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Zai Lab Limited (NASDAQ:ZLAB)
Q4 2019 Earnings Call
Mar 19, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Hello, ladies and gentlemen, thank you for standing by and welcome to the Zai Lab's Full Year 2019 Financial Results and Corporate Update 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. Now, it's my pleasure to turn the floor over to Billy Cho, Chief Financial Officer of Zai Lab, who will make introductory comments.

Billy Cho -- Chief Financial Officer

Thank you, operator. Good morning and welcome to Zai Lab's full year 2019 financial results and corporate update conference call. Earlier this morning, Zai Lab issued a press release providing the details of the Company's financial results for the 12 months ended December 31, 2019, as well as recent corporate update. The press release is available in the Investor Relations section of the Company's corporate website at ir.zailaboratory.com. Today's call will be led by Dr. Samantha Du, Zai Lab's Founder and Chief Executive Officer. We will be joined by Tao Fu, President and Chief Operating Officer, who will provide more details on our pipeline, including upcoming milestones and commercial progress. Dr. Valeria Fantin, Chief Scientific Officer and Dr. Wang, Head of Business Development, will also be available to answer questions during the Q&A portion of the call. Because some of us are dialed-in separately, Samantha will take the lead on the questions and refer to Tao, Valeria, Jonathan, and myself as needed.

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, regulatory applications, and commercial launches. This forward-looking statements are not guarantees of future performance and therefore you should not put undue reliance upon them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. I refer you to our SEC filings for a discussion of risk factors that could cause our actual results to differ materially for those discussed today.

At this time, it is my pleasure to turn the call over to Zai Lab's Founder and Chief Executive Officer, Dr. Samantha Du.

Samantha Du -- Founder, Chairman, Chief Executive Officer

Thank you, Billy. Hello, everyone, and thank you all for joining us. First and foremost, I hope everyone is safe and sound as the global effort to contain the coronavirus has impacted all of us. This devastating outbreak really shows how important global healthcare and coordination will be in the future.

On a brighter note, I'm excited to provide an update on all the progress Zai Lab has made in 2019. Zai Lab is at an inflection point and I have great enthusiasm for what the future holds for us. Coinciding with the celebration of our five-year anniversary, 2019 was a year of many important achievements for Zai Lab. Some of the key milestones achieved were the China NMPA led the approval for ZEJULA in second-line ovarian cancer, two additional submissions for regulatory approval in China for Optune have now established, collaboration agreements with Deciphera and Incyte, continued build-out of a commercial platform in China, launched ZEJULA and Optune in Hong Kong, and further enhancement of our global in-house R&D capabilities.

Today, our portfolio consists of three commercial products and nine late-stage assets being evaluated in more than 25 clinical trials across oncology and infectious disease. Looking ahead in 2020, we have another pivotal year coming up as we have expect to file three submissions for approval in China, launch ZEJULA and Optune in China, deliver key clinical readouts, announce new strategic deals and as promised during our IPO, advance two discovery programs with global rights to IND submission.

We are proud of our global reputation as a biotech pioneer and a partner of choice in China, as we continue to deliver exceptional execution across global and local clinical development, regulatory affairs, business development, commercialization, and infrastructure expansion. Within the last three years, we believe Zai is well positioned to reach our revision of becoming a leading global biopharma Company with a steady stream of approvals and commercial launches in Greater China across multiple therapeutic areas, internally generating global pivotal stage pipeline assets, and transformative partnerships.

With regard to recent updates, at first, toward addressing the impact caused by the coronavirus outbreak, global health authorities have appropriately outlined the seriousness of the outbreak, both in China and globally. And while it may be too early to speak to the optimal impact on our Company, Zai Lab currently does not expect to be materially impacted from this unfortunate event. In addition, due to the comprehensive safety measures we have quickly implemented across our firm, none of our employees have been impacted so far. We have clear procedures in place to deal with any situation should they occur. As a Company, we'll be impacted definitely by the virus. While we have seen some disruptions to our certain aspects of operations during the first three months of 2020, we do not see the need to change our key clinical, regulatory, and commercial milestones at this time. Having said this, we continue to monitor the situation very closely. We're doing everything we can to make sure all constituents, our employees, medical community, patients, registry agencies, and partners are safe and supportive.

Moving on to other highlights. We recently announced in January that Zai Lab successfully increased total gross proceeds of approximately $300 million. Combined with our cash position at the end of 2019, our pro forma cash position exceeds $515 million [Phonetic]. Under current market conditions, such financial strength should enable us to execute all of our key strategic initiatives as we continue to expand our business. I'm also thrilled to announce that following the China NDA acceptance of omadacycline this February and despite the turbulence caused by the coronavirus outbreak, our sNDA for ZEJULA as a first-line maintenance treatment for ovarian cancer patients was accepted in China by the NMPA this week. I believe ZEJULA as first-line monotherapy treatment after surgery and platinum-based chemotherapy has the potential to fundamentally change how women with ovarian cancer are treated in China.

