Zai Lab Q4 2025 Earnings Call - Zoci races to pivotal readouts with intracranial activity and a 2028 approval target

Operator: Hello, ladies and gentlemen. Thank you for standing by, and welcome to Zai Lab’s fourth quarter and full year 2025 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’s now my pleasure to turn the floor over to Christine Chiou, Senior Vice President of Investor Relations. Thank you. Please go ahead.

Christine Chiou, Senior Vice President of Investor Relations, Zai Lab: Thank you, operator. Hello, and welcome everyone. Today’s earnings call will be led by Dr. Samantha Du, Zai Lab’s founder, CEO, and chairperson. She will be joined by Josh Smiley, President and Chief Operating Officer, Dr. Rafael Amado, President and Head of Global Research and Development, and Dr. Yajing Qian, Chief Financial Officer. Dr. Shan He, our Chief Business Officer, will also be available to answer questions during the Q&A portion of the call. As a reminder, during today’s call, we will be making certain forward-looking statements based on our current expectations. These statements are subject to numerous risks and uncertainties that may cause actual results to differ materially from what we expect due to a variety of factors, including those discussed in our SEC filings. We will also refer to adjusted loss from operations, which is a non-GAAP financial measure.

Please refer to our earnings release furnished with the SEC on February 26, 2026, for additional information on this non-GAAP financial measure. At this time, it is my pleasure to turn the call over to Dr. Samantha Du.

Caroline, Analyst, Citigroup0: Thanks, Christine. Good morning and good evening, everyone. Thank you for joining us today. Zai Lab is at an important point in our evolution. We are building a company increasingly defined by global innovation, resting on a foundation, supported by a commercially profitable China business and R&D infrastructure. Today, our global oncology immunology pipeline is reaching a scale and maturity that fundamentally changes the profile of this company. We have multiple global programs advancing rapidly through the clinics, with Zosi in pivotal stage. We see a clear path toward our first potential U.S. approval by 2028. Importantly, we advanced Zosi from IND to global phase 3 in less than two years, the industry-leading pace that reflects the strength of our integrated U.S. and China development model. This capability enables faster, more capital-efficient execution, is now being applied across our broader pipeline.

Our China business continues to provide stability and leverage for our global R&D efforts. Despite a challenging macro and operating environment, full year revenue grew 15% year-over-year, and our commercial profitability continues to improve. Looking ahead to 2026, our priorities are very clear. This is a year focused on execution and preparation. We expect several meaningful pipeline catalysts, including clinical data for zoci in breast cancers, neuroendocrine carcinoma, and first-line small cell lung cancer, as well as first in human data from our IL-13/IL-31R bispecific program in atopic dermatitis. On the regional side, we have important pivotal data results for large opportunities, such as Povetacicept in IgAN and aliglubad in Thyroid Eye Disease, both of which enhance the durability of our China growth engine. Business development remains an important lever for us.

Our presence and capabilities in China provides access to one of the world’s most important, fast-evolving innovation ecosystems, creating opportunities that can meaningfully strengthen and prioritize both our global and regional pipeline. Ultimately, our objective is to build a company that can make a lasting difference for patients while creating substantial value for shareholders. With that, I’ll now hand the call over to Rafael, who will walk you through the progress of our R&D pipeline. Rafael?

Dr. Rafael Amado, President and Head of Global Research and Development, Zai Lab: Thank you, Samantha. 2025 was a year of significant progress for our R&D organization as we continue to build globally competitive pipeline. Over the course of the year, we initiated a pivotal trial in oncology, advanced one additional oncology program into the clinic, and moved our lead immunology asset into clinical development. With that, I’d like to walk you through our progress, starting with zoci, our potential first and best-in-class DLL3 targeting ADC and a cornerstone of Zai Lab’s global oncology portfolio. In second line and third line small cell lung cancer, we have initiated a global registrational phase 3 study, which will enroll approximately 480 patients across second line post platinum and third line post Atezolizumab settings, with a control arm reflecting real-world global practice, including topotecan, larotrectinib, or amrubicin....

Importantly, Zoci has advanced at a rapid pace, significantly faster than is typically observed for programs in this space. Based on current timelines, we anticipate a potential accelerated approval submission in 2027, and a first global approval in 2028. Clinically, Zoci has demonstrated encouraging efficacy in heavily pretreated, extensive-stage small cell lung cancer, including an 80% objective response rate in 10 patients with untreated brain metastases. The ability to treat both intracranial and extracranial disease without treatment interruptions represent a meaningful potential advantage for patients, and we look forward to presenting this data in the coming months. Equally important, Zoci continues to stand out for its favorable safety profile, with low rates of severe treatment-related adverse events. We believe this profile supports Zoci’s potential role as a backbone ADC in first-line combination regimens, including those that reduce chemotherapy burden.

