Zai Lab Limited (ZLAB) Q3 2022 Earnings Call
Zai Lab Limited (NASDAQ:ZLAB) Q3 2022 Results Conference Call November 10, 2022 8:00 AM ET
Company Participants
Billy Cho - Chief Financial Officer
Samantha Du - Founder, Chairperson and Chief Executive Officer
Josh Smiley - Chief Operating Officer
Harald Reinhart - President, Head of Global Development, Neuroscience, Autoimmune and Infectious Diseases
Jonathan Wang - Chief Business Development
Conference Call Participants
Michael Yee - Jefferies
Yigal Nochomovitz - Citi
Anupam Rama - J.P. Morgan
Ziyi Chen - Goldman Sachs
Jonathan Chang - SVB Leerink
Seamus Fernandez - Guggenheim
Operator
Hello, ladies and gentlemen. Thank you for standing by, and welcome to the Zai Lab’s Third Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, today's call is being recorded.
It is now my pleasure to turn the floor over to Billy Cho, Chief Financial Officer of Zai Lab, who will make introductory comments.
Billy Cho
Thank you, operator. Good morning, good evening, and welcome, everyone. Zai Lab recently issued a press release providing the details of the company's financial results for the third quarter of 2022, as well as some recent product highlights and corporate update. The press release is available in the Investor Relations section of the company's website at ir.zailaboratory.com.
Today's call will be led by Dr. Samantha Du, Zai Lab’s Founder, Chairperson and Chief Executive Officer. She'll be joined by Josh Smiley, Chief Operating Officer, who will discuss advances in our oncology product candidates and Dr. Harald Reinhart, President and Head of Global Development, Neuroscience, Autoimmune and Infectious Diseases, who will speak about the progress we made in those three therapeutic areas. And I will discuss the performance of our marketed products, included with comments on our financial results. Additional executives will also be available to answer questions during the Q&A portion of the call.
As a reminder, during today's call, Zai Lab will be making certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our business plans and objectives and timing and success of our clinical trials, our sales and revenue forecasts for our products and product candidates, regulatory applications and commercial launches. Such forward-looking statements are not guarantees of future performance and therefore you should not put undue reliance upon them. These statements are subject to numerous risks and uncertainties and actual results could differ materially from what we expect due to a various factors, including those discussed in our SEC filings.
At this time, it is my pleasure to turn the call over to Zai Lab's Founder, Chairperson and Chief Executive Officer, Dr. Samantha Du.
Samantha Du
Thank you, Billy. Hello, everyone, and thank you all for joining us today. The third quarter marked another period of strong execution across our company, including revenue growth continuing and significant progress in our needs and late stage pipelines and business development. Over the next few quarters and years ahead, I have little doubts that will continue to strengthen the company through growth and productivity.
Before I get into specific details, I would like to say that I’m very proud of all of our employees across the globe, especially regarding Zai’s ability to deliver time and time again, no matter what challenges present themselves. We have built a great culture at Zai focused on innovation to bring transformative medicines to address unmet medical needs. Fundamentally, we have a very productive year so far and we are anticipating finishing 2022 having delivered on more of our key corporate priorities.
We continue to demonstrate resilient revenue growth in the third quarter, despite some ongoing challenges from COVID in certain regions in China, we expect to deliver significant revenue growth for years to come. Our products with late-stage development candidates continue to see strong advances, highlighted by our agreement with the NMPA on the development plan for the KarXT for a bridging study in schizophrenia in China.
On the business development front, we recently announced a strategic collaboration with Seagen for TIVDAK which strengthens our ability to address unmet medical needs in women's cancer in China. In addition, we expect to realize significant synergies, given our existing commercial infrastructure and strategic position in this important disease area. In summary, we remain confident in the fundamental strength of our business and our ability to create significant shareholder value.
With that, I would like to turn the call over to Josh. Josh?
Josh Smiley
Thank you, Samantha. It's been an exciting first quarter as Chief Operating Officer of Zai. Although we currently face some challenging global economic headwinds, to echo Samantha's sentiment, it has been amazing to see the focus and determination of everyone at Zai to continue to deliver on our mission of bringing transformative medicines to patients in China and around the world. The fundamental drivers of value at Zai Lab are strengthened by our experienced leadership team, global talent and first or best in class pipeline. We announced last month that Alan Sandler had left Zai and we expect to name a new Head of Global Oncology Development soon.
