Hello, ladies and gentlemen. Thank you for being here and welcome to Zai Lab’s Second Quarter 2021 Financial Results Conference Call. As a reminder, today’s call is being recorded. I will now hand it over to Billy Cho, Chief Financial Officer of Zai Lab, for introductory comments.

Thank you, operator. Good morning and welcome, everyone. After the market closed yesterday, Zai Lab issued a press release providing the details of the company’s financial results for the second quarter ended June 30, 2021, as well as product highlights and corporate updates. 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, Chairperson, and Chief Executive Officer. She’ll be joined by Tao Fu, Chief Strategy Officer, who will provide more details on the product portfolio, along with the pipeline and commercial progress. I will conclude with comments on our financial results for the quarter. Dr. Alan Sandler, President, Head of Global Development, Oncology; Dr. Harald Reinhart, Chief Medical Officer for Autoimmune and Infectious Diseases; and Jonathan Wang, Head of Business Development, will also be available to answer questions during the Q&A portion of the call. As a reminder, during today’s call, Zai Lab will be making certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our business plans and objectives and the timing and success of our clinical trials, regulatory applications, and commercial launches. These forward-looking statements are not guarantees of future performance and therefore you should not put undue reliance upon them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. I refer you to our SEC filings for a discussion of the risk factors that could cause our actual results to differ materially from those discussed today. At this time, it is my pleasure to turn the call over to Zai Lab’s Founder, Chairperson, and Chief Executive Officer, Dr. Samantha Du.

Thank you, Billy. Hello, everyone, and thank you all for joining us. On this call, I will discuss highlights from our second quarter and provide the latest updates on what we expect to accomplish for the remainder of 2021. Consistent with our past track record, Zai Lab continues to execute the same quality across our organization during the second quarter. We successfully launched QINLOCK in China in record time. QINLOCK is our third commercial product in oncology to launch over the last 16 months and the first product in what we expect to become a world-class gastric cancer franchise. We continue to generate strong revenue growth from our first two products, ZEJULA and Optune, and we entered into three strategic collaborations with Mirati, MacroGenics, and Schrödinger, respectively, to further steepen and strengthen our disease area stronghold and our global pipeline. Alan and Billy will discuss this achievement in more detail. We now have 25 globally innovative assets in our pipeline, and the quality, depth, and breadth of our pipeline will continue to grow. Notably, 12 products are in late-stage development, of which Zai has already been approved in the U.S., and three have received FDA breakthrough therapy designation. In addition, our growing pipeline now includes 11 early-stage programs, with worldwide rights, including three in global clinical trials. We achieved broad innovative validated portfolio for success to achieve significant sales within just three years. We will continue to leverage our scale and operating excellence to expand our pipeline with innovative products through strategic partnerships and internal R&D. We expect to achieve many exciting milestones across our product platform throughout the remainder of 2021. We expect approval of our fourth commercial product, NUZYRA, for community-acquired bacterial pneumonia, and acute bacterial skin and skin structure infection by the NMPA. We also continue to make progress on additional regulatory filings and activities. We expect to have a discussion with the NMPA on the filing strategy for efgartigimod in the near future. We anticipate numerous data readouts during the rest of this year for QINLOCK in second-line GIST, for margetuximab in gastric cancer, for CLN-081 in non-small-cell lung cancer, for TPX-0022 in non-small-cell and gastric cancer, and for other product candidates in our global platform. We continue to invest in our worldwide optimization and facilities. During September, we will expand our presence in the U.S. by firmly offering a clinical development and business facility in Cambridge, Massachusetts, to tap into the Boston area biopharma ecosystem. In the meantime, our existing R&D and business centers in the San Francisco Bay Area and in China will continue to grow. Zai Lab has grown substantially since our inception seven years ago. And with the abundance of growth opportunities we see, we strongly believe that we are still in the early stage of our growth trajectory. Given the current breadth and depth of our portfolio, we have decided to hold an R&D Day on September 22 to take a deep dive into our pipelines and disease stronghold, and to highlight the fundamental growth potential of Zai. We hope you come away from this with a more comprehensive understanding of what we are doing and what we expect to accomplish in the future. We believe we have a once-in-a-generation opportunity to build a leading global biopharmaceutical company with a strong foundation in both China and the U.S. Zai is in a great position to capture growth opportunities with our global infrastructure in an ever-growing first and/or best-in-class portfolio. We remain as committed as ever to our mission to develop innovative medicines addressing the unmet medical need for patients around the world. We believe by doing this, we will benefit our shareholders as well. With that, I will now ask Tao to discuss our performance in perspective in more detail.

