Hello, ladies and gentlemen. Thank you for joining us, and welcome to Zai Lab's Second Quarter 2025 Financial Results Conference Call. 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, ma'am.

Thank you, operator. Hello, and welcome, everyone. Today's earnings call will be led by Dr. Samantha Du, Zai Lab's Founder, CEO and Chairperson. She will be joined by Josh Smiley, President and Chief Operating Officer; Dr. Rafael Amado, President and Head of Global Research and Development; and Dr. Yajing Chen, Chief Financial Officer. Jonathan Wang, our Chief Business Officer, will also be available to answer questions during the Q&A portion of the call. As a reminder, during today's call, we will be making certain forward-looking statements based on our current expectations. These statements are subject to numerous risks and uncertainties that may cause actual results to differ materially from what we expect due to a variety of factors, including those discussed in our SEC filings. We will also refer to adjusted loss from operations, which is a non-GAAP financial measure. Please refer to our earnings release furnished with the SEC on August 7, 2025, for additional information on this non-GAAP financial measure. At this time, it is my pleasure to turn the call over to Dr. Samantha Du.

Thank you, Christine. Good morning, and good evening, everyone. Thank you for joining us today. As we've reached the midpoint of 2025, Zai Lab is entering a pivotal phase, building our commercial business, advancing our global pipeline, and executing on the goals we outlined at the beginning of the year. Our long-term vision of becoming a leading global biopharma remains strong, grounded on consistent execution and meaningful progress across the business. We are reaffirming our full year revenue guidance of USD 560 million to USD 590 million. We remain on track to achieve profitability in the fourth quarter, a milestone made possible by the efficient, scalable model we have built over the years. In our regional business, momentum is building as we head into a period of significant growth, supported by multiple near-term launches. This includes a pipeline of product opportunities like VYVGART in multiple autoimmune indications and Povetacicept, a dual BAFF/APRIL inhibitor with broad potential. We also anticipate approvals for KarXT in schizophrenia and TIVDAK in cervical cancer, both currently under regulatory reviews in China. We're preparing for submission for other later-stage assets, including bemarituzumab for gastric cancer and Tumor Treating Fields for pancreatic cancer. Combined with our broader regional pipeline, these programs position us well for long-term growth. On the global R&D front, we're advancing a pipeline of innovative globally competitive programs. ZL-1310, our DLL3 ADC continues to demonstrate first-in-class and best-in-class potential in small cell lung cancer as illustrated by the updated data presented at ASCO. We also see encouraging early signals in other difficult-to-treat tumors such as neuroendocrine carcinoma. Beyond that, we're advancing our next wave of innovative global programs into the clinic, including ZL-1503, a bispecific IL-13/IL-3 antibody for atopic dermatitis, and ZL-6201, our LRRC15 ADC for solid tumors. This development continues to be a core pillar of our growth strategy. As global interest in China-originated innovation rises, Zai Lab is uniquely positioned to act as a bridge between China's thriving bio-ecosystem and global markets. Our deep local know-how and global R&D expertise allow us to source and develop high-potential assets emerging from China and the rest of the world, while continuing to expand our internally discovered global pipeline. We're also leveraging AI across the organization. For example, optimizing clinical trials, accelerating timelines, and sharpening our commercial analytics. These ongoing efforts are already improving our speed, precision, and efficiency. Going forward, we will apply more AI tools to accelerate our future growth. We remain disciplined in our operations, scaling efficiently while investing strategically in both commercial execution and pipeline innovation. The progress we have made this quarter reinforces our conviction in what Zai Lab is becoming: a profitable, high-growth company with global impact, powered by innovation, disciplined execution, and a deep commitment to delivering long-term value for patients and shareholders alike. Now, I'll turn the call over to Josh.

