Zai Lab Ltd (ZLAB) 2024 Q4 法說會逐字稿

Hello, ladies and gentlemen, thank you for standing by and welcome to Zai Lab's fourth quarter and full year 2024 financial results conference call. (Operator Instructions) As a reminder, today's call is being recorded.

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

Thank you, operator. Hello everyone, and welcome to Zai Lab's fourth quarter and full year 2024 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 Research and Development; 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 adjusted loss from operations, which is a non-GAAP financial measure.

Please refer to our earnings release furnished with the SEC on February 27, 2025 for additional information on this non-GAAP financial measure.

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

Thank you, Christine. Good morning and good evening, everyone. Thank you for joining us today. 2024 was a pivotal year for Zai Lab, marked by strong commercial performance, groundbreaking advancements in our global pipeline, and a clear path to profitability.

In 2023, we outlined a bold vision for revenue growth, targeting a five-year CAGR of 50% to the end of 2028. We are delivering on this vision. Our total revenue for 2024 grew 50% year on year with an exceptional 66% growth in the fourth quarter. VYVGART had an excellent first full year of launch, generating $93.6 million in sales in 2024, making it one of the best immunology launches in China.

We made substantial progress in advancing our regional assets. We recently launched several new products, including VYVGART Hytrulo for gMG and CIDP, AUGTYRO for non-small cell lung cancer, and XACDURO for baumannii infections.

They also reported a series of positive data results including KarXT for schizophrenia, tumor treating fields for pancreatic cancer, and tivdak that for cervical cancer, paving the way for multiple launches next year.

Furthermore, we're advancing our other innovative assets, including Bemarituzumab for first-line gastric cancer, [COVvid for eigen], and ZL-1108 for thyroid eye disease. On top of exploring additional implications for VYVGART and KarXT. These successes together set the stage for strong revenue growth over the next few years. As a key part of our mission to address unmet medical needs around the world, it took a significant step in 2024 to accelerate our global platform.

In October at ENA, we presented compiling early clinical results for ZL-1310. Our potential first in class and back in class DLL3 ADC in small cell lung cancer. Preliminary data demonstrated a 74% ORR including both confirmed and unconfirmed responses. With further follow-up and additional patients, we continue to see high rates of confirmed responses, and we look forward to sharing detailed updates at a major medical conference in the first half of this year. The pace of progress with ZL-1310 has been remarkable, moving from phase one initiation in January 2024 to a potential pivotal trial this year. Positioning for passworthy approval in small cell lung cancer in 2027, subject to ongoing regulatory discussions with FDA.

As you know, DLL3 is expressing various other tumor types. We have opened 90 to begin to explore additional indications this quarter to maximize the potential benefits for patients. Beyond ZL-1310, we're advancing a broader pipeline of globally differentiated assets with plans to initiate global trials for an IL-13/IL-31R specific antibody for atopic dermatitis and then LRRC15 ADC for solid tumors.

Lastly, we have taken decisive actions to optimize our cost structure, improve efficiency across the organization, while continuing to invest in key growth drivers. Our last from operations in the fourth quarter and for the full year are improved year over year by 45% and 23% respectively.

We are on track to reach profitability in the fourth quarter of 2025, and we have a robust cash position of $879.7 million to support our next phase of growth. Today, Zai Lab is at a major value inflection point. The team committed to entrepreneurship, innovation, and execution excellence. We look forward to delivering on our goals and capitalizing on the transformative opportunities that lie ahead in 2025 and beyond.

We remain confident in our ability to reach our $2 billion revenue target by 2028, supported by strong revenue growth in our current commercial portfolio and the expected launches of multiple additional products or indications in the next few years.

With that, I'll pass the call to Josh. Josh?

Thank you, Samantha, and thank you everyone for joining the call today. We had a good year in 2024, as demonstrated by our strong commercial execution, important advancements across our regional and global R&D pipeline, and multiple regulatory successes.

In the fourth quarter, total revenue grew an impressive 66% year over year to $109.1 million. On a full year basis, total revenue increased 50% to $399 million with growth driven by the strong adoption of VYVGART in its first year on the NRDL, along with the continued growth in ZEJULA and NUZYRA sales. We are proud of this outstanding top line growth, and with three new launches underway including VYVGART Hytrulo, XACDURO, and AUGTYRO, we expect to continue to build strong momentum this year.

