Zai Lab Limited (NASDAQ:ZLAB) Citi Biotech C-Suite Fireside Chat Series Conference Call February 14, 2023 11:00 AM ET
Company Participants
Josh Smiley – COO
Conference Call Participants
Yigal Nochomovitz – Citi
Yigal Nochomovitz
Okay, great. I’m Yigal Nochomovitz. I’m one of the biotech analysts here at Citi. This is a continuation of our newly introduced C-suite series where we feature management from some of our covered companies for a one-hour discussion about the pipeline and other topics.
So, it’s my great pleasure to have with me this morning, Josh Smiley, who is the COO of Zai Lab. Josh started in August of 2022 after a 26-year career at Lilly. As a reminder, if you have questions for me, you can just e-mail me, and I’m happy to shoot them over to Josh during the conversation.
So, Josh, welcome. Thank you so much for taking the time to speak with us for an hour. I appreciate it.
I think a lot of people are familiar with Zai Lab, but I think a lot of people also aren’t. So I think maybe to start with, if you could just outline the strategic vision for the Company over the next, say, 5 or 10 years. How do you see the mission evolving, both in the pipeline as well as the commercial side? And how do you see the transformation of Zai Lab into a larger company with a greater commercial footprint in the next, say, decade or so.
Josh Smiley
Sure. No. Thanks Yigal, and thank you for having me. So first, the Company was founded in 2014. So, we’ve been around for, I guess, nine years now. We’ve got [Technical Difficulty] in China.
Can you hear me?
Yigal Nochomovitz
I’m sorry. I think we had some choppiness on the audio. Maybe could you mind saying that again? I’m sorry. We didn’t hear you.
Josh Smiley
Sure. Is it okay now?
Yigal Nochomovitz
It’s a little — yes, it’s a little better now.
Josh Smiley
Okay. All right. Is that okay?
Yigal Nochomovitz
I think so. Hopefully, it stays. Yes.
Josh Smiley
So I was saying, we’ve been around for about nine years. We’ve got headquarters in Shanghai and Cambridge, Massachusetts [Technical Difficulty] our initial emphasis has been to build a best-in-class portfolio in oncology, immunology, neuroscience and infectious disease in China. We’ve got four products on the market, biggest is ZEJULA for ovarian cancer, but we’ve got 8 more products on the way in China. And really what our initial emphasis has been to partner with western biotechs to bring their innovation into China. As we play out the 8 launches, we expect to be commercially profitable this year and profitable on an overall basis by 2025. We will continue to build out our portfolio in China, and you should expect to see us continue to bring partnered products in those areas and particularly now in ways that we can complement the deep expertise we’re building in areas like women’s cancer, lung cancer, gastric cancer and immunology.
We do expect, though, to also launch innovation in markets outside of Greater China, both through our own internal R&D efforts. Our most advanced project is a topical IL-17 that we’re going to start a global Phase 2 program on in psoriasis later this year. We’ve got discovery efforts in oncology and a few early projects in Phase 1, but we’ll also continue to explore partnerships and business development to bring not just products into China, but to bring best-in-class types of opportunities into the rest of the world.
I think when you look at the portfolio that we have in China, it’s really exciting. It’s going to provide a great opportunity to impact many patients in China and with that to bring pretty significant economic returns. We don’t give like long-term guidance yet other than to say we’ll be profitable at the bottom line in 2025. But I think if you add up some of the opportunities that we’ll be launching in the next two to three years, you clearly see multibillion potential in China. We’ll continue to build on that. [Technical Difficulty] I think continue to be seen as sort of [Technical Difficulty] one of the go to [Technical Difficulty] clinical development on a global basis and also to be able to capitalize on the commercial opportunities in China. So, I think, hopefully, with that, Yigal, it gives a little bit of an overview of who we are, where we’re headed.
Yigal Nochomovitz
Yes. No, that’s really helpful. I think a lot of people maybe don’t appreciate some of the points you made in terms of the profitability for the commercial business by, I think you said, at the end of this year. Could you just — just expand on that a little bit? Are you referring specifically to the ZEJULA franchise or all the four products? And what are the some of the assumptions that are built into that statement? Because I don’t think [Technical Difficulty] are realizing that that’s going to happen.
Josh Smiley
Yes. So for the full year 2023, we’ll [Technical Difficulty] commercially profitable [Technical Difficulty] if you look, we’ve got four products producing, sourcing those products, promoting them to physicians and that also includes the royalties we pay back to innovators. We also will launch a fifth product this year efgartigimod. So, it includes all the launch [Technical Difficulty]. So, really, all of the expenses in [Technical Difficulty] take out all those expenses, we will be profitable.
What — and ZEJULA drives that profitability. It’s profitable. It was profitable in 2022. It’s our biggest product and has been on the market the longest. I think when we look at opportunities and profitability in China for the kind of products that we’re bringing in and marketing, so in areas like oncology/immunology, we think we can get — continue to get good pricing. And we’re marketing these products in a pretty concentrated fashion. Patients in China tend to travel when they have oncology travel to Tier 3 hospitals, so a pretty concentrated sales and marketing efforts similarly for immunology and efgartigimod.