Thank you, Samantha. I will comment on the launch performance of our three commercial products and on the progress we have made in the quarter in our main disease franchises: lung cancer, gastric cancer, hematology, autoimmune disorders, and infectious diseases. ZEJULA continued to perform very well in the second quarter, and we achieved significant sequential revenue growth. As a reminder, ZEJULA is approved in China for first and second-line ovarian cancer and is the only PARP inhibitor monotherapy approved for all-comers in the first line. This provides significant differentiation from other PARP inhibitors. The inclusion of ZEJULA in the NRDL starting from March of this year provided major momentum for the ZEJULA launch. One key leading indicator for the successful launch and NRDL implementation is hospital listings. Our team has been laser focused on increasing hospital listings, and as of June 30, 2021, ZEJULA has been listed in more than 800 hospitals in China, which represents a more than sevenfold increase from just prior to the NRDL implementation in March 2021. Combined with the differentiated label, our successful market access strategy lays the foundation for strong volume growth in the second half of the year and beyond. We remain confident that over time, ZEJULA will become the market-leading PARP inhibitor in ovarian cancer in China. Similarly, the launch of Optune is going well. As a reminder, Optune is the first innovative medical device supported by commercial health insurance in China and also has been covered in 14 supplemental insurance plans since its launch in June 2020. During the second quarter, we held extensive multi-discipline physician education campaigns to increase brand adoption, and we were pleased with the feedback we received from treatment specialists. Importantly, on the development side, we are working with our partner, Novocure, to extend indications of tumor-treating fields in areas of large unmet medical need globally and in China. We look forward to additional clinical data readouts in lung, pancreatic, liver, and ovarian cancers, in brain metastasis and in glioblastoma with high-intensity arrays over the next few years. And we continue to target a filing of tumor-treating fields for malignant pleural mesothelioma later this year. As Samantha mentioned, we achieved another important commercial milestone by successfully launching QINLOCK in fourth-line GIST in China in May, our third oncology launch in the last 16 months. QINLOCK is another great example of our track record of accelerating regulatory filing and approval of innovative oncology products. We were able to file the NDA for QINLOCK in China only two months after FDA approval, and we received NMPA approval eight months after NDA acceptance. In July, QINLOCK was included in the Chinese Society of Clinical Oncology guidelines for diagnosis and treatment of gastrointestinal stromal tumors 2021 as an option for second-line treatment for advanced GIST patients. We are encouraged by our initial launch performance and look forward to updating you on our progress throughout the remainder of the year. Let’s move on to progress in our product pipeline. Starting in lung cancer, where we continue to build a disease stronghold with six products currently in clinical development. In June, we entered into an important strategic collaboration with Mirati and obtained the right to research, develop, manufacture, and exclusively commercialize adagrasib, a potential best-in-class small-molecule KRAS G12C inhibitor in Greater China. Adagrasib received FDA breakthrough therapy designation in June for the potential treatment of non-small-cell lung cancer patients who harbor the KRAS G12C mutation following prior systemic therapy. Zai will support accelerated enrollment in key global registration-enabling clinical trials of adagrasib in KRAS G12C cancer patients, including non-small-cell lung cancer and colorectal cancer. Mirati has announced their intention to file adagrasib for second-line non-small-cell lung cancer in the U.S. in the second half of 2021. We believe adagrasib has best-in-class potential, and we will also aim to make it first-in-class in China, where there are currently no ongoing clinical trials in this product category. Adagrasib is a great addition to our lung cancer franchise and complements other promising products being developed for lung cancer, including tumor-treating fields, repotrectinib, CLN-081, and TPX-0022. For tumor-treating fields, Zai initiated the China portion of the Phase 3 pivotal LUNAR trial and the Phase 3 pivotal METIS trial in brain metastasis for non-small-cell lung cancer. You will recall that in May, Novocure announced that the FDA approved their IDE supplement for LUNAR, reducing enrollment requirements by about half and shortening the required patient follow-up from 18 months to 12 months, potentially accelerating completion of the trial by more than a year. For CLN-081, in June, Zai’s partner Cullinan announced Phase 1/2a interim data in non-small-cell lung cancer EGFR exon-20 patients. CLN-081 continues to demonstrate its best-in-class potential with good activity and encouraging safety and tolerability. Let’s move on to gastric cancer, a Zai disease stronghold with seven products currently in clinical development, including QINLOCK and demurocizumab. As I mentioned earlier, we are actively launching QINLOCK in fourth-line GIST supported by the compelling data generated from the INVICTUS Phase 3 study. In the second half of this year, our partner, Deciphera, expects to receive data from the INTRIGUE trial of QINLOCK versus sunitinib in second-line GIST. Other gastric cancer products also made significant progress in the quarter, including bema, the monoclonal antibody against FGFR2b. In April 2021, Zai’s partner Amgen was granted breakthrough therapy designation by the FDA for bema as a first-line treatment for patients with FGFR2b overexpressing HER2-negative metastatic and locally advanced gastric and gastroesophageal junction adenocarcinoma in combination with modified FOLFOX. In June, Zai’s partner Turning Point was granted orphan drug designation by the FDA for TPX-0022 in gastric cancer, including gastroesophageal junction adenocarcinoma. In our hematology franchise, in May 2021, Zai’s partner Regeneron resumed enrollment in the Phase 2 potentially pivotal clinical trial of odronextamab in patients with follicular lymphoma and diffuse large B-cell lymphoma. We look forward to initiating this important clinical trial in China. Since our last earnings call, we also entered into two other strategic research and development collaborations to bolster our global oncology pipeline. In June, Zai and MacroGenics announced that the two companies have entered into an exclusive collaboration and license agreement involving up to four immuno-oncology molecules. The first collaboration program covers the lead research molecule that incorporates MacroGenics’ DART platform and binds CD3 in an undisclosed target expressed in multiple solid tumors. The second program covers a target to be designated by MacroGenics. For both molecules, Zai received commercial rights in Greater China, Japan, and Korea and obtains an option to convert the lead research program into a global 50-50 profit-sharing arrangement upon achieving a predefined clinical milestone. For two additional early-stage molecules, Zai Lab has exclusive global development and commercial rights. Earlier this month, Zai and Schrödinger announced a global discovery, development, and commercialization collaboration focused on a novel target in the DNA damage response pathway, a key research interest for Zai Lab in oncology. Schrödinger is an industry leader in providing computational platforms using drug discovery. The research program will be conducted jointly by the two company scientific teams, and Zai Lab will have exclusive development and commercial rights globally. This initiative will complement our existing discovery efforts in the DNA damage response pathway in addition to potential combinatorial approaches within our pipeline with such products as the PARP inhibitor, ZEJULA, and ZL-2309. In our autoimmune franchise, in July, Zai Lab’s partner, argenx, announced myositis and bulus pemphigoid as two new indications for efgartigimod at its R&D Day. Today, five clinical trial applications for efgartigimod filed by Zai have been approved. With all of this progress, as you can see, Zai’s development and commercialization operations are hitting on all cylinders. We have an abundance of growth opportunities, and we very much look forward to sharing our further progress with you throughout the year. And now, Billy will discuss our financial results in the quarter.

