Hello, ladies
and gentlemen. Thank you for standing by, and welcome to Zai Lab's Q2 2021 Financial Results Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, today's call is being recorded.
It is now my pleasure to turn the floor over to Billy Cho, Chief Financial Officer of Zai Lab, who will make introductory comments.
Thank you, operator. Good morning, and welcome, everyone. After the market closed yesterday, Zai Lab issued a press release providing the details of the company's financial results for the Q2 ended June 30, 2021, as well as product highlights and corporate updates. The press release is available in the Investor Relations section of the company's corporate website at ir. Dilaboratory.com.
Today's call will be led by Doctor. Samantha Du, DIALab's Founder, Chairperson and Chief Executive Officer. She'll be joined by Tao Fu, Chief Strategy Officer, who will provide more details on our product portfolio along with the pipeline and commercial progress. I will conclude with comments on our financial results in the quarter. Doctor.
Alan Sandler, President, Head of Global Development, Oncology Doctor. Harold Weinhardt, Chief Medical Officer for autoimmune and infectious diseases and Jonathan Wong, Head of Business Development will also be available to answer questions during the Q and A portions of the call. As a reminder, during today's call, Zala will be making certain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our business plans and objectives and timing and success of our clinical trials, regulatory applications and commercial launches. These forward looking statements are not guarantees of future performance, and therefore, you should not put undue reliance upon them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect.
I refer you to our SEC filings for a discussion of risk factors that could cause our actual results to differ materially from those discussed today. At this time, it is my pleasure to turn the call over to CyLab's Founder, Chairperson and Chief Executive Officer, Doctor. Samantha Du.
Thank you, Billy. Hello, everyone, and thank you all for joining us. On this call, I'll discuss highlights from our Q2 and provide the latest update to what we expect to accomplish for the remainder of 20 21. Consistent with our top track record, satellite continues to execute with speed and quality across our organization during the Q2. We successfully launched KingLOC in China in record time.
TIMLOCK is our 3rd commercial product in oncology to launch over the last 16 months and the first product in what we expect to become a world class specialty country franchise. We continue to generate strong revenue growth from our first two products, the XULA and Optune, and we entered into 3 strategic collaborations with Meraki, Microgenics and Schrodinger, respectively. This further deepens and strengthens our disease area strongholds and our global pipeline. Innovative assets in our pipeline And the quality, depth and breadth of our pipeline will continue to grow. Notably, 12 products are in late stage development, of which 5 have already been approved in the U.
S. And 3 have received FDA breakthrough therapy designation. Innovation, our growing pipeline now includes 11 early stage programs with worldwide rights, including 3 in global clinical trials. We have to use a cloud, innovative, validated portfolio whose success will allow us to achieve significant scale within just few years. We will continue to leverage our scale and operating excellence to expand our pipeline with globally innovative products through strategic partnerships and internal R and D.
We expect to achieve many exciting milestones across our product pipeline throughout the remainder of 2021. We expect approval of non approved commercial products in Xero, a community acquired bacterial pneumonia an acute bacterial skin and skin structure infection that NMPA. We also continue to make progress on additional regulatory filings and activities. We expect to have a discussion with MNPA on the filing strategy for eflotigumab in the near future. We anticipate numerous data results during the press of this year, for P log in second lung disease, for margetizumab in gastric cancer, for CLN-eighty one in non small cell lung cancer, for PPS-twenty two in non small cell and gastric cancer and for other product candidates in our global pipeline.
We continue to invest in our worldwide organization and facilities. During September, we will expand our presence in the U. S. By formally opening a clinical development and business facility in Cambridge, Massachusetts to pass into the Boston area bio pharma ecosystem. In the meantime, our existing R and D and business centers in the San Francisco Bay Area and in China will continue to grow.
Satellite has grown substantially since our inception 7 years ago. And with the abundance of growth opportunities we see, we strongly believe that we're still in the early stage of our growth trajectory. And given the current breadth and depth of our portfolio, we have decided to hold an R and D day on September 22 to take a deep dive into our pipeline and continue to transform and to highlight the fundamental growth potential of Zai. We hope you come away from it with a more comprehensive understanding of what we are doing and what we expect to accomplish in the future. We believe we have a once in a generation opportunity to build a leading global biostromechanical company with a strong foundation in both China and in the U.