Thank you, Samantha, and hello, everyone. Let me start with VYVGART, where strong commercial execution continues to drive momentum in gMG. In the second quarter, we saw record levels of patient utilization, supported by a steady flow of new patient starts and increasing treatment duration. We are seeing a meaningful shift towards maintenance use, a reflection of growing physician confidence in VYVGART's long-term benefits. These positive trends are supported by ongoing physician education and patient support programs aimed at extending treatment duration. We expect this momentum to further accelerate following the July update to China's national MG guidelines, which meaningfully elevate VYVGART's positioning. The new guidelines recognize minimal symptom expression, or MSE, as the primary treatment goal in gMG and highlight VYVGART's ability to achieve MSE rapidly and durably. VYVGART has the highest MSE rates ranging from 40% to 73% across clinical studies and stands out for its rapid onset and deep and sustained efficacy. VYVGART is now recommended for early use in mild-to-moderate and highly active patients, and for sustained long-term treatment to maximize benefit, marking a major step forward for biological adoption for treating gMG in China. We see significant long-term potential for VYVGART. Physicians are initiating treatment earlier and shifting away from steroids, yet VYVGART penetration in gMG is only 10%. We are well positioned to drive broader adoption and to capture the substantial opportunity that lies ahead. Once listed on NRDL, we believe that the subcutaneous formulation will further accelerate uptake by driving deeper market penetration and expanding patient access. The launch in CIDP is also underway with efforts focused on increasing supplemental health insurance coverage and driving awareness. Our planned submission of the prefilled syringe remains on track and will further differentiate the brand through added convenience and improved adherence. Beyond gMG and CIDP, we are actively pursuing label expansion opportunities across a range of immunology indications with significant unmet needs, including seronegative gMG, ocular MG, myositis, lupus nephritis, and Sjogren's. Taken together, these efforts reinforce our view that VYVGART can exceed $1 billion in peak sales and become a foundational immunology brand in China. Turning to the broader commercial portfolio. ZEJULA had a softer quarter due to evolving competitive dynamics within the PARP class. That said, we are already seeing signs of stabilization entering the second half of the year. We anticipate continued volume expansion across the PARP class and expect ZEJULA sales to strengthen in first-line ovarian cancer, where it maintains a differentiated safety and efficacy profile supported by strong China patient's data and first-to-market advantage. We are confident in ZEJULA's return to growth later this year. XACDURO continues to see robust demand and highly positive feedback from physicians treating CRAB infections, a serious and underserved public health threat in China with approximately 300,000 Acinetobacter cases annually. As we work to localize manufacturing, supply constraints may modestly limit near-term growth in 2025, but underlying demand remains strong. With AUGTYRO, we are taking a focused, efficient approach to commercialization. While near-term revenue is expected to be limited, we believe its best-in-class clinical profile in ROS1-positive non-small cell lung cancer, including strong CNS activity and durability in both TKI-naive and pretreated patients, positions AUGTYRO as an important treatment option for patients. We will continue to pursue efficient ways to broaden our reach to realize the full value of its long-term potential. Turning to our financial position. We continue to execute against our profitability plan, maintaining disciplined spending while investing in growth. For the second quarter of 2025, operating loss improved by 28% to $54.9 million. On an adjusted basis, which excludes certain noncash expenses, operating loss was reduced by 37% to $34.2 million, keeping us firmly on track to reach profitability on an adjusted basis in the fourth quarter. We also expect a strong set of near-term regulatory milestones ahead. KarXT and TIVDAK are under review by the NMPA, and we plan to submit applications for VYVGART's prefilled syringe for gMG and CIDP, bemarituzumab for gastric cancer, and TTFields for pancreatic cancer in the coming months. To support these potential near-term launches, we are leveraging a scalable, resource-efficient commercial model, repurposing teams where possible and targeting field force deployment in high-impact areas. For example, our ZEJULA team will support TIVDAK, our QINLOCK team will lead efforts for bemarituzumab, and we plan to cover 85% of the schizophrenia market with a highly focused team of approximately 150 representatives for KarXT. At the same time, we are advancing several operational efficiencies, including scaling support for VYVGART, localizing manufacturing for key products, and improving cost leverage across the portfolio, all of which will drive both strong top-line growth and margin expansion. Business development remains a strategic priority. We are focused on three core areas: strengthening our global pipeline with externally sourced innovation, expanding our China portfolio with best-in-class assets, and pursuing out-licensing and global partnerships to unlock the full value of our pipeline on the global stage. With continued commercial momentum, an innovative and advancing pipeline, and a path to profitability, we are confident in our ability to deliver meaningful long-term growth and value. And with that, I will now pass the call over to Rafael to discuss the great progress within our pipeline.

