Zai Lab Ltd (ZLAB) 2018 Q4 法說會逐字稿

Hello, ladies and gentlemen. Thank you for standing by, and welcome to the Zai Lab's Year-end 2018 Earnings Conference Call. (Operator Instructions) As a reminder, today's call is being recorded. It is now my pleasure to turn the floor over to Billy Cho, CFO Zai Lab, who will make the introductory comments.

Thank you, operator. Good morning, and welcome to Zai Lab's Year-End 2018 Earnings Conference Call. Earlier this morning, Zai Lab issued a press release providing the details of the company's financial results for year ended December 31, 2018, as well as a corporate and clinical update. The press release is available in the Investor Relations section of the company's corporate website at ir.zailaboratory.com. Today's call will be led by Dr. Samantha Du, Zai Lab's Founder and CEO; and will be joined by Tao Fu, President and COO. As a reminder, during today's call, Zai Lab will be making certain forward-looking statements. To the extent that statements discussed in this call are not descriptions of 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 statements. 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, the 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 product candidates. Such forward-looking statements made on this call speak only as of date of this presentation. Zai Lab undertakes no obligation to update or revise any forward-looking statements made on this call to reflect any changes 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 to the annual report on Form-20F to be filed with the SEC this month and Zai Lab's future, current and periodic reports filed with the SEC. At this time, it is my pleasure to turn the call over to Zai Lab's Founder and CEO, Dr. Samantha Du.

Thank you, Billy. Hello, everyone, and thank you, all, for joining us. Joining me on today's call is Tao Fu, our President and Chief Operating Officer, who will provide more detail on our pipeline, product highlights, including upcoming milestones and commercial progress. Following his remarks, Billy Cho, our Chief Financial Officer, will return to review financial highlights for our full year ended December 31, 2018. Dr. Yong-Jiang Hei, Chief Medical Officer for Oncology; Dr. Harald Reinhart, Chief Medical Officer of the Autoimmune and Infectious Diseases; Dr. William Liang, Chief Commercial Officer; and Jonathan Wang, Head of Business Development, will also be available to answer questions during the Q&A portion of the call.

2018 was a transformational year for Zai Lab as we achieved significant milestones, solidifying our status of being a leading timer in U.S.-based innovative commercial space biopharma companies, which for us, means having world-class in-house discovery, development, regulatory, manufacturing, business development and commercial capabilities. We believe 2018 was also the year where we firmly demonstrated our clinical development and regulatory execution as evidenced by the early NDA submission and obtaining priority review in China for niraparib, which was over 1 year head of expectations.

Our pipeline has been terribly constructed to address significant unmet medical needs through products with first-in-class or best-in-class profile. As such, we believe each program has multiple indications and blockbuster potential in China.

Our portfolio currently includes 7 late-stage programs, 3 of which are U.S. FDA approved, niraparib, Optune and omadacycline. Just a few weeks ago, margetuximab, the latest addition to our pipeline, had positive pivotal data in later-line HER2-positive metastatic breast cancer, demonstrating security against HERCEPTIN, the largest oncology drug in China today.

Together with niraparib, the best-in-class PARP inhibitor and Optune, a revolutionary treatment for GBM patients, we believe Zai Lab has the strongest late-stage oncology portfolio with global first-in-class and/or best-in-class profiles among innovative Chinese biotech companies.

In particular, we had build a several oncology disease strongholds, including woman's cancer, GI cancers and glioma where we had multiple synergistic assets in each area. This is a strategic theme that we'll continue to pursue and expand in the future.

In 2018, we also became a commercial stage company with marketing approvals and launches of ZEJULA and Optune in Hong Kong. In anticipation of potential commercial launches in China later this year, we had also build out our core commercial infrastructure that now have over 180 employees. As of March 1, we have about 450 employees at Zai Lab, with nearly 200 employees dedicated to R&D.

Our business development execution continues to shine. We added 6 assets through 4 major strategic partnerships in 2018 with MacroGenics, Novocure, Entasis and Crescendo. We have had great success in selecting the right partners and assets. And I would like to attribute our success to our deep relationships with our biotech peers, sterling reputation, track record of success in clinical development and regulatory execution and the disciplined approach towards due diligence and deal making.

