Zai Lab at Morgan Stanley Conference: Strategic Expansion and Innovation

On Tuesday, 09 September 2025, Zai Lab (NASDAQ:ZLAB) presented at the Morgan Stanley 23rd Annual Global Healthcare Conference, outlining its strategic initiatives and financial health. The company emphasized its focus on synergistic in-licensing opportunities in China and global expansion in oncology and immunology. While Zai Lab’s financial position remains strong, with $800 million in cash, the company faces challenges in navigating the evolving biotech landscape amid geopolitical tensions.

Key Takeaways

• Zai Lab is prioritizing in-licensing opportunities in oncology, immunology, and neurology in China.
• The company aims for accelerated approval of its DLL3 ADC for small cell lung cancer in the U.S. by 2027.
• Zai Lab reported total sales of $400 million last year, with expectations for further growth.
• The Chinese biotech industry is growing, and Zai Lab is positioning itself as a key player in global medical innovation.

Financial Results

• Zai Lab achieved $400 million in sales last year.
• The company maintains a robust cash reserve of $800 million.
• With eight commercial products already launched, Zai Lab expects approvals for two more products soon.

Operational Updates

• Zai Lab is exploring synergistic in-licensing opportunities, particularly in oncology, immunology, and neurology.
• The company is advancing its internal discovery efforts, focusing on large molecule platforms such as monoclonal antibodies and ADCs.
• Zai Lab aims to initiate one to two Investigational New Drug (IND) applications annually.

Future Outlook

• The DLL3 ADC is a key asset, with plans for accelerated approval in the U.S. for second-line small cell lung cancer by the end of 2027.
• Zai Lab is conducting studies to support a first-line registration study for DLL3 ADC in combination with PD-1 therapy.
• In China, the company is focusing on the potential of POVI in IgA nephropathy, leveraging a best-in-class approach.

Market Dynamics and Geopolitics

• The Chinese biotech ecosystem is expanding, driven by investments and policy changes.
• Despite tensions in U.S.-China relations, Zai Lab believes the medical field is less affected by geopolitical risks.
• The company advocates for global collaboration in medical innovation to benefit patients worldwide.

Q&A Highlights

• Samantha Du emphasized Zai Lab’s capabilities in discovery, development, and commercialization in China.
• Josh Smiley highlighted the importance of patient data and differentiation in immunology.
• Smiley also discussed pricing dynamics in China, suggesting a price range of 10% to 15% of the U.S. net price for certain products.

Readers are encouraged to refer to the full transcript for a detailed understanding of Zai Lab’s strategic plans and insights shared during the conference.

Full transcript - Morgan Stanley 23rd Annual Global Healthcare Conference:

Jacqueline, China Biotech Analyst, Morgan Stanley: Okay, so we’re good.

Unidentified speaker: Okay, yeah.

Jacqueline, China Biotech Analyst, Morgan Stanley: Sounds good. Good afternoon, everyone. Thank you for joining us today. My name is Jacqueline. I’m the China Biotech Analyst for Morgan Stanley. Today it is a pleasure to invite Zai Lab Ki Chul Cho to join us in this conference. Today with us, we have Josh Smiley, President and CEO of the company, as well as Samantha Du, the Founder, Chairperson, and CEO of the company. Thank you for joining us today.

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: Thank you, Jack.

Jacqueline, China Biotech Analyst, Morgan Stanley: Before we start, for important disclosures, please visit the Morgan Stanley Research webpage at www.morganstanley.com/researchdisclosures. For any other questions you might have, please reach out to your Morgan Stanley sales representative. Let’s get started. Josh and Samantha, just in case our investors here are not super familiar with us and the latest updates of our company, could you give us kind of a brief introduction in terms of who we are and what Zai Lab is about?