We’re building about 100-person sales force to launch that product initially in myasthenia gravis. So, I think when we look over time, Yigal, at the portfolio that we have, we do expect to have greater than 50% operating margins in China, again, for the reasons I mentioned, best-in-class products that are bringing good pricing with them, concentrated sales and marketing efforts. And then, you take that and of course, and we have corporate expenses and R&D expenses. And by 2025, even — as early as 2025 and — certainly in 2025 will be cash flow positive at the bottom line. And of course, that will grow significantly over the second half of the decade as we begin to scale the eight launches that I mentioned upfront.
So I think relative to how investors may view China on a sort of product basis or one-off basis, the portfolio that we’ve built, the approach that we’ve taken, we think yields have really — economically attractive investment opportunity.
Question-and-Answer Session
Q – Yigal Nochomovitz
I think there was a point where — correct me if I’m wrong, but you have provided some very rough — I mean, I don’t know if I would use the word guidance, but some rough sort of numbers around. What kind of revenue situation, what revenue picture you might achieve for some of the products. I think it was for oncology by the end of the decade. Is that something that you could reference for everyone, so we understand that?
Josh Smiley
Yes. We said early last year that when you look just at the portfolio that we had built in lung and gastric cancer and ovarian cancer just because ZEJULA. If you look at those three together, we saw sales potential by the end of the decade of between $2 billion and $3 billion, just in that portfolio. Now that, first, we’ve had very positive advance to this, I think, in the last year since we said that, most notably, I’m sure we’ll talk about it, progress in Tumor Treating Fields and LUNAR. So that would have been not a high probability sales event when we talked about this a year ago. We also have added TIVDAK to the portfolio in women’s cancer.
So, I think that was meant to sort of just give a directional sort of size. I think though, if you look at everything that we have in our portfolio today in China, and that includes now efgartigimod in immunology and all the indications that are under development there and KarXT for schizophrenia. I think it’s certainly reasonable. Again, we have to execute. These all have to be approved and everything else. But I think when you start to add up the opportunities that we’re building, I mean, certainly a $5 billion type of opportunity long term in China with the portfolio that we have today, again, don’t — that’s not meant to be guidance, but I think, certainly, just when you look at the size of the opportunity, the patient numbers in China and the high probability, we have around many of these products, that’s not an unreasonable number to aspire to. And of course, we’ll continue to build on that with other deals and continue to progress our internal pipeline.
Yigal Nochomovitz
Okay. No, that makes sense. I think for some of the investors that sort of tangentially know Zai Lab but don’t really focus on China too much, it would be super helpful if you could at a sort of high level, just highlight what the differentiation is from Zai Lab’s business model and strategy versus some of the other competitors that we all know out there that have some have been around longer, some have been around shorter, Hutchmed, Junshi, Innovent, Hengrui, there are others. Just in a sort of simplified way, if you could clarify, that would be really helpful. Because I think a lot of people that don’t follow China closely just don’t have a good grip on that.
Josh Smiley
Yes, sure. And of those products, you — I mean those companies you mentioned, each of them have a sort of a slightly different approach or angle themselves. But I think if I look at Zai Lab relative to that that group collectively, I’d say that the biggest differentiator today is, I think, the breadth and depth of our innovative portfolio in China. So again, as I mentioned upfront, [Technical Difficulty]. Yigal, can you hear me now?
Yigal Nochomovitz
Josh, it might be helpful if you turn off the video. I’m being told by the technical people that if you turn off your video, it might help with the bandwidth on the audio, if you wouldn’t mind.
Josh Smiley
Yes.
Yigal Nochomovitz
Thanks.
Josh Smiley
Okay. So, I think, as I say, each of those companies have their own unique aspects. But I think for us, the breadth and depth of our best-in-class, first-in-class portfolio in China, I think, is probably the biggest differentiator. We see very good economic opportunities to leverage that portfolio, not just across a few assets, but a compelling lung cancer portfolio, compelling gastric cancer portfolio, really best-in-class, first-in-class products that give us then the flexibility on pricing to be able to drive compelling operating margins and otherwise. So, we’re going to continue to focus. That’s the number one focus that we have is to continue to drive and execute a tremendous portfolio focused in those areas in China. Can you hear me?
Yigal Nochomovitz
Yes. No, this is — thanks.
Josh Smiley
Okay, good. I just want to make sure. I think that as we think [Technical Difficulty] so I guess, I would compare us maybe to Hengrui or something to say we’re not — they’ve got a very broad portfolio, in some cases, innovative opportunities, super competitive classes. We really [Technical Difficulty] China is really first, then is good regulatory processes and good pricing opportunities. I think as we think about our opportunities outside of China then, we’re going to be selective. We’re going to — we do want to have opportunities, and I mentioned IL-17, but to bring innovation into the U.S. and Europe and other markets. But we’re going to be very selective there and continue to sort of stay in those same [Technical Difficulty] we think it’s got a compelling benefit to patients. So, I think for the next number of years, I expect that the majority of our sales and profits are going to come from China and we’re going to be selective about introducing innovation outside the U.S. But I think with that — the breadth of that portfolio in China, we have an opportunity to, as I say, be really — make big impacts on patients, but also be really profitable.