I'm very excited to support Samantha on the operational side as she personally leads our global oncology function in the interim. I'm also very excited to welcome Dr. Peter Huang to Zai Lab to lead and oversee our discovery efforts in translational medicine. Peter joined the company from Zentalis Pharmaceuticals this week and has a strong track record in leading internal discovery research, as well as external collaborations. We look forward to driving innovation in drug research and development under his leadership. I also had the opportunity to welcome Alette Verbeek to Zai Lab’s as Senior Vice President, Head of Global Strategic Partnering. Alette joined the company from Novartis and she is our first employee based in Europe. She is responsible among other things for leading our European business development efforts.
Beyond our commercial progress, which Samantha touched on, I'm excited to highlight key business development updates from the third quarter, especially our new regional and highly synergistic collaboration with Seagen for TIVDAK. As many of you know, TIVDAK is the first and only ADC approved in the U. S. for the treatment of adult patients with recurrent or metastatic cervical cancer. This collaboration further strengthens our oncology leadership in China, particularly in women's cancer, where we have established a strong sales team and portfolio, including ZEJULA and others. We will leverage such leadership as our team works to commercialize and accelerate patient access to TIVDAK in China. We will join the ongoing global TV-301 Phase 3 confirmatory study and certain potential global studies and other indications.
Of course, we continue to evaluate other business development opportunities as well, including potentially transformative opportunities and partnerships for our global pipeline. We've been very disciplined historically and plan to be even more selective in the future in terms of quality deals that are synergistic with our existing portfolio.
In terms of commercial progress, we continue to see strong revenue growth led by ZEJULA. As you may be aware, in October, the FDA expressed some concerns to our partner GSK regarding the overall survival data from GSK's NOVA study in the U.S. and the approved indications for ZEJULA in the U.S. in the recurrent ovarian cancer setting. GSK is currently considering the FDA's feedback an appropriate next steps, but I'd like to highlight today that we do not expect this development to impact our full approval of ZEJULA in the second line all comers setting in China.
Notably, unlike GSK's U.S. approval, which was based entirely on GSK's NOVA study, the NMPA's full approval of ZEJULA in the recurrent ovarian cancer setting is based on a separate study, the NORA study, which is a Phase 3 randomized double blind placebo controlled study of ZEJULA the company independently conducted in China. While the NORA study is not fully mature to date, we are seeing favorable trends in overall survival. We also do not anticipate any impact to our first line ovarian cancer ZEJULA indication in China. The FDA's discussion with GSK does not apply to this indication. This first line indication is the largest ovarian cancer market opportunity for Zai, accounting for over 60% of ZEJULA's revenue in 2022 in China and we expect this percentage to increase through the remainder of this year and beyond.
Moving to clinical development for our other oncology assets, most recently at SITC, we showcased two assets with our internally developed pipeline and with global rights, including presentations on two key early stage global programs: ZL-1211, an anti- Claudin18.2 antibody and ZL-1218, an anti-CCR80 antibody. For ZL-1211, we presented data showing enhanced anti-tumor activity combined with standard of care chemotherapy in in vivo animal models. For ZL-1218, beyond what was presented in the AACR earlier this year, the data supports ZL-1218 depleting Treg cells from human tumor samples in vitro and in vivo animal models and our single cell RNA sequence data indicates that ZL-1218 targets the highly suppressive Treg populations.
In November 2022, our partner Blueprint Medicines presented an update on a Phase 1/2 SYMPHONY trial. The data supports the plan to develop BLU-945 in combination with osimertinib in first-line EGFR L858R mutation-positive non-small cell lung cancer. EGFR mutation is one of the most common mutations in non-small cell lung cancer, especially in China. We work closely with Blueprint Medicines to accelerate the global development and potentially change the treatment landscape for EGFR mutated non-small cell lung cancer patients in China.
Further, in September 2022, our partner Mirati presented results from KRYSTAL-1, a multicohort Phase 1/2 study evaluating adagrasib with or without cetuximab in patients with advanced colorectal cancer harboring a KRASG12C mutation at the ESMO. We believe the data continue to demonstrate that adagrasib is potentially a best in class KRASG12C inhibitor in CRC. Looking ahead, Mirati expects potential U.S. FDA approval and commercial launch in the United States for adagrasib as the treatment for patients with non-small cell lung cancer, harboring the KRASG12C mutation who have received at least one prior systemic therapy with the PDUFA target action date of December 14, 2022. We remain confident that adagrasib in China can be both first in class and best in class. We'll try to accelerate the regulatory pathway for second line plus non-small cell lung cancer monotherapy by leveraging the global data package for the FDA approval, the ongoing PK study in China and the global confirmatory K12 study which Zai Lab joined in the second quarter of 2022.