S. SAI is in a great position to capture growth opportunity with our global infrastructure and ever growing 1st and or best in class portfolio. We remain as committed as ever to our mission to develop innovative medicines addressing the unmet medical needs of patients around the world. We believe by doing this, we will benefit our shareholders as well. With that, I'll now ask Paul to discuss our performance and purchase price in more detail.
Paul?
Thank you, Samantha. I will comment on the launch performance of our free commercial products and on progress we have made in the quarter in our main disease franchises, lung cancer, gastric cancer, hematology, autoimmune disorders and infection in VIVUS. So, do you believe that continued to perform very well in the second quarter and we achieved significant sequential revenue growth. As a reminder, Sejula is approved in China for first and second line ovarian cancer and is the only PARP inhibitor monotherapy approved for all comers in first line. So this provides significant differentiation from other PARP inhibitors.
The inclusion of Zejula in NRDL starting from March of this year provided a major momentum for the Zejula launch. One key leading indicator for the successful launch and NRDL implementation is hospital listing. Our team has been listed in more than 800 hospitals in China, which represent a more than 7 fold increase from just prior to the NRDL implementation in March 2021. Combined with the differentiated label, our successful market asset strategy lays the foundation for strong volume growth in the second half of the year and beyond. We remain confident that over time, Zejula will become the market leading top inhibitor in ovarian cancer in China.
Similarly, the launch of Optune is going well. As a reminder, Optune is the 1st innovative medical device supported by commercial health insurance in China and also has been covered in 14 supplemental insurance plans since its launch in June 2020. During the Q2, we held extensive multi discipline physician education campaigns to increase brand adoption and we're pleased with the feedback we received from treatment specialists. Importantly, on the development side, we're working with our partner Novocure to extend indications of tumor treating fields in areas of large unmet medical need globally and in China. We look forward to additional clinical data readouts in lung, pancreatic, liver and ovarian cancers in brain metastasis and in glioblastoma with high intensity array over the next few years.
And we continue to target a following of tumor treating fields for malignant pleural leukothelioma later this year. As Samantha mentioned, we achieved another important commercial milestone in successfully launching Kinlox in 4th line chips in China in May, our 3rd oncology launch in the last 16 months. Qinglog is another great example of our track record of accelerating regulatory filing and approval of innovative oncology products. We were able to file the NDA for Kinlox in China only 2 months after FDA approval and we received NMPA approval 8 months after NDA acceptance. In July, Kinross was included in the Chinese Society of Clinical Oncology guidelines for diagnosis and treatment of gastrointestinal thermal tumors 2021 as an option for second line treatment for advanced GIST patients.
We are encouraged by our initial launch performance and look forward to updating you with our progress through the remainder of the year. Let's move on to progress in our product pipeline, starting in lung cancer, where we continue to build a disease stronghold with fixed products currently in clinical development. In June, we entered into an important strategic collaboration with Novati and obtained the right to research, develop, manufacture and exclusively commercialize autogracic, a potential best in class small molecule KRAS G12C inhibitor in Greater China. Atagraphic received FDA Breakthrough Therapy designation in June for the potential treatment of non small cell lung cancer patients who harbor the KRAS G12C mutation following prior systemic therapy, accelerated enrollment in key global registration enabling clinical trials of adagracin in KRASG12C cancer patients, including non small cell lung cancer and colorectal cancer. Niravi has announced their intention to file adagracin for second line non small cell lung cancer in the U.
S. In the second half of twenty twenty one. We believe alagracin has edge in class potential and we will also aim to make it 1st in class in China, where there are currently no ongoing clinical trials in this product category. Adaglasmus is a great addition to our lung cancer franchise and complements other promising Zai products being developed for lung cancer, including tumor treatment fields, leprotrectinib, CLN-eighty one and TPX-twenty 2. For tumor treating fields, Zai initiated the China portion of the Phase III pivotal LUNAR trial and the Phase III pivotal METAS trial in brain metastases for non small cell lung cancer.
You will recall that in May, NovoCure announced that the FDA approved their IDE supplement for LUNAR, reducing enrollment requirement by about a half and shortening the required patient follow-up from 18 months to 12 months, potentially accelerating the completion of the trial by more than a year. For CRM-eighty one, in June, Zai's partner, Kurgannon, announced the Phase IIIa interim data in non small cell lung cancer EGFR exon 20 patients. CLM-eighty one continues to demonstrate its best in class potential with good activity and encouraging safety and tolerability. Let's move on to gastric cancer, a diabetes stronghold with 7 products currently in clinical development, including Kinlox and Bemarocizumab. As I mentioned earlier, we're actively launching Kinlox in 4th line GIST supported by the compelling data generated from the Invictus Phase 3 study.
