Hello, ladies and gentlemen. Thank you for standing by. And welcome to Zai Lab’s Second Quarter 2024 Financial Results Conference Call. At this time, all participants are in 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 Christine Chiou, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, good evening, and welcome to Zai Lab’s second quarter 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’ll be making certain forward-looking statements based on our current expectations. These statements are subject to numerous risks and uncertainties that may cause actual results to differ materially from what we expect due to a variety of factors, including those discussed in our SEC filings. We will also refer to product revenue growth rates on a constant exchange rate basis, which is a non-GAAP financial measure. Please refer to our earnings release furnished with the SEC on August 6, 2024 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, and welcome everyone. In recent years, Zai Lab has grown significantly. We have built a strong commercial infrastructure, developed a promising portfolio of global and regional assets, and established an exceptional and efficient team across our commercial, R&D and functional areas. Today, Zai Lab is at a pivotal moment, advancing towards each of our three strategic imperatives: driving topline growth, expanding our pipeline, and achieving profitability. In the second quarter, we made great strides in all areas. Our second quarter net product revenues grew 45% year-over-year, surpassing $100 million for the first time. The success of the VYVGART launch significantly contributed to this growth, demonstrating our ability to provide innovative solutions that meet unmet medical needs. VYVGART has rapidly become a cornerstone of our current portfolio and is poised to be a major driver of our near-term growth. We also made significant progress with our pipeline. We received three product approvals and advanced important late-stage regional programs, such as KarXT for schizophrenia and bemarituzumab for first-line gastric cancer. We’re also expecting data in the coming months from our global pipeline for both our DLL3 ADC and CCR8 antibodies, and we are prepared to advance these programs quickly. Additionally, we added a ROR1 ADC to our portfolio, which Rafael will cover in more detail. We are building a strong foundation for our growth well into the next decade. In addition to topline growth, we’re also focused on driving efficiencies and exercising financial prudence with improved efficiencies and a cash position of $730 million. Zai is in an excellent position. We are confident that our strategic initiatives and commitment to excellence will drive our success as we deliver innovative medicine to patients in need and generate significant value for our shareholders. I look forward to sharing more progress updates throughout the year. Now I’ll pass the call to Josh.

Thank you, Samantha, and thank you everyone for joining the call today. In Q2, our net product revenues grew 45% year-over-year to reach $100.1 million, driven by the successful launch of VYVGART and uptake of our portfolio. Starting with VYVGART, the launch is progressing exceptionally well across all aspects. First, the demand for VYVGART is strong. Nearly 3,300 new patients were treated in the second quarter, bringing the total number of new patients treated to 6,000 in the first half of this year. While it’s still early in the launch, we’re excited to see a growing percentage of patients returning for second and third treatment cycles. With over 170,000 patients living with gMG in China, we have a substantial market opportunity in this indication alone. Second, we made great progress with our targeted approach for hospital listing. By the end of the second quarter, we achieved over 70% of our full year hospital listing goal. Our specialized sales team is well-equipped to not only support VYVGART and gMG but also the launch of efgartigimod subcutaneous later this year and the expected launch for CIDP in 2025. Third, we’re seeing increasing adoption from physicians. Nearly 1,500 healthcare professionals have now prescribed VYVGART, with a third being repeat prescribers. Positive feedback from physicians and patients continues to fuel uptake, and we are focused on providing these key stakeholders with best-in-class support. The success of VYVGART is a significant milestone and continues to be one of our top commercialization priorities this year. Based on Q2 uptake and current trends, we are raising our full year VYVGART sales guidance to over $80 million for the year. Our primary focus will be on expanding access, securing new patient starts, and driving usage in the maintenance setting, which we believe will extend the duration of treatment and sustain the benefits for our patients. Now, looking at other commercial products, for ZEJULA, we anticipate continued topline growth and expanding commercial profitability, driven by increasing sales in first-line ovarian cancer and the duration of treatment. QINLOCK and NUZYRA are expected to continue to benefit from their listings on the NRDL. For OPTUNE and GBM, we are focusing on our core markets, prioritizing our top hospitals, which represent the majority of GBM potential in China. This strategic focus will help us optimize profitability, even as we do anticipate a period of adjustment. We are also preparing to launch multiple new approved products and indications over the next few months. Since our last earnings report, we’ve received three product approvals, including AUGTYRO and ROS1-positive non-small-cell lung cancer, which comprises 2% to 3% of the over 700,000 new cases of non-small-cell lung cancer per year in China, and XACDURO as the first pathogen-targeted therapy addressing hospital-acquired and ventilator-associated pneumonia caused by Acinetobacter baumannii infections, and lastly, the subcu formulation of VYVGART and gMG, which provides additional dosing flexibility. Each of these opportunities has the potential to offer significant benefits to patients, and we look forward to bringing these products to patients in the fourth quarter of this year. In the next 12 months, we expect NMPA to approve subcu efgartigimod in CIDP, and we plan to submit multiple regulatory applications to NMPA, including TIVDAK for cervical cancer and KarXT for schizophrenia. As Samantha mentioned, not only are we on track to deliver substantial topline growth, we are also focused on driving efficient operations and executing financial discipline. We are optimizing resource allocation to build a stronger and more agile organization. We’re also repositioning our commercial teams and prioritizing investments to focus on our highest potential products and indications. VYVGART is a prime example of this. Through our ongoing efforts, our net loss declined 34% year-over-year, and we are making great progress towards our goal of achieving profitability by the end of 2025. With a cash position of over $730 million, we expect to be able to fund our operations and business development deals through profitability. Overall, we are advancing towards achieving each of our three key corporate objectives, which are to drive revenue growth, achieve profitability, and build our global pipeline. And with that, I’ll pass the call over to Rafael to discuss the great progress within our R&D portfolio.