We plan to initiate a first-line pivotal trial in small cell lung cancer and to advance zoci into additional novel combination regimens before year-end. Beyond small cell lung cancer, we see a compelling opportunity for zoci in neuroendocrine carcinomas, or NECs, a large, underserved population with no approved DLL3-targeted therapies. Enrollment in our global phase 1b/2 is progressing very well, and we plan to present initial data this year with the goal of initiating a registrationally enabling study by the year-end. Taken together, we believe zoci’s differentiated efficacy and safety profiles, including activity in brain metastases, positions it to address a significant unmet need across small cell lung cancer and neuroendocrine carcinomas, where the total addressable global market is estimated to exceed $9 billion. Beyond zoci, our next wave of innovative global assets continues to advance rapidly.

ZL-6201, our internally discovered LRRC15-targeting ADC, received U.S. IND clearance. The global Phase 1 study was quickly initiated thereafter. ZL-1222, our PD-1/IL-12 immunocytokine, is progressing through IND-enabling studies. ZL-1311, a next-generation T-cell engager or TCE targeting MUC17, represents our first globally owned TCE with an IND plan by year-end. In immunology, ZL-1503 is our internally discovered IL-13/IL-31R bispecific antibody for atopic dermatitis, and is designed to address both itch and inflammation, with the potential for enhanced and faster onset of efficacy associated with less frequent dosing than current biologics. The global Phase 1/1B study is enrolling well. We expect first-in-human data later this year. Turning briefly to our key late-stage regional programs, starting with our immunology portfolio.

Sulcardigimab continues to expand across multiple autoimmune indications, with ongoing development across a broad clinical program. Recent late-stage results support further label expansion and additional phase 3 readouts are expected this year and next, with China being a valuable contributor to global enrollment. Povetacicept remains on track with an interim analysis for the global RAINIER phase 3 study for IgAN, planned for the first half of 2026, and enrollment is ongoing in the global pivotal OLYMPUS phase 2/3 study for primary membranous nephropathy. Lastly, for Elegrobart, our partner, Viridian, expects to report top-line data for the global registrational REVEAL one study in active TED. This will be in the first quarter of 2026, followed by top-line results from the global registrational REVEAL two study in chronic TED in the second quarter of 2026.

Elegrobart has the potential to become the first subcutaneous IGF-1R therapy approved for TED in China. Turning to our local oncology portfolio, for TIVDAK, we expect approval in China in the first half of 2026, which will build naturally on our established ZEJULA commercial platform, further deepening our leadership in women’s cancers. Finally, for Tumor Treating Fields, the FDA approval for Optune Pax in locally advanced pancreatic cancer earlier this month represents an important milestone in this disease, and we will work closely with China’s NMPA under the Innovative Medical Device Pathway to support an expedited review. Together, these achievements reflect the depth and quality of our pipeline, one that is advancing with speed and efficiency. With that, I’ll hand it over to Josh.

Josh Smiley, President and Chief Operating Officer, Zai Lab: Thank you, Rafael. Hello, everyone. Before getting into quarterly performance by product, I want to briefly frame how the business progressed more broadly in 2025. During the year, we made important progress across market access, portfolio optimization, and business development. We successfully completed NRDL renewals for key products and achieved guideline updates supporting VYVGART in generalized myasthenia gravis and KarXT in schizophrenia, both of which strengthen the durability of our commercial portfolio over the long term. At the same time, we sharpened our focus by divesting non-core assets and regions, allowing us to reallocate resources toward higher priority growth opportunities and to improve operational efficiency. From a business development perspective, we maintained a highly selective and strategic approach.

During the year, we entered targeted collaborations to explore novel combination strategies in first-line small cell lung cancer and strengthen our oncology platform with the addition of a MUC17/CD3 T-cell engager. Together, these actions reflect our disciplined approach to external innovation, complementing our internal pipeline while preserving financial flexibility. With that broader context, I’ll now turn to our quarterly commercial performance. Fourth quarter revenues increased 17% year-over-year to $127 million, and full year revenues grew 15% to $460 million, reflecting steady progress across our commercial portfolio. Starting with VYVGART, physician confidence remains strong and patient demand has been stable. Fourth quarter revenues, however, reflected channel dynamics related to NRDL renewal and hospital purchasing patterns. In 2026, we expect a more measured near-term growth profile influenced by pricing dynamics and evolving competition.

