actually for Billy.

Okay got it yes.

Secondly for all we know.

So.

Just could you give us some color on what kind of pre launch activities you have had.

For the two docks in China also.

I will say that in October .

Serena Xiao: With the launch of our product in Hong Kong and China, do we have a roughly guidance for the SG&A in the second half and or first half next year, as well as the expenses? And my second question is actually for William. Yeah, I agree with that. Did you want to ask the second question or do you want me to handle the first? So, hey Serena, this is Billy.

Due to the Hong Kong sales number seems pretty good so how do you see the challenges in Chinese market like from patient size.

Please turn off.

Bill to you or physician education point of view, what do you see the challenges for up to five times market.

So Paul.

Unknown Attendee: I will answer your first question, and then you can ask William the commercial related question. We are not yet providing forward-looking guidance in addition to SG&A. You can see that for the first half of 2019, we did say that SG&A was $29.5 million. That is compared to 2018 full-year SG&A, as you may have remembered, of $22 million. So we started building some of the commercial infrastructure late last year, and we continued through the first half of this year. And we have made very nice progress in that effort. Okay, I got it.

Yes, you are right that the Hong Kong up 2.1 seen very good so.

China launch I think.

To prepare for that.

Thanks, Joe launch in China, Our medical Affairs team worked very hard.

So they too many disease education.

In the medical sharing program.

We got Lucky AOL.

Two.

The introduce.

This.

TD fields and that.

And the.

It is good about it the GBM also for the same quarter does that July and.

Our bank ovarian cancer.

William Leung: Yeah, and my second question is actually for William. So could you give us some color on what kind of pre-launch activities you have had for the two drugs in China? Also, you know, I'm quite interested in, you know, the Hong Kong sales numbers seem pretty good. So how do you see the challenges in Chinese markets, like from patient size, patient affordability, or physician education points of view? What do you see the challenges for up to in Chinese markets? So for... Yeah, you are right.

So our launch readiness in China is now our medical affairs teams.

The problem is is it pro but also progressed very well in China.

For the.

Oh, yeah, yeah pace, but believe that don't go ahead or whatever.

Yeah. So.

You are right the though.

William Leung: The Hong Kong option policy is very good. After China launched, I think, to prepare for the potential launch in China, our medical affairs team worked very hard, so they did many, you know, disease education and the medical sharing program with our KOLs to, you know, introduce this. Unsponsored ADR, The GBM also for the same for July and, So our launch in China relies on our medical affairs teams. Your program is, has also progressed very well in China. Unsponsored ADR: Go ahead, Billy. No, go ahead, William.

The affordability always Magnus had always to issue for China, not only for that upfront about it but also for many a premium on French product. So we want to try many things where it went up like a P.S.P. or are they know financial pro one to support.

To improve the market access for our patients we are transforming okay I'll follow up.

China patients after launch.

[noise].

May I just add live if you have more color Sandy Suriname, So first of all that well come off the call and thanks for the question.

William Leung: Yeah, so you are right. Affordability is always, and market access is always, the issue for China. Not only for Adelaide products but also for many premium oncology products. So we will try many things, for example, like PAP or other financial programs to support, to improve market access for our patients. We will try all means to help our Chinese patients. May I just add a little bit, a few more colors to this, Serena?

Ying Du: So first of all, welcome to the call and thanks for the question. I think William gave some highlights already on what's ongoing. I have to say this one, so far, I've been very, very impressed by how the team brought up medical education, and market access, actually province by province and city by city. And with the support, actually, from the NarvaCure team, we have sponsored so many neuro-oncologist conferences, participated in specifically talking about this product. Number two, this product, remember, is a GBM; this is the one and only product. We don't have any competition. And so this, also the market in China is a very, very big market, considerably, much, much bigger. Hong Kong has only 7 million population.

I think the big William gave a you know some are already highlights what ongoing I have to say this one night, so far I've been very very impressed by how the team fraud, the medical education market access actually probably been province by Province, and city by city and with the support actually would never King team. They have the sponsors. So many neuro oncologist conference's participated in specifically talking about this product a number two this product back remember its a PBM and this is the one and only product we don't have any computation and so they also the market within China is there is there a big markets consider probably much much bigger seven Hong Kong has almost 7 million population you think about Titan mid time as population the patient number and they even consider a foldable.