Our business development pipeline continues to be robust, which will provide a sustainable competitive advantage for Zai Lab. We made progress with global expansion by opening our U.S. headquarters in San Francisco, which further strengthens our discovery and business development capabilities.

In terms of discovery, we're now ready to share more information on our progress and strategy. Over the past 3 years, we have been working on several targets, focused on oncology and autoimmune diseases. We expect to announce 1 to 2 IND filings per year starting in 2020. We're building our discovery pipeline that is synergistic with our clinical portfolio and creating a proprietary best-in-class human transgenic mouse platform to serve as our internal discovery engine.

Before I turn the call over to Tao, I would like to mention how we have strengthened our senior executive team to scale up further as a fully integrated global platform. Most recently, Tao Fu, a senior industry leader, with over 20 years of experience with leading biopharmaceutical companies, joined us in September as a President and Chief Operating Officer. Tao oversees our global business development, discovery, manufacturing and other operational activities and is leading the expansion of our U.S. operations.

Dr. Yong-Jiang Hei joined us as Chief Medical Officer for oncology this past fall and brings with him over 20 years of global oncology clinical development experience.

Dr. William Liang joined Zai in June as Chief Commercial Officer and comes to us with significant commercialization experience and track record of success in running leading oncology commercial organizations in China, particularly for AZ and Roche. William was instrumental in launching many top-selling innovative drug -- oncology drugs in China today including HERCEPTIN, Tagrisso, Iressa, Tarceva, MabThera, and Avastin to name a few.

I will now turn the call over to Tao Fu, who will go into more details on our pipeline, clinical milestones achieved this year and commercial progress. Thank you.

Thank you, Samantha. 2018 was an extremely busy year on the product development front for Zai Lab as we made significant progress on almost all of our assets in our pipeline, including assets that were in-licensed during the year. I would like to highlight the clinical and regulatory progress of our 4 programs: niraparib, Optune, margetuximab and omadacycline. 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.

Our lead oncology asset, niraparib, with brand name ZEJULA, is a potential best-in-class PARP inhibitor for ovarian cancer and other solid tumors due to its differentiated efficacy, once daily dosing and superior pharmacokinetic properties, including its ability to cross the blood brain barrier.

As Samantha mentioned earlier, we submitted the NDA to the China National Medical Products Administration, or NMPA, as a category 1 drug for the second line maintenance treatment of platinum-sensitive ovarian cancer patients and this submission was accepted by NMPA under priority review, recognizing both the urgency of the unmet need and the importance of niraparib as an important therapeutic option for patients. This submission was based on the totality of data, including the global NOVA trial conducted by our partner Tesaro and the PK study Zai Lab conducted in China, demonstrating comparable PK profile between Chinese patients and non-Chinese patients enrolled in niraparib global studies.

We completed the PK study nearly 4 months ahead of schedule and plan to present it at the upcoming AACR Conference this quarter. Niraparib was also designated as a national science and technology major project by the Chinese government as part of a key initiative to strengthen local innovation. We expect approval and launch of niraparib in China in the second half of 2019, which will be over a year ahead of our expectations and a major milestone for Zai Lab.

We're executing a comprehensive clinical trial and life cycle management program for niraparib. Currently, in China, we have 3 ongoing Phase III trials. First, we have our first Phase III study of niraparib as a second line maintenance therapy with a recurrent platinum-sensitive ovarian cancer, which has completed enrollment. Second, we begun enrollment in a Phase III China registrational trial for first line maintenance therapy in platinum-responsive ovarian cancer and expect to complete enrollment of that trial by the end of 2019.

While the results of these studies are not required for the approval of niraparib, they will provide important local data to support adoption.

Third, we dosed the first patient in the Phase III trial in patients with small cell lung cancer and patient enrollment is on track. In addition to those ongoing trials, we plan to enroll patients in a number of global studies in conjunction with our partner in ovarian cancer, non-small cell lung cancer and potential other indications. Importantly, we anticipate readout of the global PRIMA study in first line maintenance treatment of ovarian cancer in the second half of 2019. If positive, the PRIMA study will support the approval on niraparib in all comers in first-line indication. This is a very important differentiation for niraparib as Lynparza was only studied in G-BRCA mutations patients in this indication, which only represents about 15% of the total patient population. We're actively evaluating with our partner additional indications to expand the label of niraparib.