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: Zai Lab was founded in 2014, and then we IPOed in NASDAQ and still listed on Hong Kong Stock Exchange also 2019. We have now, we have about, we have our own discovery, development, and commercial, at least in China. We have about 1,700 employees across the world, the majority in China, and right commercial in China. R&D, we have R&D and all the corporate functions in Boston and also in South Bay. The company has currently, we have eight launched commercial products and also two more to get approval later this year or early first quarter next year. That’s on the China rights side. On the global side, we have DLL3 ADC, second line we’re entering pivotal trial. First line, we are still starting with first line combos and also for neuroendocrines, I would say in second line for small cell lung cancer.

Also we have for global pipeline, we have internally discovered IL-13/31, and finished the primate studies and entering pivotal, no, phase one in the U.S. this year. Next year, we’re going to have in October, DLL3 will give the full update at a major medical conference on the second line and the phase two studies. We’re also going to next year, early sometime next year, the first line small cell lung cancer and also neuroendocrines, we have updates as well. We internally, we focus our pipeline in oncology and immunology. For our pipeline in China, we also like, we also have some in neuro. For example, our key product and name again?

Jacqueline, China Biotech Analyst, Morgan Stanley: Cobenfi. Cobenfi.

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: Yeah.

Jacqueline, China Biotech Analyst, Morgan Stanley: Cobenfi.

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: Yeah.

Jacqueline, China Biotech Analyst, Morgan Stanley: CAR-XT.

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: KarXT. Yeah, yeah. And it’s a single for neuro. There’s a huge population in China. This is a drug that hasn’t been approved with a black box for 70 years. We own the China rights. Also, for our partner Genix product, which we own in China, it’s also fast growing. Last year, we had total sales of $400 million. We have $800 million cash in the bank. Overall, I think our company is a very healthy station. Josh, you want to?

Jacqueline, China Biotech Analyst, Morgan Stanley: Oh, great. Very good.

Unidentified speaker: Yeah, that’s perfect. Thanks for the overview. When we talk about we are in multiple different therapeutic areas, we have a big operation, commercial, and R&D. Before we dive into all that, I want to start off with, in-licensing model, this is a kind of an innovation model that really first put Zai Lab on the map, I guess, quite a few years ago. It’s been a bit of time since then. I’m just so curious to better understand. For the in-licensing model, how do we see, given the current landscape in China and globally, how do we evaluate this model now? Are there still opportunities? Where do we go from here with this kind of innovation model?

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: I think for China, for China market, right, we think if their product, they are synergistic with our existing pipeline, we’re still interested in China rights. Because China is still, and I think looking back, China just started NRDL reimbursement in 2018. It’s not long. It’s seven years, but the market has been growing. Like for ERESA, it’s close to $1 billion sales already USD in China. Several products are reaching that kind of scale. That’s for China. We’re still interested in great assets, either standalone pipeline product or assets synergistic with our existing China pipeline. For global rights, we, of course, we are very selective. We prefer they’re in the therapeutic areas. We have strong expertise, strong internal expertise. We combine our own discovery with external innovation. We open, you know, we’ve been with our presence in China for the last 25 years.

As the first company, biotech company, that was the previous company. We have a lot of know-how in terms of the market, in terms of the people, in terms of the good clinical sites. We’re definitely open to in-licensing.

Unidentified speaker: Absolutely.

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: Good global assets.

Unidentified speaker: Got it. Thank you. I think, as you mentioned, for in-licensing side of the equation, we have done a lot in oncology. We make a big foray into, I think, neurology/immunology with VYVGART. We’re also kind of exploring further into kind of the CNS space with Cobenfi (KarXT). You mentioned in terms of whatever we’re looking for next direction has to be synergistic. Just given the existing landscape in China, considering competition and considering the outlook, is there any particular area that we might look to further build up in, whether it’s neurology or immunology, given that we have to have two pretty major assets in this space already?

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: Yeah, definitely, because we already have, you know, great products in those three areas. Earlier this year, we did a POVI, right?

Unidentified speaker: Right, right.