Let's start with VYVGART, which has had an exceptional launch year delivering full year sales of $93.6 million and fourth quarter sales of $30 million. VYVGART is a testament to the outstanding execution of our commercial team, and we're excited about what this pipeline and product program will achieve in coming years. There are several factors contributing to this momentum with VYVGART. And expanding network of prescribers, greater access through hospital listings, new patient acquisition, and a growing number of patients starting treatment in the maintenance phase to manage symptoms and prevent relapses.

Starting with physicians, we continue to grow the breadth and depth of our prescriber base, utilizing a strong scientific and data-driven approach to help educate our physicians. More than 2000 physicians have prescribed VYVGART, including every one of our top 300 prescribers. In the fourth quarter, we saw a significant increase in the number of physicians who have prescribed three or more cycles for patients, highlighting the growing confidence in the treatment's long-term benefits.

In addition, awareness of the FcRn mechanism across the physician community is growing. This momentum will be further amplified as we launch VYVGART Hytrulo for CIDP, unlocking additional opportunities for growth.

On hospitals, we successfully achieved listings at all of our top targeted hospitals last year, covering approximately 65% of gMG market potential. We are now targeting the next wave of hospital listings, increasing our coverage to approximately 85% of the market. In parallel, we will focus on enhancing supplemental insurance coverage to offer additional support for the patient community.

We're also seeing increased utilization of VYVGART as part of the maintenance treatment. Approximately 40% of patients who initiated treatment in the third quarter of 2024 returned for an additional cycle in the fourth quarter, which aligns with clinical trial findings and reinforces our confidence in long-term patient adherence.

Additionally, new formulations such as VYVGART Hytrulo and the prefilled syringe have the potential to ease the treatment burden, enhancing the overall patient experience in improving DoT. We're making great progress, but there's still much to do. With over 170,000 gMG patients in China, our current market penetration is under 10%, indicating vast potential for growth.

As we look to 2025, we have well defined strategies in place to drive new patient growth and the duration of treatment for VYVGART and gMG. First, we will continue to establish infusion centers in top tier hospitals, enhancing patient access and convenience for treatment.

Second, the upcoming mid-2025 update to the National gMG guidelines is expected to provide tailwinds, positioning VYVGART as a more prominent treatment option for gMG. We will use this opportunity to increase physician education and shift prescribing behaviors toward a more proactive usage of VYVGART in the maintenance phase.

Third, we are promoting the regular activities of daily living or ADL assessments, reinforcing the importance of ongoing VYVGART maintenance therapy when ADL scores decline to ensure better long-term disease management.

And lastly, we are establishing programs designed to enhance patient experience and to further optimize and extend treatment duration.

As we execute on these strategies throughout the year, we anticipate a stronger ramp up in the second half of 2025, driven by an expanding pool of both new and returning patients that will have a compounding effect on sales.

While we do anticipate quarterly fluctuations due to seasonal factors such as holidays in hospital purchasing patterns, these dynamics are expected to balance out over the course of the year.

Now moving on to our other commercial products, starting with ZEJULA. It continues to be the leading PARP inhibitor for ovarian cancer in hospital sales in China. We are seeing sales increases driven by increased penetration in first line BRCA mutated patients.

For NUZYRA, the strong sales growth this year was supported by the NRDL inclusion for both IV and oral formulations. The NRDL listing for the IV formulation was successfully renewed in January 2025. We will continue to promote ongoing access and support for patients who rely on this important treatment.

In addition, we have three recent product launches that will further contribute to the total revenue growth in 2025. First, VYVGART Hytrulo, which is the subcutaneous formulation of Efgartigimod with a shorter administration time of 30 to 90 seconds for adult patients with gMG and CIDP. Hytrulo is not listed on NRDL this year but is expected to be a meaningful growth driver over time.

Second, AUGTYRO and ROS1+ non-small cell lung cancer, which comprises between 2% and 3% of the approximately 900,000 new cases of non-small cell lung cancer per year in China. AUGTYRO achieved first time EDL listing at the beginning of this year.

Third, XACDURO in hospital acquired and ventilator associated pneumonia caused by acinetobacter baumannii infections, of which there are approximately 300,000 cases in China each year. We will leverage the industry leading commercialization infrastructure of Pfizer in the anti-infective therapeutic area to help accelerate access to this important therapy for patients in need in mainland China.