Moving on to Optune. In September, we announced a strategic collaboration and license agreement with Novocure for tumor treating fields or Optune in Greater China. Optune is currently marketed in the U.S., EU and Japan for the first line and recurring treatment of glioblastoma and has demonstrated clinical proof-of-concept in multiple other tumor types, such as mesothelioma, lung cancer and pancreatic cancer.

Novocure currently has global Phase III studies in brain met and non-small cell lung cancer, which are very large commercial opportunities in China. So it truly represents a pipeline and a product opportunity for us. As part of the agreement, Zai Lab will support enrollment of Chinese patients in certain clinical trials investigating tumor treating fields in order to accelerate clinical trial enrollment. We also plan to initiate a Phase II study in gastric cancer patients in China in the second half of 2019.

On the regulatory front, we're actively working on obtaining a clinical trial waiver from NMPA. And if approved, would enable us to commercialize Optune based on available clinical data and launch Optune in China later this year.

In November, we added 3 additional assets to our oncology pipeline with the collaboration and license agreement with MacroGenics. We expanded our late-stage clinical pipeline with margetuximab, an immune-optimized anti-HER2 monoclonal antibody, currently being evaluated in both HER2-positive breast and gastric cancers. As you may be aware, MacroGenics recently announced positive results from its pivotal Phase III SOPHIA study on margetuximab, which improved progression-free survival compared to HERCEPTIN when used in combination with chemotherapy in patients with advanced HER2-positive metastatic breast cancer.

MacroGenics expects a BLA submission in the U.S. in the second half of 2019. We believe that the results of the SOPHIA study significantly derisk the development of margetuximab in China, not only for advanced HER2 breast cancer, but possibly for HER2 gastric cancer as well, which is an even larger indication.

We plan to discuss with NMPA about a potential accelerated approval pathway for HER2 breast cancer. Jointly with MacroGenics, Zai Lab will conduct a China portion of the global pivotal studies in HER2-positive gastric cancer in combination with the PD-1 agent, which is expected to start in the second half of 2019.

As part of this agreement, Zai also obtained rights to a checkpoint inhibitor MGD013, a first-in-class bispecific DART molecule designed to provide coordinated blockade of PD-1 and LAG-3 for the potential treatments of a range of solid tumors and hematological malignancy and an undisclosed multi-specific TRIDENT molecule in preclinical development.

Lastly, I want to update you on the status of omadacycline. Omadacycline was in-licensed from Paratek Pharmaceuticals in 2017 and as a next generation broad-spectrum tetracycline with both oral and intravenous formulations. Paratek obtained marketing approval for omadacycline in the U.S. in October 2018, and the drug became available in early 2019 for the treatment of community-acquired bacterial pneumonia and acute skin and skin structure infections. Also, in October of last year, EMA announced acceptance of MAA in Europe for both oral and IV formulations.

Due to the significant amount of clinical data obtained by our partner, we have an agreement with the NMPA in China on an abbreviated bridging program to accelerate the NDA submission time line. As part of the agreement with NMPA, we have a number of clinical trials ongoing, which we expect to complete this year. We anticipate beginning to prepare our NDA during the second half of 2019.

Now let me update you on the commercial progress. As Samantha mentioned, we obtained approval and started commercialization of both ZEJULA and Optune in Hong Kong late last year. The launch of ZEJULA in Hong Kong in December was a transformational event for Zai Lab, as it was our first ever commercial launch. Our work in building the commercial infrastructure and educating physicians about ZEJULA is also an opportunity for us to optimize best practices across Greater China as we prepare for the pending launch of ZEJULA in mainland.

We're pleased to report that while it is still early days, our ZEJULA commercial performance in Hong Kong is ahead of our plan in revenue and reach of target physicians. Similar to ZEJULA, we obtained marketing approval and began commercializing Optune in Hong Kong. We treated our first GBM patients in December, and recently held our official Hong Kong launch event on February 28 to increase awareness across Greater China. Importantly, we made significant progress in building out our commercial infrastructure in Mainland China and making preparation for launch of both niraparib and Optune.