Thank you, Josh. I'll start with highlights from our global pipeline since our last earnings call and then cover upcoming milestones. Let's start with ZL-1310 or Zocilurtatug Pelitecan or Zoci for short, our first-in-class DLL3 targeting ADC for small cell lung cancer and other neuroendocrine tumors. At ASCO this year, we presented dose-finding results in patients with previously treated extensive stage small cell lung cancer. Across all dose levels in the second-line setting, the unconfirmed response rate was 67% and the disease control rate was 97%. The most promising combination of response and tolerability was observed at 1.6 milligrams per kilogram, which showed a 79% unconfirmed overall response rate and a 100% control rate of the disease, which is among the strongest efficacy response signals seen in this setting to date. At a median follow-up of 3.4 months, median duration of response had not yet been reached, and 29 of 38 responders remain on study. Importantly, we observed compelling intracranial activity, an important unmet need in small cell lung cancer, where up to 70% of patients develop brain metastases. Among these patients, the ORR was 68%, and it was 86% in patients without prior cranial irradiation, again, the highest intracranial responses reported. Zoci also demonstrated a well-tolerated and differentiated safety profile. At target doses below 2 milligrams per kilogram, there were no Grade 2 or higher interstitial lung disease cases, and Grade 3 and above treatment-related adverse events occurred in just 6% of patients with no drug-related discontinuation. These data support the potential of Zoci as a clinically meaningful treatment for patients in second-line small cell lung cancer and other lines of therapy, either as monotherapy or in combination. We're pleased to receive a Fast Track designation from the FDA in small cell lung cancer, adding to the orphan drug designation granted earlier this year, and are pursuing breakthrough therapy designation. We have aligned with the FDA on the accelerated approval pathway and are finalizing details on the pivotal study design in second-line small cell lung cancer. We remain on track to initiate the registrational study later this year. Given its favorable safety profile of 1.6 milligrams per kilogram, Zoci is also well suited for use in the first-line setting. We are rapidly enrolling patients in the combination dose escalation portion of the study, which will be followed by dose optimization and then a pivotal computation trial after the defined follow-up period. We expect to provide a clinical trial update of Zoci in combination with atezolizumab in the next year. Beyond small cell lung cancer, Zoci is also being studied in other neuroendocrine carcinomas where enrollment is ongoing in a global Phase I/II study, which may have registration potential pending regulatory discussions. We plan to present preliminary data at a medical conference in the first half of next year. Moving to ZL-1503, our internally developed IL-13/IL-31 bispecific antibody for atopic dermatitis. In June, we presented preclinical data showing durable dual inhibition of both itch and inflammation pathways. While IL-4/IL-13 inhibitors have markedly improved outcomes in atopic dermatitis, symptoms mediated by IL-31 often remain only partially alleviated, contributing to limited and incomplete clinical responses to currently available medications for many patients. ZL-1503's dual mechanism and extended half-life may enable less frequent dosing and more comprehensive disease control. We are on track to initiate a Phase I study for moderate to severe atopic dermatitis later this year with both IV and subcutaneous formulations progressing as planned. Importantly, 1503 exhibits immunomodulatory properties that extend beyond atopic dermatitis with potential applications across a range of interleukin-driven diseases, laying the foundation for a top line of future indications. More broadly, across our global portfolio, we're advancing our internal discovery efforts in parallel. We are actively pursuing external opportunities to expand our pipeline with early-stage compounds from China and beyond. Now, turning to our regional programs. Let's start with oncology. Bemarituzumab, a first-in-class FGFR2b targeting therapy for gastric cancer. In June, we announced positive top line results from the global Phase III FORTITUDE-101 study in first-line FGFR2b positive gastric gastroesophageal junction cancer. Bemarituzumab plus chemotherapy demonstrated a statistically significant and clinically meaningful improvement in overall survival as compared to placebo plus chemotherapy in patients with unresectable, locally advanced, or metastatic gastric or gastroesophageal junction cancer with FGFR2b overexpression and who are non-HER2 positive. FGFR2b overexpression was defined as 2 plus or 3 plus staining greater than 10% of tumor cells by centrally performed immunohistochemistry. The most common treatment effect adverse events in patients treated with bemarituzumab plus chemotherapy were reduced visual acuity, keratitis, anemia, neutropenia, nausea, corneal epithelium defect, and dry eye. While ocular events were consistent with the Phase II experience and observed in both arms, they occur with greater frequency and severity in the Phase III bemarituzumab arm. This data, which our partner, Amgen, plans to present at an upcoming medical meeting, support a regulatory submission in China. Meanwhile, we look forward to the top line results from our second global Phase III study, FORTITUDE-102, a Phase Ib/III study of bemarituzumab plus chemotherapy and nivolumab in patients with first-line gastric cancer. Phase III data readout is anticipated in the second half of 2025 or the first half of 2026. In pancreatic cancer, our partner, Novocure, announced positive results from the Phase III PANOVA-3 trial evaluating Tumor Treating Fields with chemotherapy in newly diagnosed patients with unresectable, locally advanced pancreatic adenocarcinoma. The study met its primary endpoint of overall survival, representing the first Phase III study success in this setting. We believe this therapy could meaningfully expand treatment options for patients with limited alternatives in pancreatic cancer, and we expect to submit in China this year. Now moving to our key late-stage regional programs in immunology. For Efgartigimod, we continue to explore its potential to treat other IgG-mediated autoimmune indications, including thyroid eye disease or TED, myositis, seronegative gMG, ocular MG, Sjogren's disease, and lupus nephritis. In the second half of this year, we expect top line results from the global Phase III study of seronegative gMG and the Phase II study of lupus nephritis. In addition, we will join the registrational UNITY study of Efgartigimod subcutaneously administered by prefilled syringe in Sjogren's disease in Greater China in the third quarter of this year. Povetacicept is a dual antagonist of the BAFF and APRIL pathway. China has already joined the global Phase III RAINIER trial in IgA nephropathy, and enrollment of the interim analysis cohort is now completed. Our partner, Vertex, will conduct an interim analysis once this cohort reaches 36 weeks of treatment with the potential to file for accelerated approval in the U.S. in the first half of 2026. We also plan to join the global pivotal Phase II/III study in Primary Membranous Nephropathy expected to start in the second half of this year. Moving to VRDN-003, an anti-IGF-1R antibody, a potentially best-in-class therapy in thyroid eye disease. It has the same binding domain as Veligrotug, and it is administered subcutaneously. Veligrotug has consistently demonstrated reductions in proptosis, diplopia, and clinical activity score across both active and chronic thyroid eye disease in Phase III studies. The infrequent dosing regimen of every 4 weeks or every 8 weeks presents significant potential as a transformative option for patients with TED. The two global registrational REVEAL-1 and REVEAL-2 studies are enrolling, and our partner, Viridian, is expected to provide top line results in the first half of 2026. We are working on initiating a Phase I PK study in China and a Phase III registrational study in TED upon CDE agreement expected in the fourth quarter of 2025. These updates underscore our continued focus on pipeline renewal as well as discovery and development innovation and execution across oncology and immunology. I look forward to sharing further progress updates in the coming quarters. And now, Yajing will give an overview of our financial results.

