Zai Lab Q4 2024 Earnings Call Transcript

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Provided by Quartr
February 27, 2025

There are 13 speakers on the call.

Operator

Hello, ladies and gentlemen. Thank you for standing by and welcome to Zai Lab's Fourth Quarter and Full Year twenty twenty four 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

Speaker 1

that time. As a reminder, today's call is being recorded. It is now my pleasure to turn the floor over to Christine Cho, Senior Vice President of Investor Relations. Please go ahead.

Speaker 2

Thank you, operator. Hello, everyone, and welcome to Zai Lab's Fourth Quarter and Full Year twenty twenty four Earnings Call. Today's call will be led by Doctor. Samantha Du, Zai Lab's Founder, CEO and Chairperson. She will be joined by Josh Smiley, President and Chief Operating Officer Doctor.

Speaker 2

Rafael Amato, President and Head of Global Research and Development and Doctor. Yajing Chen, Chief Financial Officer. Jonathan Wang, our Chief Business Officer will also be available to answer questions during the Q and 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.

Speaker 2

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 02/27/2025 for additional information on this non GAAP financial measure. At this time, it is my pleasure to turn the call over to Doctor. Samantha Du.

Speaker 3

Thank you, Christine. Good morning and good evening, everyone. Thank you for joining us today. 2024 was a peak through year for Zai Lab, marked by strong commercial performance, growing pretty advancements in our global pipeline and a clear path to profitability. In 2023, we outlined a bold vision for revenue growth targeting a five year CAGR of 50% through the end of twenty twenty eight.

Speaker 3

We are delivering on this vision. Our total revenue for 2024 grew 50% year on year with an exceptional 66% growth in the fourth quarter. Safeguard had an excellent first full year of launch, generating $93,600,000 in sales in 2024, making it one of the best immunology launches in China. We made substantial progress in advancing our regional assets. We recently launched several new products, including Vibar Hytrolol for GMT and CIDP, Octero for ROS1 non small cell lung cancer and ZAKDURO for bovir moni infections.

Speaker 3

We also reported a series of positive beta results, including CAR T for schizophrenia, tumor treating fields for pancreatic cancer and TDAD for cervical cancer, paving the way for multiple launches next year. Furthermore, we're advancing our other innovative assets, including the bimatumumab for first line gastric cancer, COVID for IVF and CL-one thousand and eight for several IADT on top of exploring additional indications for V Guard and CAR ST. These successes together set the stage for strong revenue growth over the next few years. As a key part of our mission to address unmet medical needs around the world, we took a significant step in 2024 to accelerate our global platform. In October at DNA, we presented compelling early clinical results for DL1310, our potential first in class and best in class DL380C in small cell lung cancer.

Speaker 3

Preliminary data demonstrated a seventy four percent ORR including both confirmed and unconfirmed responses. With further follow-up and additional patients, we continue to see high rates of confirmed responses and we look forward to sharing detailed updates at a major medical conference in the first half of this year. The pace of progress with TL-thirteen ten has been remarkable, moving from Phase one initiation in January 2024 to a potential pivotal trial this year, positioning us for a possible FDA approval in small cell lung cancer in 2027, subject to ongoing regulatory discussions with FDA. As you know, DL3 is expressing various other tumor types. We have opened an IND to begin to explore additional indications this quarter to maximize the potential benefits for PACEICS.

Speaker 3

Beyond DL1310, we're advancing a broader pipeline of globally differentiated assets with plan to initiate global trials for an L13L31 bispecific antibody for atopic dermatitis and

Operator

then

Speaker 3

LRRC-fifteen ADC for solid tumors. Lastly, we have taken decisive actions to optimize our cost structure, improve efficiency across the organization, while continuing to invest in key growth drivers. Our loss from operations in the fourth quarter and for the full year improved year over year by 4523% respectively. We are on track to reach profitability in the fourth quarter of twenty twenty five and we have a robust cash position of $879,700,000 to support our next phase of growth. Today, satellite is at a major value inflection point with team committed to entrepreneurship, innovation and execution excellence.

Speaker 3

We look forward to delivering on our goals and capitalizing on the transformative opportunities that lie ahead in 2025 and beyond. We remain confident in our ability to reach our $2,000,000,000 revenue target by 2028, supported by strong revenue growth in our current commercial portfolio and the expected launches of multiple additional products or indications in the next few years. With that, I'll pass the call to Josh. Josh?