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: From Vertex. That’s also synergistic with our immunology pipeline. If there is in China, for China rights, immunology, oncology, and also neurology, definitely will be interested with a synergistic combination. For global rights, we prefer to stay in the therapeutic areas where, like as I said, oncology, immunology, where we feel we are very, we can handle the global trials ourselves.

Unidentified speaker: I understand. I think that’s a good place to kind of also transition to. The other side of the equation is, you know, we have made a lot of strides and efforts into leveraging kind of internal discovery or leverage other approaches to developing potential global assets. Could you kind of walk us through your thought process in terms of how do we balance between internal discovery or kind of getting global rights to other assets externally? How do we balance that? In terms of carrying forward, you know, what kind of assets or what’s our consideration in terms of looking for partnership to bring an asset further along or in terms of doing it ourselves for the global expansion?

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: Josh runs the PD team. I’m not sure about that. Josh has like.

Josh Smiley, President and CEO, Zai Lab: Yeah, yeah. I mean, I’ll start. As we think about the global pipeline, we do have our own discovery capabilities. I think what we’ve sort of focused on there is where do we think we can make the biggest difference. We’re focused on large molecule platforms like monoclonal antibodies, ADCs, bispecifics in oncology and immunology. While we have some chemistry capabilities, I think our view is other people can do that differently, better, and so on. We’ll focus on a handful of good discovery programs a year. I think our experience, both Samantha’s as well as mine, I used to work at Eli Lilly, she worked at Pfizer, is, once you start to get up to 10, 20, 30 projects per year in the candidate space, it gets very hard to manage. There’s lots of temptations to move things forward that aren’t best in class.

We’re going to pick precedent and mechanisms where we think we can make a difference with those technologies and initiate those programs. I think probably it’s fair to assume the equivalent of one to two INDs a year out of our own focused efforts. We’re going to supplement that then with business development focused on early phase opportunities. I think we think we can make the most difference if we look at opportunities in the preclinical to early clinical space where we can add some insights, leverage our global development capabilities to bring something, it’s a good idea to bring it forward path. I think we saw that on the DLL3 program. Again, I think there, as Samantha mentioned, focused on oncology and immunology, we have the scientific capabilities, the insight, and the development capabilities to move those fast.

I would think of that over time, probably similarly, one to the equivalent of one to two INDs a year coming out of that space. We look all over the world. We want innovation to be first in class, best in class kind of opportunities. Increasingly, we see some of those opportunities in China. Of course, we have a, with Samantha’s background and network and our experience in China, we have really good, the whole team, we have great insights there. I think maybe more frequently you’ll see things like the ADC program that we did with DLL3. I’m based in Boston. Our business development team’s all over the world, we’re looking at stuff everywhere.

Unidentified speaker: Perfect. Yeah, I think in terms of this direction that you’re mentioning, especially immunology, right? We recently also published a global report that focused, that we think, you know, immunology is one area of our licensing from China that’s relatively less tapped than, say, oncology or cardiometabolic obesity space specifically, right? There’s been good, healthy deals from China for these kind of assets. If you could walk through this in terms of how do we think about the opportunity set in this immunology space, right? How could we leverage this kind of potential need if it becomes the next wave of our licensing? You know, how are we positioned in this space?

Josh Smiley, President and CEO, Zai Lab: I’ll start.

Unidentified speaker: Yes.

Josh Smiley, President and CEO, Zai Lab: I have to jump in. I think first what we see, if we contrast immunology with oncology, I think what we see with immunology is a little bit of patient data and a little bit of differentiation goes a long way, right? I think with oncology, we can get excited about the mechanisms and you still have to run all the trials and you get surprised on overall survival and all those kind of things. I think with immunology, you know pretty quickly whether you have an opportunity or not. We’re quite interested in that space. We have great expertise in immunology. Now we’re running, I mean, we’ve got probably the equivalent, you know, of probably approaching 1,000 patients in clinical trials because we do all the China work for our GenX and now for POVI and otherwise.