Thank you, Rafael. Now I will discuss highlights from our second quarter 2025 financial results compared to the prior year period. Total revenue grew 9% year-over-year to $110 million in the second quarter, primarily driven by higher sales of VYVGART supported by duration of therapy extension and increasing market penetration, AUGTYRO, and XACDURO, which launched since the fourth quarter of 2024. Our focus on financial discipline and efficiency efforts was also reflected on the expenses side. R&D and SG&A as a percentage of revenue declined significantly year-over-year. R&D expenses for the second quarter decreased 18% year-over-year, mainly due to decreased personnel costs and clinical trial costs as a result of resource prioritization and efficiency efforts. SG&A expenses for the second quarter decreased 11% year-over-year, mainly due to strategic resource allocation and efficiency improvements. As a result of operating leverage we are building into our business, our loss from operations decreased 28% for the second quarter to $54.9 million. We adjust our loss from operations to exclude certain non-cash items, specifically; depreciation, amortization and share-based compensation. We had adjusted loss from operations of $34.2 million in the second quarter, reflecting year-over-year improvement of 37%. Based on our operating plan and our anticipated revenue growth, we expect to achieve profitability on an adjusted basis by the fourth quarter of this year. Looking ahead, we expect to deliver quarter-over-quarter total revenue growth in 2025 with a meaningful acceleration anticipated in the later part of the year. We remain confident in reaffirming our full year 2025 total revenue guidance of $560 million to $590 million. This revenue forecast reflects strong growth for the VYVGART franchise, continued growth for our base business, and contributions from newly launched products. We are in a strong financial position, ending the quarter with a cash position of $832.3 million. And with that, I'd now like to turn the call back over to the operator to open up the line for questions.