Speaker 1

Thank you, Samantha, and thank you, everyone, for joining the call today. We had a good year in 2024 as demonstrated by our strong commercial execution, important advancements across our regional and global R and D pipeline and multiple regulatory successes. In the fourth quarter, total revenue grew an impressive 66% year over year to $109,100,000 On a full year basis, total revenue increased 50% to $399,000,000 with growth driven by the strong adoption of DIVGART in its first year on the NRDL, along with the continued growth in Zejula and Nuzyra sales. We are proud of this outstanding top line growth and with three new launches underway, including VIVGARD HYTRULO, ZAKTORO and OGGTIRO, we expect to continue to build strong momentum this year. Let's start with VIVGARD, which has had an exceptional launch year delivering full year sales of $93,600,000 and fourth quarter sales of $30,000,000 ZivGuard is a testament to the outstanding execution of our commercial team and we are excited about what this pipeline and product program will achieve in coming years.

Speaker 1

There are several factors contributing to this momentum with VIVGARD an expanding network of prescribers, greater access through hospital listings, new patient acquisition and a growing number of patients starting treatment in the maintenance phase to manage symptoms and prevent relapses. Starting with physicians, we continue to grow the breadth and depth of our prescriber base, utilizing a strong scientific and data driven approach to help educate our physicians. More than 2,000 physicians have prescribed ZivGuard, including every one of our top 300 prescribers. In the fourth quarter, we saw a significant increase in the number of physicians who have prescribed three or more cycles for patients, highlighting the growing confidence in This momentum will be This momentum will be further amplified as we launch VIVGARD HYTULO for CIDP, unlocking additional opportunities for growth. On hospitals, we successfully achieved listings at all of our top targeted hospitals last year, covering approximately 65% of gMG market potential.

Speaker 1

We are now targeting the next wave of hospital listings, increasing our coverage to approximately 85 of the market. In parallel, we will focus on enhancing supplemental insurance coverage to offer additional support for the patient community.

Speaker 4

We

Speaker 1

are also seeing increased utilization of VibGard as part of the maintenance treatment. Approximately forty percent of patients who initiated treatment in the third quarter of twenty twenty four returned for an additional cycle in the fourth quarter, which aligns with clinical trial findings and reinforces our confidence in long term patient adherence. Additionally, new formulations such as VIBGARD HYTURLO and the prefilled syringe have the potential to ease the treatment burden, enhancing the overall patient experience and improving DOT. We're making great progress, but there's still much to do. With over one hundred and seventy thousand gMG patients in China, our current market penetration is under ten percent, indicating vast potential for growth.

Speaker 1

As we look to 2025, we have well defined strategies in place to drive new patient growth and the duration of treatment for Vibhguard and gMG. First, we will continue to establish infusion centers in top tier enhancing patient access and convenience for treatment. Second, the upcoming mid-twenty twenty five update to the national gMG guidelines is expected to provide tailwinds, positioning VibGard as a more prominent treatment option for gMG. We will use this opportunity to increase physician education and shift prescribing behaviors toward a more proactive usage of Vivgard in the maintenance phase. Third, we are promoting the regular activities of daily living or ADL assessments, reinforcing the importance of ongoing VibGart maintenance therapy when ADL scores decline to ensure better long term disease management.

Speaker 1

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

Speaker 2

As we execute on these strategies throughout the

Speaker 1

year, we anticipate a stronger ramp up in the second half of twenty twenty five, driven by an expanding pool of both new and returning patients that will have a compounding effect on sales. While we do anticipate quarterly fluctuations due to seasonal factors such as holidays and hospital purchasing patterns, these dynamics are expected to balance out over the course of the year.

Speaker 2

Now moving on to our other commercial products. Starting with

Speaker 1

the DEJULA, it continues to be the leading PARP inhibitor for ovarian cancer in hospital sales in China. We are seeing sales increases driven by increased penetration in first line BRCA mutated patients. For NUZYRA, the strong sales growth this year was supported by the NLDL inclusion for both IV and oral formulations. The NLDL listing for the IV formulation was successfully renewed in January 2025. We will continue to promote ongoing access and support for patients who rely on this important treatment.