Thank you, Josh. We continue to make significant progress with our pipeline in the second quarter, leading to multiple new approvals, as Josh highlighted, and advancements across several key programs. Starting with immunology, we received NMPA approval for the subcutaneous formulation of efgartigimod for the treatment of generalized myasthenia gravis or gMG. With both an IV option and a 30-second to 90-second subcutaneous injection available, patients will benefit from a more personalized and flexible treatment approach. Beyond gMG, efgartigimod shows great promise for treating various other autoimmune conditions. In collaboration with our partner, argenx, we’re committed to exploring new therapeutic applications. In May, China’s NMPA accepted our supplemental biologics license application for the subcutaneous formulation of efgartigimod in chronic inflammatory demyelinating polyneuropathy or CIDP. There is a significant unmet need among the estimated 50,000 patients afflicted with CIDP in China. Currently, only a small fraction of these patients achieve remission with available care, and many patients remain symptomatic. This disease can severely impact quality of life, and we are urgently working to provide patients with a new, effective and safe treatment option. Later this year, we also plan to join argenx in a registrational study in Greater China to evaluate the safety and efficacy of efgartigimod administered subcutaneously by pre-filled syringe in Thyroid Eye Disease. Moving to neuroscience, we expect to complete enrollment in a registrational bridging study for KarXT for the treatment of schizophrenia in Greater China. We anticipate topline data by the end of 2024, the results of which are expected to support an NDA filing in the first half of 2025. KarXT also presents a significant opportunity as a treatment for Alzheimer’s disease with psychosis or ADP for short. In China, approximately 8 million people live with Alzheimer’s disease, with about 45% exhibiting psychotic symptoms. Currently, no approved treatments are available for these patients, highlighting a significant medical need. In July, we joined the Phase III ADEPT-2 study in ADP to support the registration of KarXT in this indication in China, positioning us well to address this critical gap in care. We’re also building our internal global pipeline with three programs currently in the clinic, one in immunology and two in oncology. We advanced ZL-1102, our IL-17 human body, into global Phase II development for the topical treatment of chronic plaque psoriasis, and the study is currently accruing. With potentially improved safety and tolerability, this topical therapeutic may bring the potential of IL-17-targeted treatment to the large patient population with less severe chronic plaque psoriasis. Now moving to some of the key program updates in our oncology pipeline. Starting with AUGTYRO or repotrectinib, as Josh mentioned, we received NMPA approval in May for ROS1-positive non-small cell lung cancer in both the TKI-naive and TKI-pre-treated settings. We are also evaluating repotrectinib as a treatment for patients with NTRK-positive solid tumors and plan to submit a supplemental NDA to the NMPA in 2025. Turning to gastric cancer, we continue to make great progress for bemarituzumab in collaboration with Amgen. In June, we completed enrollment for the global FORTITUDE-101 study, which evaluates bemarituzumab in combination with chemotherapy as a first-line treatment for FGFR2b-positive gastric cancer. Additionally, we are assessing bemarituzumab in combination with chemotherapy and a checkpoint inhibitor in the FORTITUDE-102 study. Bemarituzumab has the potential to become the first targeted therapy specifically for FGFR2b-positive gastric cancer. Next, our Tumor Treating Fields franchise. We expect the pivotal data readout for the Phase III PANOVA-3 study in first-line locally advanced pancreatic cancer by the end of this year. We are participating in the study in Greater China. In addition to our late-stage partner programs, we made good progress in our two internal oncology assets in the clinic. ZL-1310 is our DLL3-targeted homogeneous DAR8 ADC designed with high affinity and specificity for DLL3. DLL3 is a validated therapeutic target in the treatment of small-cell lung cancer, but more than 88% of small-cell lung cancer patients overexpress it. ZL-1310 utilizes a protease-cleavable linker and a novel topoisomerase 1 inhibitor payload. It has shown promising preclinical data, and enrollment is ongoing in a global Phase I study in the United States and China for relapse and refractory small-cell lung cancer following progression on platinum-based therapy. This study will also include patients treated with a combination of our DLL3 ADC and a checkpoint inhibitor. Depending on the totality of the data, we could potentially see early clinical results by the end of 2024 or early 2025. ZL-1218 is a CCR8 antibody currently under enrollment in a global Phase I study, evaluating ZL-1218 as a single agent and in combination with pembrolizumab in patients with advanced solid tumors. We expect to present the preliminary clinical PK and PD analysis of the global Phase I study in solid tumors at the European Society of Medical Oncology in September 2024. We’re also excited by the possibility of synergistic combination opportunities for ZL-1218 with our portfolio asset, Niraparib. A recent publication in Cell highlights the combination’s potential to improve treatment of homologous recombination deficiency-positive ovarian cancers. Our efforts in drug discovery are moving at a brisk pace and we’re also progressing other internally-discovered product candidates. We continue to execute on our global development objective of generating at least one global IND per year. We recently have expanded our global oncology pipeline with a next-generation ROR1 ADC program termed ZL-6301. ROR1 is an attractive target with the potential to be used in the treatment of solid tumors where it is commonly expressed and with validation in hematological malignancies. We believe the linker payload technology embodied in ZL-6301 will overcome the limitations of earlier ROR1-targeted ADCs, even as a potential best-in-class and first-in-class targeting of expressing solid tumors. This ADC program demonstrates our continuous focus on our global solid tumor portfolio, and we will leverage our strong capabilities to develop this as quickly as possible. Overall, we achieved plenty of progress across R&D in the first half of this year, and we can expect this fast momentum to continue. I look forward to providing updates at our next earnings call. And now, Yajing will give us an overview of our financial results.