The long-term trajectory of the franchise remains intact, supported by clinical guideline expansion, affordability initiatives, and additional indications and formulations. Turning briefly to ZEJULA, we delivered a strong fourth quarter, driven by first-line BRCA positive new patient starts. While some variability is expected early in the year due to volume-based procurement dynamics for olaparib and seasonality, ZEJULA remains well positioned in the first-line setting. Looking ahead, KarXT represents a significant near-term growth opportunity. We expect to initiate the commercial launch in the second quarter of 2026, with a clear focus on disciplined execution, building disease awareness, establishing clinical confidence, and laying the groundwork for broader adoption. Recent inclusion in a national expert consensus on negative symptom management builds on last year’s inclusion in national treatment guidelines and reinforces growing recognition of KarXT’s profile.

In summary, 2026 is a year focused on maintaining the strength and stability of our existing business while preparing for multiple growth opportunities ahead. That includes continuing to build the VYVGART franchise, executing a high-quality launch for KarXT in schizophrenia, and advancing key late-stage assets such as Povetacicept in IgAN, Elegrobart in TED, and TT Fields in pancreatic cancer. The investments we are making across commercial and R&D today are designed to support a multi-year growth trajectory extending well beyond 2026. With that, I will now pass the call over to Yujing to take us through our financial results. Yujing?

Caroline, Analyst, Citigroup2: Thank you, Josh. Now I will discuss highlights from our fourth quarter and full year 2025 financial results compared to the prior year-over-year period. Fourth quarter, total revenue grew 17% year-over-year to $127.6 million, driven by strong contributions from XACDURO and NUZYRA. XACDURO performance reflected strong patient demand and expanding hospital adoption, though supply constraints during the year limited the full realization of underlying demand. NUZYRA continued to benefit from broader market coverage and increased penetration. Total revenues for the full year were $460.2 million, representing 15% year-over-year growth. Turning now to our expenses. Our commitment to financial discipline is reflected in improved operating leverage, with both R&D and SG&A declining as a percentage of revenue year-over-year.

R&D expenses for the full year declined 6%, driven by lower personnel compensation costs and an increase in the fourth quarter due to fast progression of global clinical trials. SG&A expenses decreased 12% and 7% year-over-year for the fourth quarter and full year, mainly due to the reduction in general and administrative expenses because of strategic resource optimization. Loss from operations improved 19% for the full year to $229.4 million and improved 25% when adjusted to exclude non-cash expenses, including depreciation, amortization, and share-based compensation. We maintain a strong cash position, ending the quarter with $790 million. Looking to 2026, our focus remains on strengthening the foundation of our regional business, executing across our global pipeline, and thoughtful capital deployment to support both near-term launches and long-term growth drivers.

With a strong balance sheet, we are well positioned to execute against these priorities. With that, I would now like to turn the call back over to the operator to open up lines for questions. Operator?

Operator: Thank you. We will now begin the question and answer session. To ask questions on the phone, please press star 11 and wait for your name to be announced. To cancel a request, please press star 11 again. One moment for the first question. Our first question comes from the line of Jonathan Chang of Leerink Partners. Please go ahead.

Jonathan Chang, Analyst, Leerink Partners: Hi, guys. Thanks for taking my questions. First question, can you provide any color on how we should be thinking about revenues and expenses for 2026? Second question on the global pipeline for Zoci, can you remind us of the implications of the intracranial activity in patients with brain mets, and how does this impact the opportunity and positioning of the drug? Thank you.

Josh Smiley, President and Chief Operating Officer, Zai Lab: Thanks, Jonathan. It’s Josh. I’ll start with 2026, ask Yajing to make a comment, and then we’ll hand it over to Rafael to talk about zoci. I think as we think about 2026, as we mentioned on the upfront comments, you know, we see good growth opportunities for VYVGART. We’re seeing good volume gains throughout the second half of the year. We expect that to continue in 2026. We’re pleased with how we ended the year with ZEJULA, and while we’re facing, you know, a generic market now for Lynparza, we expect to continue to hold our position and in some cases, hopefully grow. XACDURO should be a good driver for us this year.

Of course, then we’ve got a couple important launches or coming. COBENFY in the 2nd quarter will begin our commercial launch and then TIVDAK later this year. I think when you think about those things together, you know, certainly we’re looking for good commercial performance and good growth on the top line for the year. For expenses, I think we’re in good shape on SG&A, very modest investments required to support launches. Obviously, we’re gonna put the field sales force in place to launch COBENFY, and that’ll drive some incremental costs. I think otherwise, we’re in good shape as it relates to synergies and efficiencies across our SG&A. R&D should be relatively in line with what we’ve seen the last few years.

