Zai Lab Ltd Q3 FY2022 Earnings Call

Hello, ladies and gentlemen. Thank you for standing by, and welcome to the Zai Lab’s Third Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, today's call is being recorded. It is now my pleasure to turn the floor over to Billy Cho, Chief Financial Officer of Zai Lab, who will make introductory comments.

Thank you, operator. Good morning, good evening, and welcome, everyone. Zai Lab recently issued a press release providing the details of the company's financial results for the third quarter of 2022, as well as some recent product highlights and corporate updates. The press release is available in the Investor Relations section of the company's 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 Josh Smiley, Chief Operating Officer, who will discuss advances in our oncology product candidates and Dr. Harald Reinhart, President and Head of Global Development, Neuroscience, Autoimmune and Infectious Diseases, who will speak about the progress we've made in those three therapeutic areas. I will discuss the performance of our marketed products, including comments on our financial results. Additional executives 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, our sales and revenue forecasts for our products and product candidates, regulatory applications, and commercial launches. Such 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 and actual results could differ materially from what we expect due to various factors, including those discussed in our SEC filings. 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 today. The third quarter marked another period of strong execution across our company, including revenue growth continuing and significant progress in our needs and late-stage pipelines and business development. Over the next few quarters and years ahead, I have little doubt that we will continue to strengthen the company through growth and productivity. Before I get into specific details, I would like to say that I’m very proud of all of our employees across the globe, especially regarding Zai’s ability to deliver time and time again, no matter what challenges present themselves. We have built a great culture at Zai focused on innovation to bring transformative medicines to address unmet medical needs. Fundamentally, we have had a very productive year so far and we are anticipating finishing 2022 having delivered on more of our key corporate priorities. We continue to demonstrate resilient revenue growth in the third quarter, despite some ongoing challenges from COVID in certain regions of China, and we expect to deliver significant revenue growth for years to come. Our products with late-stage development candidates continue to see strong advances, highlighted by our agreement with the NMPA on the development plan for the KarXT for a bridging study in schizophrenia in China. On the business development front, we recently announced a strategic collaboration with Seagen for TIVDAK, which strengthens our ability to address unmet medical needs in women's cancer in China. Additionally, we expect to realize significant synergies, given our existing commercial infrastructure and strategic position in this important disease area. In summary, we remain confident in the fundamental strength of our business and our ability to create significant shareholder value.

Thank you, Samantha. It's been an exciting first quarter as Chief Operating Officer of Zai. Although we currently face some challenging global economic headwinds, to echo Samantha's sentiment, it has been amazing to see the focus and determination of everyone at Zai to continue to deliver on our mission of bringing transformative medicines to patients in China and around the world. The fundamental drivers of value at Zai Lab are strengthened by our experienced leadership team, global talent, and first or best-in-class pipeline. We announced last month that Alan Sandler had left Zai and we expect to name a new Head of Global Oncology Development soon. I'm very excited to support Samantha on the operational side as she personally leads our global oncology function in the interim. I'm also very excited to welcome Dr. Peter Huang to Zai Lab to lead and oversee our discovery efforts in translational medicine. Peter joined the company from Zentalis Pharmaceuticals this week and has a strong track record in leading internal discovery research as well as external collaborations. We look forward to driving innovation in drug research and development under his leadership. I also had the opportunity to welcome Alette Verbeek to Zai Lab as Senior Vice President, Head of Global Strategic Partnering. Alette joined the company from Novartis and she is our first employee based in Europe. She is responsible among other things for leading our European business development efforts. Beyond our commercial progress, which Samantha touched on, I'm excited to highlight key business development updates from the third quarter, especially our new regional and highly synergistic collaboration with Seagen for TIVDAK. As many of you know, TIVDAK is the first and only ADC approved in the U.S. for the treatment of adult patients with recurrent or metastatic cervical cancer. This collaboration further strengthens our oncology leadership in China, particularly in women's cancer, where we have established a strong sales team and portfolio, including ZEJULA and others. We will leverage this leadership as our team works to commercialize and accelerate patient access to TIVDAK in China. We will join the ongoing global TV-301 Phase 3 confirmatory study and certain potential global studies in other indications. Of course, we continue to evaluate other business development opportunities as well, which include potentially transformative opportunities and partnerships for our global pipeline. We've been very disciplined historically and plan to be even more selective in the future in terms of quality deals that are synergistic with our existing portfolio. In terms of commercial progress, we continue to see strong revenue growth led by ZEJULA. As you may be aware, in October, the FDA expressed some concerns to our partner GSK regarding the overall survival data from GSK's NOVA study in the U.S. and the approved indications for ZEJULA in the U.S. in the recurrent ovarian cancer setting. GSK is currently considering the FDA's feedback and appropriate next steps, but I'd like to highlight today that we do not expect this development to impact our full approval of ZEJULA in the second line all-comers setting in China. Notably, unlike GSK's U.S. approval, which was based entirely on GSK's NOVA study, the NMPA's full approval of ZEJULA in the recurrent ovarian cancer setting is based on a separate study, the NORA study, which is a Phase 3 randomized double-blind placebo-controlled study of ZEJULA the company independently conducted in China. While the NORA study is not fully mature to date, we are seeing favorable trends in overall survival. We also do not anticipate any impact on our first-line ovarian cancer ZEJULA indication in China. The FDA's discussion with GSK does not apply to this indication. This first-line indication is the largest ovarian cancer market opportunity for Zai, accounting for over 60% of ZEJULA's revenue in 2022 in China and we expect this percentage to increase through the remainder of this year and beyond.