With the confidence we have behind our business driven by the expected growth of VYVGART, new product launches, and the continued strong performance of our base business, we are for the first time providing total revenue guidance for the full year. We anticipate total revenues for 2025 to be in the range of $560 million to $590 million.

In parallel to strong top line growth, we're also focused on operational efficiency and financial discipline. Through our ongoing efforts on enhancing commercial efficiency, optimizing resource allocation, and increasing productivity throughout the entire organization, our loss from operations in the fourth quarter and full year 2024 declined by 45% and 23% year over year.

We are on track to reach profitability in the fourth quarter of 2025, and we have a robust cash position of $879.7 million which allows us to support our next phase of growth as we drive both revenues and profitability.

In summary, our strong execution in 2024 reflects Zai Labs commitment to deliver on our strategic goals. With a fast-growing greater China business, expanding global pipeline, and prudent financial discipline, we expect to drive substantial value for our shareholders this year and through the remainder of the decade.

And with that, I'll now pass the call over to Rafael to discuss the great progress with our pipeline.

Thank you, Josh. Let me begin by highlighting some of the key progress updates in our global pipeline since our last earnings call, along with our next steps. Starting with ZL-1310, a potentially highly active first in class DLL3 ADC for small cell lung cancer. We presented promising preliminary monotherapy results from the ongoing phase one trial last year, suggesting that this next generation ADC therapy has the potential to deliver anti-tumor responses in the majority of patients with extensive stage small cell lung cancer, including brain lesions with good tolerability.

As Samantha said, we expect to present detailed results at an upcoming major medical conference in the first half of 2025. In January 2025, the US FDA granted orphan drug designation to ZL-1310 for small cell lung cancer, reflecting its potential to treat patients with this aggressive disease.

Globally, small cell lung cancer affects around 372,000 patients each year with a low five year survival rate of 5% to 10%. Treatment options are limited when patients progress with the current standard of care resulting in limited clinical benefit. Despite recent advancements such as Tarlatamab, there remains a critical need for readily available treatment options that offer improved efficacy and manageable safety. We are working to address this critical gap with urgency.

Enrollment in the immunotherapy dose optimization study for second line small cell lung cancer is progressing rapidly, with over 35 patients already dosed. We're also assessing potential combinations in the first line setting, and we have initiated a global phase one dose escalation study evaluating ZL-1310 in combination with PD-L1 and PD-L1+ chemotherapy. We expect to provide data this year.

We also plan to initiate a registrational study in second lines plus small cell lung cancer this year, positioning us for a potential approval in 2027. Regulatory interactions with FDA related to accelerated approval for ZL-1310 are ongoing. The DLL3 is also highly expressed in other neuroendocrine tumors, and after obtaining IND clearance earlier this month, we will start a global study soon to explore ZL-1310 in these indications.

Beyond ZL-1310, we expect to advance at least two additional global assets into phase one development this year, including ZL-6201, a novel LRRC15 ADC for solid tumors, and ZL-1503 and IL-13/IL-31R by specific antibody for atopic dermatitis. We expect to further expand our global pipeline and progress at least one global product into IND enabling or IND submission stage this year.

Now moving to our key late-stage programs. Starting with neuroscience, we achieved a major milestone with KarXT, our M1/M4 cholinergic receptor agonists for schizophrenia. In January 2025, China's NMPA accepted our NDA for KarXT, marking an important step towards bringing the first novel schizophrenia treatment to China in decades.

Schizophrenia affects more than 8 million patients in China, with many patients unable to achieve adequate symptom control due to the limited effectiveness and burdensome side effects of currently available treatments.

In clinical trials, KarXT demonstrated robust efficacy, achieving statistically significant reductions in all study endpoints while maintaining a tolerable safety profile, free of the side effects of classical antipsychotics. If approved, KarXT could redefine treatments for the millions of patients whose symptoms are inadequately managed by existing treatment options.

Moving now to oncology for tumor treating fields, in December 2024, Zai Lab and Novocure announced that the pivotal phase three PANOVA- 3 trialist in unresectable locally advanced pancreatic cancer met its primary endpoint demonstrating a statistically significant improvement in media overall survival versus control. This is the first phase two study to show a survival benefit in this patient population, and we plan to file for regulatory approval of tumor treating fields in China in the second half of 2025.

In China, approximately 134,000 new cases of pancreatic cancer are diagnosed each year, and these patients have limited effective treatment options on a poor prognosis with a median survival of under 12 months. We hope to expand treatment options and improve outcomes for these patients in need.

