Operator: Hello, ladies and gentlemen. Thank you for standing by. Welcome to Xylem's fourth quarter and full year 2025 financial results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, today's call is being recorded. It's now my pleasure to turn the floor over to Christine Chou, Senior Vice President of Investor Relations.
Christine Chou: Thank you. Please go ahead. Thank you, operator.
Christine Chou: Hello and welcome, everyone. Today's earnings call will be led by Dr. Samantha Du, Xilab's founder, CEO, and chairperson. She will be joined by Josh Smiley, President and Chief Operating Officer, Dr. Rafael Amado, President and Head of Global Research and Development, and Dr. Yajing Chen, Chief Financial Officer. Dr. Shan He, our Chief Business Officer, will also be available to answer questions during the Q&A portion of the call. As a reminder, during today's call, we will be making certain forward-looking statements based on our current expectations. These statements are subject to numerous risks and uncertainties that may cause actual results to differ materially from what we expect due to a variety of factors, including those discussed in our SEC filings. We will also refer to adjusted loss from operations, which is a non-GAAP financial measure. Please refer to our earnings release furnished with the SEC on February 26, 2026, for additional information on this non-GAAP financial measure. At this time, it is my pleasure to turn the call over to Dr. Samantha Du.
Dr. Samantha Du: Thanks, Christine. Good morning and good evening, everyone. Thank you for joining us today. Satellab is an important point in our evolution. We're building a company increasingly defined by global innovation, resting on a foundation supported by a commercially profitable China business and R&D infrastructure Today, our global oncology immunology pipeline is reaching a scale and maturity that fundamentally changes the profile of this company. We have multiple global programs advancing rapidly through the clinic and with Josie in pivotal stage. We see a clear path toward our first potential U.S. approval by 2028. Importantly, we advanced Josie. from IND to global phase three in less than two years. The industry leading pace that reflects the strength of our integrated U.S. and China development model. This capability enables faster, more capital efficient execution. It's now being applied across our broader pipeline. Our China business continues to provide stability and leverage for our global R&D efforts. Despite a challenging macro and operating environment, full year revenue grew 15% year on year, and our commercial profitability continues to improve. Looking ahead to 2026, our priorities are very clear. This is a year focused on execution and preparation. We expect several meaningful pipeline catalysts, including clinical data for JOSIG, in brain metastasis, neuroendocrine carcinoma, and first-line small cell lung cancer, as well as first-in-human data from our IL-13, IL-31 receptor bispecific program in atopic dermatitis. On the original site, We have important pivotal data results for large opportunities, such as povitacid in IgAIN, and aligarh bed in third eye disease, both of which enhance the durability of our China growth engine. Business development remains an important lever for us. Our presence and capabilities in China provide access to one of the world's most important, fast-evolving innovation ecosystems, creating opportunities that can meaningfully strengthen and prioritize both our global and regional pipeline. Ultimately, our objective is to build a company that can make a lasting difference for patients while creating substantial value for shareholders. With that, I'll now hand the call over to Rafael. who will walk you through the progress of our R&D pipeline. Rafael.