Yigal Nochomovitz
Yes. So, you touched on one of the questions I get often about Zai is just the strategy for in-licensing. I mean obviously, you had a — I think it was 2021, if I’m not mistaken, or it was a high watermark…
Josh Smiley
Yes.
Yigal Nochomovitz
And then last year, a lot of things happened last year, but so everyone faced different types of headwinds, but in any case, it was lower. So, I think you’ve said you’re kind of sticking to your strengths in terms of the known therapeutic areas. What more can you say in terms of the pacing and focus for those licensing deals? It sounds like you’re taking a more critical lens maybe than you had in past years. You do have a lot on the plate in terms of assets. So just wondering how you’re thinking about that..
Josh Smiley
Yes. Well, I think probably — 2021 was a high watermark, and that’s — I don’t think we’re going to repeat that just — there just was a great confluence of events and great assets that came together. I think on the other side 2022 and only doing one China-based deal is probably low. So I think maybe if you sort of take the two years together and say, we probably expect somewhere between two and three good assets a year to come into China. That’s not always going to happen, but that’s a reasonable sort of expectation. I guess, maybe two is probably a place to sort of — over time, sort of paint a marker on. But they’re going to be — we want them to be generally in areas that are complementary or synergistic with the infrastructure and teams we’ve built. So, TIVDAK is a great example because it’s in women’s cancer, it will fit right into our ZEJULA sales force and infrastructure, same physician, same target. So we’d love to do those kind of deals.
I think, if you look in lung cancer, though, we’re covering a huge swath, I think, now of opportunities on the targeted space with adagrasib for KRAS ROS1 positive, et cetera. So I think — and now with the potential for Tumor Treating Fields. So, I think we’re going to be selective as we look in lung cancer, and we’re going to want something that’s going to bring something new and better to patients.
I think we will continue — I mean, for the right opportunity, we would move outside of the therapeutic areas we’re in, but that opportunity has to be really compelling, right? It has to be big enough to support on a standalone basis, the entry into another therapeutic area and have some compelling patient benefits, our opportunity to price well and so on.
So, I don’t — we don’t have sort of a particular new therapeutic area we’re looking at. We would be opportunistic. And it’s — I’d say it’s a very high bar to do that. So, you should expect continued deals in China in oncology and immunology and neuroscience, not more than a couple a year probably and some years that may be three because of just the way deals flow.
I think we’ve built a great reputation. So, western companies that are looking for partners in China tend to come to us and we can engage in dialogue then. So, I think that will continue. I think that the two areas you should expect some new activity and would be — we have talked about opportunities to partner more broadly with some of the bigger companies, the bigger biopharm companies on maybe more than one asset. So our deals to date have been one asset at a time. And of course, many of those assets we’re working on multiple indications, but they tend to be asset by asset. We think there are some bigger companies that we could do a multi-asset deal with and they could involve other exchanges of pipeline assets or portfolio help and could entail a capital investment from that part. So, that’s something we’re intrigued by and pursuing.
I think the third piece then would be, I think we’ve done a great job historically of picking really good assets and winners. And we can point that capability at doing that for opportunities that aren’t just China specific. We’re going to be very selective there. Don’t expect huge number of deals or big acquisitions or anything [Technical Difficulty] investigating good oncology opportunities. For example, we will look to do this in a select basis outside of China. Did you lose me?
Yigal Nochomovitz
For a sec, but I got most of it. So basically, for example, there could be potential for a deal where there’s a two-way street where you might license — some portfolio of assets instead of just one. In that exchange, you may out-license some of your internal assets in the same transaction. Is that a fair way to think about it? Because I know you…
Josh Smiley
That is. Yes. That is. I think there are, as I say, — there are companies that have broader portfolios that historically have invested in China, but may for some of the areas where we’ve got deep expertise think we’d be a good partner. And I think we are — we can be an attractive partner to the bigger biopharmas and [Technical Difficulty]. Can you hear me?
Yigal Nochomovitz
You just cut out there for a sec. Okay. I think — but I think I got the gist of it. So, in terms of some more specifics, I found those — this one little graphic on your — in your slide — in the slide deck, very interesting, where you’re making the point about having accelerated time lines to approval in China relative to some of the industry norms for ZEJULA and Optune less than a year for — on review time lines. Just curious what’s the secret sauce behind beating the standard time lines? What is Zai doing that’s making everything more efficient when interacting with the China regulators?
Josh Smiley
Yes. I think it starts with having great innovation. So, we make sure as we’re partnering that as part of our due diligence process, of course, we’re making sure we understand the data. We’re also working with thought leaders and regulators in China to understand how much of an opportunity and unmet need there is and the receptivity to the technology. We have a great regulatory team. And I think that’s — we understand the process, we stay current on changes from a policy perspective or otherwise. And I think that — I think we also have now a history of success. So, if we’re committing to a bridging study for having those negotiations, I think regulators have seen us work across multiple projects and understand that we’re going to follow through on our commitments and we’re going to bring thoughtful strategies to them in terms of whether it’s bridging or otherwise. So again, I’d say it starts with great products, and that’s — we’re not going to compromise on the technology we bring to the Chinese regulators. We’ve got a great team and we do have very thoughtful strategies around how to ensure that what we’re submitting, whether it’s bridging or part of the Phase 3 program that that’s been well thought through and well discussed before we get to the final stages of the submission.