Turning to tisotumab vedotin on Tivdak, our tissue factor ADC for recurrent or metastatic cervical cancer. In January 2025, we reported positive top line results from the China subpopulation of the global phase three innovaTV 301 study. Tivdak demonstrated a clinically meaningful improvement in overall survival compared to chemotherapy with a manageable safety profile as observed in the global study. Cervical cancer remains a leading cause of cancer-related deaths in women in China, with approximately 150,000 new cases annually.

Patients currently have limited treatment options once their cancer recurs or spreads after initial treatment, and the current treatments have a different mechanism of action and toxicity. We plan to submit a biologics license application to the NMPA for recurring metastatic cervical cancer in the first quarter of 2025.

For bemarituzumab, we're awaiting the results for both pivotal studies in gastric cancer, starting with FORTITUDE-101, which we expect in the first half of this year and FORTITUDE-102 in the second half of the year. The bemarituzumab map has the potential to become the first targeted therapy specifically for FGFR2b positive gastric cancer in China.

Next, with our immunology franchise. efgartigimod continues to demonstrate broad potential across IgG-mediated diseases. Our partner argenx announced in November 2024 the decision to advance Efgartigimod subcutaneously into the phase 2/3 ALKIVIA study for idiopathic inflammatory myopathies IIM or myositis, following promising phase two results.

The subtypes of myositis evaluated in this study affects approximately 170,000 patients in China alone, with no targeted therapies currently approved. Zai Lab is actively participating in the Greater China cohort of this global registration of trial. We will continue to explore the pipelining and product potential of Efgartigimod to treat other IgG mediated autoimmune indications, including thyroid eye disease or TED, Myositis, or Seronegative gMG, Ocular MG, and lupus nephritis.

In 2025, we expect topline results from the global Phase 3 study of Seronegative generalized Myasthenia gravis and the Phase 2 study of lupus nephritis. We also recently strengthened our regional immunology franchise with two late stage assets that are highly synergistic with Efgartigimod; Povetacicept, immunoglobulin-a nephropathy, and ZL-1108 in thyroid eye disease.

Povetacicept that is a novel dual BAFF B cell activating factor, and APRIL, a proliferation inducing ligand antagonist with testing class potential in IgA nephropathy supported by its compelling Phase 2 data. In China, IgA nephropathy has an estimated prevalence of 3 million to 5 million patients, yet there are currently no approved therapies targeting the underlying cause of the disease. Despite standard of care treatments, including ACE inhibitors and steroids, 30% to 40% of patients eventually progress to end-stage renal disease, underscoring the significant need for innovative treatment options.

China has already joined the global pivotal trial for Povetacicept in IgA and we are leveraging a regional expertise and established footprint for renal diseases with Efgartigimod to accelerate development timelines. We aim to bring this first in class therapy to patients expeditiously.

ZL-1108 is an anti IGF-1R antibody which represents another valuable addition to our regional portfolio. It significantly reduces the treatment burden for thyroid eye disease through shorter infusion times and a more concise course of therapy compared to other anti IGF-1R therapies. In its phase three studies, ZL-1108 has consistently demonstrated reductions in proctosis, diplopia, and CAS across both active and chronic thyroid eye disease. We expect to initiate a China bridging study for TED patients in mid 2025.

Thyroid eye disease affects approximately 3.3 million people in China, of which 1 million are diagnosed with moderate to severe forms of the disease. While estimates can vary, the active or acute phase of thyroid eye disease generally lasts between 6 and 24 months, roughly 20% to 30% of the overall disease course before transitioning into a chronic phase that typically makes up the remaining 70% to 80%.

Efgartigimod is under evaluation in active phase and thus ZL-1108 complements a TED franchise, creating synergies with the Efgartigimod in both development and commercialization. The wealth of advancements reflects our relentless focus on delivering innovative potential best in class or first in class therapies to patients with high unmet needs. We will continue to execute with speed and precision, advancing our pipeline while exploring new opportunities. I look forward to sharing further updates in the coming quarters.

And now Yajing will give an overview of our financial results. Yajing?

Now, I will discuss highlights from our fourth quarter and a full-year 2024 financial results compared to the prior year periods. We had a strong topline growth in the fourth quarter and full 2024, driven by increased sales for VYVGART, ZEJULA, and then NUZYRA.