Thank you, Tao. We continue to remain in high growth mode, and our financial results reflect strong progress across our business. Today, I will briefly summarize our financial results for the second quarter as well as year-to-date 2021, which are both in line with our internal expectations. Revenues for the second quarter and year-to-date 2021 were $36.9 million and $57 million, respectively. Over the same period last year, revenues were $11 million and $19.2 million, respectively. We are still early in the revenue ramp cycle, so we are very pleased with the successful launches and sales trajectory of our first three oncology products. ZEJULA sales for the second quarter and year-to-date 2021 were $23.4 million and $36 million, respectively. Over the same period last year, ZEJULA sales were $7.5 million and $13.8 million, respectively. Optune sales for the second quarter and year-to-date 2021 were $9.5 million and $16.6 million, respectively. And over the same period last year, Optune sales were $3.5 million and $5.4 million, respectively. As for our third product update, we successfully launched QINLOCK on May 20 and achieved $4 million of revenue for the quarter. Research and development expenses were $142.2 million for the three months ended June 30, 2021, compared to $68.3 million for the same period in 2020. The increase in R&D expenses was primarily attributable to additional strategic partnerships, including a $65 million upfront payment to Mirati and a $25 million upfront payment to MacroGenics. Expenses related to ongoing and newly initiated late-stage clinical trials, and pay and payroll-related expenses from increased R&D headcount. Selling, general, and administrative expenses were $54.4 million for the three months ended June 30, 2021, compared to $23.8 million for the same period in 2020. The increase was primarily due to payroll and payroll-related expenses from increased commercial headcount and additional commercial activities as Zai Lab continued to expand its commercial operations in China. For the three months ended June 30, 2021, Zai Lab reported a net loss of $153.3 million or a loss per share attributable to common stockholders of $1.76, compared to a net loss of $88.6 million or a loss per share attributable to common shareholders of $1.08 for the same period in 2020. The increase in net loss was primarily attributable to additional strategic partnerships, increased R&D and SG&A expenses for the reasons I just mentioned. As of June 30, 2021, cash and cash equivalents, short-term investments, and restricted cash totaled $1.77 billion compared to $1.19 billion as of December 31, 2020. We would now like to turn the call back over to the operator to open the line for questions.