We will now take our first question from Jonathan Chang from Leerink Partners.

First question, congrats on the positive FORTITUDE-101 study results. Can you help us understand the potential opportunity for bemarituzumab in frontline gastric cancer? What biomarker status and FGFR2b threshold would patients need for treatment with bemarituzumab? And can you help us characterize the safety profile observed in the 101 study?

Jonathan, it's Josh. Thanks for the message. I'll start on commercial and then turn it over to Rafael to talk a little bit more about the profile. First, there's over 450,000 patients with gastric cancer in China, about 1/3 of whom overexpress FGFR2b. So very significant patient population. And I think given what we know of the clinical benefits of this product and potential treatment duration, we're quite excited and confident that there's, over time, a $1 billion sales potential opportunity in this potential indication. We're already in this space with QINLOCK. We've got about 100 sales reps who promote QINLOCK today. We'll use that sales force and build on it to take advantage of the opportunity here. And again, we're quite excited by this product. It's going to deliver significant benefit to a very big patient population in China. And I'll ask Rafael to make some more comments.

Yes. Thanks, Josh, and thanks for the question. As I said in the prepared remarks, this is a drug for patients with overexpression of FGFR2b. And that's about 1/3 of patients, 30% or so. The cutoff is 2 plus to 3 plus at least 10% of the cells. So, in terms of patient numbers, it's close to 140,000, 150,000 new cases in China per year, which is very sizable. And we are preparing to launch this product with diagnostics as well. In terms of the toxicity, as I mentioned, the key toxicity was myelosuppression, which is probably more related to chemotherapy, and then ocular toxicity, which was expected and was seen in the Phase II study, the FIGHT trial. So, toxicity greater than 25% included mostly corneal toxicity that affected visual acuity. So, either complex keratitis or epithelial defects as well as dry eye. And we saw this, actually, in the placebo arm as well, but it's more pronounced in the treatment arm and more common in the 101 study than it was seen in the Phase II study. And that may be because we included a more comprehensive and standardized ocular monitoring in that trial. And this is expected. As I said, the receptor is expressed in epithelial cells in the cornea. It can be monitored by ocular consultation. Patients can be prophylaxed. It happens well into the treatment, so it doesn't happen right away. And at least in the Phase II study, they were reversible. So, the details of all the safety will be presented at an upcoming meeting that Amgen has guided towards. And then, in terms of how this will play out with regards to benefit/risk? Well, it depends on the benefit that you will see when the presentation comes up. But these are patients that have a particularly poor prognosis and there is a meaningful treatment effect that needs to be taken into account with this very aggressive form of cancer that has very limited treatment options.

Understood. And maybe a second question, if I may. Can you discuss your confidence levels in achieving your 2025 revenue guidance and profitability goal by year-end? And how should we think about the contribution of VYVGART in achieving these goals?

Thanks, Jonathan. It's Josh. First, we reaffirmed our top-line guidance of $560 million to $590 million in sales, indicating our confidence in that range. On profitability, we also reconfirmed that we expect to achieve profitability on a non-GAAP basis in Q4. We're moving forward strongly on both fronts. Regarding sales, we anticipate accelerated growth in the second half of this year, primarily driven by VYVGART. We were pleased with our performance in the second quarter, where we saw record patient numbers and an increase in patient duration and doses per patient each month. We expect this trend to continue in the second half of the year as we enhance our relationships with physicians and patients, along with the new national guidelines for gMG issued in July. You can expect to see the same kind of quarter-over-quarter sales growth for VYVGART that we experienced in the second quarter, and we are happy with those trends. For ZEJULA, we anticipate growth in the second half of the year. Although we faced some declines in the second quarter, this was primarily due to the disruptions caused by a major competitor, Lynparza, going off patent and new competitors entering the market. Nevertheless, we maintain our confidence in ZEJULA’s position as the market leader in first-line ovarian cancer and are already seeing a positive recovery in the third quarter, so we expect to see sales growth there as well. Overall, we are confident about the trajectory and growth for the second half of the year. This growth momentum will contribute to our operating expenses and drive us toward profitability. Historically, we have shown good improvement each quarter and have confidence that we will achieve this by fourth quarter of this year. Thanks.