We also recently launched our Trust Report. This report provides updates on our environmental, social and governance or ESG commitments and activities since the release of our ESG report last year and describes our latest ESG strategy, which we are calling Trust for Life. Zai's Trust for Life strategy includes three commitments: to improve human health, create better outcomes and act right now. As part of our commitment to improve human health, we seek to reach 1 million patients with Zai medicine by 2030.
And now I will turn to Dr. Harald Reinhart to discuss progress in our autoimmune and neuroscience therapeutic areas. Harald?
Harald Reinhart
Thank you, Josh. I'm excited for the opportunity to share with you today the progress across our autoimmune, neuroscience and anti-infective therapeutic areas. Let's start with VYVGART or Efgartigimod. On the regulatory front, we are happy to share that our partner argenx continues to make excellent progress. With the FDA, argenx recently announced the submission of a BLA for efgartigimod SC subcutaneous for the treatment of generalized myasthenia gravis or gMG in adult patients. As a reminder, we had sites submitted to BLA for efgartigimod IV intravenous for the treatment of patients with gMG in China in the second quarter and expect approval next year.
On the EMA front, argenx also announced that the European Commission has granted marketing authorization for VYVGART as an add-on to standard therapy for the treatment of adult patients with gMG who are acetylcholine receptor autoantibody positive. Zai continues to support argenx on indication expansion in China and worldwide and we soon expect to launch the proof of concept trials in two autoimmune renal diseases.
Moving to KarXT, the combination of xanomeline and trospium, which we are developing with our partner Karuna in acute schizophrenia. Zai Lab has obtained agreement with the NMPA on the development plan for a bridging study in China. If you recall, results from Karuna’s EMERGENT-2 trial were released this August. This pivotal trial met primary endpoint with KarXT demonstrating a statistically significant 9.6 reduction in PANSS total score compared to placebo at week five. In addition, Karuna initiated the Phase 3 ADEPT-1 study evaluating KarXT as a treatment for psychosis in Alzheimer’s disease and has completed enrollment in the Phase 3 EMERGENT-3 trial in schizophrenia. Karuna expects top line data from the Phase 3 EMERGENT-3 trial in schizophrenia in the first quarter of 2023.
And lastly, our internally developed topical IL-17 product ZL-1102 continues to progress towards initiation of a global Phase 2 study in chronic plaque psoriasis in the fourth quarter of 2022, subject to further feedback from regulators. We recently presented the results of the Phase 1 proof of concept study for ZL-1102 at the 2022 European Academy of Dermatology and Venerology Congress. Regarding our Anti Infectives portfolio, we had several noteworthy developments. For ZL-2401 or [indiscernible], we are on track to submit an NDA for the treatment of sirobactibomani eye infections to the NMPA by the end of this year. And for Omadacycline NUZYRA, we plan to initiate post approval commitments studies next year and have started the dialogue with CDE about operational details.
And now Billy will speak about progress with our commercial products and financial results. Billy?
Billy Cho
Thank you, Harald. Zai Lab continued to execute well with strong results delivered in the third quarter. For the three months ended September 30, 2022, our total revenues were $57.5 million compared to $43.1 million for the same period in 2021, representing year over year growth of 33%.
Net product revenues for the period were $39.2 million for ZEJULA compared to $28.2 million for the same period in 2021, representing 39% growth, $10.7 million for Optune which we expect to resume its growth trajectory this quarter, $5.5 million for QINLOCK compared to $4.3 million for the same period in 2021, and $1.5 million from NUZYRA compared to nil for the same period last year. We believe QINLOCK and NUZYRA are on track to enter negotiation with the NMPA regarding potential inclusion in the NRDL by the end of the year.
R&D expenses were $99.5 million for the three months ended September 30, 2022, compared to $55.1 million for the same period in 2021. The increase in R&D expenses were primarily due to the $30 million upfront payment for the Seagen deal in the third quarter of 2022, along with increased expenses related to ongoing and newly initiated clinical trials and higher payroll and payroll related expenses from increased R&D headcount and share based compensation.