Thank you, Rafael. Now, I will discuss our second quarter 2024 financial results compared to the prior year period. Total net product revenues for the second quarter of 2024 were $100.1 million, compared to $68.9 million for the same period in 2023, representing year-over-year growth of 45% or 47% on a constant currency basis. This growth was primarily driven by increased sales for VYVGART since its launch in September 2023 and an NRDL listing in January 2024, and increased sales for ZEJULA and NUZYRA. Primary drivers of this year-over-year revenue growth included the following. ZEJULA’s net product revenues increased 5% to $45 million, driven by increased hospital sales in first-line ovarian cancer and increased duration of treatment, supported by the renewal of ZEJULA’s NRDL listing for the maintenance treatment of adult patients with first-line and recurrent ovarian cancer, effective January 1, 2024. VYVGART’s net product revenues grew to $23.2 million, compared to $0.1 million for the same period in 2023, driven by NRDL listing for the IV formulation for the treatment of gMG, effective January 1, 2024, and positive physician and patient reception, as well as increased patient access as VYVGART is added to hospital formularies. NUZYRA’s net product revenues grew 165% to $12.3 million, driven by the NRDL listings for the IV formulation for the treatment of adults with community-acquired bacterial pneumonia or CABP, and acute bacterial skin and skin structure infection or ABSSSI, in the first quarter of 2023, and the oral formulation for this indication in the first quarter of 2024. Turning now to our expenses, research and development expenses were $61.6 million in the second quarter of 2024, compared to $76.7 million for the same period in 2023. This decrease was primarily due to decreased milestone fees for our license and collaboration agreement, partially offset by increased clinical trial expenses related to newly initiated studies and the progress of existing studies. Selling, general and administrative expenses were $79.7 million in the second quarter of 2024, compared to $67.9 million for the same period in 2023. This increase was primarily driven by higher general selling expenses and headcount growth, primarily to support VYVGART. Both R&D and SG&A expenses significantly declined as a percentage of revenue in the second quarter of 2024 compared to the same period in 2023, and we expect this trend to continue as a result of growing revenues and ongoing cost and efficiency initiatives. Zai Lab reported a net loss of $80.3 million in the second quarter of 2024, or a loss per ordinary share attributable to common shareholders of $0.08, compared to a net loss of $120.9 million for the same period in 2023, or a loss per ordinary share of $0.13. We are in a strong financial position, ending the quarter with a cash position of $730 million, compared to $750.8 million as of March 31, 2024. Based on our operating plan and our anticipated revenue growth, we expect to be able to fund our business through profitability, which we expect to achieve by the end of 2025. And with that, I would now like to turn the call back over to the Operator to open up lines for questions.