Yigal Nochomovitz
Okay. We’ll get into some more details a little later on the bridging with the Mirati asset and with the KarXT. But I just wanted to ask you, you mentioned pricing power and how to price in China. Obviously, we’re going to get to some of the details on the NDRL for QINLOCK and NUZYRA soon. But you also make the point in a lot of your corporate materials around the commercial supplemental insurance, which appears to be increasingly important, if I understand correctly for how to think about the payer landscape in China. And so, why is that so critical? What does that do for Zai Lab to be able to access that?
Josh Smiley
Yes, right. Today, if we look at supplemental insurance, we see probably about 100 million patients in China are covered. We see that number growing to somewhere between 200 and 300 million over the next handful of years. So it’s a fast-growing market. It provides, I think, a couple of things. I think, first, in advance of any NRDL listing, it gives the opportunity for physicians to get experience with the product in a meaningful way. Obviously, it gives access to patients more quickly and more broadly than in the past.
And I think for a product like Optune, where we have the most and longest experience, it’s — historically, has been the only option for patients to access this kind of innovation because medical devices, which Optune qualifies as have not been eligible for NRDL listing. Now, we think that’s going to change, and we’re going to talk more about that. But again, I think it’s — our view is it’s somewhere in the range of 10% to 15% of the patients may have access through supplemental insurance. Optune in 2022 was the second most reimbursed product through supplemental insurance only behind KEYTRUDA. So we do have, I think, good experience and good listing capabilities here.
But I think — so it is important for the reasons I mentioned, but really, I think the innovation we’re looking at ultimately we want it to be listed from a national drug list perspective, but we really want to impact the entire population. So, for the kind of drugs we’re bringing in, we think they bring significant benefits and can ultimately lead to a good calculus as it relates to the pricing we get relative to the volume opportunities for patients. But, supplemental insurance is a good — gives us a good running start in many of those cases.
Yigal Nochomovitz
What is — that’s interesting. And I was going to ask about QINLOCK and NUZYRA. I know you won’t be able to comment specifically on numbers yet because you’re probably going to talk about on the call soon. But more conceptually, when you think about the price cut on the NDRL versus the trade-off on the upside on the volume, like what does that trade-off look like? I mean, is that generally a win when you take the price hit and you can benefit on volume? Like, how has that played out so far?
Josh Smiley
Yes. So far, for anything, again, we have now experienced on three products, ZEJULA, QINLOCK and NUZYRA. I think the case has been you get much — the volume pickup relative to the price reduction has been positive and quite positive. I think just as — and I can’t get into the data yet on QINLOCK. I would say that we started the negotiation — we went into the negotiation with, I think, pretty close to the maximum price you could have like RMB 500,000, and we ended in a place that we thought was pretty good. But I think it goes back to the focus on products that are — bring a lot of differentiation with them into an unmet need, a class that’s providing an unmet need. ZEJULA, I think, is probably a pretty good example. Our net price now after a few rounds of negotiation, a few cycles is somewhere in around — it’s got an individualized dosing. So it’s not an exact thing, but it’s around $2,000 a month on a net basis. And I think when we look at those kind of prices, plus or minus that on an NRDL basis that’s very — a very good relative to trying to pursue just a supplemental insurance type of approach, which could yield prices that are maybe more like two-thirds or something of the U.S. price, but again, for only 10% or 15% of the population. So the dynamics for us still feel very good.
Yigal Nochomovitz
Makes sense. Specifically, on the ZEJULA trajectory, I mean, are we — is it fair to say that you’re sort of out of the COVID headwind now with China reopening, or is there some expectation that the 4Q ‘22 and the 1Q ‘23 is still going to reflect some of the pressures from COVID, or is that over now?
Josh Smiley
Well, I think — first, I think when we look for 2023, our view even as people are coming back from Lunar New Year and otherwise, we’re starting to see I think the light at the end of the tunnel as it relates to non-COVID utilization in hospitals and everything. So, we’re, I think, quite optimistic about the remainder of the year in terms of patients able to get to the hospitals for their treatment, our sales reps able to educate physicians on the benefits of ZEJULA and otherwise.
I think we’ll see a little bit of an impact in Q4, and the impact was the lockdowns that were being experienced across China. And again, the impact that means is patients weren’t able to get diagnosed as early as they should have because they couldn’t get to the hospital or something like that. It’s not going to be — I mean, you know we haven’t released our Q4 results yet, but we’ve been pretty consistent in saying that impact in terms of sales of ZEJULA [Technical Difficulty]. But it is real, and we’ll see a little bit of that in January and the beginning of February, but we expect continued good growth, whether you’re looking at certainly year-over-year, but even quarter-over-quarter, the depression that we see from COVID impacts is not enough to prevent sort of quarter-over-quarter growth.
And again, I think we’re quite optimistic about the growth prospects for ZEJULA and for the business overall for 2023. But yes, there’s no doubt, I think if you look at the market overall in the — towards the end of ‘22, you’ll see — it didn’t grow as fast as it could have or should have, and again, that’s going to be because patients just weren’t getting diagnosed or treated as early as they could. And of course, that’s terribly unfortunate. But I think going forward, we’d expect to see really good — really good growth. And we’re positioned really well from ZEJULA perspective, first-line sort of all-comers opportunity is big. About 60% of our sales are in first line today, and that’s where we’d expect the growth to continue to happen in 2023.