Our next question comes from the line of Anupam Rama from JPMorgan.

You talked about the second half growth levers with VYVGART, and you talked about the stabilization of ZEJULA looking to the second half. But just wondering if there's any outsized growth expected from the broader commercial franchise in terms of NUZYRA or XACDURO that might contribute meaningfully to getting to the guidance and profitability by the end of the year?

Thanks, Anupam. It's Josh. Yes, I think first, if you look at XACDURO and AUGTYRO, both products are in the beginnings of the launch phases. We're really excited about the potential of both products. I think with XACDURO, you should expect to see continued good growth, as we mentioned in the beginning of the call. I think the demand is strong. We're still working through supply and making sure we can fill as much of that demand as possible. So, the more product we can get into the country, the better off we will be. And we should expect to see continued good growth there, somewhat limited, I think, in the second half of the year by supply constraints. But I think long-term for this product, we're quite excited. I think with AUGTYRO, we're taking a focused approach to the launch here, but also would expect to see good growth in the second half of the year. We have good pricing on NRDL. And of course, this is a product for patients with the mutation that provides really significant benefit. So, yes, so I think as you look at your models, having more growth in the second half of the year from those products is important. NUZYRA continues to be a strong driver of growth for us and expect that to continue in the second half as well.

We will now take our next question from the line of Yigal Nochomovitz from Citigroup.

I had a bunch of questions on the bemarituzumab topic. So obviously, you can't tell us the data, but you have said that it's statistically significant and clinically meaningful. And obviously, in the Phase II FIGHT trial, the OS delta was over 13 months. So, can you just help put in perspective what the expectation should be around the OS data for FORTITUDE-101 in terms of the expected delta? And then for 102, given that it's with nivo, I'm also curious whether you would expect the delta would be less because you have nivo on both sides of the equation? And then also in China, what's going to be the regimen that is more likely to get the uptake in gastric? Is it with the chemo or also with the nivo? And then I have another one on DLL3.

I'll ask Rafael to jump in here on the question, Yigal.

Yes, I think I can’t comment on the magnitude of the treatment effect because it's embargoed until the presentation. Other than what Amgen and we have said about the clinical significance of the differences between placebo and bemarituzumab, I can't provide much more information. As for the survival differences in studies 101 and 102, I would just be speculating. The difference in survival for nivo in gastric and GE junction tumors is not substantial, only a couple of months. If the survival difference remains the same with bemarituzumab, there could be an additive effect of those two months, but it's hard to speculate until we see the data. Regarding uptake in China, it's hard to determine, but study 101 is particularly significant for us there. Nivo use is relatively low, but there are other PD-1 inhibitors and many patients are treated without PD-1 inhibitors. Chemotherapy with bemarituzumab is seen as a major advancement, so it will definitely be utilized. The timing of the launch of each treatment might also influence the uptake of PD-1 inhibitors. So, I’m unable to provide a clear and precise answer, but this sums up my qualitative assessment.

Okay. Regarding DLL3, it appears that you've administered a dose of 1.6 mg/kg so far. With the combination with atezolizumab, how do you plan to approach the dosage for DLL3? Do you anticipate staying at the 1.6 mg/kg, or might you consider lowering it due to potential combination toxicity? Or do you believe there will not be overlapping toxicity, allowing you to proceed with the same dosage as observed in monotherapy?

It's a bit early to state definitively, but the toxicities of these two agents vary significantly. At a dosage of 1.6, 1310 is well tolerated, with only 6% experiencing Grade 3 or higher toxicities. Therefore, given the non-overlapping toxicities, we believe combining it with 1.6 is quite feasible, and we are moving in that direction. Additionally, we are working on an etoposide regimen and continuing to study atezo with carbo. As we gather more data regarding follow-up, response, and safety, we expect to present our findings in the first half of next year.