Speaker 1

In addition, we have three recent product launches that will further contribute to the total revenue growth in 2025. First, VIVGARD HYTULO, which is the subcutaneous formulation of efgartigimod with a shorter administration time of thirty to ninety seconds for adult patients with gMG and CIDP. Hytulo is not listed on NRDL this year, but is expected to be a meaningful growth driver over time. Second, Occhiro and ROS1 positive non small cell lung cancer, which comprises between two percent and three percent of the approximately nine hundred thousand new cases of non small cell lung cancer per year in China. Occhiro achieved first time NRDL listing at the beginning of this year.

Speaker 1

Third, Zactoro in hospital acquired and ventilator associated pneumonia caused by Acinetobacter Bimani infections, of which there are approximately three hundred thousand cases in China each year. We will leverage the industry leading commercialization infrastructure of Pfizer in the anti infective therapeutic area to help accelerate access to this important therapy for patients in need in Mainland China. With the confidence we have behind our business, driven by the expected growth of VIVGARD, new product launches and the continued strong performance of our base business, we are for the first time providing total revenue guidance for the full year. We anticipate total revenues for 2025 to be in the range of $560,000,000 to $590,000,000 In parallel to strong top line growth, we're also focused on operational efficiency and financial discipline. Through our ongoing efforts on enhancing commercial efficiency, optimizing resource allocation and increasing productivity throughout the entire organization, our loss from operations in the fourth quarter and full year 2024 declined by 4523% year over year.

Speaker 1

We are on track to reach profitability in the fourth quarter of twenty twenty five and we have a robust cash position of $879,700,000 which allows us to support our next phase of growth as we drive both revenues and profitability. In summary, our strong execution in 2024 reflects Zai Liv's commitment to deliver on our strategic goals. With a fast growing Greater China business, expanding global pipeline and prudent financial discipline, we expect to drive substantial value for our shareholders this year and through the remainder of the decade. And with that, I'll now pass the call over to Rafael to discuss the great progress with our pipeline.

Speaker 5

Thank you, Josh. Let me begin by highlighting some of the key progress updates in our global pipeline since our last earnings call along with our next steps. Starting with CL1310, a potentially highly active first in class CLL3 ADC for small cell lung cancer. We presented promising preliminary monotherapy results from the ongoing Phase I trial last year suggesting that this next generation ADC therapy has the potential to deliver antitumor responses in the majority of patients with extensive stage small cell lung cancer, including Blaine lesions with good tolerability. As Samantha said, we expect to present detailed results at an upcoming major medical conference in the first half of twenty twenty five.

Speaker 5

In January 2025, the U. S. FDA granted orphan drug designation to ZL1310 for small cell lung cancer, reflecting its potential to treat patients with this aggressive disease. Globally, small cell lung cancer affects around three hundred and seventy two thousand patients each year with a low five year survival rate of five percent to ten percent. Treatment options are limited when patients progress with the current standard of care resulting in limited clinical benefit.

Speaker 5

Despite recent advancements such as tarlazumab, there remains a critical need for readily available treatment options that offer improved efficacy and manageable safety. We are working to address this critical gap with urgency. Enrollment in the monotherapy dose optimization study for second line small cell lung cancer is progressing rapidly with over thirty five patients already dosed. We're also assessing potential combinations in the first line setting and we have initiated a global Phase I dose escalation study evaluating VL1310 in combination with PD L1 and PD L1 plus chemotherapy. We expect to provide data this year.

Speaker 5

We also plan to initiate a registrational study in second line plus small cell lung cancer this year, positioning us for a potential approval in 2027. Regulatory interactions with FDA related to accelerated approval for CL1310 are ongoing. CLO3 is also highly expressed in other neuroendocrine tumors, and after obtaining IND clearance earlier this month, we will start a global study soon to explore ZL1310 in these indications. Beyond ZL1310, we expect to advance at least two additional global assets into Phase I development this year, including ZL6201, a novel LRRC15 ADC for solid tumors and ZL1503, an IL-thirteen, IL-thirty one bispecific antibody for atopic dermatitis. We expect to further expand our global pipeline and progress at least one global product into IND enabling or IND submission stage this year.

Speaker 5

Now moving to our key late stage programs. Starting with neuroscience, we achieved a major milestone with CAR Xt, our M1M4 cholinergic receptor agonist for schizophrenia. In January 2025, China's NMPA accepted our NDA for CAR Xt, marking an important step towards bringing the first novel schizophrenia treatment to China in decades. Schizophrenia affects more than eight million patients in China with many patients unable to achieve adequate symptom control due to the limited effectiveness and burdensome side effects of currently available treatments. In clinical trials, CARESD demonstrated robust efficacy, achieving statistically significant reductions in all study endpoints, while maintaining a tolerable safety profile free of the side effects of classical antipsychotics.

