Thanks, everyone. Welcome to Tuesday morning of the 41st annual JP Morgan Healthcare Conference. My name's Anupam Rama. I'm one of the senior biotech analysts here at JP Morgan. I'm joined by Malcolm Kuno and Priyanka Grover from the team. Our next presenting company is Zai Lab, and presenting on behalf of the company, we have the CEO, Samantha Du. Samantha?
Thank you. Thank you, Anupam. Good morning, everyone. It's such a great pleasure to be with you here today. Slide number two is the safe harbor slide. I'll skip to just slide number three, please. Zai Lab was founded 14 years ago with ambition to bring first-of-best-in-class assets to patients, first in China, then around the world. Over the last eight years, we really the team worked very hard to seize this once in a generation opportunity as a biopharma leader in China through dedication, hard work, OS like R&D, BD, commercial team. I'm here to want to thanks my team for what you have done for the last eight years. Also last year, we continued with our pr-momentum in the face of ongoing impact of COVID-19.
This slide, I want to use this slide to highlight five key drivers which illustrate why Zai Lab is uniquely and differentiated positioned for future growth and for become a leading global pharma. Of course, pipeline is so important. Our number one, I would, I wouldn't say number one in terms of importance of ranking, but I've lost respect with our deep and differentiated pipeline, which has not only near term, but also medium and long term. We already have several pro-products launched. We're expecting in the next two to three years launch additional eight products.
Six years ago, we start our in-house R&D in both U.S. and China. Combined with the business development of open innovation model, the team has leveraged our deep understanding of patients' needs and also our successful track hunting expertise and the track record. We have established a fully integrated biopharma in China. As a leader, we have had many products we launched to the market. We have not stopped at there. We always mindful as we grow, climb the mountain, as we reach the global pinnacles, we want to continue to attract and also, you know, add top talents and optimize our team. Last year, we have several experienced team join us. Overall, we have very strong global leadership team and Zai team across U.S. and China.
Last, certainly not least, Zai Lab is very well capitalized and on the path to profitability to the end of 2025. As I mentioned, 2022 is a very challenging year for most of us, if not all. Having said so, the team has continued to show its resilience and dedication. We have several positive pivotal Phase 3 data readouts. We also achieved commercial excellence. We have key regulatory events and reached all our milestones. For example, for efgartigimod and also for zolbetuximab. For zolbetuximab, we filed NDA. Both of them, we filed NDA for China approval. CAR-T and BCMA, we also obtained CTA in China. Either for bridging study, which is going to be used as China registrational study or as part of global pivotal study. You may have heard we formed a strategic partnership with Seagen.
Seagen's asset extremely exciting for us, not only the tremendous unmet medical needs in advanced cervical cancer in China, but also this provides synergy to our oncology franchise, especially for women's cancer, ZEJULA, for example. Our balance sheet, as I mentioned early on, by end of September 30, we still have $1.12 billion in cash position. We continue to drive our productivity and drive business efficiency without compromise in our top line growth. It's worth to note that we also engaged a U.S. auditor, KPMG, to support our continued Nasdaq listing along with HFCAA.
Well, I'm very excited to see, and I'm sure also you have, probably most of you have heard of this about TTFields. In the LUNAR study demonstrate TTFields has demonstrated a statistically significant and clinical meaningful improvements in overall survival over standard therapy alone, combining two different cohorts. We were very excited not because TTFields is currently for for the indication for Optune we are using in China, but also TTFields already approved in mesothelioma. It's also a solid tumor. TTFields, this positive trend also the significant meaningful improvement in OS combined with other indications we have in ongoing pancreatic cancer, ovarian cancer, gastric cancer. We all have multiple trials ongoing. Combined, I think TTFields can be a tremendous opportunity for, it's a, you know, billion-dollar product.
I would say billion-dollar, you know, blockbuster drug minimum. Also, TTFields, I'll talk about the slide later on. It has the opportunity to be nested into the NRDL inclusion. Our partner will present the full data in a upcoming important medical conference. After our partners submit the pre-market application with the U.S. FDA in the second half of this year, we will also submit our market authorization approval following the U.S. submission. Come to this first aspect. I talk about the key drivers, which is highly visible and diversified pathway to successful growth, driven by our deep and also differentiated pipeline. I mentioned earlier, we already have four launch products.