Dr. Rafael Amado: Thank you, Samantha. 2025 was a year of significant progress for our R&D organization as we continue to build globally competitive pipelines. Over the course of the year, we initiated a pivotal trial in oncology, advanced one additional oncology program into the clinic, and moved our lead immunology asset into clinical development. With that, I'd like to walk you through our progress, starting with Zosie, our potential first and best in class DLL3 targeting ADC, and a cornerstone of Zai Labs' global oncology portfolio. In second-line and third-line small cell lung cancer, we have initiated a global registration of phase three study, which will enroll approximately 480 patients across second-line post-platinum and third-line post-sarlatumase settings. with a control arm reflecting real-world global practice, including topothecan, loridectin, or ambruvizine. Importantly, SOSI has advanced at a rapid pace, significantly faster than is typically observed for programs in this space. Based on current timelines, we anticipate a potential accelerated approval submission in 2027 and a first global approval in 2028. Clinically, SOSI has demonstrated encouraging efficacy in heavily pretreated extensive stage small cell lung cancer, including an 80% objective response rate in 10 patients with untreated brain metastasis. The ability to treat both intracranial and extracranial disease without treatment interruptions represent a meaningful potential advantage for patients, and we look forward to presenting this data in the coming months. Equally important, SOCI continues to stand out for its favorable safety profile with low rates of severe treatment-related adverse events. We believe this profile supports SOCI's potential role as a backbone agency in first-line combination regimens, including those that reduce chemotherapy burden. We plan to initiate a first-line pivotal trial in small cell lung cancer and to advance SOCI into additional novel combination regimens before year-end. Beyond small cell lung cancer, we see a compelling opportunity for ZOCI in neuroendocrine carcinomas, or NECs, a large underserved population with no approved DLLC-targeted therapies. Enrollment in our global phase 1b2 is progressing very well, and we plan to present initial data this year with the goal of initiating a registrationally enabling study by the year end. Taken together, we believe SOSI's differentiated efficacy and safety profiles, including activity in brain metastasis, positions it to address a significant unmet need across small cell lung cancer and neuroendocrine carcinomas, where the total addressable global market is estimated to exceed $9 billion. Beyond SOSI, our next wave of innovative global assets continues to advance rapidly. ZL6201, our internally discovered LRRC15 targeting ADC, received US IND clearance, and the global phase 1 study was quickly initiated thereafter. ZL1222, our PD1IL12 immunocytokine, is progressing through IND enabling studies, and ZL1311, a next-generation T cell engager or TCE targeting Mach17, represents our first globally-owned TCE with an IAD plan by year end. In immunology, ZL1503 is our internally discovered IL1331 receptor alpha by specific antibody for atopic dermatitis. And it's designed to address both itch and inflammation with the potential for enhanced and faster onset of efficacy associated with less frequent dosing than current biologics. The global phase 1, 1B study is enrolling well, and we expect first in human data later this year. Now, turning briefly to our key late-stage regional programs, starting with our immunology portfolio. F-cortisumab continues to expand across multiple autoimmune indications with ongoing development across a broad clinical program. Recent late-stage results support further label expansion, and additional phase 3 readouts are expected this year and next, with China being a valuable contributor to global enrollment. But WITACISEP remains on track with an interim analysis for the global Rainier Phase III study for IGaN, planned for the first half of 2026. And enrollment is ongoing in the global pivotal Olympus Phase II-III study for primary membranous nephropathy. Lastly, for AllegroBART, our partner Viridian expects to report top-line data for the Global Registrational Reveal-1 study in active TED. This will be in the first quarter of 2026, followed by top-line results from the Global Registrational Reveal-2 study in chronic TED in the second quarter of 2026. AllegroBART has the potential to become the first subcutaneous IGF-1R therapy approved for TED in China. Turning to our local oncology portfolio, for TIFDAC, we expect approval in China in the first half of 2026, which will build naturally on our established Sajula commercial platform, further deepening our leadership in women's cancers. Finally, for tumor-treating fields, the FDA approval for OptumPax in locally advanced pancreatic cancer earlier this month represents an important milestone in this disease. and we will work closely with China and MPA under the innovative medical device pathway to support an expedited review. Together, these achievements reflect the depth and quality of our pipeline, one that is advancing with speed and efficiency. And with that, I'll hand it over to Josh.