SG&A expenses were $66.6 million for the three months ended September 30, 2022 compared to $59 million for the same period in 2021. The increase was primarily due to payroll and payroll related expenses from increased commercial and general and administrative headcount and share based compensation as Zai Lab continues to enhance infrastructure and commercial operations [indiscernible] many new drug approvals and launches and deliver strong top line growth. We expect our net product revenue to exceed cost of goods sold and commercial expenses in 2023.
Net loss was $151.2 million for the three months ended September 30, 2022 compared to $96.4 million for the same period last year. The increase in net loss was primarily due to $30 million upfront payment for the new collaboration and license agreement with Seagen and an increase in foreign exchange loss of $36.7 million, which is a non-cash adjustments. Net loss per ordinary share during the three months ended September 30, 2022 was $0.17 compared to $0.10 for the same period in 2021. Net loss per ADS during the three months ended September 30, 2022 was $1.68 compared to $1.01 for the same period in 2021. As of September 30, 2022 cash and cash equivalents, short-term investments, and restricted cash totaled $1.12 billion, which we expect will provide us with cash runway through 2025.
We would now like to turn the call back over to the operator to open the line for questions.
Question-and-Answer Session
Operator
We would now like to open the line for questions [Operator Instructions] Your first question comes from the line of Michael Yee from Jefferies.
Michael Yee
Hi, good morning and thank you for the updates. We have two questions. Maybe Samantha or Billy you could talk a little bit about the fluid dynamics in China as it relates to, obviously, you shut downs and just general ongoing dynamics, even as it relates to, say, doing business development with U.S. biotechs. For example I noted in the Q, more updates around security measures and restrictions around cross border data flow and data information on Chinese patients. So maybe just make some high level comments about that, because it's certainly an issue that has been weighing on investors? That's question number one.
And then just a question number two. I know previously the company has suggested NRDL as possible or at least in discussion for devices. So I just wanted to hear an update on that since LUNAR is coming for TTS and that could be important? Thank you.
Billy Cho
Great. Thanks, Mike. So I'll probably get started on your first question and maybe Jonathan also can kind of chime into the BD front and Samantha can make some comments from any overarching regulatory point of view and then [indiscernible] your second question. Now in relation to the COVID situation, the challenging operating environment due to the ongoing flare up, it is a reality, we've been talking about it, and I'm sure you've seen it. It's more or less a global phenomenon and we are spending a lot of time covering it.
Now this year starting really from early on this year and really throughout we have been sort of discussing about how we've been able to kind off operate even in this environment continue to execute well and we've been able to show great durability and resilience due to some of the specific kind of creative things that we've been doing. But it is -- I mean, Mike, I'm not going to sugar coat. I mean, even probably today you're probably seeing news flare-ups happening in China and the continuation a dynamic geo-COVID policy.
So we expect to have additional sort of -- we're monitoring it very closely. We're staying agile, we're very confident that we can kind of grind through this environment and we'll hope for the best in terms of sort of getting into some sense of normalcy in the not too distant future. And if that happens, we think that will be positioned even better. Now in terms of your other question on BD and are there any sort of from a geopolitical or regulatory hurdles for us to continue to do BD deals and to do very important strategic -- important transactions going forward.
Maybe I'll have John Chime in here and then Samantha can add if she can.
Jonathan Wang
Mike, just on the second part of that question. The short answer is, there has been no impact. There is no impact -- last year we sold down many significant deals. We just announced the deal last month as Josh said, with a very reputable company Seattle Genetics for our commercial stage asset. China is the second largest pharmaceutical market, whether small companies or big companies, it is too important to miss. And it's not only because of the commercial opportunity, more importantly, it's also to help them accelerate the global timeline. And if you look at the companies that do well in China, like perhaps [AVs] (ph) and others, I mean they're contributing 20%, 30% of the global patient recruitment in pivotal trials coming from China.
At the end of the day, we are providing important medicines, basic medicine to patients. So we do not think this will be affected even though there are great, obviously, geopolitical concerns around. But so far for Zai, all of our current deals are negotiating deals. It is a topic to be discussed, but it's never been a roadblock for us or delaying any of our timelines.
Samantha Du
Yeah, Mick, I’ll also come back to you number three questions regarding government. And I must say as I had issued some guidance about including medical device in the national reimbursement. And I think they definitely have been trying very hard, even though now all the medical devices, innovative guys can get local government sponsored reimbursement, but putting up international levels [indiscernible].