On the commercial front, I'm pleased to report that both ZEJULA and Optune have outperformed our revenue targets in 2019. According to IQVIA, ZEJULA was not only the leading PARP inhibitor in Hong Kong with market share of 71% last year, but also ranked among the Top 5 oncology drugs ever to launch in Hong Kong as measured by first full-year revenue. We also understand from our partner, Novocure, that Optune launch in Hong Kong represented one of the most successful launches globally.

Needless to say, we are excited to commercialize ZEJULA and Optune in China soon. While it's too early to comment on the launch trajectory of ZEJULA in China, we believe there are significant commercial opportunities. More importantly, we are excited that we have already started to address the unmet medical need of platinum-sensitive ovarian cancer patients in China.

Building our own global discovery pipeline is one of the key pillars of Zai Lab's long-term growth strategy, and I'm pleased to report that we are making good progress. We have prioritized three areas of research that includes DNA damage response, immuno-oncology, and signal transduction. We are advancing our pipeline of access in those areas by building our internal expertise in translational medicine and precision medicine approaches. And by exploring the inter-portfolio [Phonetic] combination, we expect to progress our first two global programs into the IND stage this year.

We need world-class talent to achieve our goals and we intend to continue to build and add back to our global team across all functions. We have opened Boston office this year and plans to a larger facility in San Francisco for the discovery organization this summer. As of February 2020, Zai Lab employed 733 full-time employees across seven offices globally, with 293 and 340 employees engaged in R&D and commercial activities, respectively.

This is a very exciting time at Zai Lab. Our strategic mission is on a global scale and we believe we have the experience and resources required to successfully reach our goal. As always, we want to thank you for your continued support and interest and look forward to keeping you updated with all of our upcoming milestones.

With that said, I would now like to turn the call over to our President and COO, Tao Fu. Tao?

Tao Fu -- President and Chief Operating Officer, Member of Board of Directors

Thank you, Samantha. As Samantha mentioned, 2019 was an extremely busy and exciting period for Zai Lab across a variety of fronts. We became a commercial stage Company with the successful launches of ZEJULA and Optune. We gained approval of ZEJULA in Mainland China. We further expanded our portfolio with two new strategic partnerships, expanded our China commercial organization and our global R&D team to recruitment of top level talent and significantly strengthened our balance sheet to further enable Zai Lab to bring many more important therapies to patients.

While our press release from this morning provides detailed updates across most of our programs, I'd like to focus my comments today on a few selected programs and near-term catalysts. That said, we will be happy to answer any questions during the Q&A session on any assets that are not covered in our prepared remarks.

I'll start with niraparib or ZEJULA, a PARP inhibitor approved globally for the treatment of ovarian cancer and in development for several other solid tumor indications. We believe that it is the best-in-class PARP inhibitor with an attractive of efficacy and safety profile without the need of blocker [Phonetic] testing and superior pharmacological properties, including once-daily dosing, low drug-drug interactions and the ability to cross the blood-brain barrier.

As you know, ZEJULA was approved by the China NMPA in December for second-line maintenance treatment of platinum-sensitive ovarian cancer patients, making ZEJULA the first and only category 1 PARP inhibitor approved in China. As Samantha noted earlier, this approval represents the fastest timeline from submission to approval in China for locally manufactured category 1 oncology drug in 2019, underscoring Zai Lab's execution track record and leadership in winning important therapies to patients. In addition, our sNDA for ZEJULA as a first-line maintenance treatment for ovarian cancer patients was recently accepted by the NMPA. This submission was based on the results from the PRIMA study that demonstrate that women in both the HR-deficient or HRD positive and HR-proficient or HRD negative subgroups experience a clinically meaningful and statistically significant benefit. In addition, Zai Lab recently completed enrollment of the Phase 3 PRIME study of ZEJULA in Chinese patients with first-line ovarian cancer. We're excited for an opportunity to bring this potentially game-changing label expansion to China as soon as possible.

Regarding the commercial launch of ZEJULA in China, we're very proud of our team bringing this drug to the market in mid-January expeditiously following the approval. In response to the challenges caused by the coronavirus outbreak, we have taken immediate measures such as creating online physician and patient education and counseling platform, getting ZEJULA on reimbursement list at provincial and municipal levels and maximizing commercial insurance opportunities. We anticipate providing initial commercial figures for Mainland China when we announce our next financial results and corporate update mid-year.

In Hong Kong, I'm pleased to report that our commercial launch continues to perform ahead of our initial financial forecasts. While Hong Kong is a small market compared to Mainland China, we believe our initial performance validates two key items. First, the compelling profile of ZEJULA in the Greater China region and second, the capabilities of our commercial team. Therefore, we believe many drivers for success in Hong Kong can be applied to our Midland China launches to further position ZEJULA for success in our primary market.

In today's earnings press release, we announced the termination of the Phase 3 study of niraparib as first-line maintenance therapy in patients with small-cell lung cancer due to the rapidly changing landscape in treatment options. While this may be a setback for small-cell lung cancer patients, we can refocus our resources and attention toward other indications with higher unmet clinical need and commercial opportunities for ZEJULA.