Josh Smiley: Thank you, Rafael, and hello, everyone. Before getting into quarterly performance by product, I want to briefly frame how the business progressed more broadly in 2025. During the year, we made important progress across market access, portfolio optimization, and business development. We successfully completed NRDL renewals for key products and achieved guideline updates supporting VivGuard in generalized myasthenia gravis and CAR-XT in schizophrenia, both of which strengthened the durability of our commercial portfolio over the long term. At the same time, we sharpened our focus by divesting non-core assets and regions, allowing us to reallocate resources toward higher priority growth opportunities and to improve operational efficiency. From a business development perspective, we maintained a highly selective and strategic approach. During the year, we entered targeted collaborations to explore novel combination strategies in first-line small cell lung cancer and strengthen our oncology platform with the addition of a MUC17 CD3 T-cell engager. Together, these actions reflect our disciplined approach to external innovation complementing our internal pipeline while preserving financial flexibility. With that broader context, I'll now turn to our quarterly commercial performance. Fourth quarter revenues increased 17% year over year to $127 million, and full year revenues grew 15% to $460 million, reflecting steady progress across our commercial portfolio. Starting with Vivgard. Physician confidence remains strong and patient demand has been stable. Fourth quarter revenues, however, reflected channel dynamics related to NRDL renewal and hospital purchasing patterns. In 2026, we expect a more measured near-term growth profile influenced by pricing dynamics and evolving competition. The long-term trajectory of the franchise remains intact, supported by clinical guideline expansion, affordability initiatives, and additional indications and formulations. Turning briefly to Zejula, we delivered a strong fourth quarter driven by first-line BRCA-positive new patient starts. While some variability is expected early in the year due to volume-based procurement dynamics for Olaparib and seasonality, Zejula remains well positioned in the first-line setting. Looking ahead, CARXT represents a significant near-term growth opportunity. We expect to initiate the commercial launch in the second quarter of 2026 with a clear focus on disciplined execution. building disease awareness, establishing clinical confidence, and laying the groundwork for broader adoption. Recent inclusion in a national expert consensus on negative symptom management builds on last year's inclusion in national treatment guidelines and reinforces growing recognition of CAR-XT's profile. In summary, 2026 is a year focused on maintaining the strength and stability of our existing business while preparing for multiple growth opportunities ahead. That includes continuing to build the VivGuard franchise, executing a high-quality launch for CARXT in schizophrenia, and advancing key late-stage assets such as POVI to CSEPT in IGAN, AllegraBART in TED, and TT Fields in pancreatic cancer. The investments we are making across commercial and R&D today are designed to support a multi-year growth trajectory extending well beyond 2026. And with that, I will now pass the call over to Yajeng to take us through our financial results. Yajeng?
Dr. Yajing Chen: Thank you, Josh. Now I will discuss highlights from our fourth quarter and four-year 2025 financial results compared to the prior year period. Fourth quarter, total revenue grew 17% year-over-year to $127.6 million, driven by strong contributions from Zacduro and Muzaira. Zacduro performance reflected strong patient demand and expanding hospital adoption. Those supply constraints during the year limited the full realization of underlying demand. New Zyra continued to benefit from broader market coverage and increased penetration. Total revenues for the full year were $460.2 million, representing 15% year-over-year growth. Turning now to our expenses. Our commitment to financial discipline is reflected in improved operating leverage, with both R&D and SG&A declining as a percentage of revenue year-over-year. R&D expenses for the full year declined 6 percent, driven by lower personnel compensation costs, and increased in the fourth quarter due to fast progression of global clinical trials. SG&A expenses decreased 12% and 7% year-over-year for the fourth quarter and the fourth year, mainly due to the reduction in general and administrative expenses because of strategic resource optimization. As a result, large fund operations improved 19% for the full year to $229.4 million and improved 25% when adjusted to excludes non-cash expenses, including depreciation, amortization, and share-based compensation. We maintain a strong cash position, ending the quarter with $790 million. Looking to 2026, our focus remains on strengthening the foundation of our regional business, executing across our global pipeline, and thoughtful capital deployment to support both near-term launches and long-term growth drivers. With a strong balance sheet, we are well positioned to execute against these priorities. And with that, I would now like to turn the call back over to the operator to open up lines for questions. Operator.