Our ability to learn from our portfolio and to leverage clinical sites and investigators and other things, I think gives us a real capability boost and advantage. I think we’re going to look for, you know, again, I think we’re probably less interested given a company of our size and otherwise in totally novel biology. I think for precedent and mechanisms where a new modality may make sense or where there’s still a race or an opportunity through creative design or fast-moving, you know, sort of development, we’re going to want to take advantage of that. I think we see ourselves, you know, able to play across a range of the immunology conditions.

As I say, the good thing, and I would take our IL-13/31 as an example, you know, I think by this time next year, we should begin to generate data in atopic dermatitis patients where, again, whether it’s a, you know, better dosing regimen, faster onset of action, or better relief on itch, a little bit of that data, I think, becomes a pretty valuable asset. We’ll see that, you know, we’ll look for that to bring in and develop ourselves as well for other, you know, other conditions. Sorry, Samantha, jump in.

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: Oh, great.

Unidentified speaker: Yeah, thank you. We’ve been talking a lot in terms of on a strategic level, right? If I think we can dig a bit deeper into the individual pipelines. I think, as you guys mentioned earlier, DLL3 ADC is really one of the key assets that we have in terms of our globalization plan. Could you kind of give us a bit more background in terms of, you know, given that all the positive data this DLL3 has published, how do we see its differentiation from the current landscape? There are fairly many other competitions in the whole small cell lung cancer space. In terms of how do we prioritize our clinical development strategies for this asset specifically, and also kind of the developmental plan forward, partnership, self-alone, could you kind of lay it out for us in terms of how we see this one to come to fruition, basically?

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: Go ahead.

Josh Smiley, President and CEO, Zai Lab: Okay. I’ll start. I think, I mean, you know, of course, in small cell lung cancer, there’s lots of, as Jack, as you say, sort of investment and developments otherwise. If we look at the thing that’s right in front of us, which is second line and later small cell lung cancer, there’s really two options today in the U.S. and even, you know, fewer options outside the U.S. It’s, you know, some kind of chemo regimen or tarlatamab. Tarlatamab is off to a great start in the U.S., I think, you know, trending towards, you know, annualizing towards like $500 million in sales. It’s a difficult drug to administer in a second line setting. Our view is that, you know, first, the overall response rate is what, 35%, I think, in the confirmatory trial. There are challenges in terms of monitoring patients and otherwise.

Our view is probably somewhere in the range of 20% or less of patients have access to that drug in the U.S. just because of the monitoring and the safety concerns. That is why I think we see ourselves, as Samantha mentioned at the beginning, in a position for an accelerated approval in second line and later small cell lung cancer in the U.S. by the end of 2027, about two years from now. I think that that space in the U.S. is pretty, you know, it’s pretty big, right? I mean, if tarlatamab is trending at that level after less than two years on the market in a pretty limited, you know, sort of patient aperture, I think, you know, we see this as a pretty big opportunity. We think, certainly from a DLL3 perspective, we think that’s a great target. I think, of course, tarlatamab validates that.

I think from an ADC perspective, we see this as an opportunity to provide, you know, much better patient response. Our data is 79% ORR in the targeted dose that we’re taking into the registration study and a very mild safety profile, you know, less than 6% serious adverse events in the trial. What we know relative to other DLL3 ADCs is we’re going to be first by, you know, somewhere in the range of 18 to 24 months, I think, is the advantage we have today when we think about the IDEA data from the weekend and the, you know, the next one, Roche, you know, in event coming behind that. We like where we’re positioned in the late line setting. Again, that’s very easy to see and very definable.

I think the space where we’re going to see lots of continued innovation, which is great for patients, is in the front line setting. We’re doing studies today to support a first line registration study next year, in combination with PD-1 and with or without chemo. We’ll see what the data looks like. Over time, there are other opportunities to combine with emerging agents. The final one I would say is we also see data on B7H3s as another ADC approach for small cell lung cancer. Certainly in the second line setting, we like the profile of our drug. I think our drug’s cleaner, the target’s cleaner, and we see that show up in terms of safety and safety events. For us, it’s full speed ahead in the second line study.