In regards to other indications, we recently dosed the first patient in the Phase 1b combination study of niraparib with MGD013, a bispecific PD-1 x LAG-3 DART molecule in advanced and metastatic gastric cancer and we plan to continue to work closely with our partner GSK to pursue other label expansion opportunity. Looking ahead, we're committed to making a meaningful impact on the way cancer is treated in China and globally. We believe ZEJULA is a potential best-in-class PARP inhibitor and our plan is to continue to develop ZEJULA in order to bring this innovative treatment to have many patients who may benefit as possible, including indications beyond ovarian cancer.

Now, turning to Tumor Treating Fields. If we can obtain a clinical trial waiver, we expect to receive the marketing authorization approval for Optune, the Tumor Treating Fields delivery system for the treatment of glioblastoma in the first half of 2020. We view our initial commercial success in Hong Kong as a very encouraging sign for Optune and the unmet need it can address in Mainland China. As you may know, Novocure received an approval from the U.S. FDA for new indication last year for malignant pleural mesothelioma. We plan to file MAA or Marketing Authorization Application in mesothelioma to the China NMPA this year. While mesothelioma is not one of the major cancer types in China, the approval will be very strategic for us, given that the next label expansion opportunity is in non-small cell lung cancer.

Beyond glioblastoma and mesothelioma, there are a number of exciting anticipated milestones ahead of this program. In particular, Novocure expects to announce interim results from its LUNAR Phase 3 trial in patients with non-small cell lung cancer in the second half of 2020, which has a significant market potential in China. We also have an ongoing Phase 2 pilot clinical trial in first-line gastric adenocarcinoma, which is enrolling well. Just as a reminder, the annual incidence rate in China for lung cancer and gastric cancer are over 733,000 and 679,000 diagnosed patients respectively according to the 2015 National Cancer statistics.

Now onto ripretinib, our investigational KIT and PDGF alpha kinase switch control inhibitor licensed from December. In February 2020, our partner, Deciphera announced U.S. FDA acceptance under priority review of its NDA for ripretinib in patients with advanced gastrointestinal stromal tumors or GIST. The submission was based on the compelling data from the pivotal Phase 3 INVICTUS clinical study of ripretinib in patients with advanced GIST, where the study met its primary endpoint of a significantly improved median progression-free survival of 6.3 months compared to one month in the placebo arm and the risk of disease progression or death was reduced by 85% or a hazard ratio of 0.15 compared to placebo. Looking ahead for Zai Lab in China, we plan to submit an NDA for the China NMPA for fourth-line advanced GIST this year and initiate bridging trial for second-line GIST in the second half of 2020.

And next with margetuximab. Zai Lab announced last month that the first patient has been dosed in the registrational bridging study of margetuximab in combination with chemotherapy for the treatment of patients with metastatic HER2+ breast cancer. This follows the BLA submission to the U.S. FDA for margetuximab by our partner, MacroGenics for the treatment of patients with metastatic HER2+ breast cancer in combination with chemotherapy. Looking ahead, MacroGenics expects to present final data from the Phase 3 SOPHIA clinical trial in HER2+ metastatic breast cancer by the end of 2020. In addition, Zai Lab expects to enroll Chinese patients in the Phase 2/3 Mahogany study to evaluate the combination of margetuximab, a checkpoint inhibitor and chemotherapy of front-line treatment for advanced gastric and gastroesophageal junction cancer by second half of 2020.

And finally, an update on omadacycline, our once-daily oral and intravenous antibiotic for the treatment of adults with community-acquired bacterial pneumonia and acute bacterial skin and skin structure infections for our anti-infective pipeline. In February 2020, Zai Lab announced that an NMPA has accepted its NDA with category 1 new drug destination. We also announced today that we entered into an exclusive promotion partnership with Hanhui, a leading player in the unmet infectious area in China with established commercial infrastructure and extensive promotion and distribution network to market omadacycline. The rationale behind this partnership was to expand omadacycline footprint to a much broader China market and maximize its commercial potential as a broad spectrum novel antibiotic in the community setting.

As for the rest of our late-stage pipeline assets, including our oncology portfolio and durlobactam, which is different to omadacycline in that it requires a highly specialized sales team focused on large hospitals and ICUs, we intend to directly market these products ourselves.

With that, I will hand the call over to Billy Cho, our Chief Financial Officer, who will provide an overview of our financial highlights. Billy?

Billy Cho -- Chief Financial Officer

Thanks, Tao. I will now review our financial results for the 12 months ended December 31, 2019. Revenue for the period were $13.0 million compared to $129,500 [Phonetic] in 2018. Our revenues for the period were comprised of $6.6 million of ZEJULA sales in Hong Kong and Macau and $6.4 million of Optune sales in Hong Kong. R&D expenses were $142.2 million for 2019 compared to $120.3 million for 2018. The increase in R&D expenses was primarily attributable to ongoing and newly initiated late-stage clinical trials, payroll and payroll-related expenses from increased R&D headcount, and expansion of research efforts to support internal development programs.

Selling, general, and administrative expenses were $70.2 million for 2019, compared to $21.6 million for 2018. The increase was primarily due to payroll and payroll-related expenses from increased commercial headcount and related costs as Zai Lab expanded its commercial operations in China. For the full year of 2019, Zai Lab reported a net loss of $195.1 million or net loss per share attributable to common shareholders of $3.03 compared to a net loss of $139.1 million or net loss per share attributable to common stockholders of $2.64 for the full year of 2018.