In the second half of this year, our partner, GACEFRA, expect to receive data from the INTRUDE trial of TIMLOG versus Sunitinib in second line GIST. Other gastric cancer products also made significant progress in the quarter, including bema, the monoclonal antibody against FGFR2b. In April 2021, Zai's partner Amgen was granted breakthrough therapy designation by the FDA for bema as a first line treatment for patients with FGFR2b overexpressing HER2 negative metastatic and locally advanced gastric and gastric esophageal junction in renal carcinoma in combination with modified FOLFOX. In June, Zai's partner Turning Point was granted orphan drug designation by FDA for TPX-twenty 2 in gastric cancer, including gastroesophageal junction adenocarcinoma. In our hematology franchise, in May 2021, Zai's partner Regeneron resumed enrollment in the Phase 2 potentially pivotal clinical trial of ultra naxitamab in patients with follicular lymphoma and diffuse large D cell lymphoma.
We look forward to initiating this important clinical trial in China. Since our last earnings call, we also entered into 2 other strategic research and development collaboration to bolster our global oncology pipeline. In June, Psi and MacroGenics announced that the 2 companies have entered into an exclusive collaboration and license agreement involving up to 4 immuno oncology molecules. The first collaboration program covers the lead research molecule that incorporates MacroGenics' DART platform and binds CD3 and an undisclosed target that is expressed in multiple solid tumors. The 2nd program covers a target to be designated by macrogenics.
For both molecules, Tsai received commercial rights in Greater China, Japan and Korea and obtains an option to convert the lead research program into a global fifty-fifty pocket sharing arrangement upon achieving a predefined clinical milestone. For 2 additional early stage molecules, Zai Lab has exclusive global development and commercial rights. Earlier this month, Tsai and Schrodinger announced a global discovery, development and commercialization collaboration focused on a novel target in the DMA damage response pathway, a key research interest for Zai Lab in oncology. Schrodinger is an industry leader in providing computational platforms using drug discovery. The research program will be conducted jointly by the 2 company scientific teams and Zai Lab will have exclusive development and commercial rights globally.
This initiative will complement our existing discovery efforts in DMA damage response pathway in addition to potential combinatorial approaches within our pipeline with such products with the alpha PARP inhibitor Zejula and DO-two thousand three hundred and nine. In our autoimmune franchise, in July, Zai Lab's partner, argenx, announced myositis and bullous pantherboid as 2 new indications for afapigumab at its R and D day. Today, 5 clinical trial applications for FR filed by Zai have been approved. With all of this progress, as you can see that Zai's development and commercialization operations are hitting on all cylinders. We have an abundance of growth opportunities and we very much look forward to sharing our further progress with you throughout the year.
And now, Billy will discuss our financial results in the quarter.
Thank you, Tom. We continue to remain in high growth mode and our financial results reflect strong progress across our business. Today, I'll briefly summarize our financial results for the Q2 as well as year to date 2021, which are both in line with our internal expectations. Revenues for the Q2 year to date 2021 were $36,900,000 $57,000,000 respectively. Over the same period last year, revenues were $11,000,000 $19,200,000 respectively.
We're still early in the revenue ramp cycle, but we are very pleased with the successful launches and sales trajectory of our first three oncology products. DEJULA sales for the Q2 year to date 2021 $23,400,000 $36,000,000 respectively. Over the same period last year, Dejulip sales were $7,500,000 $13,800,000 respectively. Optune sales for the Q2 and year to date 2021 were $9,500,000 $600,000 respectively. And over the same period last year, Optum sales were $3,500,000 $5,400,000 respectively.
As for our 3rd product update, we successfully launched Cannalox on May 20 and achieved $4,000,000 of revenue for the quarter. Research and development expenses were $142,200,000 for the 3 months ended June 30, 2021, compared to $68,300,000 for the same period in 2020. The increase in R and D expenses was primarily attributable to additional strategic partnerships, including a $65,000,000 upfront payment to Mirati and a $25,000,000 upfront payment to MacroGenics. Expenses related to ongoing and newly initiated late stage clinical trials and pay and payroll related expenses from increased R and D headcount. Selling, general and administrative expenses were $54,400,000 for the 3 months ended June 30, 2021, compared to $23,800,000 for the same period in 2020.