We’ll get that up and running this year, be in a position we believe to submit data for an accelerated approval in the U.S. in late 2027, with the final confirmatory overall survival data coming after it to be in the same trial. We’re really excited about this opportunity.

Unidentified speaker: Yeah, no, I think there’s a lot of anticipations for these things. I think kind of following up on the timeline that Samantha was sharing, I think you touched on as well, that we are potentially expecting kind of a durability type of data on the second line setting. Sometime this October, that’s what we’re expecting.

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: Yeah, mid-year.

Unidentified speaker: Right. Also, first line, sometime early next year. If you could kind of walk us through in terms of what kind of data or what kind of bar we’ll be expecting. First, for that second line setting, if you’re looking at the durability, how should we think about the data that’s come out? Also, for the front line setting, we haven’t really seen much yet from anybody really. What are going to be the key things that you’re going to look for in that first print of first line combination data?

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: Maybe you want me to start.

Jacqueline, China Biotech Analyst, Morgan Stanley: Excuse me, go ahead.

Josh Smiley, President and CEO, Zai Lab: I think in the second line data that we’ll show in October, it’ll be a, you know, it’s about basically six months more data from what we showed at ASCO in June. I think what’s most important in that data set will be to get to the confirmed ORR. Again, we showed a 79% ORR in the dose that we’re taking into the registration study in the dosing setting. Of course, just given the maturity of that data, some of that was unconfirmed. I think the bar we’d expect to be is, again, there’s no reason, we don’t have any reason to believe that won’t hold up. I think the bar we say is somewhere above 60% ORR on a confirmed basis in that dose and in that setting, we think is a winner. I think we’re anxiously awaiting the data cut and the presentation.

I think the thing that’s a question from the ASCO data, just given the maturity of it, is the duration data, right? So DOR and PFS. I think that by the data cut that we provide in October, we will presumably have reached the medians. We’ll be able to provide that on a real basis. I think there, again, if we think about the second line setting, I think probably the bar is four months or so of PFS or durability overall. For us, I think our DOR and PFS should be pretty close together. We have every reason to believe that we’ll be doing better than that. I think we think about plus or minus six months is probably the right place to be.

Again, we don’t have any, I’m not saying that’s what it’s going to be, but I think that’s just based on what we could eyeball from the data before. I think we’re trending in that direction. I think a drug in the second line setting that’s at a 60% ORR and something better than four months with the safety profile that we have, which of course contributes to those other two variables, we think is an exciting opportunity to benefit the patient. I think it puts us in a good position for an accelerated approval. I think as we get into the first line setting, of course, we need to see the data. Otherwise, as you say, there’s not a lot yet.

The view would be with a mild safety profile that we have with our ZL-1310 combined with a PD-1, we should be able to get the targeted effects of chemo without all the safety liabilities, which should lead to very good PFS and OS benefit versus the current standard of care, which is PD-1 plus a chemo regimen. We will see how that data, as Samantha said, we’re looking at multiple sort of cohorts there to decide what’s the right approach there. I think that anything that can add modest benefits in terms of PFS and survival is going to be an important addition for clinicians in terms of how to treat patients. The good thing then over time, and we see this in all the other tumors where you start to get investment and see progress, is you start to stack those months up, right?

Over time, there will be opportunities to not only pursue whatever we decide to pursue from a first line perspective next year. I think there will be other combinations that will make sense in a first line or maintenance setting, including things like combinations with T-cell engagers and otherwise. We will think about all that over time. For the near term, it’s using the ADC mechanism to get the more powerful benefits of chemo when combined with the PD-1 and without the safety challenges that come with the more promiscuous dosing that you have to do without an ADC.