And now we’re going to take our first question from Michael Yee at Jefferies. Your line is open. Please ask your question.

Hey. It’s Michael Yee for Kyle Yang. We have two questions. First question is related to VYVGART. Obviously, maybe just talk a little bit about the trajectory, month-over-month adds. How are things going across the country? And tell us a little bit more about the metrics that you’re tracking as it relates to what gives you confidence on your guidance? And second question, maybe a little bit different. I appreciate the new in-licensing deal for the ROR1. Can you just talk a little bit about business development? Are you particularly keenly focused on oncology? Would you go to other areas such as metabolic and obesity? I know you have neurology. So, kind of a little bit spread out everywhere, but are you considering things beyond just oncology? Thank you.

Good morning, Michael. It’s Josh. Thanks for the questions. I’ll start on VYVGART and then ask Jonathan to talk a little bit about business development strategy. I think first on VYVGART, we’re quite pleased with the performance through the first three quarters of the launch going back to last year, but certainly the first half of this year is what gives us the confidence to say, well, we certainly see the trend exceeding $80 million for the year. First, I think, as you know, what we’ve been focused on in the early parts of launch is getting physicians experience using the product with their patients in gMG. And we’ve focused on those patients who are in an acute episode or not responding well to current treatment. And I think that’s gone really well. We’re seeing about 1,000 new patients a month, and that’s been consistent through the first half of the year, and I don’t think we see any reason for that to start to slow down. Keep in mind that we see about 150,000 patients who are on label in China with gMG who will benefit, and so far, I think we’ve treated somewhere in the range of about 7,000. So we’ve still got a long way to go. But I think with the initial emphasis on patients who aren’t doing well, what we’re seeing is physicians are getting really good experience. We’ve had over 1,500 physicians prescribed so far, and of those physicians, a third of those are, I think, using it in pretty significant quantities now with their patients have used for second, third, and I think we have a pretty good percentage of physicians who have used it 10 or more times. So I think as we look now to the second half of the year, we’ll continue to focus on accruing new patients. As I say, we’re just scratching the surface, I think, in terms of the patients who can benefit from this important therapy. But we will begin to look at ensuring that we’re transitioning from just an acute sort of initial experience to ensuring patients are getting the full benefits from the maintenance aspects of the drug. So I think we’re still early in the launch, Michael. But I think as we get into the second half of the year here, we will be focused on continuing to accrue patients, but also on ensuring they’re getting back in for their second and third cycles and so on, and no reason to believe that that won’t be a successful transition over time here. So more to come. But again, I think based on where we are right now, we’re confident that we’ll be over $80 million for the year. But still, as we think into 2025 and beyond, I think just a really huge opportunity, I think, here for gMG patients in China. I’ll turn it over to Jonathan to talk about business development.