Okay, let's see either from self pay China Mall has even 2016, the you know a U type the purchasing power so lucky equivalent to the upper Middle class to you know sort of well people. It's about 17 million in 2016 U.S., but in time now it's already by the time. It was a 110. So I think two years past three years passed by the number as you know, especially pharmaceutical market innovative ones grow very fast in China, the second quarter.

Ying Du: You think about China's population, the patient number, and even consider affordability, let's say, even from cell pay. China now has, even in 2016, the purchasing power for the equivalent to the upper middle class to the wealthy people is about 17 million in the U.S. But in China, it's already been 110 million by the time it was 110. So I think two years passed, three years passed by, the number, as you know, especially the pharmaceutical market, innovative ones, grew very fast in China. Like second quarter, just report, you see the second quarter earnings from AD. They actually, they already reached for the second quarter loan, 1.2 billion U.S. dollars in sales. And it's with a 44% year-to-date, year-to-year, you know, increase.

Just report you see the sunken second core running from a 18, they actually fall they already read for second quarter alone 1.2 billing U.S. dollar sales and is with a 44% year to date year to year in Okay and increase same with a mark the second quarter. This year, we reported seven a 740 750 million roughly sales with actually a also beyond 45% increase second quarter year to year, so innovative oncology products, the NOL and I have to say most of their products and all the reporting reimbursement yet that's still is a real with high demand people are willing to pay.

Another thing I want to highlight is a distrust before this one was ever actually reached the China thought of Chinese patients and I actually was of course, a not a lot I would say maybe one for some patient population even go getting treatment to U.S. and now you know because its very well.

The unmet medical need and is a very you know.

One day, we recently hired and kill all.

Ying Du: Same with Merck, the second quarter this year, they reported 750 million roughly sales with actually also beyond 45% increase on second quarter year-to-year. So innovative oncology products are now, and I have to say, most of their products not in reimbursement yet, but still, it's with high demand, people willing to pay. But another thing I want to highlight is this drug, before this one was ever actually reached to China, a lot of Chinese patients, and actually, of course, not a lot, I would say maybe 1% patient population, even go getting treatment to U.S., and now, you know, because it's very, it's unmet medical needs, and it's a very, you know, one day, we recently had, and KOL, just basically gave us at a scientific meeting, talk about every day delay of this product reached to patients can really cause not even, you know, every day's earlier death by a day or by a month, could be by a year, because this is very rapidly growth, you know, tumor.

Just basically gave us at a scientific meeting talk about every day delay of this product suite. So patients can relate that costs are not even a hill everyday is earlier that by a day or by month could be bar here. Because this is very rapidly girls you know tumor and another lost my Wantto comment is Oh, so wish for the realized in China and this is a very unique this one before discussing got approved in China already pulled in a category one recommended.

Ying Du: And another last one I want to comment on is also something we should realize in China, and this is very unique. This one, before this got approved in China, was already put on the Category 1 recommended list, and as you know, very few drugs get recommended in Category 1, which means when doctors prescribe any other TBM drug, you know, chemotherapy, they have to, they are obligated to mention there is a treatment option with a TT field.

And all this and as you know there are few drops scattered recommended in category, one which means when dr. per square up any other TBM drive Oh, you know chemotherapy. They have to they are obligated to mention there is a treatment option TB within Ti field. So this is actually that's why when we did the wrong and why a Willem team then we did the rewalk, we realize how many people on the stupid already and they're actually according to say how can they even took other role many people from the medical community together drove like a lobby letters to people that would like to People's Congress or an alternative to talk about it too even Sunday to commissioner levels.

Their support for these products. So that's all I wanted to ask sensor enough.

Thank you so much.

[noise]. Thank you.

The next questions comes from the line of.

Yeah. Thanks, Hong from Bank of America. Please ask your question.

Ying Du: So this is actually, that's why when we did the rollout, you know, I, William, and my team did the rollout, we realized how many people understood this already, and they were actually calling to say how can they, they even together wrote many people from the medical community together, wrote like lobby letters to people, to their congress, and openly they talked about it to even send it to commissioner level. Their support for these products. So that's all I want to add. Thanks, Serena. Thank you, Samantha.

Hi, Lizzie young thanks for taking my questions. So I have two questions first as far as about a.

Commercial sales in Hong Kong for the July and Altera, So could management give us some color fancier ports for example in our call how many patients are being on the July .