Yigal Nochomovitz
So you are now, as I understand how dominant share or highest share, I don’t know if it’s majority share, but highest share in the PARP class in China, you’ve taken over from LYNPARZA. And then you’re also saying that in addition to share capture from LYNPARZA, you are growing the market as well with the growth in the first line. So both are working in your favor. Yes?
Josh Smiley
Yes, for sure. I’d say, as you know, the data — sort of the market share data in China is not as crisp, I guess, as it is in the U.S. So, we look at two different shares. I think if you look at just overall value share across the PARP category, I think we’re going to close the year at about 39% share. I think that’s going to be a little bit below LYNPARZA, but LYNPARZA has got reimbursement in prostate, for example.
So, when we tease it down to ovarian cancer patient shares, I think we’re pretty confident that we’re in the lead, and that will continue to grow. It’s mostly going to grow this year from, as you mentioned, growth in first line all comers. So, it’s going to be new patients who otherwise historically wouldn’t have gotten a PARP or going to get ZEJULA in first line. And again, we’d expect that — we’d expect the overall value share actually in 2023 for us to be the number one [Technical Difficulty]. We’re going to be number one by a considerable amount in ovarian cancer to cover the fact that LYNPARZA has got prostate cancer as well.
Yigal Nochomovitz
Okay. Yes. No, that’s a good detail, which I don’t think most people don’t realize. Okay. So then just moving on to some of the other products. So efgar, just to remind everybody, that product should be approved by the middle of the year. Is that right? And I think you mentioned you’re building out a 100-person sales force. Just talk a little bit about more the commercial plan there?
Josh Smiley
Yes. We submitted the BLA last summer. So there’s a not a PDUFA date in China. You talked about our historical success in terms of regulatory timelines. I think historically, in general, somewhere between 12 and 18 months is what’s fair to assume from submission to approval. We’re focused on trying to get that to happen within 12 months, so that would be by this summer. Of course, patients are waiting for this drug. And the other benefit of being approved earlier rather than later in ‘23 as it gives us a chance to negotiate for NRDL listing in early ‘24. So, we don’t have a definitive date, but so far, the regulatory interactions are going well and as expected. So, some — as early as this summer to the second half of this year is probably the right expectation. We’re planning for this summer. We are hiring and we’re completing the hiring plans for a 100-person sales force to launch GMG. I think when we look at myasthenia gravis in China, it’s about 200,000 patients. They’re in registries. They tend to be even more concentrated in terms of where they seek care, more concentrated than ZEJULA. So we think with 100-person sales force, we can get the vast majority of the physicians and patients who are seeking treatment. I think if you look at that 200,000 number and start to factor down for patients who aren’t responding well today to current therapies, there’s a clear 50,000-plus patient opportunity, sort of day one, and we want to stick with a 100-person sales force. We should be able to get to that pretty quickly.
We’ll submit — and this is for the IV administration, we’ll submit for subcu later this year. And then, we also are in all of the other Phase 3 trials that argenx is running on a global basis, we’re running the China portion of those trials. So, we’re anxious for the readout in CIDP coming up here soon on a global basis, where — part of that trial and then ITP and PV are coming soon thereafter. So, I think from an efgartigimod perspective, overall, going back to some of our earlier comments, I mean there’s a really significant opportunity here. Myasthenia gravis alone, I think is a really compelling opportunity that you start to stack in some of the other indications, and we’re really excited about this opportunity.
Yigal Nochomovitz
Okay. And then, the other big one — or one of the other big ones in the neuroscience vertical is KarXT. So just help us clarify a little bit the time lines there because, obviously, we already have the Phase 3 data from the U.S. study. The way you characterize it in the slides, I think, is sort of a medium to longer-term approval. I’m just wondering why that isn’t more proximal sooner approval. I know you have to do some bridging work, but just help us understand the time lines for getting that one on the market in China.
Josh Smiley
Yes. So I think first, we are — we’ve announced that we’re starting a bridging program in China. We have approval on that program itself, and it will start enrolling patients in the second quarter of this year. And then I think the reason that we have it a little bit — out a little bit longer is, I think everything else that we’re saying in the next two to three years even under the most conservative cases in terms of the regulatory path, they fit in that window.
Now our goal, of course, with KarXT will be once we start the bridging program, be able to leverage the FDA submission and approval in conjunction with the bridging program and trying to get back [Technical Difficulty] have a launch in the next few years. But we need to get going on the program and continue the regulatory interactions and otherwise. So I think it’s fair to assume that in the U.S., provided everything goes well for Karuna, there’s an approval sometime in ‘24, we’d like to be as close to that as possible given the bridging program and other things we’re working on. We’ll give more details as we get into it. But there’s — there will have to be negotiations and otherwise along the way to try to speed that up as much as we can. So, I think the more conservative date probably puts into that 2025-plus time frame. But certainly, we’ve never — I think, historically, we’ve always done better than the conservative time frames there.