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: Yeah, yeah. We are also doing trials on neuroendocrine based on our preliminary and first and POC with solid responses, right? If that next year we’ll report that data, I think if that data looks even 20%, you know, that’s the breakthrough for that field.

Josh Smiley, President and CEO, Zai Lab: Yeah, yeah. Second line in those neuroendocrine tumors, the ORR and response, I mean, and durability is pretty, pretty low in terms of approved for standard of care today. It’s early.

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: It’s very early.

Josh Smiley, President and CEO, Zai Lab: Responses, right? You don’t need to see many to get excited here, and we’re excited.

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: Yeah.

Unidentified speaker: Yeah. Lots of things to look forward to in the next 6 to 12 months for this asset, right? I know we have quite a few kind of major assets, you know, bemarituzumab, KarXT, VYVGART, but just kind of on the topic of, while we’re on the topic of kind of immunology, right? I also want to ask in terms of POVI, right? In terms of, because in terms of the overall kind of development landscape, you know, and the competitive landscape in China, right? It’s not necessarily kind of like the very first one to kind of be doing this side. Could you share with us in terms of like the underlying rationale why we choose POVI at this time point to kind of explore in this space in China?

Josh Smiley, President and CEO, Zai Lab: I’d start with it’s a very big opportunity. I think we look at IgA nephropathy in China overall. It’s in the millions of patients, you know, opportunity. While there’s lots of developments in the space, I think from an APOL1-BAF inhibitor, which we think is the combination of those two pathways, I think we think is the most powerful approach to IgA nephropathy. We like, you know, we’ve started discussions with Alpine, you know, before they were acquired by Vertex. We like that asset. We like that space. I think it’s, we think it’s a best-in-class opportunity. Again, I think given the size of the market, having multiple new mechanism approaches, whether it’s, you know, just a BAF or, you know, or the combination or others, I think is going to be good here and, you know, launching the best-in-class as maybe second or third or whatever.

A lot of this is going to depend on the data and depend on the specific regulatory path in China. We do believe we’re set up well and aligned well with what Vertex is pursuing in the U.S. in terms of an accelerated approval with an interim data cut mid-next year. We think that’s a workable approach in China as well. We think, you know, we have an opportunity to be near the front of the line, maybe not first in terms of the various mechanisms here, but certainly best-in-class over time. Even in a competitive space here, that’s not a bad thing because these are all new approaches to treating IgA nephropathy in China. There’s a huge market opportunity. Having more than one pathway and maybe multiple competitors, even with the same, you know, pathways is probably okay.

I think the things we know relative to the others who may or may not launch before us or after us or close to us is, you know, we know we’ve got dosing, you know, benefits. I think we believe we’ll probably have a deeper and more, you know, permanent type of benefit. Again, that has to play out, but we really like the opportunity.

Unidentified speaker: I understand. Yeah, I think that’s what I was thinking because it doesn’t hurt to kind of have, it’s a new area to have some others kind of pave the way and then come in with a much better product to help with the penetration. I mean, I’m being watchful of the time, there’s other questions I kind of want to go through in terms of kind of the overall China biotech landscape. Again, we know that we have quite a few major products. If you kind of give us, maybe spend like three minutes or three, four minutes or so, kind of give us a talk about our big products like KarXT, VYVGART, bemarituzumab. I think those are the kind of three major ones in terms of things we should look forward to in the next 6 to 12 months for these kind of assets.

Josh Smiley, President and CEO, Zai Lab: I’ll start with VYVGART. In the next six months, the first thing to look at is we continue to get more patients in and get them on therapy for longer. Longer for us is getting patients up to at least three courses of therapy to get the full benefits of consolidation therapy, and then more than three over time to prevent relapses and to make sure the patients with GMG in China can work and live totally normal and healthy lives. This drug gives you the chance to do that, right? I think in terms of meaningful pieces, the most meaningful for this year is in the rearview mirror, but just very close in the rearview mirror. That’s the adoption or the publication of new national guidelines for GMG treatment in China.