As of December 31, 2019, cash and cash equivalents and short-term investments totaled $276.4 million. In addition, in January of this year, Zai Lab announced the closing of an underwritten public offering with total proceeds, net of underwriting fees and other expenses, of approximately $281.3 million.

We would like now to turn the call back over to the operator, so we can go ahead and take your questions. Operator?

Questions and Answers:

Operator

Thank you, sir. We will now begin the question-and-answer session. [Operator Instructions] We have the first question from the line of Yigal Nochomovitz. Please ask your question.

Yigal Nochomovitz -- Citi -- Analyst

Hi, great, thank you very much. Hi, Billy, and Samantha, and Tao. Very good to hear that there were no coronavirus cases among your employees. I wanted to explore a bit more however the impact the coronavirus is having on the business. I know, Samantha, you mentioned that you don't expect a material impact on operations. But I would like to get a better understanding of what headwinds you might be seeing early -- in the early days of the niraparib (ZEJULA) launch in terms of reduced new patient starts, given potential travel restrictions or closed physician offices in the early innings. I do appreciate, obviously, that you did launch the product before the crisis became worldwide back in January, but nonetheless, important for us to understand what you're seeing in the field with that regard. Thank you.

Samantha Du -- Founder, Chairman, Chief Executive Officer

Thank you, Yigal, and that's a fair question. And, as you mentioned, we're very fortunate we launched product in mid-January before the outburst of this coronavirus and that's mainly during the second half of February and also the first week of March, the travel restriction was in China though. So especially, if you look at our sales activities in the first half of -- second half of January till the mid of February, I didn't see any impact on our commercial launch, mainly because our team has been very effective in not only launch in three weeks after approval but also in one day deliver all the supplies to 29 provinces and all the major hospitals. But even till the travel restrictions and outburst in China and we have seen some impact, but the team also, very entrepreneurs and there's -- we luckily held three launch events prior to this. So we have sold most of the CI, especially the KOLs, before the major upgrade.

And so, till the mid-February and March, in response to the challenges caused by the coronavirus, we have taken immediate measures such as creating online physician and patient education and consulting platforms, deliver the products to patients at home or nearby pharmacies. And we also created online -- we also create working on reimburse -- selling on reimbursement the provincial at significant level. Within the first month, we recorded three municipal cities, given local reimbursement. Of course, we also worked with the medical insurance -- commercial insurance companies. By now, we have already several patients treated with that commercial insurance provided.

Yigal Nochomovitz -- Citi -- Analyst

Okay, great. Thank you. And then just sort of following up...

Samantha Du -- Founder, Chairman, Chief Executive Officer

Also [Speech Overlap] -- sorry, just one more last one. And I just also want to report for the last two weeks, we're seeing even the business, because China relaxed on the travel restriction and we've seen the sales team has come back and we see more patients -- new patients add on to the treatment.

Yigal Nochomovitz -- Citi -- Analyst

Okay. So, can you just confirm now that as of today or I'm not sure what day, but you can tell me, when did the sales force return to the field on a full scale basis?

Samantha Du -- Founder, Chairman, Chief Executive Officer

I would say in cities other than Hubei province, the other sales force had -- majority is back on the field, but they are still not full skilled on the visits -- regular the visit to the -- to hospitals. Certain hospitals allow full guide visit, some hospitals still have limited time to allocate to the visits. So I cannot say 100% by end of the month or -- with that question, I have to answer based on the evolution of the coronavirus situation in China. But luckily the coronavirus situation in China has been in control for a while and we would like to continue to see that before we can report the full sales force feedback for the field.

Yigal Nochomovitz -- Citi -- Analyst

Okay. And then just quickly in terms of anything you're seeing with respect to enrollment rates for the ongoing clinical trials as well as the supply chain integrity for ZEJULA and Optune with respect given the coronavirus pandemic. Can you comment on any impact there or no?

Samantha Du -- Founder, Chairman, Chief Executive Officer

First of all, I think the supply has not been interrupted at all, because we -- as I mentioned, we shipped the supply and -- the first day and after we officially launched the product in mid-January and the first day delivery to all the hospitals, the pharmacies and so they are -- as we -- also from manufacturing sites, we have enough supply and also the people already back to work if we need additional supply.

And in terms of clinical recruitment, I have to say on this part we are quite fortunate because we have several major recruitments and trials. And one already completed not even patient recruitment but also they will close the -- we already closed the study in the process data mining. The other one we already completed patient recruitment in November. And since the mid-February through early March, we did see some -- we did see only 50% patients were coming back to the hospitals for follow on, but now we see more. As of this week and last week, we see more patients coming back for follow ons.

And so, other trials we are taking, either they are at the beginning of we just -- we haven't announced, but if you look at clinical.com [Indecipherable], we have 10 recent approvals of CTAs and they are in the process of getting RR [Phonetic] approvals and also the human genomic office approval. So the power has not taken out yet. And some other trials, we are on-boarding small bridging studies. They usually don't need many sites, and those we don't see impact.