What is most exciting is in the next two to three years, we have many, more than eight products to launch in China. Some of them, for example, adagrasib, Bemarituzumab, TTFields, I'm just naming a few, and have tremendous market potential. They we are gonna bring for first time ever to bring this important medicines or this kind of innovations to China at a very short period of time. This will really change Zai Lab perspective in the next two to three years. With our long eight years hard work, we not only have much deeper pipeline in medium and long term, both for China rights and for global rights, but also we have not only monotherapy opportunities, but also combo opportunities. We are truly expected, excited about our own pipeline.
Now let's come back to in-house research. We started our discovery engine in China and U.S. about six years ago. We always adopt a innovative, nimble, and efficient approach. We, our team have this, as I mentioned, deep understanding of unmet medical needs. Combined with our drug hunting capabilities, really enable us to generate the pipeline on the right side, which is our internal global pipeline. Some of them already passed POC, and we are for first, the ZL-1102, we will start full Phase 2 first half this year globally. We also have three either in the clinics or already coming to the clinics. We have many exciting programs ongoing. Of course, we will not stop business development effort. I wouldn't let Josh and Jonathan's team be free, right? We'll continue to bring assets.
Well, I think a lot of times our partners very kindly to comment our, you know, regulatory, our speed and our quality. I think what really comes down to is our. I put it in two categories. One is I use a few examples to show how our teams not only has the expertise, right, Harald? In not only just, you know, joining the global trials, but independently leading and designing global trials and China's individual registrational trials. The teams, when we work with our partners and the like, we very often provide our trial design expertise in leading the trials. Well, to have an industry-leading execution reputation, we also hear few statistics shows not only site initiation, patient recruitment speed, but also our time to approval.
Of course, this is because of team's dedication, you know, strong fundamentals, and our teams are really hardworking with all kinds of agencies. Also, we are very benefited by the first-in-class and best-in-class potential of our portfolio. We have been credited as partner of choice for China, and this really benefited us to date. We'll continue to do what we have been doing well. For example, in the last two years alone, we brought nine platform assets or nine pipeline assets or platforms. We definitely continue to do what we're doing well, focus our BD efforts to further solidify regional commercial presence with late stage and also synergistic assets.
We're also gonna focus our efforts on global business development opportunities, both from technology platform and also from new modality introduction. Otherwise, Jonathan, what do you do otherwise, right? Our commercial success continues its momentum. I do not like to labor here too much 'cause you know we have launched four products. What I like first one, ZEJULA, has already included both first line and second lines, all comer setting in the NRDL. The last two, QINLOCK and NUZYRA, we are currently seeking NRDL inclusion. Because of the unique first-in-class and best-in-class status, we're really very optimistic about our inclusion, but also, but most important, but bringing these drugs which is in need for patients in desperate need.
We'll further penetrate our existing pipeline, existing on the market product growth. Everyone probably heard, if you've not heard, efgartigimod is truly a pipeline in the product opportunity. We have many trials ongoing. Our team doctor under the leadership of Dr. Harald Reinhart, has done a lot of designs in the leading trials. We also understand there are tremendous medical needs in all areas of the trials we covered. We expect a speedy launch for this year for this product. I'd like to use ZEJULA as a case to show our profitable business model in China. First of all, I'd like to say ZEJULA is on track to become the leader in PARP sales in full ovarian cancer.
By 3rd quarter, this last year, ZEJULA has already occupied 37% of the market sales in all PARP types, irregardless it's whether ovarian cancer or other indications. We already have 37% market share in the hospital sales. There's also another thing is very meaningful is we have now obtained 28% of global share in ZEJULA. You can see most. You know China, most companies and their China revenue will not even go beyond 20%. This shows a simple program without synergy can reach this high penetration and patient exercise.
This is really benefit by our teams, you know, really hard, not only hardworking, but also I think by this asset, it has a unique the only in-class in the first line of commerce setting with or without gBRCA. As we can we expect the revenue continue to grow and doing very well in 2023. Of course, we have to pay royalty and milestones, we're continually working hard on cost goods and with the synergistic assets and with also team discipline. We'll also continue to monitor our SG&A. We believe our profit margin can be reached to 40% within the next three years. Well, since last September, there have been some concerns on ZEJULA ovarian cancer labeling on recurrent setting, which on the back of FDA's decision.