Thank you, Josh. I'm excited to share today the progress we've made across our autoimmune, neuroscience, and anti-infective therapeutic areas. Let's start with VYVGART or Efgartigimod. On the regulatory front, our partner argenx has made significant advancements. They recently announced the submission of a BLA for efgartigimod SC for the treatment of generalized myasthenia gravis in adult patients. Additionally, we submitted a BLA for efgartigimod IV for gMG patients in China in the second quarter, with expectations for approval next year. In Europe, the European Commission has granted marketing authorization for VYVGART to be used as an add-on treatment for adult patients with gMG who are positive for acetylcholine receptor autoantibodies. Zai is continuing to support argenx in expanding indications in China and globally, and we anticipate launching proof of concept trials in two autoimmune kidney diseases soon. Moving on to KarXT, a combination of xanomeline and trospium that we are developing with Karuna for acute schizophrenia, Zai Lab has reached an agreement with the NMPA on a development plan for a bridging study in China. Results from Karuna's EMERGENT-2 trial released this August showed that KarXT met primary endpoints, achieving a statistically significant 9.6 reduction in PANSS total score compared to placebo at week five. Karuna has also initiated the Phase 3 ADEPT-1 study for treating psychosis in Alzheimer’s disease and has completed enrollment in the Phase 3 EMERGENT-3 trial for schizophrenia. We expect top-line data from the Phase 3 EMERGENT-3 trial in schizophrenia in the first quarter of 2023. Lastly, our internally developed topical IL-17 product ZL-1102 is progressing toward a global Phase 2 study in chronic plaque psoriasis, with plans to begin in the fourth quarter of 2022, pending regulatory feedback. We recently presented the Phase 1 proof of concept study results for ZL-1102 at the 2022 European Academy of Dermatology and Venerology Congress. Regarding our Anti-Infectives portfolio, we have several important updates. For ZL-2401, we are on track to submit an NDA for treating sirobactibomani eye infections to the NMPA by the end of this year. For Omadacycline NUZYRA, we plan to start post-approval commitment studies next year and have begun discussions with CDE about operational details.