Yigal Nochomovitz -- Citi -- Analyst

Okay. And then just the final question is, obviously, you've mentioned that you've got the sNDA accepted by the NMPA for ZEJULA for first-line. Is it the case that you will not need to wait for the PRIMA Phase 3 results to get the first-line approval as occurred with second-line with the NORA trial? I just want to confirm that the regulatory setup is the same.

Samantha Du -- Founder, Chairman, Chief Executive Officer

You mean in China?

Yigal Nochomovitz -- Citi -- Analyst

Yes. In Mainland China, yes.

Samantha Du -- Founder, Chairman, Chief Executive Officer

Okay. Yeah, in Mainland China, as you know, we got the second-line maintenance approval also not based on the China data. And majority is based on the U.S. and also based on the PK/PD study. We do have for a second-line maintenance study going to -- we're going to see the results hopefully this -- first half of this year and we'll report by then. So, for first-line, we did not announce that we closed the study and so as you expect the package we accepted, majority is based on the package from -- the same package the GSK submitted from the PRIMA study, but of course, there are others we included, but PRIMA is the majority of the submission.

Yigal Nochomovitz -- Citi -- Analyst

Okay, understood. Thank you so much for your help and best of luck in managing and navigating through the remainder of the coronavirus crisis in China.

Samantha Du -- Founder, Chairman, Chief Executive Officer

Thank you, Yigal. I think the regulatory team on this regard, I have to really applause their efforts, because it's major into the disruption to many business and especially the regulatory team emulated with many coronavirus effect both on the kits side and on the treatment side.

Yigal Nochomovitz -- Citi -- Analyst

Thank you.

Operator

We have the next question from the line of Anupam Rama from J.P. Morgan. Please ask your question.

Anupam Rama -- J.P. Morgan -- Analyst

Hey guys, thanks for taking the question. Congratulations on all the progress and also glad to hear that everyone is doing well at the Company. I know that you have an infectious disease vertical at the Company. Any thoughts on internal options or potential business development options that may present strategies for COVID-19? Thanks so much.

Samantha Du -- Founder, Chairman, Chief Executive Officer

First of all, we do not have an in-house discovery capability for viral and also bacterial and in fact anti-infectives. And however, we do look for our opportunities. So other -- include other anti-infective, which we -- all along we have been looking into those. I will turn more details to Jonathan Wang, our Head of Business Development to elaborate on this point.

Jonathan Wang -- Senior Vice President, Head of Business Development

Yeah, hi, Anupam, thanks for the question. I think we are evaluating a lot of opportunities and as effective as Samantha said. We look at both anti-bacterial as well as anti-viral opportunity that have large unmet medical need, especially in the Asia-Pacific and China. Although we comment specifically on COVID-19, but within antiviral we're looking at a lot of opportunities as well. So, hopefully that answers your question.

Anupam Rama -- J.P. Morgan -- Analyst

Thanks for taking my question.

Operator

We have the next question from the line of Jonathan Chang from SVB Leerink. Please ask your question.

Jonathan Chang -- SVB Leerink -- Analyst

Hi, congrats on the progress, and thanks for taking my question. First question, can you provide any color on the successful ZEJULA launch in Hong Kong and reasons for confidence that the success could translate into the China launch?

Samantha Du -- Founder, Chairman, Chief Executive Officer

Jonathan, thank you for taking the time and to participate this call. I would refer that to Jonathan.

Jonathan Wang -- Senior Vice President, Head of Business Development

Yeah. Thank you, Jonathan. As Samantha mentioned, in our presentation earlier, ZEJULA was launched at the end of 2018 and its first full year of sale achieved pretty remarkable revenue and ranked basically among the Top 5 oncology drugs that was ever launched in Hong Kong behind the lives of Keytruda, Opdivo, Tecentriq, and Tagrisso. And we also overtook our competitive job even though we launched about 18 months after being positive. So we now have over 70% market share in Hong Kong for the full year of 2019 based on IQVIA or IMS data. So the commercial launch in Hong Kong was very strong and we are confident that we can replicate the success in China over time, and we believe that the success is primarily due to having this best-in-class drug as well as having a very experienced team that has clearly demonstrated the ability to execute and very rapidly ramp up sales.

And even in China, despite the coronavirus situation, I think the team was able to mobilize very quickly for the launch in China. In fact, for all the products that was approved at December in China last year, we were the only product that was launched in January of 2020.

Jonathan Chang -- SVB Leerink -- Analyst

Got it. Thank you. Second question, can you highlight the strategic similarities and differences between the ZEJULA and potential Optune launch in China?

Samantha Du -- Founder, Chairman, Chief Executive Officer

Jonathan, you can keep going for that question.

Jonathan Wang -- Senior Vice President, Head of Business Development

Yeah, I think for our pipeline, if you look at it, we -- with the licensing discovery is first-in-class, best-in-class profiles. And in the case of Optune, it's in fact the only in class. So, first and foremost we believe we have a very strong product, which gives our team a lot of confidence and that has been demonstrated in Hong Kong so far. That launch as our partner Novocure has told us and has told many people is probably the best launch out of all the geographies in terms of the ramp up and the pickup in that location. And having done very well in Hong Kong last year, I think that gives us very strong confidence in China and as you may know in China, Optune is also included in the National Treatment Guidelines, which is the official guidelines that the physicians should follow, and tell the patient that there this treatment option available for them.