Speaker 5

If approved, CAR Xt could redefine treatment for the millions of patients whose symptoms are inadequately managed by existing treatment options. Moving now to oncology for tumor treating fields. In December 2024, Zai Lab and Novocure announced that the pivotal Phase III PANOVA three trial is in unresectable locally advanced pancreatic cancer met its primary endpoint demonstrating a statistically significant improvement in median overall survival versus control. This is the first Phase III study to show a survival benefit in this patient population and we plan to file for regulatory approval of tumor treating fields in China in the second half of twenty twenty five. In China, approximately one hundred and thirty four thousand new cases of pancreatic cancer are diagnosed each year and these patients have limited effective treatment options and a poor prognosis with a median survival of under twelve months.

Speaker 5

We hope to expand treatment options and improve outcomes for these patients in need. Turning to tislelumabedotin or TIFDAC, our tissue factor ADC for recurrent or metastatic cervical cancer. In January 2025, we reported positive top line results from the China subpopulation of the global Phase III INNOVA TV301 study. This step demonstrated a clinically meaningful improvement in overall survival compared to chemotherapy with a manageable safety profile as observed in the global study. Cervical cancer remains a leading cause of cancer related deaths in women in China with approximately one hundred and fifty thousand new cases annually.

Speaker 5

Patients currently have limited treatment options once their cancer recurs or spreads after initial treatment and the current treatments have a different mechanism of action and toxicities. We plan to submit a biologics license application to the NMPA for recurring metastatic cervical cancer in the first quarter of twenty twenty five. For bemidozumab, we're awaiting the results for both pivotal studies in gastric cancer starting with forty two thousand one hundred and one, which we expect in the first half of this year and forty two thousand one hundred and two in the second half of the year. Bemarituzumab has the potential to become the first targeted therapy specifically for FGFR2b positive gastric cancer in China. Next, with our immunology franchise.

Speaker 5

SRT genome continues to demonstrate broad potential across IgG mediated diseases. Our partner, argenx, announced in November 2024, the decision to advance cartigumab subcutaneously into the Phase twothree ALKIDIA study for idiopathic inflammatory myopathies, IIM or myositis, following promising Phase II results. The subtypes of myositis evaluated in this study affect approximately one hundred and seventy thousand patients in China alone with no targeted therapies currently approved. Zai Lab is actively participating in the Greater China cohort of this global registrational trial. We'll continue to explore the pipelining of product potential of efgartigimod to treat other IgG mediated autoimmune indications, including thyroid eye disease or TED, myositis, seronegative gMG, ocular MG and lupus nephritis.

Speaker 5

In 2025, we expect top line results from the global Phase III study of seronegative generalized masphenia gravis and the Phase II study of lupus nephritis. We also recently strengthened our regional immunology franchise with two late stage assets that are highly synergistic with efgartigimod, povitacisab immunoglobulin a nephropathy and ZL1108 in thyroid eye disease. COVIDASISAP is a novel dual BAF, B cell activating factor, and APPRL, a proliferation inducing ligand antagonist with best in class potential in IgA nephropathy supported by its compelling Phase II data. In China, IgA Nephropathy has an estimated prevalence of three million to five million patients, yet there are currently no approved therapies targeting the underlying cause of the disease. Despite standard of care treatments, including ACE inhibitors and steroids, thirty percent to forty percent of patients eventually progress to end stage renal disease, underscoring the significant need for innovative treatment options.

Speaker 5

China has already joined the global pivotal trial for poverlutatacept in IgA and we are leveraging our regional expertise and established footprint for renal diseases with efgartigimod to accelerate development timelines. We aim to bring this first in class therapy to patients expeditiously. ZL1108 is an anti IGF1R antibody, which represents another valuable addition to our regional portfolio. It significantly reduces the treatment burden for thyroid eye disease through shorter infusion times and a more concise course of therapy compared to other anti IGF1R therapies. In its Phase III studies, VL1108 has consistently demonstrated reductions in proptosis, diplopia and CAS across both active and chronic thyroid eye disease.