Thank you, Harald. Zai Lab continued to execute well with strong results delivered in the third quarter. For the three months ended September 30, 2022, our total revenues were $57.5 million compared to $43.1 million for the same period in 2021, representing year-over-year growth of 33%. Net product revenues for the period were $39.2 million for ZEJULA compared to $28.2 million for the same period in 2021, representing 39% growth, $10.7 million for Optune which we expect to resume its growth trajectory this quarter, $5.5 million for QINLOCK compared to $4.3 million for the same period in 2021, and $1.5 million from NUZYRA compared to nil for the same period last year. We believe QINLOCK and NUZYRA are on track to enter negotiations with the NMPA regarding potential inclusion in the NRDL by the end of the year. R&D expenses were $99.5 million for the three months ended September 30, 2022, compared to $55.1 million for the same period in 2021. The increase in R&D expenses was primarily due to the $30 million upfront payment for the Seagen deal in the third quarter of 2022, along with increased expenses related to ongoing and newly initiated clinical trials and higher payroll and payroll-related expenses from increased R&D headcount and share-based compensation. SG&A expenses were $66.6 million for the three months ended September 30, 2022 compared to $59 million for the same period in 2021. The increase was primarily due to payroll and payroll-related expenses from increased commercial and general and administrative headcount and share-based compensation as Zai Lab continues to enhance infrastructure and commercial operations amid many new drug approvals and launches, and deliver strong top-line growth. We expect our net product revenue to exceed costs of goods sold and commercial expenses in 2023. The net loss was $151.2 million for the three months ended September 30, 2022 compared to $96.4 million for the same period last year. The increase in net loss was primarily due to the $30 million upfront payment for the new collaboration and license agreement with Seagen and an increase in foreign exchange loss of $36.7 million, which is a non-cash adjustment. Net loss per ordinary share during the three months ended September 30, 2022 was $0.17 compared to $0.10 for the same period in 2021. The net loss per ADS during the three months ended September 30, 2022 was $1.68 compared to $1.01 for the same period in 2021. As of September 30, 2022, cash and cash equivalents, short-term investments, and restricted cash totaled $1.12 billion, which we expect will provide us with cash runway through 2025. We would now like to turn the call back over to the operator to open the line for questions.

We would now like to open the line for questions. Your first question comes from the line of Michael Yee from Jefferies.

Hi, good morning and thank you for the updates. We have two questions. Maybe Samantha or Billy you could talk a little bit about the fluid dynamics in China as it relates to, obviously, your shutdowns and just general ongoing dynamics, even as it relates to, say, doing business development with U.S. biotechs. For example, I noted in the Q, more updates around security measures and restrictions around cross-border data flow and data information on Chinese patients. So maybe just make some high-level comments about that, because it's certainly an issue that has been weighing on investors? That's question number one. And then just a question number two. I know previously the company has suggested NRDL as possible or at least in discussions for devices. So I just wanted to hear an update on that since LUNAR is coming for TTS and that could be important? Thank you.

Thank you, Mike. I'll start with your first question, and then Jonathan can add to the business development aspect, while Samantha can provide insights on the regulatory side before addressing your second question. Regarding the COVID situation, the ongoing challenges due to flare-ups are a reality we have discussed, and I'm sure you're aware it's a global issue. We have been focusing on how to operate effectively in this environment and have demonstrated resilience through our innovative approaches. However, I won't downplay the situation; we are noticing new flare-ups in China and the ongoing strict zero-COVID policy. We will continue to monitor this and remain agile, confident that we can navigate through these challenges and look forward to a return to normalcy soon, which we believe will further strengthen our position. Now, regarding your other question about business development and potential geopolitical or regulatory obstacles to securing deals and making strategic transactions, I can let John elaborate, and Samantha can contribute as well.

Mike, regarding the second part of your question, the short answer is that there has been no impact. Last year, we closed several significant deals. Recently, we announced a partnership with a well-respected company for our commercial stage asset. China represents the second-largest pharmaceutical market, and it's crucial for both small and large companies. This is not only due to the commercial opportunity but also to help speed up the global timeline. Companies that succeed in China, such as AVs and others, contribute significantly to global patient recruitment in pivotal trials. Ultimately, we aim to provide essential medicines to patients, and we believe this will remain unaffected despite ongoing geopolitical concerns. Thus far, all of Zai's current deals are still in negotiation, and while it is a topic of discussion, it has never posed a roadblock for us or delayed our timelines.

Yeah, Mike, I’ll also come back to your third question regarding government. I must say as I had issued some guidance about including medical devices in the national reimbursement. I believe they have been trying very hard, even though now all the medical devices, innovative ones can get local government-sponsored reimbursement, but putting up international levels has been discussed. They are talking about timelines of two, three years, and now it’s like they are discussing five to 10 years for this transition, and even on the NRDL inclusion, more and more government talks about what innovations you have. Are you the first in class and best-in-class, as specifically this year highlighted for royalty GE's for children's diseases? So that's all helpful to the positive trend.

That's great. Thank you. Great news. Thank you.

Thank you. We will move to our next question and the question comes from the line of Yigal Nochomovitz from Citi. Please ask your question.