We have completed recruitment of our medical affairs and sales management team as well as the core marketing and commercial operations function. Our commercial team members came from the most driven entrepreneurial and scientific talent pool in China and they collectively have a proven track record of success in launching many of the top innovative oncology products in China. They are extremely excited about the highly innovated and differentiated nature of our portfolio. Our prelaunch activities are well underway. 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 programs during the Q&A session of the call. Billy?

Thanks, Tao. I will now review our financial results for the year ended December 31, 2018. As of December 31, 2018, cash and cash equivalents and short-term investment totaled $263.3 million, which includes the net proceeds from the follow-on offering in September of last year.

R&D expenses were $120.3 million for the year ended December 31, 2018, compared with $39.3 million for the same period in 2017. The increase in R&D expenses was primarily attributable to an increase in upfront licensing fees of $46.8 million from 4 new strategic partnerships entered into 2018, inclusive of MacroGenics upfront fees of $25 million expensed in 2018, but paid in January 2019, ongoing and newly initiated late-stage clinical trials, payroll and payroll-related expenses and expansion of research efforts to support internal programs.

SG&A expenses were $21.6 million for the year ended December 31, 2018, compared to $12 million for the same period in 2017. The increase was primarily due to the increase in payroll and payroll-related expenses from increased commercial and administrative headcount as Zai Lab expanded its operations.

For the year ended December 31, 2018, Zai Lab reported a net loss of $139.1 million or a net loss per share attributable to common stockholders of $2.64 compared to a net loss of $50.4 million or a net loss per share attributable to common stockholders of $2.32 for the year ended December 31 2017.

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

(Operator Instructions) Our first question comes from Anupam Rama with JPMorgan.

Maybe a couple from me. The first one is, when we track oncology launches here in the U.S., companies provide various metrics on how the launches are going beyond just sales, things like scripts, physician call volume, bottles shipped, reimbursement metrics. As we think about the ZEJULA and Optune launches in China, what are the metrics you're considering to be most relevant in the region to help The Street think about how to track these launches? And have you considered what metrics you'll be providing to The Street? That's the first question.

So for the sales checking system, we viewed the multinational standard and system (inaudible) to track our sales performance.

Anupam, I'll just add. We do have non-revenue KPIs we track on a regular basis. Things like the reach to targeted physicians, hospital listing status and, clearly for a class like PARP inhibitors, you will be able to get data from IMS for example, on how niraparib will perform against MRSA. So those are the things -- the non-revenue KPIs we will track.

Okay. And maybe perhaps you can help us with some recent oncology launches in China that really help build your confidence into -- heading into your own launches here for ZEJULA and Optune. Are there any analogues recently that really kind of highlight how big the region could be?

Yes, this is William Liang, Chief Commercial Officer. I launched Tagrisso for AstraZeneca last year and Tagrisso launch built a new launch record in China industry. So that -- my team members come from many high reputable multinational companies, they have great experience to launch the new product. And I launched 2 very important products for Roche and AstraZeneca, both product launch winning the CEO award from (inaudible)

You may want to add on the -- how much that grew first year and second year on Tagrisso.

For Tagrisso, the launch the reach was USD 150 million just on sales, in the sales for self-pay.

For the first year, right?

For the first, yes, annualized sales.

Yes, so for first year, the question was, annualized, it was USD 150 million and for second year -- but also that was out of pocket. And so second year is about $400 million? Is that -- how much?

Yes, maybe I can chime in here. This is Billy. So as you know, from our discussions, the sales of innovative oncology drugs have been doing quite well in China. However, we've been figuring out a way to communicate and share that information, so you can consume it for public use. So we're still in the midst of that and let us brainstorm together.

Our next question comes from Yigal Nochomovitz with Citigroup.

I just want to clarify a few things. For the approval for priority review for niraparib, my understanding is that, that is a full approval, not an accelerated approval? And at the point when you get the PRIMA data for niraparib and you submit that to the Chinese regulators, that, that also would be a full approval for first line regardless of the fact that you're conducting this first and second line studies in China? Can you just confirm that?

Yes.

Yes, okay. All right. Great.

It works on both, yes, yes.

Okay. And then in China, do you have anything more specific as far as the time at which you could get approval? You said you're going to launch in the second half of the year for niraparib, but is there an equivalent of a PDUFA date or something more specific? Or if not, can you just outline some of the precedents for time to approval for other priority review drugs?