Speaker 5

We expect to initiate a China bridging study for TET patients in mid-twenty twenty five. Thyroid eye disease affects approximately three point three million people in China, of which one million are diagnosed with moderate to severe forms of the disease. While estimates can vary, the active or acute phase of thyroid eye disease generally lasts between six and twenty four months, roughly twenty percent to thirty percent of the overall disease course before transitioning into a chronic phase that typically makes up the remaining seventy percent to eighty percent. The strategic mode is under evaluation in active phase and thus ZL1108 complements our debt franchise creating synergies with a strategic mode in both development and commercialization. The wealth of advancements reflects our relentless focus on delivering innovative potential best in class or first in class therapies to patients with high unmet need.

Speaker 5

We will continue to execute with speed and precision, advancing our pipeline while exploring new opportunities. I look forward to sharing further updates in the coming quarters. And now Yajing will give an overview of our financial results. Yaging?

Speaker 6

Now I will discuss highlights from our fourth quarter and full year twenty twenty four financial results compared to the prior year periods. We had a strong Capline growth in the fourth quarter and for 2024, driven by increased sales for Vivigart, Zejula and then NUZYRA. Total net product revenue grew 65% to $108,500,000 in the fourth quarter. For the full year, net product revenue was $397,600,000 reflecting robust growth of 49% year over year. Our focus on financial discipline and ongoing efficiency efforts was also reflected on the expenses side.

Speaker 6

R and D expenses for the fourth quarter declined 36% year over year and the full year R and D expenses declined 12% as late stage studies completed and as we continue to prioritize our investment to advancing high value regional and global pipeline programs. SG and A expenses in the fourth quarter were flat year over year and the modest 6% increase for the full year was primarily due to higher general selling expenses related to the launch of Vivigart and the growing sales for NUCYRA, partially offset by a decrease in G and A to $282,100,000 We're to 282,100,000 When you 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 $47,600,000 in the fourth quarter and $199,600,000 for the full year, reflecting year over year improvement of 5328% respectively. We are in a strong financial position ending the quarter with a cash position of $879,700,000 Now turning to our financial outlook for 2025. We expect our 2025 total revenues to be in the range of $560,000,000 to $590,000,000 This revenue forecast reflects strong growth for the Vivica franchise, continued growth across our other products, including Xejula and NUZYRA and the contributions from our newly launched products Actyra and ZAKTORO.

Speaker 6

Lastly, based on our operating plan and our anticipated revenue growth, we expect to achieve profitability in the fourth quarter of twenty twenty five. And with that, I would now like to turn

Speaker 2

the call back over to

Speaker 6

the operator to open up the line for questions. Operator? Thank you.

Operator

We will now take our first question from the line of Anupam Rama from JPMorgan. Please ask your question.

Speaker 5

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

Speaker 7

Hi, Anupam, it's Josh. No, I think if you look at our revenue range, we expect the base business to grow strongly. We'd point to Zejula and NUZYRA as particular growth drivers. Vibhguard, we expect to grow faster than the overall rate of growth implied in the May to May. And of course, we're launching first full year launch for Octyro and Exactoro.

Speaker 7

So we will expect some sales there. But I think there it's just strong performance across the brands. We're excited about the year. Next question, operator?

Operator

Thank you. We will now take our next question from the line of Michael Yee from Jefferies. Please ask your question, Michael.

Speaker 8

Hey, good morning. Thank you for the question. We had two. First was on VIVGART. While there's no specific revenue guidance for 2025 for that product line, I think you made some nice comments around the shape of the curve for this year.

Speaker 8

Can you just a little more color on the growth trajectory in the first half of the year versus the second half of the year? And is that driven by the treatment guidelines? Maybe just help us out a little bit about where the trajectory of XJULIA could be by the end of the year? And then a R and D question around DLL3. Can you just confirm your thoughts about how fast you can move into a pivotal study?

Speaker 8

I think there's another Chinese ADC that was recently in licensed to put up some data around a seventy percent response rate. I'm just trying to think about the competitive dynamic there in the dispute at which you could be addressed. Thank you.

Speaker 7

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

Speaker 7

And of course, those build up and accumulate through the year. Big year, we do expect an official update to the myasthenia gravis treatment guidelines in China that more prominently features VIVGARD. So we'll get some benefits there. And of course, we're while CIDP is not on the NRDL, we're in the process of launching that and making sure patients who do have the supplemental insurance or other ways of accessing the drug that they get it as well. So I think those things when you put them together just lead to even stronger, I think, second half growth and we'll see in the first half.

Speaker 7

But certainly don't mean to imply that we won't see growth throughout the year and again very, very strong outlook for VivGuard for this year. Rafael will take the three questions.