Hey, Mike. Thanks for the question. So I think the ROR1 is really a continuation of our strategy to grow the global pipeline. And in terms of our focus, as we grow that global pipeline, it’s primarily oncology and immunology programs. And even within that, we have certain areas that we’re more focusing on. For example, ADC is an area that we are growing early-stage, as well as late-stage product pipeline. When we turn sort of more regional assets, which we are also very keenly looking at to build on the operational synergies there. In that area, we can probably go a bit beyond oncology and immunology like what we have done with KarXT, for example. When we see a product in a pipeline kind of opportunity that’s big enough, then certainly we want to leverage our capabilities in China, in Asia, in this part of the world. I think we have demonstrated capabilities across modalities, across diseases. But certainly globally, we are much more focused within oncology and immunology.

Thanks, Jonathan.

Operator, next question.

Thank you. And now we’re going to take our next question from Anupam Rama at JPMorgan. Your line is open. Please ask your question.

Hey, guys. Thanks so much for taking the question and congrats on the progress. So, with subcu VYVGART now approved, how do you think about the dynamics of incorporating this modality into the marketplace in the near term and what is kind of like a post-NRDL world look like for subcu? I’m assuming NRDL is coming next Jan, but given the approval came in July, would we have to wait for 2026 NRDL for subcu VYVGART? Maybe you could walk us through that timeline as well? Thanks so much.

Thanks, Anupam. It’s Josh. Yeah. We’re excited about the approval for subcu. Yeah, so just going back, of course, now IV is approved and on NRDL, and that’s what we’re focused on. We’ll look to launch subcu later this year, and it won’t be covered by NRDL this year. I think given the timing of the approval, which was post-June 30th, it’s unlikely that we’ll be able to add this product to NRDL for 2025. It’s an important addition to the franchise. It improves the patient experience versus IV in terms of time, as Rafael mentioned on the call. So, we’ll work to make sure that the product’s available for physicians and patients, but I think for now the base assumption is that that’ll be available through NRDL in 2026, not 2025. I don’t see that as a major impediment to continuing to drive the kind of patient uptake and maintenance that I talked about in the last answer. Today patients do go to the hospital for treatment, for follow-up, and of course, subcu, while a better experience, a faster experience, still requires physician administration. So we’re focused on getting that to NRDL as quickly as possible, but I think it’s likely a 2026, not 2025 opportunity. But then, of course, we’ll look to combine that with CIDP approval and launch, and that’ll be our next big indication. But we still have, you know, a great opportunity in front of us with gMG, and as they say, I think the IV formulation works really well and fits the treatment paradigm for China today. Thanks, Anupam.

I believe Josh provided a solid overall view. However, I want to mention that while it's unlikely we'll be part of the NRDL in January, we will keep collaborating with municipal and provincial reimbursement plans for subcut products, which we have done previously. For instance, our OPTUNE is the second most covered by municipal and provincial insurance plans, just behind KEYTRUDA.

Yeah. Thank you, Samantha. Very good. Next question, Operator?

Yes, of course. Just give me a moment. Now we’re going to take our next question, and it comes from the line of Yigal Nochomovitz from Citigroup. Your line is open. Please ask your question.

Hi. Great. Thanks very much. So, back in the second quarter of 2023, you outlined the profitability guidance by the end of 2025 and the 50% year-on-year topline CAGR. It would be really helpful if you could just take a moment and walk us through the key drivers on the P&L more concretely to get to that profitability target by the end of 2025 and discuss the growth assumptions and what contribution you’d expect from subcu VYVGART, as well as CIDP, and potentially any contribution from these new launches of XACDURO and AUGTYRO that are coming at the end of the year? Thanks.

Thank you, Yigal. It’s Josh again. I’ll start, but then we’ll ask Yajing to provide additional comments on the P&L. The key factor for achieving profitability for the full year of 2026 by the end of 2025 is topline growth, as you indicated in your question. We anticipate a compound annual growth rate of 50% or more from the end of 2023 to the end of 2025, beginning with the launch of efgartigimod this year. We're already seeing progress towards that number in the second quarter. As efgartigimod increasingly contributes to our total revenue, our sales growth will rise. It’s essential to monitor the topline growth over the next eight to twelve quarters to see if we can maintain that 50% growth rate. If we achieve this, the rest of the P&L will align accordingly. Regarding the composition and contribution, the main driver between now and the end of 2025, moving into 2026, will be VYVGART, IV, gMG. This will significantly drive growth given our current position and timeline until 2026. We don't anticipate any other FcRns to be on the NRDL and available during that time, especially through 2025. This leaves us with a vast opportunity in front of us. Later this year, we will launch three new products or product forms including XACDURO and repo, both expected to launch at the end of Q4. We will seek NRDL listings over time, and they should contribute to franchise growth. For our base business, including ZEJULA, QINLOCK, NUZYRA, and OPTUNE, we expect a cumulative growth similar to last year, approximately in the 20% range. We foresee continued growth for these products over the next year or two, though perhaps not exactly at 20%. Combining the ongoing growth of the base business through 2026, significant growth from gMG, and the addition of CIDP next year, along with new products, gives us confidence for a topline potential of over 50%. Most infrastructure to support these products is already established, allowing us to manage our expense base effectively, but I'll ask Yajing to offer any final comments.