Operator: Thank you. We will now begin the question and answer session. To answer questions on the phone, please press star 1 1 and wait for a name to be announced. To answer a request, please press star 1 1 again. One moment for the first question. Our first question comes from the line of Jonathan Chang of Leering Partners. Please go ahead.
Jonathan Chang: Hi, guys. Thanks for taking my questions. First question, can you provide any color on how we should be thinking about revenues and expenses for 2026? And then second question, on the global pipeline for Zosi, can you remind us of the implications of the intracranial activity in patients with brain mets, and how does this impact the opportunity and positioning of the drug? Thank you.
Josh Smiley: Thanks, Jonathan. It's Josh. I'll start with 2026. Ask Yajing to make a comment, and then we'll hand it over to Rafael to talk about Zosie. I think as we think about 2026, as we mentioned on the upfront comments, you know, we see good growth opportunities for VivGuard. We're seeing good volume gains throughout the second half of the year. We expect that to continue in 2026. Um, we're, we're pleased with how we're and how we ended the year with, um, Zajula and while we're facing, you know, a, um, uh, generic market now for, for Lumparza, we expect to continue to hold our, our position. And in some cases, hopefully grow, uh, Zach Doro should be a good driver for us this year. And of course, then we got a couple of important launches or coming. CoBEM fee in the second quarter will begin our commercial launch and then TIVDAC later this year. So I think when you think about those things together, certainly we're looking for good commercial performance and good growth on the top line for the year. For expenses, I think we're in good shape on SG&A, very modest investments required to support launches. Obviously, we're going to put the field Salesforce in place to launch Cobempy, and that'll drive some incremental costs. But I think otherwise, we're in good shape as it relates to synergies and efficiencies across our SG&A. R&D should be relatively in line with what we've seen the last few years. Obviously, big focus and resource allocation to our global portfolio. But as some of our late phase opportunities start to in China start to come offline. We've got capacity there. So I think, you know, sort of flat to very modest growth in R&D. So this year, you know, pretty straightforward thinking. Obviously, we've got some, you know, some pushes and pulls as it relates to when things are approved and when we get them into the market and otherwise. I think then as we think about, you know, 27 and on, we'll start to get the benefits of these launches like CoBEMFI and TIVDAC and some of the assets that Raphael talked about in his upfront comments. Yajing, I don't know if you want to add anything to that.
Dr. Yajing Chen: Maybe just add a little bit more dynamics in 2026. And 2026 is a transition year. I think underlying demand growth, as Josh talked about, is very true. Also, we want to be mindful of other dynamics moving pieces including the IV, the Vivicar IV price adjustment, and maybe later on the NADL rebate dynamics in the fourth quarter for Vivicar's high true low. So, and then we are sort of like looking at the hospital budgeting purchasing behavior as well. So this is part of the reason that we want, we probably not going to provide the four-year guidance at this time, but also the moving pieces when we get more clarity, we can share more specifics later in the year.
Josh Smiley: Thank you, Jing. Rafael, do you want to talk about Zosie, please?
Dr. Rafael Amado: Yeah, absolutely. So brain metastasis, obviously, in this disease is a big problem. About 70% of patients develop brain metastasis. And I think the speed with which patients experience responses with Zosie is well appreciated among investigators. And it's actually... one of the key properties of the molecule. So we've reported up to 80% response rates in patients with untreated metastasis. So there are two situations. If a patient comes in with brain metastasis, oftentimes they have to have brachytherapy or some local regional therapy, which delays systemic therapy. Whereas if it's an uncomplicated untreated med, patients can go into SOZI directly. And we see, again, pretty high activity in the brain. The other is, you know, there are some drugs that may have activity, but then there is a high rate of relapse in the brain where the brain is a sanctuary site. So using SOCI prevents recurrences in the brain, which is really important. So we've reported in resist criteria before, and we're planning to report now in the first half of the year using Raynaud criteria, which is a response assessment that is used in neuro-oncology. is a much more stringent one where it's bi-dimensional and uses 50% instead of 30%. So it really characterizes the responses in the brain, and we look forward to presenting that in the first half of this year.