Total net product revenue grew 65% to $108.5 million in the fourth quarter. For the four-year, net product revenue was $397.6 million reflecting robust growth of 49% year over year. Our focus on financial discipline and ongoing efficiency efforts was also reflected on the expense side.

R&D expenses for the fourth quarter declined 36% year over year and the full year R&D expenses declined 12% as latest studies completed and as we continue to prioritize our investment to advancing high value regional and global pipeline programs.

SG&A expenses in the fourth quarter were flat year over year and the modest 6% increase for the full year was primarily due to higher general selling expenses related to the launch of VYVGART and the growing sales for NUZYRA, partially offset by decrease in G&A expenses and selling expenses for other products.

Our loss from operations decreased 45% for the fourth quarter to $67.9 million and 23% for the full year to $282.1 million. When you adjust our loss from operations to exclude certain non-cash items, specifically depreciation, amortization, and share-based compensation, we have adjusted loss from operations of $47.6 million in the fourth quarter and $199.6 million for the full year, reflecting year over year improvement of 53% and 28% respectively. We are in a strong financial position, ending the quarter with a cash position of $879.7 million.

Now turning to our financial outlook for 2025. We expect our 2025 total revenues to be in the range of $560 million to $590 million. This revenue forecast reflects strong growth for the VYVGART franchise, continued growth across our other products, including ZEJULA and NUZYRA, and contributions from our newly launch products AUGTYRO and XACDURO.

Lastly, based on our operating plan and our anticipated revenue growth, we expect to achieve profitability in the fourth quarter of 2025.

And with that, I would now like to turn the call back over to the operator to open up the line for questions. Operator?

Thank you. (Operator Instructions)

Anupam Rama, JP Morgan.

Hey guys, thanks so much for taking the question and congrats on all the progress. Just when it comes to the 2025 revenue guidance which came in ahead of consensus, wondering if there are products beyond VYVGART that we should be thinking about outside growth for the year. Thanks so much.

Hi Anupam, it's Josh. No, I think if you look at our revenue range, we expect the base business to grow, strongly. We'd point to ZEJULA and NUZYRA as particular growth drivers. VYVGART, we expect to grow faster than the overall rate of growth implied in the $560 million to $590 million and of course we're launching a full first full year launch for AUGTYRO and XACDURO. So we will expect some sales there, but I think there it's just strong performance across the brand. So we're excited about the year.

Michael Yee, Jefferies.

Hey, good morning. Thank you for the question. We had two, first was on, VYVGART. While there's no specific revenue guidance for 2025 for that product line, I think you made some nice comments around the shape of the curve for this year. Can you just add little more color on the growth trajectory in the first half of the year versus the second half of the year? Is that driven by the treatment guidelines? Maybe just help us out a little bit about where the directors of ZEJULA could be by the end of the year.

And then a R&D question around DLL3. Can you just confirm your thoughts about how fast you can move into a pivotal study? I think there's another Chinese ADC that was recently in licensed and put up some data around the 70% response rate. So I'm just trying to think about the competitive dynamic there and the speed at which you could go. Thank you.

Thanks Mike. It's Josh. First on VYVGART. I think we're excited about the momentum we have coming into this year and expect us to have a really good growth here again in 2025. As you pointed out, I think what we particularly expect to see as we get through the year is the compounding effect of the new patients we're starting, particularly those in the maintenance or what we call consolidation phase, where these are patients who are going to expect to go on multiple cycles through the year and of course those those build up and accumulate through the year.

Midyear we do expect an official update to the Myasthenia gravis treatment guidelines in China that more prominently features VYVGART, so we'll get some benefits there. And of course we're -- while CIDP is not on the NRDL, we're in the process of launching that and making sure patients who do have the supplemental insurance or other ways of accessing the drug that they get it as well.

So I think those things when you put them together just lead to even stronger, I think second half, growth, and we'll see in the first half, but certainly don't mean to imply that we won't, see growth throughout the year and again very strong outlook for VYVGART for this year.

Rafael will take the DLL3 question.

Thank you, Michael. With regards to the regulatory pathway and speed, we think we have an opportunity to achieve accelerated approval. We are in discussions with regulators and we plan to start that study this year. We treated a number of patients already that will be presented in the first half of this year. And yes, there are other DLL3 products, but they're much earlier, probably a year and a half or so behind.

So we're confident that we could be the first ones to be approved and the properties continue to be very similar to what we started to observe with the first patients that we treated. So, overall, very confident that we will start the study this year and that accelerated approval is a viable pathway.