I want to say U.S., EMA has a different, did not agree with FDA's decision. Here, I want to clarify China's market situation. First, you can walk away with just these two main points. Number one, ZEJULA on second, on the recurrent setting, full approval was really supported by this NORA study conducted independently in China. We have already announced the OS. We already have announced interim OS data at the 2022 ESMO, and it looks very, shows a very favorable OS trend. What's unique about this trial is also the use of individualized dosing regimen based on the body weight. The whole OS analysis of this study will come out this year, expected to come out this year.
Overall, we have our second line of ZEJULA is a very, labeling is still very strongly supported by the NMPA. Very much like the NHSA approach. I also want to highlight, like first line of ZEJULA, we are also, as I mentioned, we're the only first and the only OS ZEJULA status in ovarian cancer first-line setting, and also included in the NRDL. We also have an independent study to further demonstrate the unique, with the similar dose regimen approach, shows the benefit, have the benefit risk profile for Chinese patients, and also support our penetration of this product in China market. Just two points you need to mention over the last slide.
Well, I mentioned our commercial, but, and, but I also I'd like to touch upon a very important piece, 'cause many people only heard about NHSA, which is NRDL with inclusion. They are also growing commercial and supplemental insurance. They play an important role in China's payers landscape. For example, commercial insurance will expect to reach RMB 300 billion by the end of 2025. The city supplemental insurance will expect to reach more than 200-300 by the end of 2025 in terms of enrollees. We are very fortunate to be the beneficiary of this supplemental insurance. Our Optune right now is second top listed, only second to Keytruda, and listed in 72 supplemental insurance plans, nearly tripled from a year ago.
I, as I mentioned earlier, you know, team is such an important feature for Zai Lab, is not the only important feature. This year we brought in three heavy hitters. Mr. Josh Smiley, coming from more than 26 years of experience, working in the multinational company from all aspects of this business. Coming in as Chief Operating Officer. Peter Huang, who has many years experience from Pfizer, then became a founding member, head of research at the Gentalis Pharma, coming in as Chief Scientific Officer. Certainly not the least, is Dr. Amado. Josh, Amado, you like to raise your hand?
Yeah. The Dr. Amado also have a long track record leading multinational R&D in oncology, he has also startup experience by being the founding head of research and the CMO at Allogene Therapeutics. He joined us from Allogene Therapeutics just last week. Well, this will be my last slide for before I talk about 2023. Is, because I think it's worth to note, and that because of the COVID, there are a lot of lack of communications. I thought I can use this slide to give you a little bit flavor of China's regulatory environment. Over the last, just 2022, China has updated many regulatory, you know, streamline requirements. I just want to highlight four of them. One is the NHSA published a detailed renewable price adjustment mechanism, including indication expansion.
This is very relevant to us. But also NHSA first time ever initiate a national reimbursement plan for innovative devices, which can be as early as end of this year. This will benefit our TTFields tremendously. Of course, there's increasing support for rare disease and also for the antibiotic resistance. We all benefit from every single policy. Well, of course, I only listed the policies which have relevance to us. Well, turn to 2023. I'm very excited about 2023. I think, we are start seeing the light at the end of tunnel. We will continue to accelerate our medicine to patients. Here I listed a few of the milestones for you to watch for. We continue to expand our differentiate pipeline with global rights.
We are on the path to build our global leadership biopharma leader position. We expect to commercially profitable in 2023, paving the path for overall profitability by end of 2025. We also demonstrate commercial excellence, creating near term certainty and opportunity. Our in-house discovery engine, combined with open innovation model and combined with our research and development, clinical research and development, and also our business development effort, will bring us more assets for long-term business. Also prepare us well for being a leading global biopharma. As a good corporate citizen, we always deliver on our ESG commitments. By the way, my younger son, 17 years old, is his school's ESG officer. This including goals of reaching 1 million patients by 2023. Last slide. I'd like to say it has been hard year for all...
most of us, 2022, if not all. I see the as I said, I think 2023 will be a turning year for us. We will 2023 will have many things to grow the company, and I believe we're going to reach to a taller mountain. Thank you for your attention.
Thanks, Samantha.
You too.
Just as a reminder, there's a few ways to ask a question, right? You can use the Ask Us a Question feature in the portal, and I will look at it here on this iPad. You can email me, or you can raise your hand and we're happy to get your question answered. Here, Jonathan, you can sit here.
I read that. I came into them. No, do not scared.