Speaker 5

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

Speaker 5

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

Speaker 8

Very good. Thank you.

Operator

Thank you. We will now take our next question from the line of Jonathan Chang from Liberink Partners. Please ask your question, Jonathan.

Speaker 4

Hello. This is Yander Li on for Jonathan Chang. Thanks for taking my question. So I have a follow-up question regarding the regulatory strategy for VL1310, the VL3 program. So for the pivotal study, could you share your current view on whether you can do a single arm study or you would need a randomized control study to support the accelerated approval?

Speaker 4

And how does that influence your thought on the 2023 DOA submission timeline? And I have a follow-up question after that. Thanks.

Speaker 5

Yes. So it's a good question, but obviously we don't discuss details of regulatory discussions with FDA. There's been two products approved as single arms, but there are other products that are approved as accelerated approval in randomized trials. And the advantage of the latter is that one can confirm the approval with the definitive endpoint of survival. So how will we proceed and will be revealed once we launch that study?

Speaker 5

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

Speaker 4

Got it. Yes. And can I just have a follow-up question? So can you comment on the like the 2023 sorry, 2026, the DO submission timeline relatively to timeline of potential tarlatanab for approval and the timeline of other B730680C clinical study readout? Does that like kind of align with what you're thinking?

Speaker 4

Thank you.

Speaker 5

Yes. There are obviously other products there. Tarlatanat has accelerated approval. It's a very different agent. And obviously, there's been precedence that even with full approval in the same line of therapy, accelerated approval can be granted.

Speaker 5

There are multiple examples in the hematology field. The mechanism of action is different. The toxicity is different. And so far, the level of activity of thirteen ten is higher, is in the seventy percent range as opposed to forty percent. So we're not too concerned about the potential of tarlatanab getting full approval before our PDUFA date.

Speaker 5

So that's with regards to tarlatanab in second line. With B7 H3, my sense is that they started or they plan to start a pivotal trial, but we don't really comment on the details of competitors. And I actually do not know what their timelines are. All I can say is that our plan is to move as fast as possible with an accelerated approval pathway.

Speaker 4

Understood. Thank you so much for answering my questions.

Operator

Thank you. Our next question comes from the line of Yigal Nochomovitz from Citi. Please ask your question, Yigal.

Speaker 9

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

Speaker 5

Thank you for the question. I'll answer the second question first. We will have data on the various dose escalation doses and we should have a fair amount of maturity in the earlier doses and definitely enough time for responses to have been confirmed. In addition to that, as we mentioned in the prior quarter, we started the dose optimization and we've accrued really fast to that randomized cohort of the study that was 50 patients and we should have at least the opportunity to be confirmed in the vast majority of patients. So we think we'll have data in about seventy five patients or so at different levels of follow-up, obviously.

Speaker 5

With regards to first line, we were pretty active in first line. We started combinations with PD L1 inhibitor and then very soon we're going to start with carboplatin plus PD L1 inhibitors at triplets. Our initial goal is to avoid a topocyte because it's a very mild depressive drug and that's really what tends to limit the length of therapy. But there's been precedence as you know of other ADCs that combined with PA1 inhibitor, checkpoint inhibitors have been able to supplant chemotherapy such as Pratsev and GU. So if you think about the fact that we can get seventy percent in second line and the response rate in first line is slightly lower than that is in the 50s to 60s, it's not very far fetched to think that ZL1310 plus a PD1 inhibitor could be potentially superior to the current standard of care.

Speaker 5

So this is the way we're thinking. Nevertheless, we are going to test the combination with CARVOL and then we will have to select the dose for ZL1310 with that combination. We should have data this year on that dose optimization and then we will have regulatory discussions as to how to move it into frontline.

Speaker 9

That makes sense. Super helpful. Thanks for taking my question.

Operator

Thank you. We will now take question from the line of Linhai Zhao from Goldman Sachs. Please ask your question, Linhai.

Speaker 10

Thanks for taking my question. I have two questions. The first one is about EFCAR. Since we have the CIDP and also the SC formula approved in the second half of twenty twenty four, I'm curious what has been the observations of real world patient usage and adoptions we have observed so far? And in terms of sales breakdown, how what percentage of sales coming from the CIDP and subcutaneous formula?

Speaker 10

And in the longer term, what percentage would you expect would come from this CIDP and subcu formula? That's the first question. And the second question is about CAR XT. Since we have our NDA has been accepted in January, that means that the China approval should be around roughly a year away. And most recently, BMS has also shown that they have received a very encouraging feedback and the early trend has been pretty good.