Jonathan Chang: Got it. Thanks for taking the questions.
Operator: Thank you for the questions. One moment for the next question. Our next question comes from the from . Please go ahead.
Leigh: Hey, good morning. Thanks for taking my questions. I guess my first question is more about, you know, sort of the U.S.-China development model that you alluded to in the opening. So I just wonder, can you elaborate a little bit more other than maybe, you know, sourcing assets from the region? I guess how much, you know, clinical de-risking or, you know, timeline acceleration can you achieve by leveraging some of the resources in the region?
Josh Smiley: Thanks, Leigh. It's Josh. Rafael, why don't you talk a little bit about this point to Leigh's question? Sure.
Dr. Rafael Amado: So our model obviously has been speedy development in China based on pretty efficient development structure, as well as regulatory and other functions in China. And that's led to the success of registrations local regionally. And now we're applying that speed relationship with investigators and sites to add China to global trials or to be the sole site when we want go-no-go decisions with products. So we now have all our global trials, really, including China participation, and that really has allowed us to move with speed and quality. That will be also the case for phase three studies. We expect that China will participate and enroll about a third of the patients. At least that's our expectation, for instance, on our current pivotal trial and second line with SOZI. So I think all in all, you know, this efficiency that we have built over the course of the past 10 years in China is serving us well as we are now expanding our pipeline towards, you know, global assets. And we are seeing the fruits of that by, for instance, moving within two years to phase three from IND, as an example.
Leigh: Okay, and then my second question is on Zosie, and obviously you guys are going to present data in neuroendocrine. I just wanted to get a little color in terms of, you know, expectations, what sort of data you guys can present, what's good data. And in terms of regulatory pathway, can you maybe just conduct a single-arm study to get approval and maybe expand a little on that as well?
Dr. Rafael Amado: Yeah. NECs is a complex group of diseases, and first line is treated with chemotherapy. There is the gastroenteropancreatic subgroup, and then other neuroendocrine carcinomas that exclude lung, because lung tends to have a different prognosis. And when you look across the board in second line, chemotherapy really has this small activity in terms of response rate and BFF. So our study has started in second line, and it's looking at GEP, neuroendocrine carcinomas, non-GEB neuroendocrine carcinomas or extrapulmonary. And then there's a group that is looking at neuroendocrine tumors, which are less aggressive. So, you know, an initial data set will be presented in second line. We are pleased with what we're seeing thus far. We will have, I think, sufficient patients to make an assessment in terms of the response. You know, the durability may be limited, but we think that there's enough information there to present in the first half of this year. And, you know, there may be about, you know, 60 plus patients that will be included in this analysis. Like you said, we are sort of ourselves seeking a regulatory path for patients. any see in second line and and this is this is actually the subject of our regulatory discussions that were initiated now in terms of whether a single alarm would be sufficient or whether a randomized trial would be required um you know it's unclear what the control arm would be in the second uh option but it's still a possibility so those discussions are beginning now as we uncover the data And we're also thinking about what to do in frontline as well. As you know, some T cell engagers are getting into this space, and we would probably consider something in first line in combination, but that is down the line in the future. We want to sort of see what we can do to help patients in second line where options are just as scarce.
Christine Chou: Thank you. Thank you for the questions. One moment for the next question. Our next question comes from Michael Yee of UBS.
Operator: Please go ahead.
Michael Yee: Thank you. Good morning. We have two questions. First, just wanted to understand. Given all the thoughts and comments you have talked about regarding steady revenue growth and pushes and pulls as it relates to financials this year, does the company believe that they could achieve break-even or profitability by the end of the year? Do you think that's something that is achievable given what we had expectations for last year? And then the second question is, obviously, as Josie and Dale, all three are critically important. What is the expectation for completion of enrollment and the timing of reading out the primary endpoint and response rate in order to file? Thank you.