Now, the opportunity is really significant here. I think, there are 8 million patients with schizophrenia in China, at least half of whom are in registries and actively seeking care and concentrated site wards or hospitals in China. So I think this is one. Going back to my earlier comments, it was compelling enough and big enough on a stand-alone basis and such innovation that we thought it made sense to use this as a way to start in neuroscience.
So, I think as we think about opportunities to invest behind the launch here, it’s probably at launch somewhere in terms of overall people and targets at somewhere probably between what we’re talking about for efgartigimod initially and where we are for ZEJULA, which has about 450 sales reps right now supporting it. So we’re still in a pretty concentrated launch, but for very significant number of patients.
Yigal Nochomovitz
Okay. And just remind us everyone, what exactly has been asked for with regard to the bridging work, or is that still being discussed, or is that already — that’s already sorted out? I mean, is it — I’m assuming you’re going to need to show the obvious things like the PK comparability and safety, but how much actually on efficacy are you going to have to demonstrate relative to the U.S. claims?
Josh Smiley
Yes. Of course, you know the space, right? I think in neuroscience — there were no Chinese patients in the EMERGENT-2. And the biomarker or even the PK data is probably not exactly — it’s not enough here, right? You need to see some kind of efficacy because it’s neuroscience and it’s not a biomarker driven. So I think we certainly need to show some trends and efficacy. We don’t need to — we’re not running a full Phase 3 program or anything there.
As you know, these are short-term studies to begin with, right? We’re not — we’ll be able to leverage the safety data and otherwise from a global perspective. So, our bridging program, and we haven’t given sort of full details on it, does look at efficacy in schizophrenic patients in China. It doesn’t need to be a fully powered Phase 3 program. So, I think that’s why I’d say I put all those things together, Yigal, and our goal will be to get all of that done and be in a position that soon thereafter, the U.S. approval, if it comes we’ve got enough data to be able to significantly — being able to significantly discuss the regulatory path possible.
And I guess I’d put that back to, well, adagrasib, we’re in a similar position. We had to do bridging work in China but we’re now more confident on the end date there because there’s been a U.S. approval and otherwise. So I think that’s — I wouldn’t read too much into where we put [Technical Difficulty] on the chart. It’s just we are a step behind there and that there hasn’t been a U.S. approval yet for us to leverage in regulatory discussions. But we do — we are starting the bridging program. So that’s, for us, the best case is I mean when we haven’t participated in the Phase 3 is you have a U.S. approval based on Phase 3. We’ve started a bridging program and we’re part of broader next-generation Phase 3 programs. We’re going to have all of that on KarXT and we’ll be waiting for the U.S. approval and really try to make sure that we’re speeding up the regulatory path as much as possible.
Yigal Nochomovitz
Okay. So, maybe if we could just kind of run through kind of lightning around, I guess, some of the — you have so many assets, we can’t get to everything. But just I think to help people understand what’s likely this year versus say 2024 in terms of some of the near-term approvals? I mean, my list, I have TIVDAK is one, MARGENZA, the MacroGenics, odronextamab, repotrectinib, Mirati 1, we talked about the FGFR2b and then the antibiotic, SUL-DUR.
Josh Smiley
Yes.
Yigal Nochomovitz
Could we just kind of run through super fast just roughly where those might fall out in the next, say, 18 to 24 months?
Josh Smiley
Yes, sure. [Technical Difficulty] I mean maybe the most relatively soon approval as we’re working through the final aspects of submission there. I think for us, that’s probably a relatively — in terms of products to really care about in terms of commercial opportunity. That’s probably one of the smaller ones but that’s close…
Yigal Nochomovitz
Sorry. Josh, you cut out for a second. I didn’t hear which drug you were referencing.
Josh Smiley
The MacroGenics. Yes. I’d say that’s — we’re in the final process of submission there. So that should be a relatively sort of near term. Similarly, for SUL-DUR, we’ve already submitted. It’s got breakthrough priority review process, but it’s antibiotic and complex. So we’ll see how — there’s probably a lot of review stuff that goes into that just because it’s sort of a combo product and otherwise, but that’s one that we should expect regulatory action on sometime in the next 12 to 18 months for sure.
So, those are probably the two closest other than efgartigimod, which we’ve already talked about. I think then we said repotrectinib. We are having pre-NDA meeting with [Technical Difficulty] later in this quarter, and we’d expect to submit sometime by the end of the year. Again, that’s also in conjunction with the Bristol-Myers on a global basis. So that’s more of a near-term one. And of course, then, as I mentioned, the review process on these can be anywhere from 12 to 18 months.
Of course, with efgartigimod, subcu is the next piece we submit this year and expect regulatory action in 2024. Adagrasib, we’re in the midst of regulatory discussions. So, as I alluded to in our KarXT discussion, we leveraged the U.S. accelerated approval. We’ve already started our own bridging program, and we’re part of the conformatory Phase 3 K-12 trial. So those things together are — the package now that we have regulatory [Technical Difficulty] because that’s not [Technical Difficulty] negotiated discussion. We’d expect to hopefully have that on the market sometime in the next — in the nearer term in the two-year period as well.