Very good, thank you.

Jonathan Chang, Leerink Partners.

Hello, this is Yen-Der Lee, for Jonathan Chang. Thanks for taking my question. So I have a follow-up question regarding the regulatory strategy for ZL-1310, the [VOC] program. So, for the pivotal study, could you share your current view on whether you can do a single arm study, or you will need a randomized control study to support the accelerated approval? And how does that influence your thoughts on the 2023 BOA submission timeline? And I have a follow-up question after that. Thanks.

Yeah, so it's a good question, but obviously we don't discuss details of regulatory discussions with FDA. There's been two products approved, as single arms, but there are other products that are approved as accelerated approval in randomized trials, and the advantage of the latter is that one can confirm the approval with the definitive endpoint of survival.

So, how will we proceed and will be revealed once we launched that study. Whichever way we go forward, we will move expeditiously as I said, I will start today. There's a lot of, enthusiasm from investigators to accrue, to this product and we're confident that, we will be able to move this and potentially get approval, in 2027. So, stay tuned.

Got it. Yeah, and can I just add a follow-up question? So, can you comment on the -- like the 2023 -- sorry, 2026, the [BOS] submission timeline relatively to the timeline of potential Tarlatamab for approval and the timeline of other [B73] ADC pivotal study read out. Does that like kind of align with what you're thinking? Thank you.

Yeah, there are obviously other other products there. [Tarlatamab] has accelerated approval, and it's a very different agent, and, obviously, there's been precedents that, even with full approval in the same line of therapy, [accelory] approval can be granted. There are multiple examples in the hematology field. The mechanism of action is different. The toxicity is different, and so far the level of activity of 1310 is higher, it's in the 70% range as opposed to 40%.

So, we're not too concerned about the potential of, Tarlatamab getting a full approval before our PDUFA date, so that's with regards to Tarlatamab in second line. With this (inaudible) my sense is that, they started or the plan to start a pivotal trial, but, we don't really comment on the details of competitors, and I actually do not know what their timelines are. All I can say is that. Our plan is to move as fast as possible with an [acceler] approval pathway.

Understood. Thank you so much for answering my questions.

Yigal Nochomovitz, Citi.

Hi, this is Reanon for Yigal. Thanks for taking my question. I just wanted to ask, on DLL3 just wondering if you could talk about your strategy going into the first line setting and then with the update expected at the upcoming medical conference, just wondering what kind of data we should expect there like how many patients efficacy points, anything you could tell us there.

Yeah, thank you for the question. I'll answer the second question first. We will have data on the various dose escalation doses, and we should have, a fair amount of maturity in the earlier doses, and, definitely enough time for responses to have been confirmed. In addition to that, as we mentioned in the prior quarter, we started the dose optimization and we've accrued really fast to that randomized cohort of the study.

That was 50 patients, and we should have at least the opportunity to be confirmed in the vast majority of patients. So we think we'll have data in about 75 patients or so at different levels of follow up, obviously. With regards to first line, we were pretty active in first line, we started combinations with PD-L1 inhibitor. And then, very soon, we're going to start with, carboplatin plus PD1 inhibitor, so a triplet.

Our initial goal is to avoid topocyte because it's a very masuppressive drug and that's really what tends to limit the lenhotherapy. But there's been precedents you know of other, ADCs that combined with P1 inhibitor, checkpoint inhibitors have been able to supplant chemotherapy such as PAT and GU.

So, if you think about the fact that we can get 70% in second line and the response rate in first line is slightly lower than that is in the 50s to 60s. It's not very far-fetched to think that, ZL-1310 plus PD-1 inhibitor, could be potentially superior to the current standard of care. So this is the way we're thinking. Nevertheless, we're going to test the com the combination with carbo, and then we will have to select the dose, for ZL-1310 with that combination. We should have data this year on that dose optimization, and then we will have regulatory discussions as to, how to move it into frontline.

That makes sense. Super helpful, thanks for taking my question.

Linhai Zhao, Goldman Sachs.

Thanks for taking my question. I have two questions. The first one is about (inaudible). So since we have the CIDP and also the SC formula approved in the second half of 2024, I'm curious, what has been the observations of real world patient usage and adoptions. We have observed, so far and in terms of sales breakdown what percentage of sales coming from the CIDP and subcutaneous formular and in the longer term, what percentage would you expect? Would come from this, CIDP sub formula.