Maybe I can ask the first question here, which is on back of the LUNAR results for Optune, one of the questions that I think is how does that, how does that opportunity shape up in China? That's a predominantly self-pay market right now. You guys talked about supplemental insurance. I wasn't sure, but I thought that Samantha might have said there might be an NRDL mechanism.
Mm-hmm.
Maybe you could expand on that.
So you-
Sure. I'll chime in. Feel free to chime in.
Yeah.
Anupam, thanks for the question. You're right. What Samantha mentioned was last August that there was a policy update with a path to a potential national reimbursement for innovative medical device. We believe there is a possibility that the policy will be finalized as early as this year, which will be implemented thereafter. Kind of timing-wise, it converges nicely. You know, if we were fortunate enough to have, you know, after the comprehensive data update on LUNAR, after the successful, you know, submission, potential submission later this year in the U.S., followed by China, it kind of converges nicely, right? Where now we have Tumor Treating Fields as our kind of a specialized product for GBM, 'cause nothing ever worked in GBM before.
Now you're talking about lung, and nothing actually works really well in second line either. It goes from sort of a specialized product to a potential, mass market, opportunity that can, you know, we can treat many more patients. It's quite exciting.
Anything to add?
No, that's good.
If I may add. Sorry, Anupam.
Go ahead.
One more. You know, 'cause you could tell, you know, to use Josh's word, you know, we were cautiously optimistic on LUNAR. We are now dropping the word cautiously.
Mm-hmm.
We are optimistic on Tumor Treating Fields and making a real big impact. I'd just like to say the success of LUNAR means that, you know, there is a, you know, better read-through for not only first line lung, but ovarian cancer is reading out later this year. It's expected pancreatic will follow. As you know, nothing works on pancreatic either. This is a potential real game changer. Again, we'll have to wait for the comprehensive data like everybody else. We're helping, you know, work with Novocure. This is their jurisdiction, but they're, you know, very busy with their applications. I think you can pretty much guess where, you know, the comprehensive presentation will be made this year. We'll leave it at that.
The one other question that we get a lot is: How has the size and scope of your sales force changed over the last couple of years? How do you expect it to change based on approvals over the next couple of years? I think the question really involves, like, you know, given the size of the market, like, how do when should you start thinking about profitability of some of these products as individual products?
I'll quickly chime in again.
Since Billy's wearing a tie, we're gonna let him answer all the hard questions.
It's great.
It's official.
I also match with Samantha, amazingly. Right now we've invested over the years, for, you know, to be a commercial stage company, which we are right now. We have about 1,000 people in the commercial organization, 70% of whom are on the field. Of course, we're covering four commercial products, mainly three, we're working with a partner on one. That investment is starting to bear fruit. Samantha, as you saw in her presentation, said that we'll be commercially profitable. We target to be commercially profitable this year in 2023. As a matter of fact, ZEJULA is already commercially profitable last year. That's a quite a inflection point for us.
What's gonna be happening from here on out, because we have about eight or even more potential approvals and launches coming in the next 2-3 years, you're gonna start to see what we call operating leverage and synergy. So as a case in point, we have a team for Optune, right? For Tumor Treating Fields. That team will be able to handle not only GBM, but across indications in Tumor Treating Fields. Working with also other, you know, a TA-focused sales team that's gonna happen. Let's say lung, let's walk this through. Lung is gonna have in the next 2-3 years, not only potentially Tumor Treating Fields, but also potentially adagrasib, potentially repotrectinib, and so on and so forth. This is kind of happening.
We're at that inflection point this year, and it's gonna position us very well, you know, from here on out.
Questions from the audience?
One right here. Just to finish on LUNAR. You guys did have some Chinese sites, I believe, in the LUNAR study. What percentage of the patients come from China relative to elsewhere?
Yeah, I'll jump in. We did have sites, and we do have an agreement with NMPA that the number of patients are sufficient for, you know, for a submission in the Phase 3 study. We don't give the exact number of patients. In general, I think if you look at our Phase 3 studies, we typically provide somewhere between 10% and 20% of the patients. I think the, again, the most important piece to take from the study is that we have a sufficient data set to support the submission.
What is the standard of care in China for second line?
Well, one thing we can say is we joined the trial relatively late in its total timeline. I think our patients that participated are probably representative of, you know, current standard of care, which I think in first line tends to be, you know, checkpoint plus chemo. You know, chemo and something chemo second line now. Again, I think the data set though that we have will be, you know, sort of cuts across the various iterations, permutations of standard of care now. We're quite confident that our data will reflect, you know, sort of current practice and be relevant to the prescribing physicians.