Thank you, Josh. I appreciate the question. We are pleased to see the potential for revenue growth. With a projected revenue increase of 50%, we are focused on managing operating expenses efficiently. As mentioned previously, our general and administrative expenses will remain steady over the next few years since the necessary infrastructure is already established. We do not anticipate significant growth in this area. Our research and development spending will also stay relatively constant as we conclude current studies and begin new global initiatives. The area where we expect some growth is in sales and marketing, especially with a number of product launches planned for the coming years. However, this growth will be modest compared to revenue growth. Overall, we expect operating expenses as a percentage of revenue to decline significantly year-over-year, a trend we have demonstrated in the last three years and aim to continue over the next couple of years. This is our strategy to achieve profitability by the end of 2025.

Okay. Thank you very much.

Thank you.

That was great. Just one follow-up.

Thank you.

Yeah.

Just one follow-up. I’m assuming that KarXT and bemarituzumab are going to launch, I would think, in 2026. Is that a fair assumption? And once those are launched and then you have those two plus VYVGART plus the original four products, is there the potential to provide some sort of longer-term guidance for the entire commercial portfolio so investors can get a sense of the trajectory as we move into the second half of the decade?

Yeah. First, just to confirm, I think both of those products should be contributing revenue in 2026. The exact timing of approvals, end of 2025, early 2026, or whatever is obviously contingent on getting the trials complete and submitted and otherwise. But certainly in 2026, we’d expect both of those products to be on the market. And yeah, I think at that point, as you know, Yigal, we gave guidance. The first guidance that we gave was last year and said that between, as I say, the end of 2023 and end of 2028, we expect sales growth to be at least 50% on a compound annual basis. I think as we get those products on the market and have a few years of history behind us with the first wave of launches, of course, we’ll be in a position to give a little bit more longer-term guidance. But I think the thing that is important to keep in mind is the products that will drive 50% plus sales growth between now and the end of 2028 are all still going to be in the growth phase of their launch trajectories. And if we can get to that kind of growth in 2028, there’s no reason that it shouldn’t continue at very high rates as we get to the end of the decade and early into the 2030s. I mean, of course, products like bemarituzumab and KarXT by 2028 will still be early in their launch trajectory, and we’ll be adding indications to VYVGART-like Thyroid Eye Disease and otherwise. So I think we’re quite optimistic about the long-term growth potential of the portfolio, and we just need to take them one launch at a time. But so far, so good, and we’re quite excited.

Thank you.

Thank you so much. Now we’re going to take our next question. And the question comes from the line of Louise Chen from Cantor. Your line is open. Please ask your question.

Hi. This is Sarah Dwyer on for Louise Chen from Cantor. Congratulations on the progress this quarter. We have two questions. One, kind of a follow-up to the previous question that we just talked about, which is the KarXT and the bema. As we’re getting closer to the registrational stage, how should we think about these two assets in terms of the contribution to the overall top and bottom line? And then maybe kind of a different question is the latest status on the DLL3 ADC and what kind of data we should expect later this year? Thank you.