So I think with all these positive on the back of Hong Kong as well as the physician endorsement, we're very confident about the launch of Optune in China once it's approved.

Jonathan Chang -- SVB Leerink -- Analyst

Got it. Thank you.

Operator

We have the next question from the line of Maury Raycroft from Jefferies. Please ask your question.

Maury Raycroft -- Jefferies -- Analyst

Hi, everyone. Congrats on the progress, and thanks for taking my questions. First question is just on the launches. Just wondering if you can provide any more specifics on the patient starts in Hong Kong for ZEJULA and Optune, and then for ZEJULA in China?

Samantha Du -- Founder, Chairman, Chief Executive Officer

Jonathan, you want to continue your discussion.

Jonathan Wang -- Senior Vice President, Head of Business Development

Yes, sorry. I just want to clarify you need the patient numbers in Hong Kong for both products.

Maury Raycroft -- Jefferies -- Analyst

Yes. If that's -- if you're willing to provide that info.

Jonathan Wang -- Senior Vice President, Head of Business Development

Yeah...

Samantha Du -- Founder, Chairman, Chief Executive Officer

Okay. So, Maury. Yeah, we currently do not have the split in Hong Kong for the patients from Mainland China and also from Hong Kong. So we are not in a position to split that number yet.

Maury Raycroft -- Jefferies -- Analyst

Understood. And for the bridging trial for ripretinib and second-line GIST, I'm just wondering if you can comment on how many patients you're going to need for that study? And will you need that the study results from that in order to submit the NDA?

Samantha Du -- Founder, Chairman, Chief Executive Officer

So correct me, Maury. You've mentioned second-line, not the first-line?

Maury Raycroft -- Jefferies -- Analyst

That's right.

Samantha Du -- Founder, Chairman, Chief Executive Officer

Okay. For second-line, we have two choices. We can either work with our partners to be part of the global -- contribute to the global patient recruitment, but all we can do a small parallel study while we are doing the global trial. So it depends on our partners' progress, will may go either way.

Maury Raycroft -- Jefferies -- Analyst

Got it. And last quick question is just on Omadacycline, just wondering if you can provide more specifics on the agreement with the Hanhui, and what the terms are there?

Samantha Du -- Founder, Chairman, Chief Executive Officer

So thank you. I'll turn that question to Tao.

Tao Fu -- President and Chief Operating Officer, Member of Board of Directors

Yeah, sure, sure, Maury. Thanks for your questions. So, as we mentioned, this is really a CFO agreement. So we are -- we really retain all the development right -- regulatory right and we'll continue to be the M&H holder. So we grant the exclusive promotional right to Hanhui, which is one of the leading anti-infective player in China. They have over 800 sales reps in the anti-infective business. And if you think about this product, it really is a block spectrum antibiotic that has a lot of hue within the community setting. So you really need a pretty large primary care sales force from all this kind of product. So we think this is of that go-to-market strategy versus building a primary care sales force ourselves.

So as related to the terms, I think we look all revenue that we will -- we receive upfront payments and milestone payments and there will be a profit split mechanism for their promotional effort.

Maury Raycroft -- Jefferies -- Analyst

Got it. Okay, thank you very much for taking my questions.

Samantha Du -- Founder, Chairman, Chief Executive Officer

Yeah, also Maury, just want to add a line. This is our first primary care, and it's also unpaid sector. That's why we like to work with the partner on this.

Maury Raycroft -- Jefferies -- Analyst

Understood. Understand. Thank you.

Operator

We have the next question from the line of Yang Huang from Bank of America. Please ask your question.

Yang Huang -- Bank of America Merrill Lynch -- Analyst

Thank you. Thank you for taking my question and congratulations on all the progress. And the good to know that everyone is doing great on the road. And my first question is, I think earlier in the call, you've mentioned Optune is really important to get the second indication in mesothelioma and which has some indications, we're getting lung cancer. Do you mind to further elaborate on that point?

Samantha Du -- Founder, Chairman, Chief Executive Officer

Sure and thank you, Yang both joining the call and thank you for your time. I will turn the question to Tao.

Tao Fu -- President and Chief Operating Officer, Member of Board of Directors

Yeah. Thanks, Samantha. And thank you, Yang for your question. So we do believe the Mesothelioma approval is very important and also what we're trying to get that indication approved in China as well, because it is the first validation of the tumor treating field technology outside the brain, and it really is a very strong technology of validation. And as you know Mesothelioma is also a form of lung cancer and lung disease. So we believe the success there, really it bodes well for the LUNAR trial and the current studies in non-small cell lung cancer. And as you know, not a very, very large market in China, close to 800,000 patients per year. So we really think that's the validation, the potential of treating field in lung cancer.

Yang Huang -- Bank of America Merrill Lynch -- Analyst

Okay, great. Thanks. And my next question, and my next question is about ZEJULA launching in Mainland China. So as I understand, the main channel for ZEJULA, or patients will be going through from pharmacy right, not -- probably not a hospital yet. So how many pharmacies you already answered for ZEJULA? And so what's your kind of year-end goal or how many funds that you intend to that is utilizing by the end of this, thanks.