Speaker 10

So that's but we all know that's in The U. S. Market. So in the China market, can you share a bit more on the potential differences in the schizophrenia treatment between U. S?

Speaker 10

And how would you see the potential commercial hurdles in China? And in addition, any updates on the ADP clinical development? Thank you.

Speaker 7

Thanks for the question. It's Josh. I'll start and then Rafael can talk a little bit about ADP for First on CID your question about CIDP in VIVGART, just keep in mind that while we received approval by the time we got the product up for commercial launch, it was right at the end of twenty twenty four. We do not have NRDL listing for Hytulo or CIDP in 2025. So, I think we expect relatively limited impact.

Speaker 7

It's only going to be available through supplemental insurance or cash paying market. So we're really looking forward to listing in later years and full benefit there. So our focus this year, while we do want patients with CIDP to have the opportunity to benefit from this product, really the vast majority of our sales and efforts will focus on gMG in 2025 and gMG in an IV formulation. To the question about CarXT, I think we are very excited about the commercial opportunity for CAR XT in schizophrenia. Of course, we're as you mentioned, we submitted at the end of last year and are looking forward to an approval and a launch.

Speaker 7

There are eight million patients with schizophrenia in China, about four million of whom are seeking care in pretty intensive settings, typically using an atypical antipsychotic. And I think we know from the clinical trial experience and certainly what BMS is seeing in The U. S. Is that CoBEMFI or CAR XT provides a really important opportunity to help patients who are not responding well to atypical antipsychotics or who, you know, can get more of the positive, you know, the negative symptom relief that you can get with MC versus the atypical antipsychotics. So we're just excited to get the product approved and start to launch.

Speaker 7

We'll launch with sales force in about 150 person range focused on these big treatment centers. And we're looking forward to that. I think it's going to be a great product in China. For schizophrenia, Rafael, maybe you can make some comments about Alzheimer's.

Speaker 5

Sure. So in dementia related psychosis, there's a series of studies, they're called ADEPT studies that are being executed by BMS. As you know, sometimes I've got a black box warning against the use in dementia, which CAR XT doesn't have. And in fact, we're seeking an indication in this setting, which is really an unmet need. We very much want to pursue this indication and we're in discussions with BMS as to what the best regulatory path way is, whether it's participating in ADEPT versus doing other separate bridging trial or other potential registration pathways, but that will be performed this year.

Speaker 5

And just to reiterate that it's an indication that we will be pursuing.

Speaker 11

Thank you.

Operator

We'll now take our next question from the line of Lee Wasek from Cantor Fitzgerald. Please go ahead.

Speaker 12

Hey guys, thanks for taking our questions. I have one on pipeline, one on commercial. I guess for ZL1310, the ZL3 ADC, in terms of durability, where would you place ADC versus the other modalities such as T cell engagers or RIDEAL? And can you talk about chemosensitivity or RIDEAL sensitivity in small cell lung cancer? And then if you align on AA path for second line, how should we think about the confirmatory study and the enrollment timeline there?

Speaker 12

And then second for VIVGAR, anything you can share in terms of break down of new patient adds versus maintenance for Q4? And then how should we think about the sequential contribution from each group going forward?

Speaker 7

Rafael, do you want to start on?

Speaker 5

Yes, I'll start with DLL3. I think the durability of response, which I think was your first comment, it's still early to be able to know what the median durability response is going to be. And I think that is a good thing. Perhaps by ASCO we may know, but we haven't reached it yet, last time we looked. And I think a good DOR would be if fifty percent of patients are at six months or greater, that would be, I think, something important, particularly given that there are so many patients that respond.

Speaker 5

If you look at tarlatanab, the response rate is in the 40s with DOR of nine months. That's really what's in the label. So we hope to be thereabouts those number hopefully the longer the better. In terms of chemosensitivity, I'm not sure exactly whether you're referring to whether patients were by number of factor resistant. We've looked at that and there's really no difference in sensitivity to thirteen ten.

Speaker 5

Patients tend to respond with the same proportion whether or not they are refractory or resistant to platinum and that is not the case with other agents as you may know. With regards to the confirmatory trial, it depends on how the accelerated approval is obtained. If it's obtained in the context of a randomized trial where accelerated approval is obtained by a response, then the same study will confirm the approval using 10 to eleven ten point, which tends to be overall survival in second line. Otherwise, one has to do a second study, which is what tarlatanat has done. So the regulatory pathway, we will disclose it once that study starts.