We have a question from Yigal Nochomovitz from Citigroup. Please go ahead.

Hi, great. Thank you very much for taking the question. So you have a very rich pipeline of in-licensed assets that are making their way through clinical development and now three approved products. So, are you still as focused on the BD effort to bring in new assets into the company, or do you believe you have a sufficiently rich pipeline and will focus more on developing the assets that you’ve already bought? Thanks.

Thank you, Yigal. This is Samantha. Good morning. I will let Jonathan address the question.

Hi, Yigal. Thank you for the question. Look, I think that Zai’s strategy always follows the company’s current strategy. And this has really been evolutionary for us. I think we’ve positioned ourselves as the partner of choice in China. So I think we will continue to execute on bringing globally first-in-class, best-in-class assets into our pipeline to complement it within oncology, autoimmune, and infectious diseases. But I think beyond that, we are also looking for transformative deals. We are also looking for opportunities to go beyond our existing therapeutic areas just like we have done in the past with efgartigimod. With the general assets, I think we will continue to do that. And I think even beyond that, like what we have done recently with the MacroGenics and Schrödinger deals. I think going forward, we will support discovery assets. I think BD is always evolving, and I think it’s multi-dimensional for the growth of the company.

Okay, thanks, Jonathan. And I just had one follow-up. So by my count, I believe you have 11 oncology products in your portfolio with two already approved. So that opens up the possibility of investigating combination strategies within your portfolio. So that being said, I’d be curious to know which products do you believe would make the most sense to evaluate in combination clinical trials and in what tumor types?

Thanks, Yigal. Alan, our President of Oncology Development, please take the questions.

Sorry, I was on mute. Thank you for the question. And yes, this is one of the great advantages that we have here at Zai given the large number of assets in the portfolio and additional ones forthcoming. I think that there are opportunities that would exist interestingly in our gastric franchise and our lung franchise, I think, in particular, given the broad number of assets that we have in there and the targeted approach with which we are looking at a number of different combinations that may be associated with KRAS, also a combination in lung and also in gastric with the various combinations that are available, including PD-1, LAG, HER2 agent, etcetera. So I think that would give you a hint of some of the areas with which we are looking. Have I addressed your question?

Yes, thank you.

Thank you.

Thank you. We have the next question. This is coming from the line of Michael Yee from Jefferies. Please go ahead.