Samantha Du -- Founder, Chairman, Chief Executive Officer

Yeah, that's a very good question and I think Jonathan has the detailed answer for you.

Jonathan Wang -- Senior Vice President, Head of Business Development

Yeah. Yeah, thanks for that question, Yang. You're right. So the oncology products in China are -- the prescriptions are procured at the pharmacies, but these pharmacies are also affiliated with the hospitals. But what I can tell you is that when we launched ZEJULA in Mainland China, we had about 150 sales FTEs dedicated to cover ZEJULA. And for these 150 FTEs, they cover currently about 800 to 900 hospitals in Mainland China already and that basically covers about up to 5,000 to 6,000 physicians as well in terms of that coverage. So I think as Samantha said, we also got on to a couple of important municipal city reimbursement, while we still wait for the NRDL inclusion hopefully later this year.

So you know we have already mobilized and have done a lot of work despite the coronavirus situation in China and hopefully that gives you a bit more confidence.

Yang Huang -- Bank of America Merrill Lynch -- Analyst

Okay, OK. Great, thanks.

Operator

We have the next question from the line of Jiang [Phonetic] from Credit Suisse. Please ask your question.

Jiang -- Credit Suisse -- Analyst

Hi, thanks for taking my questions. I have two small questions. First, why is the -- is there any reason that why we have not put much effort for ZEJULA in breast cancer? And my second question is what is our focus for the in-house segment products? And when we expect to see some milestones for these products? Thanks.

Samantha Du -- Founder, Chairman, Chief Executive Officer

Thank you for the question. I think in post-presentation, we alluded to our effort in the breast cancers. Tao, why don't you covered this question?

Tao Fu -- President and Chief Operating Officer, Member of Board of Directors

Yeah. So thanks for your question. We are working very closely with our partner GSK on additional line expansion opportunities for niraparib. So we intend to -- we'll work with them and hopefully join global studies. I think breast cancer is one of the indication about that.

Jiang -- Credit Suisse -- Analyst

Thanks. Can you give me -- give us some color on the in-house segment product efforts?

Valeria Fantin -- Chief Scientific Officer

Yes. Samantha, do you want me to take that one?

Samantha Du -- Founder, Chairman, Chief Executive Officer

Yeah Valeria, please.

Valeria Fantin -- Chief Scientific Officer

Yes, sure. Thanks for the question. You were asking about when are we going to start hitting our milestones and actually this is a key year. We are targeting one to two new global INDs and first patient dose this year, and we will be providing more details as these IND filings proceed. And in terms of the overall strategy for that portfolio as Samantha mentioned earlier, the types of programs that you will be seeing emerging from our internal efforts fall into three major categories, immuno-oncology, DNA damage response and repair, and oncogenic signaling. And these are the three areas that we have currently prioritized because as you know there's clinical validation for these three. They are synergistic with our clinical pipeline and as Samantha mentioned, we will be exploring intra portfolio combinations. And they are also aligned with growing in-house expertise, so this is a way to continue to build depth and expertise in those three very key scientific areas.

Jiang -- Credit Suisse -- Analyst

Okay. Thanks so much.

Operator

We have the next question from the line of Xiang Gao from Macquarie. Please ask your question.

Xiang Gao -- Macquarie -- Analyst

Hey, thanks very much for the presentation. And our company is holding up very well in a volatile market. This is Gao Xiang from Macquarie. I have two questions. The first one is, what are the updates for the anti-infectives especially for the ETX2514? So is that also going to be collapsed with the sales company? And the second question is manufacturing of biologics because we have quite a few drug candidates of biologics, right? So I just want to know what's the plan for the manufacturing for that category?

Samantha Du -- Founder, Chairman, Chief Executive Officer

Yeah. So Xiang, and that's a good question. So for the second -- for the manufacturing side, we always do API supplies from different suppliers, local suppliers, sometimes we qualify two suppliers because we do feel like API is especially for small molecule APIs, we don't see that should be one of our core expertise. We do work with very credible suppliers. On the commercial activities, we were talking about the project from we licensed from Entasis. That is small hospital products and also more ICU products, we do intend to commercialize that ourselves.

Xiang Gao -- Macquarie -- Analyst

Okay. So for the biologics down the road, we are still going to use some CMO.

Samantha Du -- Founder, Chairman, Chief Executive Officer

So biologics, it's so far we -- the imminent one, we are talking about is the PD-1 and also the Margetuximab. So those, they will be imported first. And then during that time, if we switch to local we either can go locally by ourselves because we do have the capability to expand our manufacturing facility, and -- or we can go to a CMO, it depends on which makes sense at the time.

Xiang Gao -- Macquarie -- Analyst

Okay. Maybe just a follow-up question, very quick. Correct me if I'm wrong. I remember that ZEJULA actually is manufactured by ourselves, right?

Samantha Du -- Founder, Chairman, Chief Executive Officer

Yes, ZEJULA drug products. But again API, we do use two suppliers, qualified local suppliers.

Xiang Gao -- Macquarie -- Analyst

Okay, got it. Thank you very much.

Samantha Du -- Founder, Chairman, Chief Executive Officer

Yeah. Thank you.