The increase was primarily due to payroll and payroll related expenses from increased commercial headcount and additional commercial activities and Zai Lab continued to expand its commercial operations in China. For the 3 months ended June 30, 2021, Zai Lab reported a net loss of $153,300,000 or a loss per share attributable to common stockholders of $1.76 compared to a net loss of $88,600,000 or a loss per share attributable to common shareholders of $1.08 for the same period in 2020. The increase in net loss was primarily attributable to additional strategic partnerships, increased R and D and SG and A expenses for the reasons I just mentioned. As of June 30, 2021, cash and cash equivalents, short term investments and restricted cash totaled $1,770,000,000 compared to $1,190,000,000 as of December 31, 2020. We would now like to turn the call back over to the operator to open up the line for questions.
Operator?
Ladies and gentlemen, we will now begin the question and answer session. We have the first question coming from the line of Michael Yee. We have the first question coming from the line of Yigal Nochomovitz from Citigroup. Please go ahead.
Hi, great. Thank you very much for taking the questions. So you have a very rich pipeline of in licensed assets that are making their way through clinical development and now pre approved products. So are you still as focused on the BD effort to bring in new assets into the company? Or do you believe you have a sufficiently rich pipeline and will focus more on developing the assets that you've already got?
Thanks.
Thank you, Yigal. This is Samantha. Good morning. I'll let Jonathan to address the question.
Hi, Yigal. Thank you for the question. Look, I think at Zai, the BD strategy always follows with the company's growth strategy. And this has really been evolution for us. I think we've been really positioned ourselves as the partner of choice in China.
So I think continue to execute on bringing globally 1st in class, best in class assets into our pipeline to complement it within oncology, within autoimmune and within infectious diseases. But I think beyond that, we're also looking for transformative deals. We're also looking for opportunities to go beyond our existing therapeutic areas, just like we have done in the past with EFCAR, with the Regeneron assets, I think we'll continue to do that. And I think even beyond that, like what we have done recently with the MacroGenics, with the Schrodinger deals, I think even to support Discovery assets. So I think BB is always evolving and I think it's multidimensional, fiscal year growth of the company.
Okay. Thanks, Jonathan. And I just had one follow-up. So by my count, I believe you have 11 oncology products in your portfolio with 2 already approved. So that opens up the possibility of investigating combination strategies within your portfolio.
So that being said, I'd be curious to know which products do you believe would make the most sense to evaluate in combination clinical trials and in what tumor types?
Thank you, Gao Allen, our President of Oncology Development. Please take the question. Hello, sorry, I was on mute. Thank you
for the question. And yes, this is one of the great I think that there are opportunities would exist interestingly in our gastric franchise and our loan franchise, I think in particular, given the broad number of assets that we have in there and the targeted approach with which we have. So we're looking at a number of different combinations that may be associated with KRAS, also a combination in lung and also in gastric, with the various combinations that are available, including PD-one, our Marge, HER2 agents, MET, etcetera. So I think that would give you a hint of some of the areas with which we're looking. Have I addressed your question?
Yes. Thank you. Thank you.
Thank you. We have the next question. This is coming from the line of Michael Yee from Jefferies. Please go ahead. Ask your question.
Hi, good morning. Good evening. We have two questions. One was on the recent Schrodinger deal, but just more broadly strategically, should we anticipate that you are going to do more deals that bring in more global rights and with an intention of developing and bringing in more internally developed R and D programs rather than an in license of other programs rather instead developing your own internal and to do it globally? That's question 1.
How should we think about that? And question 2 is based on a comment around expanding outside your therapeutic areas. I think you have a very strong focus on oncology, etcetera. That's pretty well known. Can you just maybe expand upon the idea to go beyond oncology and to what other areas should we expect or could anticipate so we're not surprised?
Thank you so much.
Thank you, Michael. Hal, do you want to comment on the AI and the investor surrender deal?
Yes, sure. Samantha, Mike, thank you very much for your questions. So, yes, the Scholmer collaboration is a pretty exciting new partnership for us. As you may know, they are the industry leader in physics based, computational chemistry platform and really have a very strong existing track record. So we have this collaboration with them, really focused on a key area of R and D interest for Zai Lab, the DNA damage repair pathway on a very interesting target, which we will disclose later.