Yes, in China, based on last year's data, for Class I, average is about 12 months, but we hope to achieve before that.

Okay. And regarding Optune and the clinical trial waiver, do you -- can you cite any precedents related to other innovative medical devices or developed outside of China that were successful in getting a clinical trial waiver?

No, because that's just like Tagrisso, Optune was the first one ever and this -- in China, we'll be the first one ever if we achieve it, but we are working closely with agency on this.

Okay. And then with relaunch of both Optune and niraparib, my understanding is that the early launch like you mentioned with Tagrisso would be self-pay, private pay. You have -- what are you modeling as far as how quickly that would expand to broader reimbursement? And we've also heard that the -- that now it's going directly to national reimbursement and that The Provincial Drug Reimbursement is less of a factor. Can you comment on that because we're curious about where that stands?

Yes, I think Chinese -- the Chinese government issue more frequent, but annually the central government reimbursement. So that's why most often and not if you can get into the national reimbursement list before Provincial or Municipal. And -- so typically, we did note year of launch and after a year of launch, you typically you can get into the reimbursement list. If you want to, it doesn't have to.

And Yigal, you're right. I think once you have national reimbursement, the provincial reimbursement become less important. But you'll not necessarily always can really need the yearly cycle. So the provincial reimbursement could still be quite important in that.

Yes, the China government, they are improving their reimbursement process. So this is good for new product launch.

Yes, okay. Got it. And then just a few other quick ones. For Hong Kong and Macau, are you planning to give any guidance related to the sales ramp for 2019?

So I think Tao had a commentary on that little bit early, but so far so good. At this point, we are not providing guidance.

Okay. And then just one question on the earlier stage R&D program. I noticed that you have a preclinical program in gastric cancer. And I was just wondering, regarding the level of commitment to gastric given that you've already got the Five Prime deal and obviously, the MacroGenics deal, what was the thought process in yet a third gastric cancer program internally?

Yes, this is -- this is a completely different mechanism of action from the Five Prime and the margetuximab asset. So we think there is opportunity to continue to build synergistic asset in this area because this is one of the largest tumor type in China with close to 650,000 annual incidents a year as you know.

The second largest one.

Our next question comes from Jonathan Chang with SVB Leerink.

This is David on for Jonathan. So first question given the HER2 breast cancer landscape in China, could you talk a little bit about how you view benchmarks for approval in the third line setting in terms of progression-free survival and overall survival?

So this is Yong-Jiang Hei, I am the CMO Oncology at Zai Lab. I think we -- with the SOPHIA study being positive, so we would certainly leverage that global study in China. We -- obviously, as you know, the Chinese patient population if nothing are the same as the U.S. population, but I think, conceptually, we're looking at lateral lines of therapy after patients have come through the other HER2 agent. So we are still in discussion with the NMPA, CFDA about what would be the best pathway to get approval as soon as we can. But we will have better view on the strategy after we have a chance to talk to them.

Okay. Could you talk a little bit about that regulatory strategy further? And do you expect to kind of leverage the same Phase III data and provide something like a PK bridging study? Or do you have any thoughts on whether they might require an entirely new study at this time?

So obviously, I think sometimes you know the pathway quite well. We certainly will be doing a PK study and to show the lack of ethnic difference between the U.S. and the Chinese population. And we will certainly also looking at perhaps some kind of a bridging strategy as well. I don't think and we don't intend to do another Phase III study in breast cancer in China.

Okay. Okay, great. And then just one more from me. Regarding the brivanib study that you mentioned beginning this year. Could you comment at all on kind of your thoughts on the evolving HCC landscape? And then, is there any other context you can provide on the study itself in terms of line of therapy for HCC and choice of PD-1 agents?

Yes. The -- as you have stated, the landscape is evolving quickly. I think we do believe the combination of anti-VEGF molecule plus a PD-1 represents one of the -- right now most promising pathway to treat HCC in China. We do see a lot of competition in this area. The PD-1 companies are doing studies in HCC. And I think the combo study so far looks really promising. So we, of course -- since we are only starting the trial at the moment, we will have to do a dose finding to be sure that we are expecting the right dose for our drug. And in terms of the PD-1 source, we have a collaboration with Tesaro where we are able to use their PD-1 in our study.