I think then on bemarituzumab, our big — this is gastric cancer in conjunction with Amgen, we’ll join their FORTITUDE-101 study this year. And as soon as that’s complete, then we would look to leverage that submission. Of course, that’s going to be sometime more in the 2025 time frame. We talked about KarXT. Let’s see. I think those are probably the most proximate — I’m trying to think about — well, okay, then, of course, LUNAR, which is — probably want to spend a few minutes on that.
Our expectation is as Novocure has said, there’ll be a full data reveal and readout at a major medical meeting sometime in the middle of this year. I think the speculation is ASCO, but that’s — I don’t think they’ve said anything — hasn’t been accepted or anything yet as far as I know. But that — they will — they are preparing to submit the second half of this year for approval. And we would — we participated in LUNAR, and we have enough Chinese patients and sites and data to trigger submission. So, we don’t need bridging work or anything in China. So we would trigger our submission off of the U.S. submission and try to do that as soon thereafter as possible. The process is a little different because it’s medical device. But for the most part, it’s pretty comparable. So, we would look to be able to submit LUNAR for Chinese approval as early as the second half of this year. But again, that’s going to be triggered off of what Novocure does in the U.S. I think those are probably — I don’t think — I’m trying to think if I missed anything there. I think those are the big bets so far.
TIVDAK, TIVDAK, yes, of course, we’ve joined the confirmatory Phase 3 trial. So again, we’ll be in regulatory discussions to try to leverage the accelerated approval and the fact that we are now in the confirmatory trial to try to speed up that approval in China. So, I think those probably cover 7 or 8 — odronextamab. The pivotal — what could be a pivotal Phase 2 study should complete this year. And then I think particularly if you look at follicular lymphoma, I think the data there is pretty exciting. So, we look to as quickly as we can begin regulatory discussions and submission for approval there.
Yigal Nochomovitz
That’s the CD20xCD3?
Josh Smiley
Yes. That’s right, Regeneron. Yes, with Regeneron. Yes. And I think the data in DLBCL looks pretty good, too. So, we’d have to look and see what works out. But again, I think that data will be, I think, relatively complete by the second half of this year, and we’ll see what position that puts us in for a potential submission in China.
Yigal Nochomovitz
Okay. Well, let’s talk about LUNAR because I think assuming that is going to be the — it is kind of a big data readout. I mean, you had the top line, which gave us the headline, but we don’t have a lot of the numbers. And obviously, it was — stock obviously benefited very nicely from that readout. So, that’s great. But I have been getting a lot of questions on it. And I think people are trying to understand a little bit what the conclusions will be when we see the full data at ASCO. I mean, it was not a simple trial in the sense that it started. I believe if you look on clinical trials, it started December 2016. And then at that point, it was kind of built as a trial for platinum failures. But then as you know, the landscape shifted rapidly with KEYTRUDA approval in May of 2017. And then again, there was a second one in squamous in October ‘18. So, a lot of people are saying, well — okay, well, it was a platinum failure as a design, but from a sort of de facto basis, most of the patients did receive some form of IO in the frontline. So therefore, maybe more of them received the docetaxel plus the TTF in the second line given that they probably wouldn’t want to retreat them with the IO. And then you look at the data, and obviously, you trended on the docetaxel plus TTF but didn’t hit stat sig. And you did hit stat sig on the overall study, obviously, which would — the obvious inference is that the IO plus TTF made a very significant difference in pushing you over to statistically significant territory. So, that’s kind of the backdrop, all of us, you obviously know. But that’s been kind of the question as to how to think about this in terms of the applicability of TTF in this sort of situation. So, anything you can say there would be very helpful.
Josh Smiley
Yes. And of course, I can’t say anything about the [Technical Difficulty] that will be presented at a medical meeting. What I can say is we participated in the trial. We enrolled our patients at the end of the trial. So, we have said that the patient set that we have, which is a subset of course, of the overall LUNAR data is representative of standard of care. So, the majority of patients that we enrolled did have checkpoint in first line. And again, we’ll have to see the data. But our plan, I can tell you what our plan is, is to be ready to submit post Novocure submission. And our plan is for a broad label in second line, so that it’s going to be Tumor Treating Fields in conjunction with whatever the physician choice for standard of care is in second line there. And based on what we know of the trial design and data, we are expecting a broad label and broad approval. I can’t dispute any of the sort of speculative analyses you do based on what we’ve seen so far. But I think we’re as we move from — I think we said we moved from cautiously optimistic about the opportunity with probably emphasis on cautious to — again, from everything we know and we don’t know more than the top line data and — but we know when we enroll patients and otherwise.
So, I think it’s — I think I would say at this point, we’re all going to see and learn more about the data in the coming months. But our view is the trial was powered for overall survival. It hit. I think the sub-analysis and what Novocure said in the press release was that both — while one was statistically significant, the other trended toward benefit. So again, I think a lot to learn from the data itself, but our view is it’s — our base case is we’re going to be submitting for a broad second-line label and then our data in China will be supportive of that submission. If that’s the case, right? Okay. And there’s a lot of ifs there, right? If that’s the case, we see a really compelling opportunity here. I think the biggest positive development beyond the trial itself is the move in China toward making innovative medical device that’s eligible for reimbursement as early as ‘24, but I think certainly by 2025, when that probably is the window that we’d be looking at a potential — maybe have a potential approval in ‘24 for 1/1/25 if we get to have this be available for broad reimbursement. I think that’s — that could be a huge commercial opportunity, right. We know the numbers, almost 780,000 new patients a year diagnosed with first-line lung cancer. Of course, they’re going to progress. So, you start to do the factors on the numbers [Technical Difficulty] to get to a pretty compelling sort of patient number. Our experience with Optune has been — all kinds of other considerations from where we think — this is going to be a meaningful technology in China.