So they're talking about in two, three year terms, so it's coming. Now it’s like they are talking about five to 10 years terms and even on the NRDL inclusion, more and more government talk about number ones, how much innovation you have, are you the first in class and best-in-class even specifically this year highlight for royalty GE's for children's diseases. So that's all helpful to the positive trend.
Michael Yee
That's great. Thank you. Great news. Thank you.
Samantha Du
Sure. Thanks, Mike.
Operator
Thank you. We will move to our next question and the question comes from the line of Yigal Nochomovitz from Citi. Please ask your question.
Yigal Nochomovitz
Yeah. Hi, Samantha and team. Thanks very much for taking the question. I just wanted to follow up on the comments regarding the NOVA versus NORA comparison that you're making. Obviously it's encouraging to see the favorable OS trend in NORA. So just a few questions there. Can you comment on what percent of maturity of the overall survival in NORA? And are you seeing stronger OS trend in geographic or the non- geographic group? And then what's your current hypothesis as to why in your China trial, the NORA so far the OS is trending favorably whereas obviously in the NOVA trial from GSK, it didn't end up that way? Thank you.
Bill Cho
Thanks, Yigal. Josh, you want to kick it off and others can chime in if needed.
Josh Smiley
Yes, sure. Good morning, Yigal. Thanks for the question. I think first in the NORA trial, we'd expect to achieve the number of events in 2023. So we're well along toward majority, but don't have a specific percentage there. And we -- what we can say is, at this point having looked at the data that the numeric trend is favorable in both populations. But, again, I'd remind everyone that the study was powered for PFS not OS and we will disclose that data in 2023 when the study is complete, but we take patient safety very seriously and based on our analysis of the data, given what we had -- what we know from the NOVA study, we feel confident that there is a positive risk benefit in the data we're seeing from an overall survival perspective as well.
So I think that's probably the most important thing I keep re-emphasizing. We do have a separate study, full Phase 3, full approval based on PFS. I think in terms of why we may see differences, probably the most significant difference that we know of in the studies is the fact that we used an individualized dosing regimen in [indiscernible] the dosing based on weight and platelet counts between 200 milligrams and 300 milligrams and we think that allows patients to stay on the drug, have fewer side effects and get the full efficacy benefit that could be one of the reasons.
Again, as you know, looking at the NOVA study, it wasn't powered certainly for overall survival and all the challenges that come with crossover and otherwise. So again, we're confident in the studies that we see in China and confident that we're providing a real and meaningful benefit to patients, both in first line and second line all comers settings.
Yigal Nochomovitz
Okay. And then, Billy to just on commercial business, ZEJULA had another strong growth quarter-on-quarter of 15% similar to last quarter. So this is the conclusion is that the COVID [indiscernible] given the comments you made earlier, but just in general, do you think the COVID headwinds are pretty much behind us and when would you feel comfortable given the initial revenue guidance for ZEJULA?
And then for QINLOCK, obviously there was a very, very strong rebound over the second quarter. If you could elaborate a little bit on the dynamics there. And then finally for Optune, obviously, you said you are year-on-year. It's been down a little bit relative to the first half so could you just give us some thoughts as to how that trajectory will evolve? Thank you.
Billy Cho
Yeah. Thank Yigal. On ZEJULA, I think -- I mean, look, we're still in a challenging operating environment as we've talked about before, but we've be able to navigate this well. We expect to continue to navigate it well. And while we don't give guidance on specific revenue and margins et cetera at this time, we feel very good about reiterating our statements that ZEJULA is positioned to be the market share leader by no later than next year. And we look forward to delivering on that goal.
On QINLOCK, you're right, we had a great quarter in third quarter. Now, if you recall in the last earnings, we mentioned that we adjusted the pricing to prepare for the NRDL negotiations, clearly that helped sort of -- drive some kind of initial demand right off the bat and it continues to be endorsed within the best practice guidelines, not only in advanced line, but even in earlier lines as well. It actually got a little bit of an upgrade on second line so that can help build awareness for QINLOCK.
So we look forward to getting over the hurdle if we can with NRDL, let's see if we can get to the rational pricing level that we like or that we can access and next year if under those circumstances we should have good trajectory. And I think Yigal you were asking about Optune on the last piece. You're right. So we had a flat quarter year-over-year at just shy of $11 million and as you heard from the opening remarks, we do expect to resume growth in fourth quarter and position us well for 2023 and beyond.