Speaker 5

So I hope that answers your questions with regards to thirteen ten and obviously we'll know more at the time of the presentation.

Speaker 7

Thanks, Rafael. Thanks, Lee. On VIMGuard, your question about the proportion of patients, where they're coming from, I think we continue to see about 1,000 patient initiations per month. So, we're really pleased with that. And increasingly, those patients are being started in the maintenance or consolidation phase of their disease.

Speaker 7

So, these again are the patients who will maintain treatment on VibGard for three to five cycles per year based on what we know from the clinical trials and from real world studies from argenx. And I think that the majority of patients now that we're getting on a monthly basis are starting in that setting. And so to your question, the more of that we get as we progress through the year this year, you're going to have that reservoir of existing patients coming back in for their second, third and fourth courses. And as as I mentioned at the beginning of the call, if we just look at patients who started on VIBGARD in the third quarter of twenty twenty three, about forty percent of those patients had already come back in, in the fourth quarter, come back into their physicians to start a second course of therapy. So we're really pleased with the progress we see here.

Speaker 7

This very much I think matches what argenx saw about this phase of their launch in The U. S. So again, gives us a lot of confidence about the long term prospects here for VibGard. Thanks.

Operator

All right. Thank you. Our next question comes from the line of Jack Lin from Morgan Stanley. Please ask your question, Jack.

Speaker 11

Hi. Thank you for taking my question. I have two questions, one on publicastisat and the other on the catalyst. So publicastisat, I'm curious if you could share more. I mean, you mentioned earlier, you'll be joining the global study, but in terms of timeline, what might be we're looking at in terms of China launch?

Speaker 11

And following that, given that there is some product that have been approved or are in the late stage of development, how do we see the kind of relatively later launch in China with like what's our strategy to kind of launch and push Pobetastis, I think, in China to end kind of what the potential might be, especially with consideration of potential labor expansion beyond IGA end? So that's kind of the first question on Pobetastis. And the second question, just curious, could you help me summarize what are the key top major catalysts that you most expect the company in this coming year? Thank you.

Speaker 5

Yes. So perhaps I'll start with Povee. In terms of participation in the China trial, you're right. We initiated I mean, there is enrollment already in China that was initiated and actually is expected to end this year. So we will file with a global trial and we hope to actually be able to get axillary approval.

Speaker 5

This is a disease where there really aren't active drugs and patients get immunosuppressive drugs in the form of steroids when they develop proteinuria. And so being able to have an agent that can hold the natural history of the disease is really important because as I mentioned in the preparatory remarks, a lot of these patients end up in renal failure. There are other agents out there. This is a BAF April inhibitor, others target, all their targets like BLES, April is commonly targeted with these agents. But there are some properties of this product that I think may make it ideal.

Speaker 5

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

Speaker 3

Thanks, Jack. This is Samantha. I'll address your key catalyst in 2025. Since we have a very limited time left, I'll just give you a few very key highlights. First of all, on the pipeline side, on the global, as we talk today in lengthy about our DL3 assets, ADC assets, we will have data updates for monotherapy in small cell lung cancer at a major conference in the first half this year.

Speaker 3

We will have data updates for GL-thirteen ten combo for first line small cell lung cancer this year. Of course, we also will initiate a pivotal study in small cell lung cancer with possibility for an FDA approval in 2027. We'll initiate a global Phase one study in other neuroendocrine cancers in first half this year. And we also of course as we mentioned in our news release, we have other preclinical data updates for at least two additional global assets that are moving into Phase one development. Recently, the big news will be bemateuzumab will see data readouts and followed by NPA submission in first half twenty twenty five.

Speaker 3

And we also have five regulatory submissions in China this year. And I won't give you the detailed numbers, but bema is a big one as you know first line breast cancer. On the BD side, we have additional global and if appropriate regional e licensing and of course if it's fit in with our strategy, it will be our licensing BD deals as well. So overall, we are very confident that we are going to achieve profitability in full quarter '20 '20 '5. Thank you.

Operator

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

Speaker 3

Thank you, operator. I want to thank everyone for taking the time to join us on the call today. We appreciate your support. Look forward to updating you again after the first half of twenty twenty five sorry, after first quarter of twenty twenty five. Operator, you may now disconnect this call.

Operator

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

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Zai Lab Q4 2024
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