Hi, good morning, good evening. We have two questions. One was on the recent Schrödinger deal, so just more broadly strategically, should we anticipate that you are going to do more deals that bring in more global rights and with an intention of developing and bringing in more internally developed R&D programs rather than in-licensing other programs instead of developing your own internal and to do it globally. That’s question one. How should we think about that? And question two is based on a comment around expanding outside your therapeutic areas. I think you have a very strong focus on oncology, etcetera. That’s pretty well known. Can you just maybe expand upon the idea to go beyond oncology and to what other areas should we expect or could anticipate so we’re not surprised? Thanks so much.

Thank you, Michael. Tao, do you want to comment on the AI and Schrödinger deal?

Yes, sure, Samantha. Mike, thank you very much for your questions. So yes, the Schrödinger collaboration is a pretty exciting new partnership for us. As you may know, they are the industry leader in the physics-based computational chemistry platform and really have a very strong existing track record. So we have this collaboration with them, really focused on a key area of R&D interest for Zai Lab, the DNA damage repair pathway on a very interesting target, which we will disclose later. So we are really trying to leverage the capabilities of both companies and obviously get Zai Lab global rights on this particular target. Yes. So the AI area is a new promising area. We will try to stay on the cutting edge. We’re really trying to use external collaboration to complement our existing capabilities in areas such as AI discovery.

Yes. I think just to elaborate on what Tao was saying. The discovery technology platform collaboration that you mentioned, Michael, is a way for us to expand our discovery capabilities and complement our existing discovery technology platforms for us to do internal global drug discovery development. But having said so, we will continuously do what we have done very well, which is to see unmet medical needs, whether for China or globally based on the pipeline. Thank you for question number one.

Makes sense. Yes, both are important. Makes sense. Both are important. And then the idea of expanding therapeutically, could you comment on what areas could be of interest?

Yes. We actually have many opportunities, more and more inbound interest from potential customers who have really given us a lot of credit for what we have done for the partnerships. And so, we’re actively looking to expand horizontally. We want to expand into new therapeutic areas. For instance, an example is the collaboration with argenx with efgartigimod, which offers a pipeline product opportunity. So that’s the kind of expansion you are looking for. That may horizontally – sorry, vertically. We’re always looking for more opportunities to complement our existing pipeline.

We have the next question. This is coming from the line of Seamus Fernandez from Guggenheim Securities. Please go ahead.

Great. Thank you for the question. So maybe just if we could cover the dynamics around just investor questions that we’ve gotten and concerns that have been raised with regard to some of the volatility in shares in China and where biotech fits strategically in terms of the Chinese government’s focus on certain areas. I think, Samantha, you’re uniquely well positioned to comment on those concerns. Obviously, Zai is well outside of some of the concerns that have been raised for other companies with regard to how the company’s accounting has been executed, things like that. But just maybe help us understand the importance and strategic positioning of the biotech industry in China and its importance to the continued growth and local growth in China. And then the second question, Billy, I was just hoping you could give us a sense of the potential payments that we could see to collaboration partners as it relates to milestones that we should be thinking about for 2021 and 2022, given the very robust series of pipeline opportunities? And then just one final question, should we see a meaningful data set, particularly either LUNAR or one of the other major data sets come forward, how are you guys thinking about manufacturing capabilities with your partner, Novocure, in the context of CTF and how do you hope to address that? Thanks so much.

Thank you, Seamus. The first question is, since you asked me to speak about the sector. And actually, we do agree. We have seen lots of volatility around the companies in China listed on NASDAQ. So we had some quite a lot of evidence, myself also, and there are some times in discussions with the Zai Lab and companies like Zai Lab. From our due diligence, of course, from our understanding, and I am not sure I am representing any government bodies. But we believe that the actions that caused the recent market volatility are unrelated to specific businesses. Also, recent events, including the Chinese government’s continued support for the innovative biotech industry. For example, with new guidelines issued in July, oncology drugs have set high standards for innovation and drug development. These have been very helpful for companies focusing on differentiated first or best-in-class product portfolios instead of simply following previous trends. The recent renewal of ICH guideline membership status shows a strong commitment to global harmonization. Other sectors are already very heavily regulated. If you look at the 14th China’s economical five-year plan, the biotech sector is considered one of the strong supported pillars for the industry, with a focus on innovation and promoting integration in biopharmaceuticals, signaling a big boost for innovation capabilities in China. So I think the overall picture is focused on supporting innovation while moving towards quality and compliance.