Okay. Actually, just one more from me. Quick one for Billy. Could you provide any additional update on cash guidance and expected runway? Or is that it for now?

Yes, that's it for now at this juncture, you could refer to our cash balance at the end of the year, which put us in a pretty strong balance sheet position and also look at our net loss of last year, which if you exclude the expense $25 million for MacroGenics that was paid out this year, you get to about $114 million. So you can kind of reference that for now.

Next question comes from Maury Raycroft with Jefferies.

Just to start, so for the cost of goods value that you have out there today, can you comment on that and whether that number is representative of what we should expect going forward?

Sorry, Maurice, could you clarify cost of goods number?

Just the 43. I think it's 43,000 or so that you reported. Just wondering if that so, as a percentage of revenue it's about 33%. Just wondering if that's representative or?

No, it's not. As you know, that's basically at the very tail end, a little over $100,000 in revenue recorded for 2018. So I think, I'll kind of guide you towards seeing more robust data.

Got it. And just for that $100,000 worth of revenue, I don't know if you're -- I know it's early, but I don't know if you're willing to go into any more granularity as to whether that's coming from Optune or niraparib?

So the only level of detail that I can provide you is that, for niraparib, our first patient was treated in mid-November and then, of course, we made a press release that late December is when we treated our first GBM patient, newly diagnosed GBM patients with Optune. So based on those 2 points, you can get a feel for what majority -- what contributed that over $100 million -- $100,000 of revenue.

Okay. And then, I guess, you guys aren't commenting on number of patients treated with either program?

Yes, it's early days. So give us a little bit more time.

Got it. Okay. And then -- so for the SOPHIA data readout, I guess, with GC and breast cancer, how are you thinking about prioritizing both of those programs? And can you provide any more granularity on the time lines for the breast cancer launch in China?

I think it's -- as I mentioned earlier, we are in discussion with the CDE about the specific pathways. So I think right now it is a bit too early to speculate on the time line. We will do the necessary trial, the PK study for sure, and as you think of that, that would take us to next year. So eventually in terms of how long it's going to take for us to get actually approval and launch, I think it's a bit early for us to estimate at the moment. The breast cancer certainly is very important but that requires additional studies. So we are working closely with MacroGenics to design the global Phase III study, which would help us to bring margin for gastric cancer in China.

Maury, maybe I can just put the commercial opportunity in perspective. So in China, we have about up to 70,000 HER2 positive breast cancer patients, obviously we will be targeting not the first line, but later line patients, but that's still a pretty significant pool of patients. And for HER2 gastric cancer, it's even bigger. It's about 90,000. So..

Also we're talking first line, right?

Yes.

Yes.

And after first-line reimbursement more seconds-line patients come.

Yes, yes. So I think, both are pretty significant commercial opportunities.

Got it, very helpful. And last question is just on with the 2 potential launches in the second half of the year, just how should we think about SG&A and maybe if you can comment on the number of people you're going to have on the ground from a sales perspective? And any additional details there would be great.

Yes, maybe I can talk about the SG&A number and then maybe I'll have William or other colleagues chime in about the commercial strategy, especially on the headcount side, but SG&A, of course, will increase given that historically we only had G&A and starting 2008 we added S because we had to build the team for Hong Kong. So that drove some of the increase in costs as you heard before on the call as well as the press release. So that number will go up, but again, at this time, we are not giving projections on the increase of SG&A for 2019.

And also in terms of the commercial organization, we actually are closer to the approval, we will have more solid numbers to give it to you. Right now we already have 180 people, but it's a core team, but as I said, as we get closer to approval, we will have more solid numbers.

Our next question comes from Serena Shao with Crédit Suisse.