Can I ask one more? The NRDL has been a process over the last few years, and it seems like private pay, as you mentioned, is gonna be a larger component potentially of your customers. How do you decide now to go down the NRDL pathway or say, "No, we're not gonna deal with that price cutting, and we're gonna go into the private market exclusively?
Yeah. Well, first, I, we're pleased with the developments that we've seen from an NRDL perspective. Samantha mentioned this before she made some comments. I think over the last, you know, number of years, there's been a move towards greater transparency, better predictability, emphasis on, you know, health economics and otherwise. We go into any negotiation with what we believe is the, you know, the value of the product, would it makes sense from a business case perspective. I think, you know, certainly with ZEJULA, we're quite pleased with the price that we've been able to support over now multiple, you know, indications and negotiations. We just concluded two products, NUZYRA, and QINLOCK. We can't. That's not public yet, but I think the process went well.
Again, we certainly have a walk away. I think for the products, though, that we are bringing to market that Samantha showed, our view is they are NRDL products. We wanna get this innovation to Chinese patients in a broad sense. The supplemental insurance is helpful, and we expect that to continue to grow, and it gives good opportunities for patients to access therapies before they're on NRDL. The kind of products we're bringing to market, we really expect them to get good value on NRDL, and that's our general approach.
Thank you to the whole team for a great presentation. 2023 sounds like.
Oh, sorry.
2023 sounds like a year of landmark and sort of execution. You mentioned a lot of catalysts and milestones coming up. Are there any potential delays or risks that you might think that could cause a delay in any of the milestones you mentioned, Samantha? Just going a little further out to 2024 and 2025, any sort of key milestones that you can highlight a few?
Yeah, I'll start, then please join in team. I think first, you know, of course, we're dealing with the reopening and COVID, you know, impacts in China right now. You know, we expect there'll be, you know, some modest impacts in the first quarter. I think certainly from a business perspective, we expect a strong growth, you know, from a sales perspective in 2023. We do not expect any impacts to our clinical milestones or regulatory milestones. Our teams have been, you know, really working through COVID challenges for the last three years, and I think have great, you know, protocols and ways to ensure that we can keep the business running.
The short answer is we do not expect any delays to 2023 milestones. I think as you look out to 2024 and, you know, the most, I think, exciting, you know, milestone this year is the approval and launch of Efgartigimod. You know, we're really excited about that. I think as you look out then to 2024 and 2025 and think about the slide that Samantha showed, the opportunity to begin to launch a whole suite of first in class, best in class products. We don't have enough time to go through each of them, right?
I think that's certainly really important to us, getting the submission in on LUNAR that, you know, Billy talked about, which we'll do after the U.S. submission, I think is a really important, you know, milestone, you know, in the near term. Really, as we look at 2023, 2024, and 2025, the opportunity to launch, you know, as Samantha mentioned, eight or more, you know, best in class, first in class products that can have broad impacts on patients in China is really the suite of those things are what we're, looking at and looking forward to.
Yeah. The only thing I'll quickly add is I think that, we find ourselves in a relatively fortunate position to be able to execute, you know, over the next kind of one, two, three years that you're asking about. For example, you know, we have achieved relevant scale. We have a commercial stage with a pretty broad pipeline clinical optionality. Over 80% of our clinical assets has proof of POC, so great visibility near, medium, and long term. We have a balance sheet and improving synergies. It's great to be, especially in this particular time and place, to be able to check those boxes. I don't think a lot of companies can check a lot of the, you know, all four of those boxes.
We're, you know, looking forward and look forward to the next, you know, one, two, three years to really achieve our mission.
Billy, maybe final question from me. You guys gave the guidance of achieving overall corporate profitability by twenty-.
End of.
End of 2025. I mean, what keeps you up at night about that guidance?
So it's on the record now. It's gonna keep me, keep us up at night from here on out. I think it's, you know. After eight years, you know, we're kind of at that point where we can make a statement like that. It's, first of all, it's terrific. Like Samantha said, it's on the back of, you know, the hard work day and night. Many of our employees work just through the holidays despite the dramatic exit wave. It's all the culmination of that. Yeah, I mean, we feel pretty good about it, Anupam.
Thank you, Billy and Samantha and team.
Thank you. Thanks, everybody.
Thank you.