Yigal Nochomovitz
I mean if you can comment, when we see the data at the medical meeting later this year, will we be able to see some of the subgroup work? So, for instance, looking specifically at the China patients and basically checking the box that obviously wasn’t powered just for the China patients, but nonetheless, conclusions there in that subgroup were consistent with the overall study, or if you can say that now, then that would also be great. But I don’t…
Josh Smiley
I can’t say it now, and I can’t comment — I mean, Novocure owns the data disclosure here. Of course, we will — as a partner, we’re going to be closely aligned and all those kind of things. But I think that — I mean I certainly know that part of the reason to have a relatively brief description of results in the press release was to preserve the opportunity to go into good depth at a major medical meeting. So, I can’t give you all the details on which subgroup analyses will be shown and otherwise. But I certainly know the plan is to use the medical meeting to fully elucidate the data in the trial on — you certainly will have from us post meeting — you’ll get a view from us on what we’re going to do with the data. And again, until you — and last or until otherwise, you should assume that our view is this is going to be — we’re going to be moving full speed ahead on preparing our submission and preparing for a broad second-line label.
Yigal Nochomovitz
Okay. And let’s just switch over to the — your internal pipeline. You mentioned that the IL-17 Humabody earlier. So I mean, according to what you stated, I believe you said it’s going to be in a global Phase 2, either end of ‘22 or basically any day now, early 2023. So, can you comment on where that one stands if you’ve kicked off the global Phase 2? And I think you’ve also commented around potentially partnering that in the other direction, meaning to people outside of China, maybe United States or Europe. Is that still a…
Josh Smiley
Can you hear me?
Yigal Nochomovitz
Hi. Yes. Can you hear me?
Josh Smiley
Yes.
Yigal Nochomovitz
Is that still the game plan in terms of the partnering, essentially like the reverse licensing strategy?
Josh Smiley
I think so. So first, we will start a Phase 2 program this year, our biggest — our challenge over the last number of months has been CMC ensuring we have enough product to begin and complete the Phase 2 program. We’re working through those pieces now. So I think everything had worked perfectly. We had started the global Phase 2 in the fourth quarter last year. It didn’t work perfectly. These are all solvable issues, but we’re getting to point now where we’re building enough supply that we can start and finish the trials.
I think, yes, I mean, I think we’re quite excited about the — there’s really a novel opportunity here. And if we can, in a broader setting, demonstrate IL-17 like efficacy with topical safety, which is the goal here, and that opens up a very broad opportunity in psoriasis. We probably alone are not the best company to fully leverage that opportunity. As you know, the very big players here in — around the world in psoriasis and in these markets to, I’d say, fully take advantage of this novel technology. A partner probably makes sense. We need to get into Phase I. And I think the right time to partner would be in the next year or two as we’re beginning the study and otherwise.
So again, I think our hope is that this is a very compelling technology. And as such, with some data, it will attract interest from others, and we’re going to continue to invest in this and push it forward. But I think if we get to the point of beginning to plan for commercialization. So, while we’re still in Phase 3, I would be reluctant to want to do this one on our own. [Technical Difficulty] There are going to be other things in our pipeline that if it’s a gastric cancer opportunity [Technical Difficulty] in the U.S., we’ve got really good expertise there. And I think those are things that we could choose to do ourselves. But I think broad immunology in the U.S. is that, for sure, I think, companies who are better positioned than us to do that, doesn’t mean we may not be part of that, but I think we would look for a partner here.
Yigal Nochomovitz
Okay. That makes sense. And then we’re just kind of at the top of the hour, but maybe just last question. I think you talked a lot about at the beginning about the innovation aspect and how you’re differentiated there. What’s the next asset after the IL-17 that’s getting close to a clinical study — that’s being derived from your internal R&D engine?
Josh Smiley
Yes. We have a Claudin antibody in Phase 1 that I think we’re — we think it’s got an opportunity to be differentiated. I mean, that’s a growing interest class and competitive, but I think that’s one that we’re hopeful that there’s differentiation. I think the next is our [Technical Difficulty]. So on the immunology sort of — I mean, oncology, but the immuno-oncology side, that’s one that we’d expect to start and begin to generate clinical data in this year. And I think that’s a space that is interesting, but I think still pretty open. So, those are the two for this year, I think I look at it in terms of actually generating some clinical interest and validation.
Yigal Nochomovitz
Okay. This is great. We can keep going for another hour or two, but we have limited time. But thanks, Josh. I appreciate the time. Very interesting. And I’m sure we’ll be chatting very soon.
Josh Smiley
Yes. No, thank you. And sorry about the technical issues on my side. [Technical Difficulty]
Yigal Nochomovitz
No worries.
Josh Smiley
Okay. Thanks, Yigal. Okay. Bye.
Yigal Nochomovitz
Bye.
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