Oh, Ultra and and also about the health care insurance coverage in Hong Kong for the two drugs, that's sort of the one is about oh, how or pricing strategy, Hong Kong compared to our competitors, which might be able to give us some color about you all a man hours.

Yang Huang: Thank you. The next question comes from the line of... Yang Huang from Bank of America. Please ask a question. Hi, this is Yang.

Progress Trudge Socs, that's my first question.

Oh, Yeah, you take those.

Yang Huang: Thanks for taking my question. So I have two questions. The first one is about commercial sales in Hong Kong for Jula and Optune. So could management give us some color on a few points? For example, like how many patients have been on Jula or Optune?

Yeah, Yeah, let me take a first quick caught on that because because Ah and Oh, William is actually dialing from China from distance and lives. We are hard for him to be able to you know, especially a wouldn't miss.

Yang Huang: And also about the health care insurance coverage in Hong Kong for the two drugs. Sir, the first is about. Our pricing strategy in Hong Kong compared to our competitors, which might be able to give us some color about your mainland pricing strategy. Thanks. That's my first question. Unsponsored ADR. Yeah, yeah, let me take a first quick cut on that. Because William is actually dialing from China from a distance, and it's real hard for him to be able to, you know, especially Dr. William Leung is fully trained in China. And even though he has worked in multinational companies, and I just want to say a few things, to highlight a few things first. If you miss 93, he can go down to the next level.

Dr. William now is fully trained in China, and they even though he worked in multinational companies and I just want to see things to highlights for a few things first if you Miss nicer three he can go down to the next level. So in terms of a commercial sales of Ah Ah and so number one. The question you have is in terms of pricing would last one is pricing strategy right.

And the IRA Pedro that's her guests compared to competitor I have to say.

Lynparza cells sudden 85.

Oh 750000 per patient right and then in Hong Kong.

And the other products I would say and the way could you know your Hong Kong. We are we haven't disclosed that number but it's in the way we cannot give you the exact number Chris.

Ying Du: So in terms of commercial sales, number one, the question you have is in terms of pricing, the last one is pricing strategy, right? Unsponsored ADR, Yes, compared to, compared to, I have to say Limpaza sells 785, 750,000 per patient, right? And in Hong Kong, And our product, I would say, the way because, you know, in Hong Kong, we haven't disclosed the number, but it's in the, we cannot give you the exact number, because in Hong Kong, it's very different from other places. You can actually charge differently based on the hospital, clinics, and also based on the patient needs, and patient affordability.

The Hong Kong is very different from the other places you actually can charge differently based on its a hospital clinics and also based on the patient need patience affordability.

So that's number one the pricing strategy, but we always stay competitive remember we are best in class and also with unmet medical needs. So ways. So far we think we're very competitive not in terms of dropping the size the price the money in terms of the product quality and number two in terms of Oh. The number. Two question you had was about the number of patients and Oh again I don't think we are.

We are in a previous we're not in a position to common that details. So I believe typically that's not a number we release, especially this first six month lunch.

And.

Ying Du: So that's number one, pricing strategy, but we always stay competitive. Remember, we are best in class and also address unmet medical needs. So we, so far, we think we're very competitive, not in terms of dropping the size or the price, but more in terms of the product quality. Number two, in terms of the number two question you had was about the number of patients, and again, I don't think we are, we are, you know, we are not in a position to comment on that detail because I believe, typically, that's not a number we release, especially for And what is your other question? Oh, reimbursement.

And what is your other question Oh reimbursement I have to say than Pos in the house Lynparza has launched two years ago still valuing reimbursement in Hong Kong and we're also just launched six months, we are not in reimbursement either so thank you for all the three questions Jim.

Oh, Yeah, if you don't mind well last one is about the PD one so kind of common thing at all.

Treaty War on our clinical trial programs and are preparing for sure Tom alarm for trials and venture rich tradition in China.

Ying Du: I have to say, Limpasa and us, Limpasa was launched two years ago, and it is still not reimbursed in Hong Kong. And we have also just launched for six months; we are not reimbursed either. So thank you for all three questions, Yang. Oh, yeah, if you don't mind, my last one is about PD-1. So can you comment on your PD-1 clinical trial progress and the potential timeline for trials and eventual registration in China? Okay, let me go from different just highlights, okay, then further details, I'll defer to our CMO.