That's the first question and the second question is about KarXT, since we have -- our NDA has been accepted in January, that means that the China approval should be around, roughly a year away, and most recently BMS has also shown that they have received a very encouraging feedbacks and the early trend has been pretty good.

So, but we all know that's in the US market. So in the China market, can you share a bit more on the potential differences in the schizophrenia treatment between US and how would you see the potential commercial hurdles in China and in addition, any updates on the ADP clinical development. Thank you.

Thanks for the question. It's Josh. I'll start and then Rafael can talk a little bit about ADP or KarXT. First on your question about CIDP in VYVGART, just keep in mind that while we received approval by the time we got the product up for commercial launch, it was right at the end of 2024. We do not have NRDL listing for Hytrulo or CIDP in 2025, so I think we expect that you know relatively limited impact. It's only going to be available through supplemental insurance or cash paying market, so we're really looking forward to listing in later years and full benefit there.

So our focus this year, while we do want patients with CIDP to have the opportunity to benefit from this product, really the vast majority of our sales and efforts to focus on gMG in 2025 and gMG in an IV formulation.

To the question about KarXT, I think we are very excited about the the commercial opportunity for KarXT and schizophrenia of course as you mentioned, we submitted at the end of last year and are looking forward to an approval and a launch. There are 8 million patients with schizophrenia in China, about 4 million of whom are seeking care in pretty intensive settings, typically using an atypical antipsychotic, and I think we know from the clinical trial experience and certainly what BMS is seeing in the US is that (inaudible) or KarXT provides a really important opportunity to help patients who are not responding well to atypical antipsychotics or who can get more of the negative symptom relief that you can get with (inaudible) versus the atypical antipsychotics.

So we're just excited to get the product approved and start to launch. We'll launch with the Salesforce in about 150 person range focused on these big treatment centers, and we're looking forward to that and I think it's a great product in China for schizophrenia.

Rafael, maybe you can make some comments about Alzheimer's.

Sure, so in dementia-related psychosis, there's a series of studies, they're called Adapt studies, that are being executed by BMS. As you know, antipsychotics have a black box warning against the use in dementia, which KarXT doesn't have, and in fact, we're seeking an indication in this setting which is really in a met need.

We very much want to pursue this indication, and we're in discussions with BMS as to, what the best regulatory pathway is, whether it's participating in Adapt versus doing other separate breaching trial or other potential registration pathways, but that will be performed this year, and just to reiterate that it's an indication that we will be pursuing.

Li Watsek, Cantor Fitzgerald.

Hey guys, thanks for taking our questions. I have one on pipeline, one on commercial. I guess for ZL-1310 DLL3 ADC in terms of durability, where would you place ADC versus the other modalities such as T cell engagers or (inaudible) And can you talk about chemo sensitivity or real sensitivity in small cell lung cancer.

And then, if you're lying on a path for a second line, how should we think about the confirmatory study and the enrollment timeline there. And then second for VYVGART, anything you can share in terms of breakdown of new patient adds versus maintenance for Q4, and then how should we think about the sequential contribution from each group going forward.

Rafael, do you want to start?

Yeah. I'll start with the DLL3. I think the durability of response, which I think was your first comment, it's still early to be able to know what the median durability response is going to be, and I think that is a good thing. Perhaps by ESCO we may know, but we haven't reached it yet, last time we looked.

And, I think a good [DOR], would be If 50% of patients are at six months or greater that would be, I think something, important particularly given that there's so many patients that respond. If you look at Tarlatamab, the response rates in the 40s with DOR of 9 months, that's really what's in the label. So, we have to be, thereaboutst those numbers, hopefully, the longer the better.

In terms of, chemo sensitivity, I'm not sure exactly what you're referring to whether patients were by on factory or resistant. We've looked at that and there's really no difference in sensitivity to 1310. Patients tend to respond, with the same proportion whether or not they are refractory or resistant to platinum and that is not the case with other agents, as you may know.

With regards to the confirmatory trial, it depends on how the accelerator approval is obtained. If it's obtained in the context of a randomized trial where accelerator approval is obtained by response, then the same study will confirm the approval, using (inaudible) event end point which tends to be overall survival in second line.

Otherwise, one has to do a second study, which is what Tarlatamab has done. So, the regulatory pathway we will disclose it once that study starts. So, I hope that, answers your questions, with regards to 1310 and obviously we'll know more, at the time of the presentation.