Yeah. Hi, Samantha and team. Thanks very much for taking the question. I just wanted to follow up on the comments regarding the NOVA versus NORA comparison that you're making. Obviously, it's encouraging to see the favorable OS trend in NORA. So just a few questions there. Can you comment on what percent of maturity of the overall survival in NORA? And are you seeing stronger OS trends in the geographic or the non-geographic group? And then what's your current hypothesis as to why in your China trial, the NORA so far the OS is trending favorably whereas in the NOVA trial from GSK, it didn't end up that way? Thank you.

Thanks, Yigal. Josh, you want to kick it off and others can chime in if needed.

Yes, sure. Good morning, Yigal. Thanks for the question. I think first in the NORA trial, we expect to achieve the number of events in 2023. So we're well along toward majority, but don't have a specific percentage there. What we can say is, at this point having looked at the data, the numeric trend is favorable in both populations. But again, I'd remind everyone that the study was powered for PFS not OS, and we will disclose that data in 2023 when the study is complete. We take patient safety very seriously, and based on our analysis of the data, given what we know from the NOVA study, we feel confident that there is a positive risk-benefit in the data we're seeing from an overall survival perspective as well. I think that's probably the most important thing I keep re-emphasizing. We do have a separate study, full Phase 3, full approval based on PFS. I think in terms of why we may see differences, probably the most significant difference that we know of in the studies is the fact that we used an individualized dosing regimen in the dosing based on weight and platelet counts between 200 milligrams and 300 milligrams, and we think that allows patients to stay on the drug, have fewer side effects and get the full efficacy benefit that could be one of the reasons. Again, as you know, looking at the NOVA study, it wasn't powered certainly for overall survival and all the challenges that come with crossover and otherwise. So again, we're confident in the studies that we see in China and confident that we're providing a real and meaningful benefit to patients, both in first-line and second-line all-comers settings.

Okay. And then, Billy to just on commercial business, ZEJULA had another strong growth quarter-on-quarter of 15% similar to last quarter. So this is the conclusion is that the COVID situation is given the comments you made earlier, but just in general, do you think the COVID headwinds are pretty much behind us and when would you feel comfortable giving the initial revenue guidance for ZEJULA? And then for QINLOCK, obviously there was a very strong rebound over the second quarter. If you could elaborate a little bit on the dynamics there. And finally for Optune, obviously, you said you are year-on-year. It's been down a little bit relative to the first half so could you just give us some thoughts as to how that trajectory will evolve? Thank you.

Yeah. Thank Yigal. On ZEJULA, we're still in a challenging operating environment as we've talked about before, but we've been able to navigate this well. We expect to continue to navigate it well. While we don't give guidance on specific revenue and margins at this time, we feel very good about reiterating our statements that ZEJULA is positioned to be the market share leader by no later than next year. We look forward to delivering on that goal. On QINLOCK, you're right, we had a great quarter in the third quarter. Recall in the last earnings, we mentioned that we adjusted the pricing to prepare for the NRDL negotiations. Clearly, that helped drive some initial demand right off the bat, and it continues to be endorsed within the best practice guidelines, not only in the advanced line but even in earlier lines as well. It actually got a little bit of an upgrade on the second line, which can help build awareness for QINLOCK. So we look forward to getting over the hurdle if we can with NRDL, let's see if we can get to the rational pricing level that we like or that we can access, and next year, should those circumstances hold, we should have a good trajectory. And I think Yigal, you were asking about Optune on the last piece. You're right. We had a flat quarter year-over-year at just shy of $11 million and as you heard from the opening remarks, we do expect to resume growth in the fourth quarter and position us well for 2023 and beyond. What really has been going on for Optune, as you may know, the market access strategy has been around in the top cities supplement insurance, very helpful, and that's a real growth area and in the large hospitals. So when you have cities like Shanghai where, even in the past, but more recently, it's expected to have a greater impact in terms of a nationally reimbursed treatment option like ZEJULA, where we have more strategies to maneuver.

Also, Yigal, there are two things I would like to add here. First of all, I don't think the COVID situation is over, especially the situation is still not resolved. Number two, in terms of Optune, the major reason is not only COVID but also because in all the major hospitals now, very few people can take surgery and so surgery has to go through a very stringent analysis and waiting for COVID testing report. All of that is impacting our growth. Bottom line is that there is a live surgery taken on because we usually put the device on after the patient took surgery, and this is also another reason why we didn't see a significant growth year-over-year.