In those guidelines, VYVGART is positioned as a frontline therapy for patients with mild to moderate GMG and patients who are active. It reinforces the need to get patients to at least three courses of therapy to get the benefits of consolidation therapy. We know from other places where you’re building a market, other markets, other therapeutic areas, guidelines make a difference. They make a big difference. We’ve seen that in GLIPS and everything else around the world. That was big. The next big inflection point for us will be NRDL for 2026. Of course, we want to manage a reasonable price for the IV version, but we need to get the sub-Q Hytrulo version added in 2026. We expect we will. That’ll be a big unlock in terms of patient benefits, convenience, persistency over the course of the therapy.

I think those are the things to think about in the near term. Maybe back to our comments on POVI, getting a few more competitors in this space will be good. We still only have like 10% of patients who could benefit from a newer therapy like VYVGART even getting prescribed today. Having a few more launches and reasonable competition, I think will help us overall. We’ll see that over the course of the next 12 to 18 months. I think that’s for VYVGART. I think for Cobenfi or KarXT, it’s getting the approval and getting out and educating physicians on the benefits of this product. I think we do have some advantages in China relative to the U.S., and that is the concentration of patients that is still very concentrated in big urban psych wards. Monotherapy, atypical antipsychotic monotherapy is by far the standard of care.

It’s more diverse in the U.S. where you have much more combination therapy and otherwise. The label, the opportunity with Cobenfi is very straightforward in China. We just need to get approved and get out on the market. BEMA, we’ve said we need to wait now given the most recent update from Amgen, who owns the global disclosure on this product. They’ve said that in 402-101, where we hit on the pre-specified interim analysis on overall survival, they’ve said in the final analysis, which is just descriptive, which is six months further follow-up, they saw the overall survival benefit decrease. Given that announcement and the fact that there’s a second study 102 that’s about to read out, we’ve just said we’re going to pause on our BEMA submission efforts, wait for that data, package that all together, and move forward.

I don’t think we have much to say on BEMA other than gastric cancer is a huge opportunity in China. There’s a big unmet need, and we hope that BEMA is part of that, part of the go-forward treatment paradigm.

Unidentified speaker: I understand. Perfect. Just one quick question, I think, to follow up on the Cobenfi as well. We’re expecting a fairly near-term approval. I understand, given the kind of the cycle, there might be a period of time where it’s not covered under NRDL. How do we think about in terms of our NRDL strategy when it comes to pricing? Given, I think there are some dynamics you mentioned that’s fairly concentrated in China, and that could be good for commercial adoption. How do we think about in terms of the commercial strategy for under NRDL and also the key items that we’re going to be progressing on during that period before it actually gets covered under NRDL?

Josh Smiley, President and CEO, Zai Lab: I think, you know, first, yeah, we, you know, best case scenario is we get an approval, you know, right toward the end of the year, very early next year. We will have some period of time, probably close to a calendar year before it’s eligible for NRDL listing. That’s just the way the process works in China. I think, though, if we fast forward to whatever that is, and we’ll work back, I think we can look at lots of reference points in China and the way that the pricing dynamics are set. I think it’s fair to assume that we can or should be at somewhere between 10% to 15% of the U.S. net price, which, on a daily basis, could be $5 or more.

You put that against the patient population in China, and you can get to pretty exciting commercial numbers without having to make unrealistic assumptions about, at any given time, the amount of patients or the penetration relative to atypical antipsychotics for Cobenfi. I think in the period between when we’re approved and when we have NRDL listing, again, these are patients who certainly need different therapies. This is a drug without a black box warning. It’s a drug that provides lots of benefits as it relates to the negative symptoms associated with schizophrenia. We’ll pursue every opportunity through commercial insurance, supplemental insurance. There are lots of trends in China now to try to amplify the opportunities for drugs before they go on to NRDL to be reimbursed and then otherwise.