Okay. Let me go from different or just highlights. Okay. Then further details I'll defer and two hours he CMO and the first for PD one the interest for us to be PD. One it's not like we are we want to be a PD one company because as you know there are more than 200 pretty ones already in China.

The reasonably affirmed its PD, one it's really because.

We believe you know from our current portfolio has lot assumed the trees bids PD one, especially for example, full mark to summer.

And so we're going to do a combo with a full gastric cancer with PD, one and it's important we holds both combos in this part of work not only from device its effectiveness effectiveness of the supply. The Dino then the also clinical development, but even more for the <unk>.

Ying Du: And the first one, PD-1, the interest for us to do PD-1 isn't like we want to be a PD-1 company, because, as you know, there are more than 200 PD-1s already in China. But the reason we bring this PD-1 is really because we believe, you know, our current portfolio has a lot of synergies with PD-1, especially, for example, for Mark Twosonet, and we are going to do a combo for gastric cancer with PD-1. And it's important we hold both combos in this part of the world, not only for device effectiveness, the effectiveness of the supply, you know, also clinical development, but even more for pricing. And instead of negotiating with two companies, or, you know, plus the government, three parties, we now own both products; we only negotiate with the government, and based on the competitive landscape of PD-1 in China, we can decide how to allocate to each, you know, combo, each portion of the combo in terms of pricing.

For the pricing and instead of negotiating with two companies or.

Plus the government three parties, we now own bulk products, we'd be going we don't let me go through with the government and based on the competitive landscape of PD one in China, we can decide how to allocate to each.

Yeah combo each portion of the Campbell on the pricing.

Ying Du: And so number two I want to highlight is that we brought this product in based on all the DD work we have done, all the PD-1s we have reviewed, we do believe this is based on their preclinical and limited, not limited, actually a lot of clinical data. They have the constructor-like quality, which we believe is a very high quality PD-1.

And then so number two I want to highlight is that we brought this product in also plays I'm older D. The work we have done all the PD ones. We have revealed we do believe there is a base on their preclinical and the limited clean no limited actually lot of clinical data. They are they have the 'cause trigger like quality, which is we believe is a very high quality and the PD. One is not all PD, one or PD. One that saw the same as you know so we're always looking for the best of our philosophy always either for best in class or first in class, so that still fits into that category, especially in China and so what so Oh, you said has already gone down three pivotal trials and those pivotal trials are likely to be getting up.

Getting approval U.S. and with that we are going to.

Ying Du: It's not all PD-1s; all PD-1s are the same, as you know, so we're always looking for the best. Number three, as I mentioned, we're bringing in for combos, right? So like we talked about Gatsby combos with our, you know, the O13, we're talking about combos with our internal programs. And the key when we do that is, number one, we want to make sure we do it most effectively, and also, what we're trying to do with the combos is, and we never announce when the CTA gets accepted or IND gets accepted. As a company policy, we always announce when the first patient comes in.

You know sent were simultaneously and the ceasing to file ceta to see what bridging or what peak or PK studies were going to do to quickly along the product in China as well. So that's number two number three as I mentioned, we bring meaningful combos right. So as we've talked about castricum combos with the other.

With the Oh 13, we're talking about combos with our internal programs and so those timeline I can say we started the older process.

Yes, some of them were already typically and you don't have to do certain studies in China, but as you know, we we do star trial and in this part of the World and the key when they do that is number one we want to make sure.

And we do with more effectively.

And also what we trying to do with the combos is.

Ying Du: So I think you'll hear news from us in the not-distant future about the patient recruitment process for those combos. And that's in terms of approval time, and that really is a little bit further down the road, and especially with the Chinese government, which does not have very many dates. We really do not have enough dates.

And we never know when the city that aseptic Oh, I mean, do you get a sceptic as a company policy, we always announced when the first patient yet so I would I think you'll see it you'll hear news from us in the not too distant future about the patient recruitment process for those combos and the.

That's it hurts approval time and that really is a little bit further down the road and especially the Chinese government does not have profuse purpose.

Ying Du: So we have to be very careful how to guide our investors. We want to be responsible. So once we get closer to the timeline, we can give you more color on that. Thank you, Yang. Yeah, great. Thanks a lot. Thank you. The next question comes from the line of Xiang Zhao from Macquarie.

So the future date, we really feel that they pursue the two sorry for my English [laughter] producer date, we'd have to be very careful how to guide our investors we want to be responsible so once we get closer to the timeline. We can give you more color on this.