Josh Smiley: Great. Thanks, Mike. How about Jiajing? You talked about the cash flow, and then we'll hand it over to Rafael.
Dr. Yajing Chen: Yeah, so our corporate profitability, I mean, the cash flow break-even, it definitely continues to be a very clear objective for Xilab. We will manage the business accordingly. Our business right now is commercially profitable today. That provides a stable foundation for the company. At a corporate level, I think the timing of the probability is really driven by the two primary factors. One is the the top-run growth, the rate of the growth, and the other one is the level of investment that we choose to make in the high-value global programs. So I think at this time, we remain efficient, disciplined in our spending. We do expect the corporate profitability to emerge. I won't be able to share the guidance for 2026, where we're going to be, but that's definitely the goal for us to continue to drive. And also, I want to mention that we are focused on progressing towards the goal, but also focused on continuing to expand our global pipeline. So, we do want to preserve the flexibility to invest when we see the strong value.
Josh Smiley: Thanks, Yajie.
Dr. Rafael Amado: Go ahead, Rafael. Thanks, Josh, and thanks, Michael, for the question. So the study started in December. It's a global trial. It started in the U.S. first, and China is coming online imminently as Europe will and North America and other countries in Asia as well. Asia Pacific. Our plan is to have about 75% of the patients enrolled by the end of the year. We have to have everybody enrolled before we do the interim analysis for response. And we think that we will finish enrollment at the end of the first quarter of next year and do the analysis and subsequently file. So we're hoping for an approval in 2028. The study, as you know, is a combination of second line as well as post-Arlatema patients, and we're balancing the accrual of each one of those subgroups in the study. So, 2027, end of accrual and filing, and 2028, hopefully, accelerated approval.
Christine Chou: Perfect. Thank you very much.
Operator: Thank you for the questions. One moment for the next question. Our next question comes from from City Group. Please go ahead.
Caroline: Hi. This is Caroline on for you, Gal. Thanks for taking our question. Could you talk about your strategy to grow VivGuard, specifically how to increase cycles per patient? Thanks.
Josh Smiley: Thanks, Caroline. VivGuard, you know, we are focused on moving the cycles per patient to the minimum of three, which is what's embedded in the national myasthenia gravis guidelines in China that were updated in July of last year. Of course, in the clinical data, getting, you know, getting out to five or more over a 12-month period demonstrates, you know, really significant benefits, but our focus right now is on three. We're making reasonable progress, and we made reasonable progress in 2025. We If you just look at average cycles closing out the year in 2025, we improve versus 2024 by more than 50%. So we're on the way, but we're not yet on average at three. So I think, you know, we've got a couple key initiatives to help drive that focus. I mean, the first is to leverage the guidelines and that's through our medical professionals and our sales professionals. And I think that's really important. And we're seeing the, The benefit of that, we know guidelines make a big difference in China. They make a big difference in most markets. And this has been just, it's been a build the market approach with VivGuard. So I think we're making good progress there and certainly have the clinical data and now the national guidelines to support that. We are also working on affordability initiatives while NRDL listing. is clear for VivGuard. Patients do copay and pay out of pocket, so we've got in place an online support program that helps patients navigate things like appointments and resources and otherwise to help on the logistics and the copay. We have a targeted copay assistance program that helps, and it really is focused on the national guidelines and focused on ensuring we can get patients out to three cycles with as minimum economic burden as possible. We are seeing the benefits of those focus points, and I do expect during the year that we'll continue to see good expansion in duration of therapy and get the majority of our Certainly patients who are in the acute phase of the disease, the majority of those patients, I think this year are going to get to three and more cycles. We also this year, though, are expanding, really focusing on patients who are in the non-acute phase. They, of course, also benefit from long-term therapy and getting three or more cycles. But that's probably going to be a little bit longer climb to get there. So I think as we look at the data throughout the year, We've got great patient expansion opportunities by leveraging our strength in acute patients, moving to non-acute. Those acute patients, I think the initiatives are underway and having results that'll get us out to those, you know, on average three or more cycles. And then the non-acute patients will start to pick up and add, you know, certainly good volume growth throughout the year. So I think that's, you know, we're quite excited about the opportunities with VivGuard this year, the opportunities to get to many more patients and for them to get the full benefits of the drug, you know, through persistence and duration. Thank you.