I think I wouldn’t put a huge number in for 2026 in the models, but we certainly expect a lot of patients to begin to benefit from this drug and physicians to get experience using it in 2026 in anticipation of a 2027 takeoff.

Unidentified speaker: Yeah, I understand. Perfect. I think let me now walk into kind of a broader topic. Given kind of the rise of China Biotech Group this year, you know, we’re getting a lot more attention. Curious just thinking about what your thoughts in terms of moving forward, how does China Biotech or just China Innovation position the global ecosystem, right, in the years down that line? In terms of this having this more nuanced relationship, I guess, with overseas innovators, you know, are there what kind of potential geopolitics or policy-related risks or things that you might be concerned with or you feel like you might not need to be concerned with?

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: Let me answer your last question first. I think, you know, the U.S.-China relationships have been rocky. We know that, and even before COVID, right? However, we’re in a very different field. We are in a medicine field. Even during World War II, you have to give treatment to captives, right? Even the war captives, the soldiers captives. I think so far we haven’t, from China and the government side, from the U.S. government side, all the meetings have been to, I think people are not too concerned about this because we’re not like database sensitive. We’re not into the genomics. We are really into providing medicine for patients with medical needs. That’s, I will just stop there. I would say never, you know, cannot say, you know, what’s the word?

Unidentified speaker: Never.

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: I would say never, right? I can’t, you know, I’m not a politician. I got a question one time and said, when China is going back to Times Square, I was like, what? Oh, okay. I said, I recommend you feel very well-known commercial real estate developers ask him that question, right?

Unidentified speaker: Right.

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: Anyway, coming back to the China ecosystem, actually, if you flash back to when I first went back, that was 2001, and China was still in the mode of generics and traditional Chinese medicines. I remember the first company when I founded to apply in an IND required two years. Also, drug approval between China, even up to China during 1988, between China and the U.S., had a five to seven year lag. It just flashed, it’s just two decades later. Now you see more than 5,000 biotech companies. I think this is attributed to, number one, over the last two decades, you see a heavy investment from multinationals setting up R&D centers. Also, you see the policy, China joined ICH. China’s regulatory process improved. China also opened up the national reimbursement system for innovative drugs.

All of this, and also because there’s lots of talents, homegrown talents, and also a lot of talents who have been sent back to China. Just like in the 1980s in Japan, when I was working in the 1980s and 1990s at Pfizer, we set up an R&D center in Osaka, Japan. Each year we spent $1 billion. We incubated a lot of talents for the country. Multinationals have done that for China too, but also looking back to talents, you look at the people, Josh, right? He looks American. You are American, right? China is an attractive market. The policy is more and more through, I think it’s a bounty. I would say it’s bounty, but still the trend is going up, right? Another one, patience. Patience is there.

Over the last two decades, I remember the first global multiple center trials were conducted in China with a project I was involved in when I was at Pfizer. That was in 1997. Back those days, you pretty much had to put the people there, just do it for them, just for the sake of patience. After that two decades, China actually, especially in oncology, in anti-infectious, now it’s immunology, has actually built up the expertise, a lot of global KOLs. Now, a lot of global trials, you see the leading KOLs from China. The publications now are actually exceeding the U.S. in scientific journals, New England Journal of Medicine, all of that. Patients, KOLs, entrepreneurs, and more and more capital flow in. Even the Chinese government wants to do three pillar industries: one is semiconductor, AI, and then life science, innovative life sciences.

That’s the first time ever they announced that. I think that is good for the whole human being. You don’t want the U.S. to be the only country to support innovation, pay for innovation. The more and more countries doing that is going to be good for everyone.

Unidentified speaker: Awesome. Perfect. Excellent. I think we’re coming up on time. We’re closing here. Thank you so much, Samantha, Josh, for joining us today. Thank you everyone for coming.

Samantha Du, Founder, Chairperson, and CEO, Zai Lab: Thanks, Jackie.

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