Yes. Sure. Hi, Seamus, I’ll take the second and third question. So the question related to upcoming milestone type of payments. As you know, Seamus, we don’t give guidance – forward-looking guidance on those figures. But rest assured, it’s immaterial compared to, let’s say, the upfront portion or the actual royalty that kicks in after the commercialization. You would have seen some disclosures along the way. I know that Turning Point announced yesterday that we made a $5 million payment because we achieved a certain development milestone. You can expect something along those lines for notable development or regulatory milestones achieved. But in terms of materiality, it’s quite limited compared to the upfront royalty, which is at the one-time upfront and then at the back end. In terms of your question about the kind of ramping up volume and what that means for manufacturing capabilities for Tumor Treating Fields, yes, you’re right. Your observation is correct that if the LUNAR trial is successful with final Phase 3 data out next year, we’re talking about a different level of scale and opportunities to drive operating leverage, especially in the Chinese market. These are the discussions we’ve had with our partner.

Okay, thank you.

Thank you. We have our next question which is coming from Anupam Rama from JPM. Please go ahead.

Hey, guys. Thanks so much for taking the question. A couple of broader macro questions, following up on the last question. But specifically, there has been a lot of headlines on the Chinese regulators' proposed rules on oncology trials. Maybe you can talk about what the implications for developments here are in the region for your broader pipeline. And then, Samantha, digging into your comments a little bit more on the PCAOB auditing and sort of what’s going on in China there. You guys have PCAOB not reviewing your financials, the 10-K sort of risk. What – how are you strategically thinking about this situation and kind of addressing it over the long-term? Thanks so much.

First of all, Anupam, thank you for the question. So, you are asking about elaborating on the July 2nd guideline, first, is that the first question?

On the oncology proposed – Yes.

Right, right. Okay. So as I mentioned earlier, we think that guidance for the industry is that still guidance for the industry input. We really think that will continue to raise the bar for innovation for oncology development. As we all know, China has many PD-1 and PD-1 combinations already approved, right? I think it’s from many angles, and not only from a regulatory focus, but if the CPA continues to support it, that really means it’s not helpful for patients who should have already been exposed through many approved products instead of being in a placebo arm. So, secondly, what we are trying to emphasize is aligning closely with FDA standards in oncology, which is, number one, you have to show differentiation and to address unmet medical needs. Secondly, if there are already gold standards established, you need to conduct comparator studies instead of placebo trials. These criteria work very well with Zai Lab’s strategy in our pipeline. From day one, we have regulated internally or externally to develop products based on whether they show first-in-class or best-in-class potential. That is our criterion. As for the overall country structure and government matters regarding new policies, those really relate more to broader government policies and directions guiding China’s growth over the past four years. They look to balance different industries and control how to manage entry and access while providing equal opportunities to the population of 1.4 billion. While having said that, it’s not our area of expertise, and those matters have been debated for a long time. I’m a little surprised by how quickly the market reacted to such activities, as this has been long debated, even as far back as 2018. Overall, Zai Lab believes we are well-positioned for the future as a biopharmaceutical company with exposure to China while continuing to expand in the U.S. We take a global approach, allowing us to tap into opportunities for growth, and we feel strong confidence regarding Zai Lab.

Yes, sure. Anupam, you asked about PCAOB. I just want to mention two broad points. First, I want to remind everyone that we are a 100% privately owned enterprise with a straightforward legal structure. No VIE, never have, never will. Our financial reporting has historically been and continues to be on a U.S. GAAP basis and in accordance with PCAOB standards as a domestic company, which is why we are having a quarterly call with quarterly filings. We have also completed a full financial audit historically as well and ongoing. The second broad point is that while we have infrastructure in China, we have eight offices around the world, and we are making investments in the U.S. We plan to have options available to us to significantly limit any risks that have been discussed publicly. You can also refer to our 10-Q filings for additional information on those. But thanks for your question.