Obviously, big focus and resource allocation to our global portfolio. As some of our late phase opportunities start to in China, start to come offline, we’ve got capacity there. I think, you know, sort of flat to very modest growth in R&D. This year, you know, pretty straightforward thinking. Obviously, we’ve got some, you know, some pushes and pulls as it relates to when things are approved and when we get them into the market and otherwise. I think as we think about, you know, 2027 and on, we’ll start to get the benefits of these launches, like COBENFY and TIVDAK and some of the assets that Rafael talked about in his in his upfront comments.

Yajing, I don’t know if you wanna add anything to that?

Caroline, Analyst, Citigroup2: Maybe just to add a little bit more dynamics in 2026, and 2026 is a transition year. I think, underlying demand growth, as Josh talked about, is very true. Also, we want to be mindful of other dynamics moving pieces, including the IV, the VYVGART IV price adjustment, and maybe later on, the deal rebate dynamics in the fourth quarter for VYVGART, the ZEJULA. Then we are sort of, like, looking at the hospital budgeting purchasing behavior as well. This is part of the reason that we probably not going to provide the full year guidance at this time, but those are the moving pieces. When we get more clarity, we can share more specifics later in the year.

Josh Smiley, President and Chief Operating Officer, Zai Lab: Thanks, Yajing. Rafael, do you wanna talk about Zoci, please?

Dr. Rafael Amado, President and Head of Global Research and Development, Zai Lab: Yeah, absolutely. Brain metastasis, obviously, in this disease is a big problem. About 70% of patients develop brain metastases, and I think the speed with which patients experience responses with Zoci is well appreciated among investigators, and it’s actually one of the key properties of the molecule. We’ve reported up to 80% response rates in patients with untreated metastases. There are two situations. If a patient comes in with brain metastases, oftentimes they have to have brachytherapy or some regional therapy, which delays systemic therapy. Whereas, if it’s an uncomplicated untreated met, patients can go into Zoci directly, and we see again pretty high activity in the brain.

The other is, you know, there are some drugs that may have activity, but then there is a high rate of relapse in the brain, where the brain is a sanctuary site. Using zoci prevents recurrences in the brain, which is really important. We’ve reported in RECIST criteria before, and we’re planning to report now in the first half of the year, using RANO criteria, which is a response assessment that is used in neuro-oncology. It’s a much more stringent one, where it’s a bidimensional and uses 50% instead of 30%. It really characterizes the response in the brain, and we look forward to presenting that in the first half of this year.

Lin Haichong, Analyst, Goldman Sachs: Got it. Thanks for taking the questions.

Operator: Thank you for the question. One moment for the next question. Our next question comes from the line of Li Watsek from Cantor. Please go ahead.

Li Watsek, Analyst, Cantor: Hey, good morning. Thanks for taking my questions. I guess my first question is more about, you know, sort of the U.S., China development model that you alluded to in the opening. I just wonder, can you elaborate a little bit more, other than maybe, you know, sourcing assets from the region? I guess how much, you know, clinical de-risking or, you know, timeline acceleration can you achieve by leveraging some of the resources in the region?

Josh Smiley, President and Chief Operating Officer, Zai Lab: Thanks, Lee. It’s Josh. Rafael, why don’t you talk a little bit about this point to Lee’s question?

Dr. Rafael Amado, President and Head of Global Research and Development, Zai Lab: Sure. Our model obviously has been speedy development in China based on pretty efficient development structure, as well as regulatory and other functions in China, and that’s led to the success of registrations local regionally. Now we’re applying that speed relationship with investigators and sites to add China to global trials, or to be the sole site when we want go, no-go decisions with products. We now have all our global trials really including China participation, and that really has allowed us to move with speed and quality. That will be also the case for phase 3 studies. We expect that China will participate and enroll about a third of the patients.

At least that’s our expectation, for instance, on our current pivotal trial and second line with Zoci. I think all in all, you know, this efficiency that we have built over the course of the past 10 years in China is serving us well as we are now expanding our pipeline towards, you know, global assets. We are seeing the fruits of that by, for instance, Zoci moving within 2 years to phase 3 from IND, as an example.

Li Watsek, Analyst, Cantor: My second question is on zoci, and obviously you guys are gonna present data in neuroendocrine. Just wanted to get a little color in terms of, you know, expectations, what sort of data you guys are gonna present, what’s good data? In terms of regulatory pathway, can you maybe just conduct a single arm study to get approval? Maybe expand a little on that as well.