So really trying to leverage the capabilities of both companies and obviously get Zai Lab Global rights on this target. Yes, so the AI area is a new promising area. We'll try to stay on the cutting edge. We're really trying to use external collaboration to complement our existing capabilities in areas such as AI discovery.
Yes. I think just to elaborate on what Tal was saying, the discovery technology platform collaboration, like Michael, you rightly mentioned, is a way for us to expand our discovery capability and to complement our existing discovery technology platforms for us to do internal global discovery and development. But having Feko will continuously do what we have done very well, which is being adequate, we see differentiation, we see unmet medical needs, whether for China or for global. It's based on the speed with the other pipeline? Thank you.
So question number 1. Yes. Go ahead.
Makes sense. Yes, both are important. Makes sense. Both are important. And then the idea of expanding therapeutically, could you comment on what areas could be of interest?
Yes. We actually have many opportunities, more and more inbound interest from potential partners who have really gave us a lot of credit for what they have done for the partnership. And so we're actively looking. So when we expand horizontally, we want to expand with anchor asset into a new therapeutic area. So that has to have such as, for example, expand into the collaboration with Artemix, so as pigma, which offers a pipeline of product kind of opportunity.
So that's kind of deal when we do expansion we are looking for. That I mean horizontally, but vertically, we're always looking for more opportunities to complement our existing pipeline.
We have the next question. This is coming from the line of Seamus Fernandez from Guggenheim Securities. Please go ahead.
Great. Thanks for the question. So maybe just if we could cover the dynamics around just investor questions that we've gotten and concerns that have been raised with regard to some of the volatility in shares in China and where biotech sits strategically in terms of the Chinese government focus on certain areas? I think Samantha, you're uniquely well positioned to comment on those concerns. Obviously, Zai is well outside of some of the concerns that have been raised for other companies with regard to how the company's accounting has been executed, things like that.
But just maybe help us understand the importance and strategic positioning of the biotech industry in China and its importance to the continued growth and local growth in China? And then second question, Billy, I was just hoping you could give us a sense of the potential payments that we could see to collaboration partners as it relates to milestones that we should be thinking about for 2021 and 2022 given the very robust series of pipeline opportunities?
And then just one final question. Should we see a meaningful
data set, particularly either LUNAR or one of the other major datasets come forward, how are you guys thinking about manufacturing capabilities with your partner NovoCure in the context of CTF and how do
you hope to address that? Thanks so much.
Thank you, Seamus. The first question is since you asked me to speak about this sector and actually, we do agree we have seen lots of volatility notice around China concept companies listed on NASDAQ. And so we have done quite a lot of dividends, myself also. And we spent time with different agencies to discuss with them what does that mean to FedLabs. And also, of course, Zai Lab's companies like Zai Lab.
So really from our view diligence, of course, from our understanding, and I'm not sure we are representing any government bodies. But we believe that the actions that caused the recent market volatility are unrelated to Guy's particular business. And also, recent events, including the Chinese government continues to support an innovative biotech industry. For example, the new CVE drafted guidelines issued on July 2 on CAR T drugs raise the bar for innovation in drug development. And this actually are very helpful for companies really focusing on differentiated 1st or best in class product portfolios instead of focus on doing many tools or mean out words.
AP also recently renewed the ICH guideline membership status, which shows their continued strong commitment to harmonization global harmonization. And also quite honestly, other sectors are already very heavily regulated. But if you're looking at the 15th time of economical 5 year plan and biotech sector is considered one with a very strong supportive pillar industry. And the focus really is on innovation and promote integration, innovation with biotechs and accelerate the biotech and biopharmaceutical and we boost the in China and innovation capability from fundamental side. And so from all the activities we involved, also including some minor details like for these sectors, first data piloting tax reduction plan in Shanghai, Puzhou, where we're based on.
So there are many positive news. Of course, those are only perhaps now hidden to the topic. What we have seen so far, we're very confident on Zai Lab's fundamental growth. So, Peter, you want to address the second question?
Yes, sure. Hey, Seamus, I'll take that second and third question. So the question related to upcoming milestone type of payments, as you know, Seamus, we don't give guidance, forward looking guidance on those figures. But rest assured, it's immaterial compared to, let's say, the upfront portion or the actual royalty that kicked in after the commercialization. So you would have seen some disclosures along the way.