Thank you. We have our next question which is coming from Jonathan Chang from SVB Leerink. Please go ahead.

Hi guys. Thanks for taking my questions. First question, are there certain subsectors or spaces within Chinese biopharma that could be more or less vulnerable to changes in the regulatory landscape in the future?

Well, I think of companies like Zai Lab, right. As I said, we are focusing on innovation, focusing on unmet medical need medications for patients globally. I think we are in the best sector at the right time.

Got it. And maybe just a second question. Can you provide any additional color around how investors should be thinking about second half revenues, maybe specific to ZEJULA? Are there additional metrics you can provide to give us a sense of how ZEJULA is performing relative to competitor programs? Thank you.

Billy?

Yes, sure. Thanks, Jonathan. We are obviously quite pleased with the sales momentum that we are seeing year-to-date. We saw a nice volume uptake and market share gains. Our NRDL implementation, while early, is off to a fast start, and you saw our press release indicating that starting from the implementation date of March 1 until the end of June, we actually increased the number of hospital listings by over sevenfold, which is closer to 850. We are quite happy with how that implementation is going so far and look forward to building on the momentum for the back half of the year as well, and we are pretty confident—we are extremely confident—that we will hit our internal goals. While we are not yet giving full year sales guidance, you can see some statistics that we shared around hospital listings. Our hospital coverage is also expanding, and now we have over 2,000 hospitals in our coverage.

Got it. Thanks for taking the questions.

We have the next question. This is coming from Ziyi Chen from Goldman Sachs. Please go ahead.

Sure. Thank you for giving me the opportunity to raise questions. I look at the pipeline, actually this time, we have specifically left out the internal R&D pipeline, which now we counted about 13 projects in targeting identification and about 10 projects in the range of lead optimization to Phase 1 studies. So, a couple of questions regarding the in-house discovery strategy. Number one, is Zai Lab teaming up with a couple of AI companies, actually not only Schrödinger, but back in March, I see there is a collaboration also with AlphaMa. So, I am trying to understand a bit more about, in terms of building the in-house pipeline, will external collaboration on the discovery side be one of the major drivers or still are you building a pretty strong in-house team? If we can know the number, how big that discovery team is now within Zai Lab? And particularly, I think in terms of the pipeline covering the oncology autoimmune. But in terms of target selection, is there any specific strategy you are going to be following in terms of picking the right target to work on? My second question is still trying to get a sense of the PARP competition, particularly towards the end of this year. I think Zai Lab has a very good chance to get into NRDL for the first-line indication. But at the same time, we start to see some of the local competitors, including Henry Medicine, Beijing, they are also being pretty aggressive in terms of marketing for their products. Of course, it’s a third-line indication instead of second line or first line. And based on our track, in the second quarter—well, the first half of this year, probably Zai Lab already got about 25% to 30% market share in the PARP market. So if you guys get the first-line indication, what kind of market share should we be looking at in 2 years to 3 years time? Thank you.

Thank you, Ziyi. Your first question related to our in-house discovery. I think as you can see in the news release, we announced our platform of internal discovery with global rights. I would like to remind the audience that we have a ten-year-old company. We have been increasing investment in the internal discovery with our in-house platforms. However, we are also expanding through collaborations like we talked about earlier with MacroGenics' bispecific platforms, and we discuss working with Schrödinger and other universities, although we did not feel it was necessary to elaborate further on those. I am very pleased with our five years of internal discovery efforts. We started with a small team in Shanghai, and our team is expanding. Our values in Shanghai will soon be bolstered by San Francisco Bay Area talent. We are also going to be opening a fast treatment facility for margetuximab trials and focusing more on global development and business activities. So, that’s the first thing I want to share. Secondly, we are no longer working with AlphaMa as we are now in a different phase of drug development. Technologies we cannot handle all on our own, so we need to collaborate with companies that have AI capabilities or strong computational technology. That does not mean we will not continue to expand our internal technology platforms, but we want to focus on unmet medical needs and first-in-class assets to complement not only our China pipeline but also our global pipeline. As Zai Lab is scaling up, we have the capacity, the people, and the strategy is clearly progressing. However, specific targets will take more time to address, which we can discuss during our upcoming R&D Day.