Dr. Rafael Amado, President and Head of Global Research and Development, Zai Lab: Yeah. NEC is a complex group of diseases, and in first line, it’s treated with chemotherapy. There is the gastroenteropancreatic subgroup, and then other neuroendocrine carcinomas that exclude lung, because lung tends to have a different prognosis. When you look across the board in second line, chemotherapy really has a dismal activity in terms of response rate and PFS. Our study has started in second line and is looking at GEP neuroendocrine carcinomas, non-GEP neuroendocrine carcinomas or extra pulmonary. There’s a group that is looking at neuroendocrine tumors, which are less aggressive. You know, an initial data set will be presented in second line. We are pleased with what we’re seeing thus far.

We will have, I think, sufficient patients to make an assessment in terms of the response. You know, the durability may be limited, but we think that there’s enough information there to present in the first half of this year. You know, there may be about, you know, 60-plus patients that will be included in this analysis. Like you said, we are sort of ourselves seeking a regulatory path for NEC in second line, and this is actually the subject of our regulatory discussions that we’re initiating now in terms of whether a single arm would be sufficient or whether a randomized trial would be required. You know, it’s unclear what the control arm would be in the second option, but it’s still a possibility.

Those discussions are beginning now as we uncover the data. We’re also thinking about what to do in frontline as well. As you know, some T-cell engagers are getting into this space, and we would probably consider something in first line in combination, but that is standalone in the future. We want to sort of see what we can do to help patients in second line, where options are just so scarce.

Li Watsek, Analyst, Cantor: Thank you.

Operator: Thank you for the questions. One moment for the next question. Our next question comes from Michael Yee of UBS. Please go ahead.

Michael Yee, Analyst, UBS: Thank you. Good morning. We have two questions. First, just wanted to understand, given all the thoughts and comments you have talked about regarding steady revenue growth and pushes and pulls as it relates to financials this year, does the company believe that they could achieve breakeven or profitability by the end of the year? Do you think that’s something that is achievable given what we had expectations for last year? The second question is, obviously, zoci and DLL3 are critically important. What is the expectation for completion of enrollment and the timing of reading out the primary endpoint on response rate in order to file? Thank you.

Dr. Rafael Amado, President and Head of Global Research and Development, Zai Lab: Great. Thanks, Mike. How about Yajing Chen, you talk about the cash flow, and then we’ll hand it over to Rafael.

Caroline, Analyst, Citigroup2: Our corporate profitability, I mean, the cash flow breakeven, it definitely continue to be a very clear objective for Zai Lab. We will, you know, manage the business accordingly. Our business right now is commercially profitable today, that provides a stable foundation for the company. At a corporate level, I think the timing of the profitability is really driven by the two primary factors. One is the top-line growth, the rate of the growth, the other one is the level of investment that we choose to make in the high-value global programs. I think at this time, we remain efficient, disciplining our spending. We do expect the corporate profitability to emerge.

I won’t be able to share the guidance for 2026, where we’re gonna be. That’s definitely the goal for us to continue to drive.

Anupam Rama, Analyst, JPMorgan: ... Also I want to mention that we are focused on the progressing towards the goal, but also focused on the continue to expand our global pipeline. We do want to preserve the flexibility, to invest when we see the strong value.

Josh Smiley, President and Chief Operating Officer, Zai Lab: Thanks, Xiaji. Go ahead, Rafael.

Dr. Rafael Amado, President and Head of Global Research and Development, Zai Lab: Thanks, Josh, and thanks, Michael, for the question. The study started in December. It’s a global trial. It started in the U.S. first, and China is coming online imminently as Europe will and North America and other countries in Asia as well, Asia Pacific. Our plan is to have about 75% of the patients enrolled by the end of the year. We have to have everybody enrolled before we do the interim analysis for response. We think that we will finish enrollment at the end of the first quarter of next year and do the analysis and subsequently file. We’re hoping for an approval in 2028.

The study, as you know, is a combination of second-line as well as post-thalidomide patients, and we’re balancing the accrual of each one of those subgroups in the study. 2027, end of accrual and filing, and 2028, hopefully, accelerated approval.

Josh Smiley, President and Chief Operating Officer, Zai Lab: Perfect. Thank you very much.

Operator: Thank you for the questions. One moment for the next question. Our next question comes from Yigal Nochomovitz from Citigroup. Please go ahead.

Caroline, Analyst, Citigroup: Hi, this is Caroline on for Yigal. Thanks for taking our question. Could you talk about your strategy to grow VYVGART, specifically how to increase cycles per patient? Thanks.