What really has been going on for Optune, as you may know is, Optune has -- it’s been -- the market access strategy has been around in the top cities supplement insurance, very helpful, and that's a real growth area and in the large hospitals. So when you have cities like Shanghai, which is in the past, but even like [indiscernible] more recent one, it's going to have a more of an impact in let's say a nationally reimbursed treatment option like ZEJULA where we have more kind of strategies to maneuver. So I think those are the comments that we'd like to kind of message to you.
Samantha Du
Also, Yigal, there are two things I would like to add here. First of all, I don't think [indiscernible] situation is over, especially the [indiscernible] still not over. Number two, in terms of Optune, the major reason cost not only we say is a COVID right? But also because all the major hospitals now very few people can take surgery and so surgery has to go through a very stringent analysis and waiting for COVID testing report all of that. Bottom lines is that, there is a live surgery taken on the -- because we usually [indiscernible] patients took a surgery, then we'll put it on right. So this is also another reason cause the year-over-year we didn't see a significant growth or even further growth.
Yigal Nochomovitz
Thank you.
Operator
Thank you. We will take our next question and the question comes from the line of Anupam Rama from JP Morgan. Please ask your question.
Anupam Rama
Hey, guys. Thanks so much for taking the questions. Two really quick ones from me. The $1.2 billion of cash, one question we frequently get is kind of what is the cash runway sufficient to. And then on 1102, the internal pipeline program. I think, correct me if I'm wrong, this will be the first global study that Zai Lab conducts on its own. How should we think about the geographic breakdown of the study as you think about Asia, US, EU and other regions? Thanks so much.
Billy Cho
Thanks, Anupam. I'll give you -- we will give the second question to Harald. On your first question on cash runway, we feel pretty good about having runway through 2025. As we stated our revenue even in this environment we can -- we have a durable resilient revenue curve, we expect to see that, we just flat out things [Technical Difficulty] the demand is there and we see it. Now, we have some on the supply side issues with COVID, but the demand is clearly there for our portfolio in the drugs that we're trying to bring in’s we feel pretty good about that and by the way, that's including BD deals along the way on an annual basis.
So with that, I'll hand it over to Harold on the second question on 1102.
Harald Reinhart
Yeah. Hi, this is Harald. Yes you are correct. This is the first Zai program which is global and to go into Phase 2. It is a drug which we have developed in-house and which has, as you remember, had a very nice proof of concept readout. So we're anxious to move into Phase 2 and we have selected certain territories, North America being one, Asia being another one, Australia being another one. We do believe that we can place the study in various territories in we just awaiting the feedback from regulators as to where and in what sequence to place it.
Anupam Rama
Thanks so much for taking our questions.
Harald Reinhart
You're welcome.
Operator
Thank you. We will move to our next question. Please standby. The question comes from the line of Ziyi Chen from Goldman Sachs. Please ask your question.
Ziyi Chen
Hi. Good morning. Thank you for taking my questions. Two questions. The first one is really on expense control, because in the past nine months, three quarters, we have seen company have been controlling the OpEx pretty well. And just as Billy mentioned, now you are really extending the cash runway into 2025. So we're trying to understand a bit more on that. What you have done? Are you [indiscernible] the headcounts or laying off some people and also have you deprioritized or terminated any of the projects. So we're trying to understand how you actually achieve that? And more importantly, looking forward like 12 months, what are the major milestone payment you could potentially pay out and how big that could be?
And the second question is really on KarXT. I think you have agreed with CDE that you're going to run a bridging study, so trying to understand on how you can design a trial in China and how long does it take for the bridging study to be completed in China. And for the potential regulatory filing. And particularly KarXT is going to be targeting very different therapeutic areas compared to oncology portfolio you have. So in terms of the future commercial strategy, what is your current strategy -- current thinking of that? Thank you.
Billy Cho
Hi, Zi. Thanks for your questions. I'll take the first and give the KarXT question to Harald. Before the -- yeah, I mean the controlling expenses topic, yes, I mean, we are -- the investments that we've made and the progress we've made allows us to really not only maintain growth, but also get into increases in productivity as well. And clearly, you see that this year, but I would say that in terms of prioritizing our resources, it's really embedded sort of in how we operate the business and really in our culture, even if you go back couple of years, you would have seen us talk about very quickly being able to prioritize the resources and even our prioritize certain programs ahead of others.