Thank you.

Thank you. We will take our next question and the question comes from the line of Anupam Rama from JP Morgan. Please ask your question.

Hey, guys. Thanks so much for taking the questions. Two really quick ones from me. The $1.2 billion of cash, one question we frequently get is kind of what is the cash runway sufficient to. And then on 1102, the internal pipeline program. I think, correct me if I'm wrong, this will be the first global study that Zai Lab conducts on its own. How should we think about the geographic breakdown of the study as you think about Asia, US, EU, and other regions? Thanks so much.

Thanks, Anupam. I'll give your second question to Harald. On your first question on cash runway, we feel pretty good about having runway through 2025. As we stated, our revenue, even in this environment, allows us to maintain growth while also improving productivity. Clearly, you see that this year, but I would say that in terms of prioritizing our resources, it's really embedded sort of in how we operate the business and really in our culture. Even if you go back a couple of years, you would have seen us talk about being able to prioritize resources quickly, and even our prioritized certain programs ahead of others. So if you look back, you'll see that cadence. And more specifically this year, we announced some programs that we have elected to prioritize so we can make sure to continue to grow and we're making good advances on mid- to late-stage clinical programs and the operating leverage that's kicking into our commercial strategy. So I think that will continue, and we feel pretty confident about that going forward. And I think the part B of that question was on milestone payments. We don't disclose our filings, the breakdown, or details on milestone payments, but I can tell you that while we don't give guidance—like next year or over the next 12 months—all the payments related to development milestones that we have in a pretty broad portfolio, I would just basically say that it's less than a typical upfront payment for a deal, including the most recent one we did with Seagen.

Yeah, hi, this is Harald. Yes, you are correct. This is the first Zai program which is global and to go into Phase 2. It is a drug that we have developed in-house and which has, as you remember, had a very nice proof of concept readout. So we're anxious to move into Phase 2 and we have selected certain territories, North America being one, Asia being another one, Australia being another one. We believe that we can place the study in various territories; we are just awaiting the feedback from regulators as to where and in what sequence to place it.

Thanks so much for taking our questions.

You're welcome.

Thank you. We will move to our next question. Please stand by. The question comes from the line of Ziyi Chen from Goldman Sachs. Please ask your question.

Hi. Good morning. Thank you for taking my questions. Two questions. The first one is really on expense control because in the past nine months, three quarters, we have seen the company has been controlling the OpEx pretty well. And just as Billy mentioned, now you are really extending the cash runway into 2025. So we're trying to understand a bit more on that. What have you done? Are you letting off some people or have you deprioritized or terminated any of the projects? We're trying to understand how you actually achieved that? More importantly, looking forward like 12 months, what are the major milestone payments you could potentially pay out, and how big that could be? The second question is really on KarXT. I think you have agreed with CDE that you're going to run a bridging study, so trying to understand how you can design a trial in China and how long it takes for the bridging study to be completed in China. For the potential regulatory filing, particularly since KarXT is targeting very different therapeutic areas compared to the oncology portfolio you have, so what is your current thinking regarding the future commercial strategy? Thank you.

Hi, Zi. Thanks for your questions. I'll take the first question and give the KarXT question to Harald. Regarding controlling expenses, yes, we are extending the cash runway. The investments we've made and the progress we've achieved allow us to maintain growth and increase in productivity as well. Clearly, you see that this year, but I would say that in terms of prioritizing our resources, it's really embedded in how we operate the business and in our culture. Even if you look back, you'll see that we talk about prioritizing resources quickly and have prioritized certain programs ahead of others. So if you look back, you'll see that cadence. More specifically, this year, we've announced some programs that we have elected to prioritize to ensure we continue to grow and make good advances on mid- to late-stage clinical programs, alongside the operating leverage that's coming into our commercial strategy. Therefore, we feel confident moving forward. As for milestone payments, we don’t disclose our filings or the breakdown of the details on milestone payments, but I can tell you that while we don’t give guidance on specific revenue and margins for the upcoming year or over the next 12 months, payments related to development milestones are less than a typical upfront payment for a deal. I will pass it on to Harald for the second part regarding KarXT.