Josh Smiley, President and Chief Operating Officer, Zai Lab: Thanks, Caroline. Vyvgart, you know, we are focused on moving the cycles per patient to the minimum of 3, which is what’s embedded in the national myasthenia gravis guidelines in China that were updated in July of last year. Of course, in the clinical data, getting, you know, getting out to 5 or more over a 12-month period demonstrates, you know, really significant benefits. Our focus right now is on 3. We’re making reasonable progress, and we made reasonable progress in 2025. If you just look at average cycles, closing out the year in 2025, we improved versus 2024 by more than 50%. We’re on the way, but we’re not yet on average at 3.

I think, you know, we’ve got a couple key initiatives to help drive that focus. I mean, the first is to leverage the guidelines, and that’s through our medical professionals and our sales professionals, and I think that’s really important, and we’re seeing the benefit of that. We know guidelines make a big difference in China. They make a big difference in most markets. This has been just. It’s been a build the market approach with VYVGART. I think we’re making good progress there and certainly have the clinical data and now the national guidelines to support that. We are also working on affordability initiatives while NRDL listing is clear for VYVGART.

Patients do pay, a co-pay and pay out-of-pocket. We’ve got in place an online support program that helps patients navigate things like appointments and resources and otherwise to help on the logistics and the co-pay. We have a targeted co-pay assistance program that helps. It really is focused on the national guidelines and focused on ensuring we can get patients out to three cycles without, you know, with as minimum economic burden as possible.

We are seeing the benefits of those focus points. I do expect during the year that we’ll continue to see good expansion and duration of therapy and get the majority of our, certainly patients who are in the acute phase of the disease, that the majority of those patients, I think, this year are gonna get to 3 and more cycles. We also, this year, though, are expanding, really focusing on patients who are in the non-acute phase. They, of course, also benefit from long-term therapy and getting 3 or more cycles, but, you know, that’s probably gonna be a little bit, a little bit longer climb to get there.

I think as we look at the data throughout the year, we’ve got great patient expansion opportunities by leveraging our strength in acute patients, moving to non-acute. Those acute patients, I think the initiatives are underway and having results that’ll get us out to those, you know, on average, 3 or more cycles, and then the non-acute patients will start to pick up and add, you know, certainly good volume growth throughout the year. I think that’s, you know, we’re quite excited about the opportunities with VYVGART this year, the opportunities to get to many more patients and for them to get the full benefits of the drug, you know, through persistence and duration. Thank you.

Caroline, Analyst, Citigroup: Thank you.

Operator: Thank you for the questions. One moment for the next question. Our next question comes from Anupam Rama from JPMorgan. Please go ahead.

Anupam Rama, Analyst, JPMorgan: Hey, guys. Thanks so much for taking the question. On the global second, third line DLL3 study, which is enrolling patients, you kind of talked about this, but can you remind us what the ultimate regional breakdown of sites is going to be, given this is a global effort? Is there a breakdown of patients that need to be ex China for US and more global approvals? Thanks so much.

Josh Smiley, President and Chief Operating Officer, Zai Lab: Thanks, Anupam. I’ll start, but Rafael can talk about the, you know, enrollment and how we’re thinking about that. I think first, if we look at small cell lung cancer, you know, and focus first on the U.S., I think in the, you know, second line and later settings, we see about 15,000 patients available. First line’s probably 25,000. If we, you know, sort of look at that on a major market, Western market, that’s probably 100,000 patients, you know, total in small cell lung cancer that are eligible for treatment in, you know, first or later line settings.

It’s a big opportunity and of course, you know, when we sort of size that, and you guys have done this as well, it’s, you know, it’s approaching $10 billion probably in terms of total opportunity, and we think Zoci can fit really well, you know, in that space. I think when we look at neuroendocrine, you know, we’re probably in the, you know, in the U.S., it’s somewhere in that 5,000-10,000, you know, sort of range, maybe similarly in other markets. We have more to learn here, I think, as we, you know, continue to work through the trial. It’s not insignificant, I guess, is what I would say. Rafael, maybe you can talk about enrollment.

Dr. Rafael Amado, President and Head of Global Research and Development, Zai Lab: Sure. The distribution, I think, of the countries and patients coming from China and other regions is, it’s really designed to make sure that we have enough patients, post talatinib, that reflect real-world usage in the United States. That may be up to 30% of patients or so coming from the United States. About 30% of patients will come from China. This is a reasonable number. I don’t think it’s ever been questioned that, you know, a percent of patients of that magnitude can jeopardize, you know, approval in a positive study. The rest of the patients will come from Europe. You know, in terms of post talatinib patients, obviously, we count on Japan as well.