So if you look back, you'll see that cadence. And more specifically this year, as an example, over the past two or three sort of finding cycles, we also announced some programs that we have elected to be prioritize so that we can make sure continue to grow and we're making good advances on the mid to late stage clinical programs, and also the operating leverage that's kicking in into our commercial strategy. So I think that will continue and we feel pretty confident about that going forward.
And I think the part B of that question was on milestone payments. Now, we don't disclose our filings, the breakdown or the details on milestone payments, but I can tell you -- I think there is a kind of a confusion, lot of people get confused with these kind of what we call [indiscernible] industry where you see pretty big numbers, couple of hundred million dollars, over billion in some of these strategic deals, but what I can tell you is that, while we don't give guidance like next year or over the next 12 months, all the payments related to development milestones that we have in a pretty broad portfolio, I would just basically say that it's less than a typical upfront payment for a deal, right? Including the most recent one we did with Seagen, if you just kind of -- I'll just kind of give that framework.
So the main messaging being it’s in -- the actual payments that goes out is quite sensible. So -- and not material, which is also why we don't have to disclose it, right, because if there was material we would. So I'll turn it over to Harald for the second question on KarXT.
Harald Reinhart
Yes, thank you. The KarXT situation is really evolving. We have, as you said, reached agreement after negotiations with the CDE on a bridging programs -- bridging study for China. That study, we have currently an agreement and we are waiting the formal approval for that and once that is in-house we will start the program. We are currently thinking of a study program and I cannot go into great details, but I can say this much, this will be very similar as the study design, as the EMERGENT studies that you know, they had two identical EMERGENT studies, EMERGENT2 which is just read out and EMERGENT3, which is a copy of EMERGENT 2.
So we will try to mimic that with slight modifications as needed. And so the design is clear, the structure and the requirements that the regulators have on us is also fairly clear and these are acute schizophrenia studies, nowadays it take a total of five weeks to execute the actual study, but obviously there is a follow-up.
Then as far as the portfolio, I think there were some questions about that. This is the first study in the area that we call neurosciences, but we clearly have an interest to get into neurosciences with several of our other programs. And neurosciences is, for instance, quite dominant on the efgartigimod side of things, because we are running a CIDP study there, we are running obviously gMG. And so we are very familiar with the space as such, and have the context in this space. Thank you.
Ziyi Chen
Got it. Thank you.
Operator
Thank you. We will take our next question, the question comes from the line of Jonathan Chang from SVP Securities. Please ask your question.
Jonathan Chang
Hi guys, thanks for taking my questions. First question on TIVDAK. Can you discuss your views on the opportunities, both in cervical cancer and other tumor types? And how much of a headwind or not the ocular toxicities associated with the drug are? And then on the second question, on the business development front this has been a cracker year than in the past, can you provide some color on the considerations for this year and how you're thinking about additional in-licensing opportunities looking forward? Thank you.
Billy Cho
Hey Jon, do you want to take this questions from Jonathan.
Jonathan Wang
Sure. Thanks for the question, Jonathan. First on the first question. The ocular toxicities that TIVDAK has shown are pretty low grade ocular toxicities. So I think a [indiscernible] than some of these other ADCs and these ocular toxicities can be easily managed through a typical eye drops. So I think the safety profile is actually pretty good for this ADC. And then, TIVDAC, it's a first-in-class product and it's a product which especially in China is very relevant, because cervical cancer is today 110,000 annual incidence, it has the highest mortality of all the women oncology diseases. Especially relevant China, because [indiscernible] is only approved more recently for [indiscernible] and the vaccines to really drive down cervical cancer incidents, it's going to take decades, because these patients sort of emerge with the disease in their 50. So you basically have to fast forward at least 10, 20 years for that really to take effect. So we view the incidence is going to continue to grow. There is a limited number of treatment options, IO is really the only other product that's available here. So we believe that, TICDAK a targeted therapy will be widely used by physicians in an area with high unmet medical need in cervical in China.
Billy Cho
And then also, I think the other thing is for Zai, there's a lot of synergies, because we don't have to add any salesforce, we can just tag along with our Niraparib ovarian cancer sales team. So I think that side is also very advantageous for us given the relationships we have.