Yes, regarding KarXT, you are correct that we have reached an agreement with the CDE for a bridging study in China. The design of the trial will be similar to the EMERGENT studies that you know; they had two identical EMERGENT studies, EMERGENT-2 and EMERGENT-3. We will try to mimic that with slight modifications as needed. Acute schizophrenia studies typically take about five weeks to execute the actual study, but there is a follow-up. As for the portfolio, this is our first study in the neurosciences area, but we aim to get into neurosciences with several other programs as well. Neurosciences is quite dominant in our efgartigimod side of things, as we are conducting CIDP studies - we are running gMG studies, so we are very familiar with that space.

Got it. Thank you.

Thank you. We will take our next question, the question comes from the line of Jonathan Chang from SVP Securities. Please ask your question.

Hi guys, thanks for taking my questions. First question on TIVDAK. Can you discuss your views on the opportunities, both in cervical cancer and other tumor types? And how much of a headwind or not the ocular toxicities associated with the drug are? On the second question, on the business development front, this year has been a strong year compared to the past, can you provide some color on the considerations for this year and how you're thinking about additional in-licensing opportunities looking forward? Thank you.

Hey, Jon. Do you want to take this questions from Jonathan?

Sure. Thanks for the question, Jonathan. First, regarding TIVDAK, the ocular toxicities that it has shown are pretty low-grade and can be easily managed through typical eye drops. So I think the safety profile is actually quite good for this ADC. TIVDAK is a first-in-class product, particularly in China, where cervical cancer has a high incidence and mortality rate. There are limited treatment options available apart from immuno-oncology. We believe that TIVDAK will find widespread usage in this high unmet medical need in cervical cancer in China.

Additionally, TIVDAK brings significant synergies for Zai, as we don't have to add any more sales force; we can simply leverage our existing Niraparib oncology sales team. This is advantageous given the existing relationships we have. Now, regarding business development, there are variabilities throughout the year. Last year saw a lot of significant deals, while this year our focus has been on making sure we maintain our high standards for bringing in globally competitive and differentiated assets. We have also been cautious due to the current market conditions, but if another asset like F-Star or KarXT comes along, we will be aggressive in pursuing it. We're exploring both regional and global opportunities due to the evolving market conditions, which may allow us to secure rights that weren’t available in previous years, including 50-50 global rights that U.S. and Chinese biotechs may now be interested in.

Got it. Thank you.

We will take our next question. The question comes from the line of Seamus Fernandez from Guggenheim Partners. Please ask your question.

Great, thanks for the question. So just two quick ones. Just as we think about the KarXT opportunity, just hoping that you guys could frame that opportunity for us in terms of market size and perhaps when we might see a possible entry into the Chinese market? And then just the last question is, specific to the LUNAR study, can you just help us understand what the time frame is? If that were to fail, how your investment behind that program would work out? Thanks so much.

Hi, Seamus. Thanks for your question. Maybe I'll address your second question first and then hand over the second one regarding KarXT to Jonathan. For LUNAR, there are multiple significant milestones coming up pretty soon, probably by early Q1. We'll go from there, as Samantha mentioned, there is potential for national reimbursement in the future, a step change in the opportunity for Tumor Treating Fields. Is LUNAR important? Yes, but it is not the end-all be-all, as there are other shots on goals available. We're hoping for the best and will remain cautiously optimistic as we make a data-driven decision.

Hi, Seamus. It's Jonathan. Regarding KarXT, it's a sizable market opportunity. There are 8 million schizophrenia patients in China, and 4 million currently receive treatment. The product profile is promising, particularly in addressing both positive and negative symptoms. This differentiates KarXT from existing products. The launch has the potential to greatly impact this concentrated market, especially since a small sales team can cover the psychiatric hospitals and neurology departments. As for the timeline, we only need to conduct one abbreviated bridging study, so it's a relatively quick path forward, and we'll provide more guidance as we start that study.

Thank you. I would like to turn back over to Zai Lab's CEO, Samantha Du for closing remarks.

Thank you, Operator. I’d like to thank everyone for taking the time to join us on the call today. We appreciate your support and look forward to updating you again and again after next quarter. Operator, you may now disconnect this call.

This concludes today's conference call. Thank you for participating. You may now disconnect.