We count on the U.K., some countries where a lot of studies have been done with talatinib, and obviously, the United States, where talatinib is gaining market share. I think that’s probably the distribution that you should expect on the study.

Josh Smiley, President and Chief Operating Officer, Zai Lab: Thanks so much for taking our question.

Operator: Thank you for the questions. One moment for the next question. Our next question comes from the line of Shuhui Zhao of Jefferies. Please go ahead.

Caroline, Analyst, Citigroup1: Thank you very much. Thank you, Samantha, Josh, Rafael, Yating, and Shen. I have 3 questions for the management team. The first one is as a follow-up to the JP Morgan question. Could you please share some more details on those? Because for this time, we are also very excited to see the clinical trial design for the first-line small cell lung cancer, including the combo Remagen, and also for the strategy of NEC, where it also be advanced to the first-line treatment in the future. My second question is regarding the KarXT. What should we expect from KarXT in 2026 and 2027, and how will you build your commercialization team going onward?

My last question is also, because for the past 1 year, we also saw some deals regarding the autoimmune bispecific. Can we talk about some big? Thank you so much.

Josh Smiley, President and Chief Operating Officer, Zai Lab: Thanks, Shuhui. Rafael, why don’t you start, and then I’ll come back in with the next two.

Dr. Rafael Amado, President and Head of Global Research and Development, Zai Lab: Yeah, maybe I’ll focus on the first-line opportunity. I mean, just the overarching sort of desire for Zoci is to be the centerpiece ADC for different lines of therapies and combinations. That is because of its low incidence of grade 2 toxicity, activity in the brain and high response rate, really, and durability. On first line, we’ve seen in the first study, the phase 1, 2, Study 001, we’ve been enrolling patients in first line for some time. We started with a doublet, with atezolizumab, and then a triplet, adding carboplatin. We hope to present mature data towards the second half of this year.

you know, we have just to give you a sense, we’ve treated about 60 patients or so, and we continue to follow these patients. I think once we have an idea of the activity, we will then make a decision of what the design of the frontline study should be. Our desire is for it to be one that spares chemotherapy, but also we have our eyes on how the frontline sort of landscape is going to change with the entrance of IMDELLTRA, potentially in frontline and other TCEs in frontline. you know, if we, you know, continue to see this high level of activity, we will be testing with other agents as well to see whether this combination offers even more activity for patients in first line.

I think it’s stay tuned to the data, but, you know, our final design will be when we actually see the entire durability and activity in first line with the data that we’ve been able to elicit from the phase one, two study.

Josh Smiley, President and Chief Operating Officer, Zai Lab: Thanks, Rafael. I’ll talk about KarXT for a minute. You know, Shuhui, we’re really excited about this opportunity, was approved without only product approved without a black box in this setting, first new mechanism in, you know, more than 70 years. There’s a, you know, really exciting introduction here. We’ll launch the product commercially in the second quarter, we’re going through all the process now of getting product in, and labeled, and inspected and otherwise. Second quarter, we’ll be out with the product in the market. Of course, we don’t have NRDL listing this year, just given the timing, but we do expect that in 2027. This year’s focus will be on getting physicians experienced using the drug.

you know, getting a commercial team up and running. I think, you know, prescribing here is really concentrated in China. While there were, I think, in 2024, over 2 billion days of atypical antipsychotic prescription use, when we look at how that’s prescribed and how it’s managed, it’s probably 800 institutions, give or take, that make up a vast majority of that volume, at least from a, you know, sort of initial prescribing and monitoring perspective. We’ll focus on those institutions at launch. That generates, you know, something in the range of, you know, 100 plus or minus, you know, sort of commercial team. very focused this year, and we’ll, you know, we’ll expand as necessary, but we do see this as a relatively efficient, big opportunity.

you know, again, for this year, I think in terms of financials, I wouldn’t expect, you know, significant sales. Again, this is gonna be a non-NRDL product for patients who otherwise aren’t gonna have things like commercial insurance or other access to, you know, to payment mechanisms. For 2027, I think if you look at NRDL and how to think about this, if you look at the brand, the brand of olanzapine, for example, you know, it’s in the range, I think, of about $5 a day on NRDL, paliperidone and similar. There’s I think a pretty straightforward reference here. Final comment I’ll make on KarXT is, I do think this is a relatively straightforward opportunity.

Atypical antipsychotics are monotherapy is, like, 90% plus of the standard of care today. This is a drug that brings, you know, great additional benefits in terms of safety and negative symptoms. We’ll be educating physicians on that, on those points this year in preparation for what I think will be a exciting unlock in terms of financial value beginning in 2027. On business development, you know, we’ve got Shan on the phone and Rafael.