Okay. And if I could have one for Josh. Josh, obviously, there's a lot of momentum with Efgartigimod, but you have these four new trials; the lupus, seronegative gMG, myasthenia gravis, Sjogren's disease. I'm just kind of curious, when you put all those together, how does that change your perspective on the potential overall peak for this drug relative to the initial rollout of indications? Can you just kind of frame that so we can get a sort of a ZIP code of how much more that's going to drive the overall franchise long term?

Sure. Thanks, Yigal. First, we've said consistently that over time, we see a greater than $1 billion sales potential on an annual basis in China for VYVGART when you look at the various indications. And I think we're certainly on the way there. Of course, today, the opportunity is to drive penetration, usage, and duration in gMG. But I think if you look at the indications you mentioned, certainly, those that are complementary in the gMG space can add somewhere in the range of 25% or more sort of patient opportunity within gMG. So, this would be ocular and seronegative. Lupus, we're excited to see the data. That's a very big potential indication, but still more to come. I think myositis and Sjogren's, again, also pretty big indications. So, I think if you look at the total patient population then add in thyroid eye disease, we go from a starting point of about 170,000 patients with gMG in China to something well over 500,000 when you start to put these indications together. So, as we've said, the $1 billion type of opportunity, you don't have to assume huge penetration rates or otherwise. And again, I think the data that we've seen so far that have been released give us a lot of confidence that there's going to be significant benefits across the various indications here. But for us today, it's drive penetration in gMG, look forward to the supplementary indications that can build out that patient population for 2026, get Hytrulo approved through NRDL. We think that will bring significant patient benefits, then supplement that with the prefilled syringe, which we'll work towards submitting later this year. So, a lot to come in VYVGART and a lot to be excited about in terms of the current performance and things to look forward to.

We will now take our next question from Ziyi Chen from Goldman Sachs.

Two questions from me. The first one is for VYVGART. I understand that management mentioned in the first quarter, there has been some inventory management that linked to weaker sales. And I'm wondering, was VYVGART still under this type of inventory management in the second quarter? And how should we look into the second half, and particularly in July, what has been the momentum versus previous months in the first half? And also, we look at Argenx, they observed very strong subcutaneous formulation uptake. And what will be the strategy in China between subcutaneous and IV formulation for VYVGART from your perspective? And my second question is regarding the DLL3 ADC. Now the asset is going to be moving into pivotal study pretty soon. So, at this juncture, we're trying to understand a bit more about the company strategy in the U.S. market. Are you still actively looking for a partner for clinical development? Or the strategy is going to be pivoting towards self-sponsoring the pivotal study and potentially future commercialization to capture all the economics?

Thanks, Ziyi. I'll begin with VYVGART and then pass it to Rafael for his insights on DLL3. Regarding inventory, just a reminder that 2024 marked our first year of launch. As is typical with new product launches on NRDL, we accumulated inventory throughout the year to meet demand. By the end of Q4, we had stocked the channel in anticipation of Hytrulo's approval. Therefore, you'll see some inventory build reflected in the 2024 numbers, which is expected. In the first half of this year, we managed the VYVGART inventory closely. In the second half, you should anticipate normal inventory build as we prepare for 2026, expecting strong sales, particularly with Hytrulo likely being added to NRDL. From our observations worldwide where Hytrulo is available, it emerges as a crucial treatment option compared to IV. Over time, we anticipate Hytrulo will become a significant formulation for patients with gMG, and we will pursue NRDL diligently in this context. As we approach 2026, expect a transition from predominantly IV use to a notable increase in Hytrulo usage, followed by the PFS version in subsequent years. Now, I'll turn it over to Rafael to discuss DLL3.

Yes. So, with regards to the pivotal trial, we have said before that we've been in discussions with FDA and the accelerated approval pathway is still viable. It will be a randomized trial, and we're on track to initiate this trial before the end of the year. We have to align on the dose. But as we presented at ASCO, 1.6 mgs per kilogram is looking very strong and probably the best sort of combination on benefit/risk. We will continue to generate data. We will present some data as well on the durability. But our goal is to get agreement on the dose and initiate this trial. And with regards to a partnership, our initial pursuit is going to be to go ahead and launch this trial ourselves. And these discussions, I think may remain open, but we're pretty committed to moving this forward by ourselves and this study will be launched by us.

Our next question comes from Li Watsek from Cantor.