So, Ziyi, I will take your second question about ZEJULA in relation to NRDL and some competition that you referenced in Henry and other domestic companies. ZEJULA is the only PARP approved for all-comers in the first-line setting. It is a once-daily monotherapy with an excellent safety profile and has the ability to cross the blood-brain barrier. We already have it in second line for NRDL. We believe it has been positioned as the best-in-class PARP for various types of patients. You asked what looks like in terms of market share while we are not giving guidance, I know you have heard us historically say that we are confident we can be the market share leader, and we stick by that. I would also like to point you towards some ex-China statistics. In the U.S. right now, ZEJULA has a 51% market share in the first line. In Japan, it has a 68% market share. While we are not giving an exact percentage for China, we have a robust strategy to establish ZEJULA as the best-in-class PARP inhibitor, and we believe we are making very good progress towards that end. Also, on NRDL for first-line ovarian cancer, it is eligible for negotiation this year. At the end of July, the NHSA published a review list for the drugs that are in the negotiation list, and ZEJULA is included.

Yes. Yes, I think Ziyi also correctly pointed out we are the only one with an all-comers first-line monotherapy approved in China and eligible for NRDL inclusion for next year.

Thank you. The next question comes from Yang Huang from Credit Suisse. Please go ahead.

Thanks and congrats management for the nice commercial progress in China in the second quarter. I have two questions. First, the Tumor Treating Field competitive landscape in China. Over the last year, we are starting to see a few domestic companies starting conducting their Tumor Treating Field device clinical trials in China, and potentially in the next few years, we are going to see clinical data from those studies. So, I just want to get management’s comments on the long-term competitive landscape in terms of tumor treating devices in China. That’s my first question.

Yes. I think that’s a good question you asked. First of all, as you correctly mentioned, it’s local companies still in the clinical development stage and still focused on a very narrow indication. We do not know how the results will come out in the next couple of years. So, it’s too early for us to say whether there is competition because we are also expanding. As you have seen, we have many other indications, large trials ongoing, and some already passed Phase 2 and are moving into Phase 3 with multiple indications on the horizon. So, we are very comfortable with our own data. Even if there are competitors, we welcome any treatment options as long as they are proven successful. There will always be others interested to come into the space, but whether it will reach comparable qualifications remains to be seen. Zai will have a very strong footprint in the areas we are focusing on, and we remain very confident in this particular opportunity. We have been dedicated to capturing opportunities ever since we in-licensed and have gotten rapid approval and clinical guidance, meaning doctors are already including these treatments within their guidelines.

Great. Thanks for all that color. And my second question is about our KRAS track. So, I noticed in our press release, we did not mention our kind of clinical plan for KRAS with the license from Mirati. Can you comment on that?

Alan, do you want to cover that?

Sure. Thanks, Samantha, and thanks for the question. We are extremely excited at Zai to be partnering with Mirati on this very interesting and promising molecule in KRAS. As a former thoracic oncologist who has spent over 20 years trying to find something effective for KRAS, this is exciting. We will participate in all the global mono and combo trials. We also have the potential to run exploratory local studies within our own pipeline assets, such as those that address PD-1 and LAG-3. While it’s a bit early to comment on what those local studies might entail, we will be engaging with Mirati in their global combination studies. There will be more to comment as we move further along.

Okay, thanks.

Thank you for the questions.

Thank you. That concludes our question-and-answer session for today. I would now like to hand the conference over to our host for any ending remarks.

I think maybe Samantha is on mute, but...

So basically we are done with the Q&A.

Yes, Q&A is done, Samantha.

Okay. Thank you, operator. I am sorry for being on mute. Thank you, operator. I want to thank everyone for taking the time to join us on the call today. We appreciate the support and look forward to updating you periodically on our progress throughout the year. Operator, you may now disconnect this call. Thank you, all.

Certainly. Ladies and gentlemen, that concludes our conference call for today. Thank you all for your participation. You may disconnect now.