Thank you our young.

Great. Thanks, a lot.

[noise].

Thank you.

Linhai Zhao: Please ask the question. Yeah, thank you very much for taking my questions. I have two small questions.

The next question comes from the line of young Chow from Macquarie. Please ask your question.

Linhai Zhao: The first one is the SG&A cost. I just want to know, you know, basically, what's the breakdown between, you know, Zhula and Optium in Hong Kong and how much of the SG&A goes to that. And how much is it for the preparations to launch in China? That's my first question. And second question about R&D costs, you know, with more and more drugs entering the late stage, we're supposed to pay our partners more milestone fees. So I just want to know roughly how much that could go up in the second half and first half of 2020.

Yes. Thank you very much for taking my questions I have two small questions first one is.

The ASG you cost.

I just want to know basically what you the breakdown between July and LP, and opportune, Hong Kong and how much of the SGN a go through that and how much is for the preparations to launch in China.

That's my first question and second question and by the R&D cost.

Linhai Zhao: And if you don't mind, I'll just ask another small question about the PD-1 competition. You know, it is already very competitive in China. So how are we gonna compete with the big pharma, especially Hongwei and Sinobel? Thank you very much. Hey Xiang Gao, maybe I can start with the first two.

You know with more and more drugs entering the late stage, we are supposed to pay outside and there is more and milestones phase. So I just want to know roughly how much. It can go up in the second half and for top 2020 .

And if you don't mind just ask another small question about the PD. One competition you know it is already very competitive in China. So how are we going to compete to be the big pharma, especially about hungry and as I know about.

Thank you very much.

Hey, Sean go maybe.

Unknown Attendee: Hey Xiang, yeah, yeah, Billy, why don't you start with the first two? I'll address the last one, and you can address the three. I'll chip in. Sure. So Xiang Gao, your first question on SG&A, we are not breaking that up between products at this juncture, but I think, based on our previous answer to the question, a lot of this increase in SG&A went into building our commercial infrastructure, of course, not only in Hong Kong but in our main geography of mainland China. Also, in R&D, we are also expanding our development team and certain discovery team, And also, I want to highlight that it's not just for milestones, it's a very small portion of all of the costs, but it's more clinical developments, more new discoveries, and more expanding our pipeline, and more opening up new indications.

Oh, Yeah, Yeah, Billy why don't you start with the first I'll address the last one and I go back to Strauss <unk> yeah.

Sure.

So it's I know your question first question on this today, we are not breaking that up between product at this juncture, but I think based on our previous.

The answer to the question a lot of this increase of yesterday went into building our commercial infrastructure of course, not only in Hong Kong, but in mid or main geography of mainland China.

Oh, Yes, Oh. So are you in R&D. We also are trending over artist development team and certain discovery team and go so it's not really just so this part of that.

And I also want to highlight its not just full mouth milestone. It's very small portion of all of the core customer, but it's more clinical development markets, new discoveries and a more expanding our pipeline and more if the opening up new indications.

Unknown Attendee: Yeah, and Shangguan, to your second question, so that was SG&A, and then Samantha already provided some commentary on R&D, but we would like to point out not only the first half year-over-year, but also how we track from the full year or second half of last year to this year. So what I'm saying is our R&D expenditure for the first half of this year came out to about $58.9 million, right Last year, the full-year R&D budget was actually $120 million.

Yes, and some go to your second question should also see in a and then our cement already provided guidance, but some commentary in R&D, but I, we would like to point to also.

Not only first half year over year, but also how we track from the full year or second half of last year to this year. So what I'm, saying is our R&D expenditure for first half of this year came out to about 58.9 million right.

Unknown Attendee: But to your point, we do have many more projects coming up, but we wanted to also highlight those numbers for you. And also, our goal is to build, and at this stage of China, we believe it's very important to be national champions. So rather than to make EBITDA even or positive, our goal is to, this is land grappling in China, and this is building national leaders like 20 years ago in Japan, where with all the competitions, you come up with three national champions. That's what we want to be, at least one of them.

Last year, the full year R&D was actually 120 million.

But to your point, we do have many more projects coming up but I wanted to also highlight those numbers for you.

And also our goal is to abuse at this stage of China. We believe it's very important to be national champion so rather than to make a you know a P value even or even an old positive. Our goal is to this 11 crappy in China and this is building national leader that couldn't two years ago from Japan.