Operator

We have the next question from the line of Seamus Fernandez from Guggenheim. Please ask your question.

Seamus Fernandez -- Guggenheim -- Analyst

Thanks for the question. So just two questions here. Can you guys just update us again on the opportunity in GIST? Maybe talk a little bit about that and timing and if there is any complexities introduced from the collaboration with Deciphera because of COVID-19, if there are any issues there? And then for Samantha, maybe you can talk about what you think are the kind of near and long term, if there are any near and long-term structural changes from COVID-19? I know that a lot of people aren't inclined to consider potential positives coming out of this, but if there are or if there are any silver linings that you would envision on a long-term basis, love to know if any of your thoughts there. Thanks so much. Operator, did that go through?

Samantha Du -- Founder, Chairman, Chief Executive Officer

Sorry, I've muted my line. So let me -- thank you, Seamus. Really sorry about the hold-on. And yes, with regard to Ripretinib for the fourth-line -- with the approval in China, we do expect to leverage the Invictus data as part of our regulatory submission. And, but in the meantime, we will conduct a break in short bridging studies and we will combine those data together to for our NDA submission. We do not expect the coronavirus will impact on this product.

To answer your second question, the coronavirus. I think in the short term, especially in regions affected in China, we do see some disruptions in both sales and also in clinical recruitment but having said so medium term we see a good recovery, but in long term, I think companies like us who has very strong fundamentals, who always looking for the best and the first in class unmet medical needs, and also we have a very strong cash position, we have that Billy mentioned earlier, we have more than $557 million in the bank. So that will put us in even stronger position to not only able to get through this crisis, but also come out to be organizationally more efficient and more thinking out of box and also have more agility to adapt to global changes.

Seamus Fernandez -- Guggenheim -- Analyst

Thanks very much, Samantha.

Samantha Du -- Founder, Chairman, Chief Executive Officer

Thank you, Seamus.

Operator

We have the next question from the line of Yigal Nochomovitz from Citigroup. Please ask your question.

Yigal Nochomovitz -- Citi -- Analyst

Thanks for taking the follow-up very quickly. Thanks, Samantha. Just regarding the prior question that I asked related to trial enrollment, given COVID. I think you mentioned that you were in a fortunate position because one study was closed recently, and another one completed recruitment in November but could you just tell us which studies those were because it wasn't quite clear. Thank you.

Samantha Du -- Founder, Chairman, Chief Executive Officer

Sure, Yigal. Thanks for asking. The one we already in the data mining stage is the second-line of ovarian cancer maintenance studies. So it's in the -- and the one we just closed the recruitment in November last year is for the first one, ovarian cancer maintenance therapy.

Yigal Nochomovitz -- Citi -- Analyst

Okay, thank you very much for clarifying.

Samantha Du -- Founder, Chairman, Chief Executive Officer

Yeah. Thank you.

Operator

[Operator Instructions] We have the next question from the line of Jonathan Chang from SVB Leerink. Please ask your question.

Jonathan Chang -- SVB Leerink -- Analyst

Thanks for taking the follow-up. On a different topic for MGD013, the PD1/LAG-3 bispecific partnered with MacroGenics, we're expecting a pretty expansive albeit heterogeneous update on the Phase 1 study at ASCO this year. Where do you think this drug is most likely to show activity?

Samantha Du -- Founder, Chairman, Chief Executive Officer

Thanks, Jonathan for asking the question. I probably would like Tao to answer that question, before I answer it. Yeah, the data package is coming from them. And unless Valeria wanted to have some additional comment on that or Tao.

Tao Fu -- President and Chief Operating Officer, Member of Board of Directors

Yeah, so Jonathan I think probably better for MacroGenics to answer that question, but what we did noted in our prepared remarks that we actually had a combination trial of MGD013 and niraparib in gastric. That's what we have for the public.

Jonathan Chang -- SVB Leerink -- Analyst

Got it, thank you.

Operator

[Operator Instructions] I'm showing no further questions at this time. I will now turn the call back over to Zai Lab's CEO, Samantha Du for closing remarks.

Samantha Du -- Founder, Chairman, Chief Executive Officer

Thank you, operator. I wanted to thank everyone for taking the time joining us on the call today. We appreciate your support and look forward to updating you periodically on our progress throughout the year. Operator, you may now disconnect this call.

Operator

[Operator Closing Remarks]

Duration: 65 minutes

Call participants:

Billy Cho -- Chief Financial Officer

Samantha Du -- Founder, Chairman, Chief Executive Officer

Tao Fu -- President and Chief Operating Officer, Member of Board of Directors

Jonathan Wang -- Senior Vice President, Head of Business Development

Valeria Fantin -- Chief Scientific Officer

Yigal Nochomovitz -- Citi -- Analyst

Anupam Rama -- J.P. Morgan -- Analyst

Jonathan Chang -- SVB Leerink -- Analyst

Maury Raycroft -- Jefferies -- Analyst

Yang Huang -- Bank of America Merrill Lynch -- Analyst

Jiang -- Credit Suisse -- Analyst

Xiang Gao -- Macquarie -- Analyst

Seamus Fernandez -- Guggenheim -- Analyst

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