Thank you, Sarah. Regarding KarXT and bema, we expect both to contribute to the company in 2026. To clarify the timelines for KarXT, we should finish the bridging study this quarter and aim to submit the data by year-end or early next year, which positions us well for a 2026 approval and launch. For bema, we're involved in two first-line studies, FORTITUDE-101 and FORTITUDE-102, as Rafael mentioned. The enrollment for 101 is complete, and we plan to release results with our partner, Amgen, in early 2025 and submit thereafter. The approval for the first-line doublet study of bema with chemotherapy is likely by early 2026. FORTITUDE-102 is currently enrolling and is about six months behind. We anticipate both assets will be contributing in 2026. Looking at the opportunity for KarXT in schizophrenia, there are 8 million diagnosed patients in China. KarXT is a significant advancement, being the first new mechanism approved globally in over 30 years, and there is considerable interest among thought leaders in China for this product. We believe it has the potential to generate $1 billion in annual revenue over time in China. We are also participating in the Alzheimer’s psychosis trial, which represents another substantial opportunity in the long term. For bema, gastric cancer is a major concern in Asia, particularly in China. We're targeting patients with overexpressed FGFR, and those with more than 10% expression number around 100,000 annually. This first-line therapy has the potential to provide patients with extended survival if we can replicate results from earlier studies. We have previously indicated that this could also lead to $1 billion in annual sales in a first-line setting. We need to complete the trials, submit the results, and get approval, but both products are promising and represent major advancements in patient care in China. Regarding DLL3, we anticipate data from the dose escalation phase of the Phase I trial to be available and presented at a medical meeting by the end of this year or early next year, and we hope to have updates to share in Q4. We are excited about the progress with this asset, which targets an important area, and we believe we have a strong candidate here. Thank you for the questions.

Thank you.

Thank you so much.

Now we’re going to take our next question. And the question comes from the line of Jonathan Chang from Leerink Partners. Your line is open. Please ask your question.

Hi, guys. Thanks for taking my questions. On bemarituzumab, can you discuss how enrollment in the Phase III FORTITUDE studies have progressed versus the plan and what are your latest thoughts on FGFR2b expression levels and the level of overlap with other markers like PD-L1? Thank you.

Thanks, Jonathan. I'll begin and Jon from our team might share some insights as well. First, regarding enrollment, we've been quite satisfied with our ability to enroll participants. We’ve added a significant number of patients to both FORTITUDE-101 and 102, primarily due to the high incidence of gastric cancer in China and our effective clinical execution along with strong relationships with key sites. As I mentioned, enrollment for 101 is complete, and we will now focus on completing the assessment and preparing for a submission in partnership with Amgen on a global scale, hopefully early next year. 102 is approximately six months behind, but the enrollment is progressing very well. You can expect both of these studies to be fundamentally finished by 2025 with promising topline data expected. Looking at the opportunity, if we consider the expression greater than 10%, it’s estimated to be between 75,000 to 100,000 patients in China. Furthermore, I believe there’s relatively limited overlap with some other targeted agents in this case. Our primary focus, however, is on the larger long-term opportunity presented by the triplet study, particularly in combination with PD-1 in a first-line setting, which is quite exciting. Jonathan, do you have any additional insights to share?

Yeah. Sure. Maybe just quick comments to add to Josh’s remarks. I think first, China contributes more than 50% of the majority of gastric patients around the world. So since Zai joined the bema studies, which Zai joined much later than global, we contributed more patients in China than any other country in the world and a very significant percentage of the global enrollment. Thereby, we are accelerating the global timeline of bema to China and to other markets. On the expression levels, when we did the initial FORTITUDE-144 study, the Phase II study, whether the high expressions or the low-medium expressions was actually much more than what we expected before we started the Phase II studies. So FGFR2b is about 32% and of which high expression patients is about 18% of the overall patient population. So it is a very large patient group, and the more higher expressions we also found with FGFR2b, the more aggressive the tumor type. So therefore, bema showing much wider separation of the PFS and the OS curves in the original FORTITUDE-144 study. And we also saw there’s additive effect with agents like PD-1, and mind you, PD-1 in gastric cancer, the response rate is in the teens. So it works, but there’s probably a lot more room for improvement. So look, we’re very excited about bema. We think there’s a lot of potential to be transformative for these medicines, and we’re looking forward to the data, which we are accelerating at the moment together with Amgen.

Thank you.

Thank you. Now we’re going to take our next question. And the question comes from the line of Jack Lin from Morgan Stanley. Your line is open. Please ask your question.

Hi. Thank you. Can you hear me?

Yes.