Ying Du: And that's why we have very strong supporters in the investment community, from you guys, and that's why we have all this confidence. But having said so, if you're looking at historical numbers, if you look at how much we spend as a company with our current portfolio, you see how I believe I can give you the very exact number. We are very effective in using investors' money and delivering the most out of the portfolio. And also, in terms of licensing, you can see we did some controversial licensing, but three times in a row, we proved to the market what we had done. Good DD work. We have done enough market analysis in China. We understand the policies, which is the right product to bring in. So far, I'm very confident in our BD team, our commercial team, our discovery team, and our development team.

Well with all the competition to come out clearly you know national champion, that's where we want to be well at least one of them and that's why we have where we have very strong.

Support supporters from the investment community from you guys and that's why we have all the confidence and but having said so if you're looking at historical numbers. If you look at how much we spend as a company with current portfolio this year well below contributed.

Very exact number we have very effective effectively in kind of using the investors' money and deliver the most potent folio and also in terms of a licensing you can see we did some controversial licensee three prime in the role we prove to the market where you have some.

Ying Du: Development team also shows exemplary execution capabilities in China. If we go into detail, you can see exactly every program, how we break through the system, and how we make it really faster for approval in China. I just want to add one other quick point about the R&D costs because you specifically asked about the milestones and future costs. Although we can't give specific guidance for each one of our licensing projects, but on an overall level, most of our milestones are regulatory approval related. So these are not immediate milestones that get triggered, a lot of them by clinical trials. And I think the other thing is that we have a very capital-efficient model. So a lot of our trials are also global trials where we contribute a small percentage of patients to those trials. So, consequently, they're not standalone trials which may cost a lot of money.

Good did the work we have done enough market analysis in China, we have not understand the policies reaches the right product to bring in so far I'm very confident in Maverick BD team. Our commercial teams discovered team and development teams developing team also shows exempted a tree execution capabilities seen Tyler.

If we go to details you can see exactly every program how weak break through the system, how we'd make it really foster approval in China.

Yes, Jonathan go ahead, I just want to add one other quick point about the R&D cost because you specifically asked about the milestones and future costs.

Although we can't give specific guidance for each one of our licensing project, but on an overall level most of our milestones regulatory approval related.

So these are not.

Unknown Attendee: We help our partners, and together, we're trying to get some simultaneous approval. And I think, lastly, I just want to start on the PD-1 competition. In addition, there may be niche opportunities in monotherapy, the rationale, as Tao and Samantha mentioned earlier, is to fully open up our other best-in-class or first-in-class assets in our pipeline. So a lot of these are de-risked on a global basis, whether it's combination with the PUP or combination with VEGF, etc.

Immediate milestones that gets triggered a lot of them unit by unit clinical trials and I think the other thing is that we have a very capital efficient model. So a lot of our trial is also global trials, where we contribute a small percentage of patients to dose trials. So consequently, they're not stand alone trials, which may cost a lot of money, we help harness and together.

We're trying to get from simultaneous approval and I think lastly, I just want to start on the PD. One competition. In addition to their may be niche opportunities in monotherapy, the rationale as Tom and cement.

I mentioned earlier is just 40 open up the you know the other best in class a first in class assets in our pipeline.

Unknown Attendee: We have a lot of these best-in-class agents, single agents, which together with this good PD-1 have a lot of commercial opportunities, really expanding the pie for us. And on top of that, I also want to add the reason we decided not to do a PD-1 very early on is that, as you mentioned, we do believe the PD-1 market is very crowded. And if we develop PD-1 internally, just start from, let's say, even license it at phase one, preclinical, like most companies are, but that can develop one niche indication, PD-1, if we do it just for China alone, not leveraging global packages, that requires a minimum of 80 million U.S. dollars. But by doing so, we're working with partners who have already generated pivotal data. We just need to do a bridging and PK study, which is very cost-efficient.

So a lot of these are de risk on a global basis, whether its combination with a powerful combination with that Jeff et cetera, we have a lot of these best in class agent single agents, which together with this good PD one.

We have a lot of commercial opportunities and really expanding the pie for us.

Our accounts help though I also want to add is the reason we decided not to do a PD one very early on so as you see as mentioned, we do believe PD one market to skirt crowded.

