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Transcript : Zai Lab Limited, Q3 2023 Earnings Call, Nov 08, 2023

November 08, 2023 at 08:00 am EST

Presentation Operator MessageOperator (Operator)

Hello, ladies and gentlemen, thank you for standing by, and welcome to Zai Lab's Third Quarter 2023 Financial Results Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded.

It's now my pleasure to turn the floor over to Christine Chiou, Senior Vice President of Investor Relations. Please go ahead.

Presenter SpeechChristine Chiou (Executives)

Thank you, operator. Good morning, good evening, and welcome to Zai Lab's third quarter 2023 earnings call. Today's call will be led by Dr. Samantha Du, Zai Lab's Founder, CEO and Chairperson. She will be joined by Josh Smiley, President and Chief Operating Officer; Dr. Rafael Amado, President and Head of Global Oncology Research and Development; Dr. Harald Reinhart, President and Head of Global Development, Neuroscience, Autoimmune and Infectious Diseases; and Dr. Yajing Chen, Chief Financial Officer. Jonathan Wang, our Chief Business Officer will also be available to answer questions during the Q&A portion of the call.

As a reminder, during today's call, we will be making certain forward-looking statements based on our current expectations. These statements are subject to numerous risks and uncertainties that may cause actual results to differ materially from what we expect due to a variety of factors, including those discussed in our SEC filings. We will also refer to product revenue growth rates on a constant exchange rate basis, which is a non-GAAP financial measure. Please refer to our earnings release furnished with the SEC on November 7, 2023 for certain disclosures regarding this non-GAAP financial measure.

At this time, it is my pleasure to turn the call over to Dr. Samantha Du.

Presenter SpeechYing Du (Executives)

Thank you, Christine. Hello, everyone, and thank you all for joining us today. Throughout the year, we have continued to successfully advance our pipeline, including several important developments for key late-stage programs, such as bema, KarXT, [indiscernible] and efgartigimod. In the third quarter, we were especially excited about the launch of our [ 5th ] commercial product, VYVGART, following months of strategic preparation. Although still early in the launch, we are encouraged by the initial demand for VYVGART and by the positive feedback from both physicians and patients.

Josh will provide more details on the progress of this very important product launch. We are well positioned to execute on our corporate strategic goals, including the launch of multiple new products and new indications over the next few years. Our pipeline of potential first-in-class and best-in-class products has significant potential to meaningfully improve the lives of patients, and we expect this product candidates to contribute to our long-term growth to drive shareholder value.

And with that, I'll pass it to Josh. Josh?

Presenter SpeechJoshua Smiley (Executives)

Thank you, Samantha. It is an exciting time at Zai Lab as we launched VYVGART, the first FcRn blocker approved for the treatment of generalized myasthenia gravis in China. There are over 170,000 patients in China living with gMG, many of whom continue to suffer from symptoms such as decreased muscle strength and mobility despite receiving treatment. VYVGART is an important new treatment option for gMG and has the potential to significantly change the way patients are treated today. We've already made significant progress through our outreach efforts, having engaged around 75% of our top 200 hospitals since launch in September.

And while we are still in very early stages of the launch of VYVGART, we are encouraged by the positive feedback from neurologists and patients. We are seeing physicians gain experiences on VYVGART, and impressively, nearly 70% of our top 100 MG specialists have already prescribed VYVGART to a patient. Furthermore, many are repeat prescribers and we are seeing the depth and breadth of prescribing continue to increase. We are focused on increasing awareness, providing education on the benefits of this important therapy and building a strong support network for physicians and patients.

Importantly, we are also working hard to increase patient access, and we are in the negotiation process for VYVGART's inclusion on the NRDL, which would allow many more patients to be able to benefit from this therapy. We're very excited by the potential of VYVGART and not just in gMG but across a wide range of new opportunities. Earlier this year, we saw positive pivotal data in CIDP. And by the end of 2023, we expect pivotal data in ITP and PV. Next year, we're expecting the approval of subcutaneous VYVGART and gMG, and we believe that being able to provide alternative dosing options, both IV and subcutaneous is beneficial for patients and caregivers. These are just some of the near-term opportunities for VYVGART to add additional layers of growth to the franchise.

Now turning to the rest of the commercial portfolio. We delivered year-over-year product revenue growth in the third quarter of 22% on a reported basis and 27% on a constant currency basis. In addition to the launch of VYVGART, ZEJULA hospital sales grew and it continued to be the leading PARP inhibitor in hospital sales for ovarian cancer in China. QINLOCK and NUZYRA continued to benefit from their inclusion in the NRDL, and our team was able to expand supplemental insurance coverage for Optune.

Looking ahead, we will continue to focus on the execution of our strategic goals. First, we are seeking to accelerate our medicines in the market and drive revenue growth. Over the next 12 months to 18 months, we anticipate several important registrational data readouts, including for efgartigimod and Tumor Treating Fields in pancreatic cancer. And we expect to initiate several important trials, including FORTITUDE-102, a trial evaluating bemarituzumab in first-line gastric cancer. Next year, we could see 3 or more NMPA approvals and 4 NDA or supplemental NDA submissions in China.

Second, we are focused on driving profitability by leveraging our existing capabilities and platforms and by increasing productivity across the organization. And third, we continue to focus on expanding our pipeline through internal discovery and through regional and global collaborations. We entered into a strategic partnership with MediLink in April for a next-generation DLL3 program, which we are currently advancing to a global Phase I trial. And we also have our topical IL-17 Humabody, which is entering global Phase II development.

In parallel, we will continue to look for meaningful new external opportunities in strategic areas to further expand our pipeline. We are very excited by the depth and breadth of our portfolio and we are confident that our commercial organization will be able to drive significant revenue growth over the next few years. We are well positioned financially with a cash position of $822 million as of September 30, which we believe will support our business and operations until we reach profitability.

And now I'll turn the call over to Dr. Amado. Rafael?