Now on the second question for business development. First, there are variabilities throughout the year. I mean, last year we had a -- at least from a quantity perspective, a lot more deals and we did a number of very significant transactions. Admittedly, products like [F-Star] (ph) like KarXT, adagrasib they don't come every year. So first of all, I think there are variability because of that. So we have a very -- I mean, we always have a very high standard when we're bringing assets. There has to be globally competitive globally differentiated assets.
So that's first and foremost. Now within that broader context, obviously, this year everybody because of the capital market we have to be extra cautious. So we are taking approaches as we look internally, as we look externally to add this additional lens, because we do have a very broad and diverse pipeline today. We have a lot of products to support our growth. And our share price unfortunately is not where we hope it can be. So we have to take that into consideration as we look at new BD opportunities as well.
But look, if there is another asset like an F-Star, like KarXT we will be aggressive and we'll bring it in. And in addition to these regional opportunities, we have global opportunities today because today's market is different from last year from a business development perspective, there are more opportunities that may offer rights, which may not be available in past years, including global rights, including 50-50 global rights that biotechs in the United States and in China may be interested in because of the conditions.
I think as Josh also made in his remarks, we are also looking at other types of deals, which, can we help other types of companies to bring broader portfolio assets to help them in China from a development as well as the commercial perspective. So we are busy. So stay tuned. And I'm sure you'll hear more from business development over the next few months.
Jonathan Chang
Got it. Thank you.
Operator
Thank you. We will take our next question. The question comes from the line of Seamus Fernandez from Guggenheim Partners. Please ask your question.
Seamus Fernandez
Great, thanks for the question. So just two quick ones. Just as we think about the KarXT opportunity, just hoping that you guys could frame that opportunity for us in terms of the size of the market opportunity again and perhaps when we might see a possible entry into the Chinese – the market in China?
And then just the last question is, specific to the LUNAR study can you just help us understand what the timeframe is? And if that were to fail, how your investment behind that program would work out? Thanks so much
.
Billy Cho
Hi, Seamus. Thanks for your question. Maybe I'll -- I'll address your second question first and then I'll hand the second one to Jonathan -- Jon on KarXT opportunity in China. For LUNAR, I mean there is actually multiple shots on goal, LUNAR is pretty significant milestones coming up pretty soon, probably early Q1. And I think we'll go from there, as Samantha spoke previously about an opportunity to even get national reimbursement in the future. So if everything goes well, this will be a real sort of step change. We're talking about pretty big quantum step change in the real opportunity -- mass market opportunity here for Tumor Treating Fields.
Now Seamus to your question at LUNAR, data is not cooperative, there are other shots on goals as well right. There is global Phase 3 trial going on right now in pretty advanced stages and are progressing across pretty large tumor types as well. So is LUNAR important? Yes. Is that kind of all deal end-all? Certainly not. But we're hoping for the best, we’ll remain cautiously optimistic and we will make a data-driven decision, regardless.
Samantha Du
Yeah. I think with or without LUNAR’s success and I don't think it should hurt Zai Lab considering whatever market valuation we are at.
Jonathan Chang
Hi, Seamus. It’s Jonathan. So maybe also to address your first question on KarXT. Look, I think it's a pretty sizable market opportunity. There are 8 million schizophrenia patients in China, obviously, there are other indications which we are working with Karuna to expand. But the lead indication in schizophrenia, there are 8 million patients of which 4 million are currently getting active treatment on the register. And so, I think -- you know the product profile well, because I think not only on the safety side but on the efficacy side for both the positive and negative symptoms, there are differentiations. So given the product profile, given that in this sector there has not really been something innovative, something this impactful on these different dimensions. I think this product will make a pretty significant impact once we launch it. And this market is also very concentrated. The psychiatric hospitals and some of the neurology department in the larger hospitals, you do not need a large sales team to cover it. We believe looking at other players in this market, you're looking at probably that 200 sort of sales force, and we also have coverage in many of these hospitals with our neurology franchise, with our opportunity then. So I think there are definitely synergies there.
From a timeline perspective, I think Harald already mentioned. I mean we only need to do one abbreviated bridging study. So it's a pretty quick and simple path forward and we'll give more guidance as we start that study.
Operator
Thank you. I would like to turn back over to Zai Lab's CEO, Samantha Du for closing remarks.
Samantha Du
Thank you, Operator. I’d like to thank everyone for taking the time to join us on the call today. We appreciate your support and look forward to updating you again and again after next quarter. Operator, you may now disconnect this call.
Operator
This concludes today's conference call. Thank you for participating. You may now disconnect.