We’re spending a lot of time around the world looking at opportunities, certainly, you know, as you mentioned, I think if you look at the innovation happening in China, particularly in areas that we’re interested in, oncology and immunology, modalities like ADCs and T-cell engagers, there’s a lot of good opportunities to pick from. You should expect us to continue to do that. We, you know, announced recently a deal on the MUC17, which I mentioned earlier. I think that’s kind of our, you know, typical kind of deals you should think about from us, would be late preclinical, you know, targets that are, you know, have some biological precedence and, you know, where we can move fast, leverage the clinical development expertise that Rafael talked about earlier.

You know, have a chance to introduce, you know, first, invest in class, products in oncology and immunology, to the world. We’re really excited about that. Thanks.

Dr. Rafael Amado, President and Head of Global Research and Development, Zai Lab: Thank you. Thank you so much, Josh.

Operator: Thank you for the question. We will now take the last question from Lin Haichong from Goldman Sachs. Please go ahead.

Lin Haichong, Analyst, Goldman Sachs: Thanks for taking my question. My question is around zoci. The first one is regarding the phase 3 trial for the second line small cell lung cancer. Understood that the current clinical protocol does not take talimogene as a control arm, but it was allowed to be available both as a prior treatment option and a post-progression treatment options. On that end, I want to collect your thoughts on the potential risk of having a elongated OS for the control arm, given that you’re allowing talimogene both before and after the second line treatment. That’s the first question. The second question is about the first line. Understood that you’re going to share the phase 1 trial data for both doublet and triplet in the second half.

Just want to collect your detailed plans about when do you want to make a decision on what to choose from doublet versus triplet in first line? Thank you.

Josh Smiley, President and Chief Operating Officer, Zai Lab: Go ahead, Rafael.

Dr. Rafael Amado, President and Head of Global Research and Development, Zai Lab: Thanks for the question. Maybe let’s start from the second one. In terms of first line, we would like to start the first line study, phase two study this year. In spite of the fact that, you know, it may take some time for us to see durability, we may just use a landmark in terms of patients without progression at a given number of months and then make a decision. Again, our strong desire is to spare chemotherapy, because that’s really what leads to most of the morbidity and most patients can only get about four cycles of carboplatin and a checkpoint inhibitor because they progress. Actually, the majority of them, some of them are intolerant.

give more therapy with ZL-1310 plus a checkpoint inhibitor, with the kinds of responses that we see in second line, which should be better than first line, you know, we think we stand a good chance of actually having a positive trial. That’s for first line, expect that we will launch a study by the end of the year. With regards to your question about tarlatamab, I mean, the patients will be post tarlatamab in both arms, but they can only come in if they have progressed on tarlatamab. Some may have responded and progressed, some may have been the novel resistant patients, but they will be equally in each arm and the study is stratified for post tarlatamab versus no tarlatamab.

In that regard, I think each arm will perform equally. With regards to post-progression therapies, the same things apply. We obviously cannot control post-progression therapy. Some patients may get tarlatamab, some may get lerwi, some may get something else. But they should, because it’s a sufficiently large study, get those therapies equally in each arm. Whatever advantage tarlatamab may afford, in terms of survival, it should be the same in each one of the arms. We’re not really concerned about bias here, and particularly in the post tarlatamab patients that enter the study because they’re stratified, and again, they can only come in if they have progressed. I hope this answers your question.

Lin Haichong, Analyst, Goldman Sachs: Thank you. Just to quickly clarify that you’re saying that you’re not really concerned about bias between the two arms. Can you share a bit more? I would say if the patients use zoci in the second line, would the physician still wish to use tarlatamab after zoci?

Dr. Rafael Amado, President and Head of Global Research and Development, Zai Lab: The physician may use tarlatamab after zoci, but so could they after topotecan, for instance, or lurbinectedin. I guess what I was saying is that tarlatamab is a post-progression therapy, which again, in survival studies, in any study, we cannot control. They should be used equally frequently in both arms, because once they progress, it’s up to the investigator to decide what therapy to use.

Lin Haichong, Analyst, Goldman Sachs: Got it. Thank you so much.

Operator: Thank you for the question. We have come to the end of the question and answer session. With that, I would like to hand the call back to Samantha Tu for closing remarks.

Caroline, Analyst, Citigroup0: Thank you, operator. Thanks, everyone, for taking the time to join us on the call. We appreciate all your support and look forward to updating you again after the first quarter of 2026. Operator, you may now disconnect this call.

Operator: Thank you. That concludes today’s conference call. Thank you for participating. You may now disconnect your line.