I know that Turning Point announced yesterday and they did disclose we made a $5,000,000 payment because we achieved a certain development milestone. And you can expect something kind of along that zip code when we have a notable sort of development or regulatory milestone achieved. But you can kind of get a sense, right, Seamus, that in terms of materiality, it's quite limited compared to the upfront royalty, which is at the one time upfront and then at the back end. In terms of your question on sort of the kind of ramping up volume and what that means in terms of manufacturing capabilities for Tumor Treating Fields, And I'll let Tal add any other additional comments. But yes, I mean, you're right.
Your observation is right in that if LUNAR trial is successful with final Phase 3 data out next year, we're talking about different level of scale. And are there opportunities to drive operating leverage at that volume at that scale, especially China scale? And these are the questions that are that we've been having these discussions with our partner.
Thank you.
Okay. Thank you.
We
have the next question from the line of Anupam Rama from JPM.
A couple of broader macro questions following up on the last question. But specifically, there's been a lot of headlines on sort of Chinese regulators' proposed rules on oncology trials. Maybe you can talk about what the implication for development here are in the region for your broader pipeline? And then Samantha, digging into your comments a little bit more on the PTAOB auditing and sort of what's going on in China there, you guys have PTAOB not reviewing your financials as a 10 ks sort of risk. What's how are you strategically thinking about this situation and kind of addressing it over the long term?
Thanks so much.
First of all, Anupam, thank you for the question. So you're asking about to elaborate on the July 2nd guideline. First, is that the first question?
On the oncology proposed, yes.
Right, right. Okay. So as I mentioned earlier, we think that guidance for industry, first of all, is actually still guidance for solid state industries improve. We really think that they're going to raise the bar for innovation for oncology development. And as we all know, China has many, many PD-1s and PD-1s like the biopsy, V2s may not worse, right?
And I think this from many angles is not only not really be respond. If CPA continue to support it, that really means it doesn't help it's not helpful for patients who already should have been exposed to the approved many approved products including instead of exposed to the placebo arm. And secondly, so what they are really trying to emphasize is actually closer to FDA standard oncology, which is number 1, you have to show differentiation and to address unmet medical needs. And secondly, is there already a gold standard established and you need to do comparative studies instead of placebo trials. I think that's the fundamental on that particular guideline.
So that fits very well with Skylab's strategy, the novel pipeline. And from day 1, we will evaluate internally or externally to develop product. That's how we use the global standard to see whether it shows 1st or best in class or only in class. That's all the criteria. And in terms of you asked also perhaps about overall the country's future, right, about the government issue, mainly as rules, policies.
And again, those really has a lot to do with the overall government policies, direction of China's role over the last 40 years. They also want to balance different industries and how to control the government, how to be anti the government market and how to balance the population, which we've seen in the educational sector, how to the student provides equal opportunities to 1,400,000,000 population. But having said that, those are not our area of expertise. And honestly, those have been in debate for a long time. And I'm a little bit surprised actually the market reacted very bad with that kind of negativity because this has not been known as new.
This has been long debated even since 2018. And on overall Zai Lab, we believe we are very well positioned. For the future generation of biopharmaceutical companies have China exposure, but also continually spending in U. S. Continuously instead of just China for China, but really China for global and global for global.
Those directions we're taking, I think it's all on a very positive trajectory, especially for companies that already are Xi Life size. We believe that this gives us a strong opportunity to continue to see growth and strong growth from Zai Lab. And David, you want to continue on anything else?
Yes, sure. Thanks, Samantha. Anupam, you asked about PCAOB, so I'm just going to mention 2 quick broad points. First, just want to, as you know, remind everyone here that we are a 100% privately owned enterprise with a very simple legal structure, no VIE, never have, never will. And our financial reporting has historically been and continues to be on a U.
S. GAAP basis and in accordance with PCAOB standards. As a domestic issue now, which is why we're having a quarterly call with quarterly filings, we have also completed a full start date soft audit historically as well and ongoing. And the second broad point is that, we're, of course, we have same infrastructure in China, but we do have 8 offices around the world. And we're making investments in the U.
S. As well. And that I guess without going through details, I can make the statement that we do plan to have options available to us to significantly limit the risk that's been publicly kind of published so far. And you can also look towards our 10 Q, our filings for additional info on those. But thanks for your question.
Thank you. We have our next question. This is coming from Jonathan Chang from SVB Leerink. Please go
ahead. Hi, guys. Thanks for taking my questions. First question, are there certain subsectors or spaces within Chinese biopharma that could be more or less vulnerable to changes in the regulatory landscape in the future?