Thanks Rafael. Thanks Li. On VYVGART, your question about the proportion of patients, where they're coming from, I think we continue to see about 1,000 patient initiations per month, so we're really pleased with that. And increasingly those patients are being started in the maintenance or consolidation phase of their disease. These again are the patients who will maintain a treatment on VYVGART for 3 to 5 cycles per year based on, what we know from the clinical trials and from reward studies from argenex, and I think that the majority of patients now that we're getting on a monthly basis are starting in that setting.

And so to your question, the more that we get the -- as we progress through the year this year, you're going to have that reservoir of existing patients coming back in for their second, third, and fourth courses. And as I mentioned at the beginning of the call, if we just look at patients who started on VYVGART in the third quarter of 2023, about 40% of those patients had already come back in in the fourth quarter, come back into their physicians to start a second course of therapy.

So we're really pleased with the progress we see here. This very much, I think, matches what argenex saw about this phase of their launch in the US. So again, it gives us a lot of confidence about the long-term prospects here for VYVGART. Thanks.

Jack Lin, Morgan Stanley.

Hi. Thank you for taking my question. I have two questions, one on Povetacicept and the other on the catalyst. So Povetacicept, I'm curious if you could share more, I mean you mentioned earlier you'll be joining the global study, but in terms of timeline, what might be looking at in terms of China launch and following that, like given that there is some product that have been approved or are in the late stage of development, how do we see the kind of relatively later launch in China with -- like what's our strategy to kind of launch and push Povetacicept up in China and kind of what the potential might be, especially with consideration of potential labor expansion beyond the IgAN. So that's kind of the first question on Povetacicept.

And the second point, I'm just curious if you can help me summarize, what are the key top major catalyst that the most expecte company in this coming year. Thank you.

Yes, so perhaps. I'll start with, probably, in terms of, participation in the China trial, you're right, we initiated -- I mean that there is enrollment already in China that was initiated, and actually it is expected to end this year. So, we will file with the global trial. And we hope to actually be able to get accelerator approval. This is a disease where there really aren't active drugs and patients get immunosuppressive drugs in the form of steroids, when they develop proteinuria.

And so being able to have an agent that can hold the natural history of the disease is really important because as I mentioned in the preparatory remarks, a lot of these patients end up, in renal failure. There are other agents, out there. This is a BAFF APRIL inhibitor, all the targets, like [Villa], APRIL is commonly targeted, with these agents, but, there are some, properties of this product that I think may make it ideal.

Obviously we will have to see comparisons with regards to efficacy and safety, but it's giving, every four weeks, we have data globally as opposed to local data from China only, so we have sort of a more diverse, population with regards to activity and safety and we have actually longer-term data, than some of the other products. So, we're confident that particularly if we get accelerated approval, this will be transformational for patients with this disease, particularly those that have the severe form of, IgA nephropathy.

Thanks, Jack. This is Samantha. I'll address your key capitalist in 2025. Since, we have a very limited time left, I'll just give you a few key highlights. First of all, on the pipeline side, on the global, as we talk of today in lengthy about our DLL3 ADC assets, we will have data updates for monotherapy in small cell lung cancer at a major conference in the first half this year.

We will have data updates for ZL-1310 combo for first line small cell lung cancer this year. Of course, we also will initiate a pivotal study in small cell lung cancer with possibility for an FDA approval in 2027. We'll initiate a global phase one study in other neuroendocrine cancers in the first half this year.

And we also, of course, as we mentioned in our news release, we have other preclinical data updates for at least two additional global assets that are moving into phase one development. Recently, for the big news would be Bemarituzumab, we'll see data readouts and followed by NMPA submission in first half 2025.

And we also have five regulatory submissions in China this year. And I won't give you the detailed numbers, but Bemarituzumab is a big one, as first line gastric cancer. On the BD side we have additional global and if appropriate, regional e-licensing and of course it's a fit in with our strategy will be our licensing BD deals as well. So overall we're very confident that we are going to achieve profitability in full quarter 2025. Thank you.

Thank you. We have now reached the end of the question-and-answer session. Thank you all very much for your questions. I'll now turn the conference back to Dr Samantha Du for her closing commands.

Thank you, operator. I want to thank everyone for taking the time to join us on the call today. We appreciate your support. Look forward for updating you again after the first half of 2025. Sorry, after the first quarter of 2025, operator, you may not disconnect this call.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.