And if we'd be right up the PD, one internally to star from let's say even license the phase one hour preclinical like most of the company are but that didnt develop one niche indication PD. One you would do it does for China alone not leveraging global passages that required minimum 80 million us dollars.

Ying Du: And still, I agree, but also I want to highlight that we're not here just for PD-1 monotherapy. It's a combo, expanding our portfolio. And still, we believe this is the best drug going to be with a Chinese company to promote this. It's not a PD-1 monoclonal antibody.

But by doing so we are working with partners already generated pivotal day. Those we just need to do a precision and Tcs study, which is very cost efficient are still I agree moderate lesson, but also want to highlight where not here just for PD, one monotherapy use accountable expanding portfolio and still this is that we believe this is the best PD ones with a phone to be with a Chinese company.

Per month per month. This is not a PD one way Bill. We believe this is very unique.

Ying Du: We believe this is very unique, both from the manufacturing cost-effectiveness and from the safety efficacy data. We have been down PD so far and have a lot of, as Jonathan said, a lot of synergies with our existing portfolio. Thank you again, Sean. Yeah, thank you very much. And congrats on the progress. Looking forward to the second half.

From both from the manufacturing cost effective from the safety efficacy data we have.

Being down BP, So far and has allowed us as that dealt with a lot of similarities with average policy system portfolio.

Thank you again, okay sounds.

Yes.

Yes, Thank you very much and congrats on the progress looking forward to the second half. Thank you.

Okay. Thank you Sir.

Wilfred Yuan: Thank you. Okay. Thank you. Thank you. The last question comes from the line of Wilfred Yuan from Bank of China International.

Thank you. Your last question comes from the line of steel from Yeah from Bank of China International. Please ask your question.

Wilfred Yuan: Please ask your question. Hello, thank you for taking my question. So I just want to follow up on one quick question on R&D.

Hello, and thank you for taking my question. So just one follow up one quick question on R&D. So can you provide some information on the breakdown on the spending in the first half in terms of.

You can program.

Wilfred Yuan: So can you provide us some information on the breakdown of the unforeseen spending in the first half in terms of different programs? Oh, yeah, sure. Yeah, sure. Happy to do it. The R&D breakdown, I think you can pretty much imply we did before the, before we finished the first half of the year, we had this Cypher deal, right, where the upfront was publicly announced at $20 million. So you can assume that, correctly assume that $20 million of the $58.9 million was the upfront, And also we have 17.5 up front to inside, right? Yeah, for July. C-I-L. And again, we don't break down the details very much because a lot of our internal people are working on multiple projects, even though we do have a kind of time, we do have that kind of tracking system, but we're not in a position to comment on that.

Oh, yes sure.

Yeah sure happy to.

The R&D break down.

I think you could pretty much imply if you did before the before we finished the first half of the year, we had to decide for a deal right where the upfront was.

Public in now.

At $20 million. So you can.

Correct, you seem to $20 million of the 58.9 million was the offers an upfront licensing fees.

I also would have 17.5 up from full insight right.

Yes for July .

Yeah Yeah.

No again, we don't each individual programs, we don't go into the details because lot of our internal IP people working on multiple projects, even though we do have a kind of a pilot we do have that kind of tracking system. So we're not in the position to comment on that.

Thank you wrong, the sorry, I'm sorry for if not this is not for you, but as a company as a public company, we have to be consistently responsible to all investors.

Unknown Attendee: Thank you, Ron. Sorry, Ron. If not, it's not for you.

Thank you. Thank you congratulation on the progress.

Thanks Ryan.

Ying Du: But as a company, as a public company, we have to be consistent and responsible to all investors. Thank you. Thank you. Congratulations on the progress. Thank you. Thank you. We have reached the end of the question and answer session. I would like to hand the conference back to Zai Lab CEO, Samantha, for closing remarks. Thank you, operator. I want to thank everyone for taking the time to join us on the call today. We appreciate your support and look forward to updating you periodically on our progress throughout the year. Again, operator, thank you, and you may now disconnect this call. Unsponsored ADR Unsponsored ADR Unsponsored ADR

Thank you we have reached an all the question and answer session I would like to hand, the conference back to the Zion, let's see Olson mento for closing remarks.

Thank you operator.

I want to thank everyone for taking the time to join US on the call today. We appreciate your support and look forward to updating you.

Sure all the quarterly on our progress throughout the year.

But then operator, thank you and you may now disconnect the call.