Well, I think of companies like Zai Lab, right, as I said, focusing on innovation, focusing on bringing unmet medical needs to patients and for patients globally. This I think I personally believe we are in the best sector in dialysis.
Got it. And maybe just second question, can you provide any additional color on around how investors should be thinking about second half revenues? Maybe specific to Zejula, are there additional metrics you can provide to give us a sense of how Zejula is performing relative to competitor programs? Thank you.
BD? Yes, sure. So thanks, Jonathan. We're obviously quite pleased with the sales momentum that we're seeing so far year to date. We saw a nice volume uptake and market share gains.
Our NRDL implementation, while early, is off to a fast start. And you saw our press release, citing that starting from the implementation date of March 1 till the end of June, we actually increased the number of hospital listing by over 7x or about 7 fold, which is actually closer to kind of more close to 850 than 800. So we're quite happy with the implementation going so far and look forward to, of course, kind of building on the momentum for the back half of the year as well. And we're pretty confident. We're actually very confident that we will hit our internal goals.
So Jonathan, we're not yet giving kind of full year sales guidance just yet. But you can see some statistics that we shared around hospital listings. Our hospital coverage is also expanding as well and now we have over 2,000 hospitals in our coverage.
We have the next question. This is coming from Yi Chen from Goldman Sachs. Please go ahead.
Sure. Thank you. Thank you for giving me the opportunity to raise questions. I look at the pipeline actually this time we have specifically left out the internal R and D pipeline, which now we counted about 13 projects in targeting identification and about 10 projects in the range of lead optimization to Phase 1 studies. So a couple of questions regarding the in house discovery strategy.
Number 1 is Zai Lab team up with a couple of AR companies actually, it's not only Shilohnga, but back in March, I see there is a collaboration also with AlphaMab. So I'm trying to understand a bit more about in terms of building the in house pipeline, will still we are building you are building up a pretty strong in house team. If we can know the number, how big the discovery team is now within Zai Lab. And particularly, I think in terms of the pipeline covering the oncology autoimmune, but in terms of a target selection, so is there any specific strategy you're going to be following in terms of picking the right target to work on? My second question is still trying to get a sense on the PARP competitions.
Particularly towards end of this year, I think Xylem would have a very good chance to get into the NRDL for the first line indication. But at the same time, we start to see some of the local competitors, including HONORI Medicine, Beijing, they are also being pretty aggressive in terms of marketing for their products. But of course, it's a 3rd line indication instead of second line, first line. And based on our track, in the second quarter, well, first half this year, probably that I've already got about 25% to 30% market share in the apartment market. So if you guys get the first line indication, what kind of market share we should be looking at in 2 to 3 years' time?
Thank you.
Thank you, Junyi. My first question related to our in house discovery. I think as we as you can see, in the news release, we announced our pipeline of internal discovery pipeline with global rights. As I just like to remind the audience, this is a 10 years old company and we 5 years invest in internal discovery, increasingly invest in internal discovery with our eHealth platforms, but as well as the expansion of like we talked about earlier, microgenex bispecific platforms. We talk about working with Schrodinger's and other universities, which we did not really feel it's material enough to expand, to elaborate.
But having said so, what I'm trying to say is, I'm very pleased with the 5 years in terms of discovery efforts with a study with very small team in Shanghai. Now the team is expanding not only in Shanghai, but in Suzhou in San Francisco Bay Area. We're also going to very soon announce our opening of Boston Cambridge Massachusetts side and more focused on global development and also focusing on business, like all kinds of business activities. So that's, I think, the first thing I want to say. Secondly, I think we are no longer working within the war for R and for D, because we are in a different phase of drug development.
They're constantly technologies, which we as a one company cannot have it all. And so with that, we understand we need to collaborate. We need to collaborate with companies so companies have strong computational chemistry capabilities or companies have strong bispecific platforms and which complement what we don't have, but which doesn't mean we will now continue to add internally other technology platforms. And all of this, I am saying going forward, you will continue to see we have more and more collaboration, some with the SMEs, some with the mature companies. But our intention is not say we do not want to continue our licensing model.
What works, we're not going to fix it. We'll continue to bring in continue as we accelerate internal discovery, we'll also continue to look for the best of unmet medical needs and our 1st in class assets to complement not only for our China rights pipeline, but also global pipeline. I'd say that now is in this scale, and we have the capacity to have the people. And I think this is where we're going. So in terms of specific targets, those details, hopefully, we can because of the time of the day, we can bring this on the side door or we can talk about this in upcoming R and D day.