Hi. Thanks for taking my question and congrats on the stellar performance this quarter. So my question is on the subcutaneous VYVGART. I kind of understood the topic was touched upon earlier with particular detail on the NRDL timing. But I was wondering if company could expand on the kind of the commercial strategy, such as pricing to drive adoption, particularly given that a potential competition, rozanolixizumab was also accepted by the CDE for review and could potentially be approved later this year, which is also a subcu-based FcRn. So I also want to know if management could help share thoughts kind of comparing VYVGART with the two drugs and also how does UCB’s China commercial operation compare to us, especially in the immunology space? Thank you.

Thanks, Jack. It’s Josh. I’ll start. I think first, I think, as I mentioned and Samantha mentioned as well, we’ll do everything we can to make subcu a viable alternative and option for patients who have supplemental insurance or other ways of accessing it. But for now, the emphasis on the IV formulation works well. As I say, it fits very well into patient treatment patterns and how patients seek treatment for gMG in China. I think the differentiation among the agents is really going to be around how does it improve the symptoms and manage the symptoms of gMG much more than the convenience or formulation piece. So I think we’re quite confident that the data that we have, that argenx has accumulated and that we are now accumulating in a real-world setting in China is going to give us, I think, a really strong position, even as other agents are potentially approved and on the market. Of course, anything that’s approved in the next number of months is not going to be eligible for NRDL listing until 2026. And again, I think by that point, the data that we’ve generated both in clinical trials but also now in a real-world setting with what will be tens of thousands of patients’ experience, I think, will put us in a really strong position. So we’re not, I think, overly concerned about the next approvals or the next generation of agents. Of course, in any setting like this, having been involved in many launches over many years, having more competitors is both a challenge from a competitive perspective but also an opportunity, particularly in new classes where you have more good and high-quality organizations talking to physicians and educating them and educating patients. So I think from that standpoint, we welcome some of the bigger companies with quality products. But I think on an individual basis, we think our data stands up really well and will be in a strong position for many years to come.

Thank you.

Thank you.

Thank you. Now we’re going to take the question. And it comes from Linhai Zhao from Goldman Sachs. Your line is open. Please ask your question.

Thanks for taking my question. I’m curious about the overall commercial strategy for OPTUNE going forward, especially given that I know that for GBM, we are now adopting a more focused commercial strategy to the top tier oncology companies where we could find more concentrated GBM patients. Just curious about would we adopt a similar concentrated strategy for other indications? For example, we have larger indications in non-small cell lung cancer and potentially the pancreatic cancers which may be less concentrated compared to GBM. Then for the other indications, would you still consider adopting this concentrated commercial strategy for OPTUNE, and overall, how do you see the profitability at the program level for OPTUNE? Thanks.

Thanks for the question. It's Josh. I'll address this. Regarding GBM, we now have enough experience to identify the best economic opportunities. We've made adjustments in the second quarter that will help us achieve profitability with this indication. The main limiting factor is reimbursement. Until there are changes in NRDL eligibility for medical devices, we need to carefully consider where to allocate our resources to not only increase sales but also enhance profitability. This will be our focus for Q2 and beyond for GBM. For the upcoming opportunity with LUNAR in non-small cell lung cancer, we will apply the same strategy. This product, if approved, offers a vital treatment option for second-line lung cancer in China, and there is strong interest in making it available. We will ensure that our resource allocation will maximize benefits for both physicians and patients, as well as for shareholders. Due to the emphasis on supplemental insurance, we will concentrate on areas where patients can access and stay on the treatment. The potential for TTFields in second-line lung cancer is considerable, and we are eager to see the results from the PANOVA trial at the end of this year regarding pancreatic cancer. While this may be a less concentrated opportunity, having a treatment that can be effective in pancreatic cancer could be very valuable. If the data supports it, we will optimize the launch. In summary, this is a crucial technology. We must take a focused approach because of reimbursement challenges, but with ongoing demonstrated benefits across multiple tumors, there is substantial potential here. Thank you for your question.

Thanks. That’s very helpful.

Thank you. I’m showing no further questions at this time. I will now turn the call back over to Zai Lab CEO, Samantha Du, for closing remarks.

Thank you, Operator. I want to thank everyone for taking the time to join us on the call today. We appreciate your support and look forward to updating you again after the third quarter of 2024. Operator, you may now disconnect this call.

This concludes today’s conference call. Thank you for participating. May now all disconnect. Speakers, please stand by.