I have two pipeline questions. First on bemarituzumab, just wondering what steps are left to file in China. And is it possible to get NRDL listing in 2027? Or should we assume it's more of a 2028 event? And then for DLL3 ADC, how are you guys thinking about the data from Henry DLL3 program next month? Any read-through to your own on program and for data update later this year, what additional information do you hope to share relative to the ASCO update?

Thanks, Li. I think first on bemarituzumab, and Rafael can provide some more comments here. But our focus now is to get the file submitted and approved. And as you know, NRDL timing is dependent on when you're approved during the year and that always changes and everything else. So, we're just focused right at this point on getting that product approved as quickly as possible and then moving as quickly as possible into NRDL listing. So, we'll have more to come there as we move through the regulatory process. I think, Rafael, if you could jump in on both of the questions.

Yes, we have breakthrough designation for bemarituzumab and will be collaborating with Amgen on the potential registration in China as quickly as we can. We need to conduct a pre-BLA meeting for feedback on CD, and this is a priority for us. We are in talks with Amgen about starting the submission process. Regarding competition from Henry, we are aware that they will be presenting next month. It's important to note that products, especially ADCs, can be differentiated by many factors such as the type of antibody, epitope, avidity, payload, and linker. We believe our antibody is best-in-class, as indicated by a 79% response rate we showcased at ASCO a couple of months ago, which is one of the highest rates seen, with significant activity in brain metastases as well. We are well prepared to execute the Phase III study, and we have a timing advantage over our competition. Over the next four months, we will present updated data, including response rates and event timelines for both durability of response and progression-free survival. Importantly, we are characterizing these brain responses, as they are unprecedented, and we are receiving positive feedback from our investigators about their high incidence and durability. Our presentation will include assessments of brain metastases and may also feature some biomarker data. The main update will focus on optimized doses and durability of responses.

We will now take our next question from the line of Jack Lin from Morgan Stanley.

I have two brief questions. The first one regarding the DLL3. I just would hope to clarify a bit on the catalyst data timeline. So, if I could confirm, again, in terms of when we might expect the next data update from the second-line treatment and especially, I think, on the expansion cohort. And also, I think it was mentioned previously at the ASCO call, we also have first-line data upcoming. I'd just like to reconfirm on the timeline to expect for that. And the second one, I think, briefly on whether the company has a review or update in terms of some of the policy news update regarding the commercial insurance ramp-up and if there's any implications or changes to our commercial strategy for products like Optune? Just these two questions.

Yes. For DLL3-1310, we anticipate providing an update before the year's end regarding the second line, as previously mentioned, and I've explained the nature of this update. We had 89 patients at ASCO; now we expect more than 110 patients along with four additional months of follow-up. As for the first line, since we are focusing on the second-line study, we are still enrolling in the first-line cohorts, both with atezo alone and in combination with carbo. If we obtain significant data, we may share it this year, but it's more likely we will do so early next year. Our priority is on enrolling in the second line and establishing the Phase III study. I hope this clarifies the data timeline. Additionally, we are making good progress with neuroendocrine carcinoma and neuroendocrine tumors, which are separate cohorts. We will provide an update when we have meaningful information, but so far, the accrual has been positive, so we expect to have updates fairly soon. We want to ensure we have sufficient durability before presenting a substantial update.

And Jack, I think on the commercial insurance policy changes, we're quite encouraged by the trend here. Keep in mind, I know you know this, the reimbursement or funding for innovative drugs in China through a commercial insurance channel is considerably less than 10% today. So, I think as we look at policy changes to try to drive that number higher, it certainly benefits us as we launch new innovative products, not just Optune or TTFields, but any of the products we've discussed today. There's always a lag between when they're approved through NMPA and when they are eligible for NRDL listing. So, I think that time period, as commercial insurance expands, gives us a really good opportunity as we get drugs like bemarituzumab approved or KarXT or others to leverage these channels and drive good experience and sales in that stub period between approval and NRDL listing. So, I think that's important. Certainly, as it relates to Optune and as we think about PANOVA or the opportunity in pancreatic cancer, I think that's one that we'll certainly be able to time that well with some of these policy changes. So, again, I think it's positive for all companies who are bringing innovative drugs to market in China, and we look forward to participating and taking advantage of that policy change.

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

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 2025. Operator, you may now disconnect this call.

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