I actually have a couple of questions here. My first question actually so was discussed. The Chinese government now, they're going to have the accelerated insurance coverage, especially on the oncology drugs. I think quite a few biotech names in Hong Kong reacted very positively to this news. I think definitely that's also going to be quite positive for Zai Lab as well. So I think, because our niraparib has already submitted NDA last year and then this new coverage of insurance coverage potentially is going to come in September. So I think, in the best case scenario, we could achieve approval and insurance coverage at the same time. What's the probability the management think that's going to happen. That's my first question. My second question is, I'm quite curious about the pricing of Optune and niraparib in Chinese market. I think it may be too early for you to disclose any of your pricing strategy here, but I think these 2 products already launched in Hong Kong. Can you share -- well, any information you can share on the Hong Kong market? How does it benchmark to the U.S. price of these 2 products as to your Hong Kong price? And then how is it going to be benchmarked with your potential China launch and China pricing? That's my second question, and the third question is really, more of a question on niraparib, the first line of ovarian cancer progresses. I think Dr. Fu mentioned that, the next readout, the data readout for Phase III, is going to be second half '19. I'm not sure if I get this right. So what's the potential NDA submission and approval time line in China for the first line ovarian cancer? That's my question.

Okay. So, Serena, I'll take your first one. And the first one, regarding reimbursement, and as you mentioned, very likely this time, by September, Chinese Government will announce the list, who are on the reimbursement list. And in our speculation as we predict the second half, and as I mentioned, average it takes -- Class I takes about 12 months. We submitted in December. But we are still very optimistic about our potential to get onto the reimbursement list. But having said so, there is a risk we will miss that.

But Serena, as you're familiar with the Chinese systems, even if we miss the national reimbursement, we still have opportunity to get on many of the provincial reimbursement lists. So our team has a lot of experience managing this. So we're pretty confident either way we will be able to really manage the commercial.

Another nice thing to -- the other thing we want to note is ZEJULA is definitely best-in-class, especially it has the blood-brain barrier, can transfer to this blood-brain barrier and this is done by approved products, can do so, so there, like lots of -- especially in China, we actually treated several patients in Hong Kong on this issue and they had been exposed to other paths before and only when they switched to our path it shows tumor shrinking and also patient benefit. So there are lot of opportunities for best-in-class to get into the reimbursement list.

Yes, I definitely believe so, and I think -- yes, go ahead.

Go ahead. I just want to make a comment on top of Samantha's point. I think we discussed it in our script earlier. If the PRIMA study is positive, obviously we will have a very broad first-line label, which niraparib will not have. So the G-BARCA mutation in first line patients is only about 15%. So they simply wouldn't be able to treat other patients. So it's a very important differentiation as you know, that's the largest ovarian cancer indication.

I think your second question was about the approval time, right?

It’s about pricing, So Billy, why don't you take this one?

I will take this one. Yes, so price strategy is still being formulated definitely because we're still not launched in China for both ZEJULA as well as Optune. However, I think if you kind of dig around public sources, you can see where the product has been for pricing in China as a reference for now. You can say probably about a 30% discount to U.S. prices and if you provide a patient assistance program so -- and you can get a nice framework going. Optune, given it's really innovative and unique and gives us premium position in differentiation, it could be in a different scenario. So we are not, again, giving, we are still formulating the pricing strategy, but you can refer to how it's priced globally both at a listed level as well as reimbursed level type of view.

And I believe you have a third question on the PRIMA study and how we will leverage that for China filings, so maybe Yong, you can take that question.

So the PRIMA study is done by Tesaro, it just came out, and it's a event-driven trial and their current projection looks at maybe towards the end of this year to have the readout. So we hope by the time we would have the approval in SNDA-like setting so it become SNDA filing in China and we could perhaps even try to have some of this filing with U.S., let's say, something, which we will look into.

Our next question is a follow-up question from Jonathan Chang with SVB Leerink.

Guys just a quick follow-up, maybe got kind of lost in the update, but just to confirm with regard to the update you guided towards in second half this year on second line platinum-sensitive data. Are we still expecting that update in that time frame of second half and do you have any context on the setting that you might provide that?

So the trial has done very well, we finished the enrollment in January. And again, it's also an event-driven study. So we have to track the number of events. And if looking, I think -- but we do have 2 criteria. So we either reach the number of events that we have target or the specific period of time. So the latest we would have the readout, the time would be sometime in Q1 next year. And if the number of events is high, we could reach that number by end of this year. So we are tracking the event, and so we will see.

And I'm not showing any further questions at this time. I would like to turn the call back over to Zai Lab CEO, Samantha Du, for closing remarks.

Yes, 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, thank you, everyone.

Ladies and gentlemen, that concludes today's presentation. You may now disconnect, and have a wonderful day.