Thank you, Ji. And Billy, you want to address the question regarding this?
Yes. So the I'll take your second question about the Zejula in relation to NRDL and some competition that you referenced in Hungary and other domestic companies. So just to reiterate, Zejula is the only PARP approved for all comers in the first line setting. It is a once daily monotherapy, excellent safety profile and has the ability to cross the blood brain barrier. And we already have it in the 2nd line for NRDL.
And we strongly we actually believe that's already been positioned as the best in class part for all ovarian cancer patients. So I'd also like to kind of you also mentioned next year with first line volume ticking off potentially, what does it look like in terms of market share? While we don't give guidance, I know you've heard us historically say that we're confident that we can be the market share leader and we stick by that. I'd also like to point you towards some ex China statistics In the U. S.
Right now, Zejula has 51% market share in first line and in Japan, they have 68% market share. So, again, we're not giving the exact kind of percentage for China, but we have a very robust strategy on how to firmly establish Zejula as the best in class PARP inhibitor and we think we're making very good progress toward that end. And also on NRDL, for first line ovarian cancer, it is eligible for negotiation this year. And actually, at the end of July, the MHSA published a review list, right, for the drugs that are in the that are eligible for Energia negotiation and Tejula is included. So we'll leave it at that.
Thank you for your
question. Yes. I think, Tiwi, also you correctly pointed out we're the only ocomer first line monotherapy approved in China and eligible for NRDL inclusion for next year.
Yes, sure. Thank you so much, Billy.
Thank you. The next question comes from Yang Wang from Credit Suisse. Please go ahead.
Thanks and congrats management for the nice commercial progress in China in the second quarter. I have two questions. First is tumor treating field competitive landscape in China. So in the last year, we're starting to see a few China domestic China companies starting conducting their tumor treating field device clinical trial in China. And potentially in the next few years, we're going to see clinical data from those studies.
So I just want to have management comments on competitive landscape in the long term in term of tumor treating field device in China? That's my first question.
Yes. I think, Ying, that's a good question you asked, Yan. And first of all, as you correctly mentioned, it's a local company still in clinical development stage and still focus on very narrow indication and which we do not know how the result will come out and that's in the next couple of years we'll see. So it's too early for us to say whether there is any competition because we also expanding and as you see we have many other indications, large trials ongoing and some already passed Phase 2 going into Phase 3. Those are a lot of indications.
So we are very comfortable at this stage with our own data. And even if there are any drugs, we welcome more or any treatment options. I'm sure if it's proven to be successful, there are going to be people who want to come up. But whether it's me too or me now worse or whether it's even qualified Mi Da Worse, we'll see. And whether it's by then, Zai will have very strong footprint in the areas we are in.
We have very strong confidence in this particular opportunity. And we've been working on Optune ever since we in license, We got very quick approval. We got into the clinical guidance for the so basically patients doctors put this already into treatment guidelines. So we'll see, but we are very optimistic.
Great. Thanks for the color. And my second question is about our KRAS drug. So I noticed in our press release, we did not mention our kind of clinical plan for KRAS with just licensed stuff from Oneartis. So can you comment on that?
Alan, do you want to cover that?
Sure. Thanks, Samantha, and thanks for the question. So a couple of comments. One, we're extremely excited, at Zai to be partnering with Mirati on this very interesting and wonderful molecule in KRAS. And as a former thoracic oncologist, having spent over 20 years trying to come up with something for KRAS, which is extremely exciting.
We had the opportunity to participate in all of the global trials. We also have the potential to run exploratory local studies within our own pipeline assets, such as with the PD-one and WIAC-three and PD-one, etcetera. And so it's a bit early to comment on what local studies will do, but what I'd like to emphasize is that we will be participating with Mirabe in their global combination in their global study. And there'll be more to comment as we move further along. Okay, thanks.
Thank you. Thank you for the question.
Thank you. That concludes our question and answer session for today. I would now like to hand the conference over to our host for any and the remarks.
I think maybe Samantha is on mute. But
So there's a bidding, so basically we are done with the Q and A?
Yes, Q and A is done, Samantha.
Okay. Thank you, operator. I'm sorry for I was on mute and I didn't pick up your sentence. Thank you, operator. And 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 periodically on our progress throughout the year. Operator, you may now disconnect this call. Thank you all.
Certainly.