Christine Chou: Thank you. Thank you for the questions.
Operator: One moment for the next question. Our next question comes from Anupam Brahma from JPMorgan. Please go ahead.
Josh Smiley: Hey, guys. Thanks so much for taking the question. On the global second, third line DLL3 study, which is enrolling patients, you kind of talked about this, but can you remind us what the ultimate regional breakdown of sites is going to be, given this is a global effort? And is there a breakdown of patients that need to be ex-China for U.S. and more global approvals? Thanks so much.
Josh Smiley: Thanks, Anna Palm. I'll start, but Rafael can talk about the enrollment and how we're thinking about that. But I think first, if we look at... small cell lung cancer, you know, and focus first on the U.S. I think in the, you know, second line and later settings, we see about 15,000 patients available. First line is probably 25,000. If we, you know, sort of look at that on a major market, Western market, you know, sort of look, that's probably 100,000 patients, you know, total in small cell lung cancer that are eligible for treatment and, you know, first or or later line settings. So it's a big opportunity. And of course, you know, we, when we sort of size that and you guys have done this as well, it's you know, it's you know, approaching $10 billion probably in terms of total, total opportunity. And we think Zosi can fit really well, you know, in that space. I think when we look at neuroendocrine you know, we're probably in the, you know, in the U S it's somewhere in that five to 10,000, you know, sort of range. maybe similarly in other markets. We have more to learn here, I think, as we continue to work through the trial, but it's not insignificant, I guess, is what I would say. Rafael, maybe you could talk about enrollment.
Dr. Rafael Amado: Sure. The distribution, I think, of the countries and patients coming from China and other regions is really designed to make sure that we have enough patients post-Tarlatamab that reflect real-world usage in the United States. That may be up to 30% of patients or so coming from the United States. About 30% of patients will come from China. This is a reasonable number. I don't think it's ever been questioned that a percent of patients of that magnitude can jeopardize, you know, approval in a positive study. The rest of the patients will come from Europe. You know, in terms of post-Tarlatama patients, obviously we count on Japan as well. We count on the UK, some countries where a lot of studies have been done with Tarlatama, and obviously the United States where Tarlatama is gaining market share. So I think that's probably the distribution, you know, that you should expect on the study.
Josh Smiley: Thanks so much for taking our question.
Operator: Thank you for the questions. One moment for the next question. Our next question comes from the line of Choi Choi of Jefferies. Please go ahead.
Choi Choi: Thank you very much. Thank you, Samantha, Josh, Shafao, Yajing, and Shen. So I have three questions for the management team. The first one is as a follow-up to the JP Morgan question. So could you please share some more details on Zosie? So because for this time, we are also very excited to see the clinical trial design for the first-line small cell lung cancer, including the combo Remagen, as also for the strategy of NEC. Will it also be advanced to the first-line treatment in the future? And my second question is regarding the CAR-XP. So what should we expect from CAR-XP in 2026 and 2027? And how will you build your commercialization team going onward? And my last question is also because for the past one year, we also saw some deals regarding the . So can we talk about some . Thank you so much.
Josh Smiley: Thanks, Shui Shui. Rafael, why don't you start, and then I'll come back in with the next two.
Dr. Rafael Amado: Yeah, maybe I'll focus on the first-line opportunity. I mean, just the overarching sort of desire for SOCI is to be the centerpiece ADC for different lines of therapies and combinations, and that is because of its low incidence of grade three toxicity, activity in the brain, and high response rate, really, and durability. So on first line, we've seen in the first study, the phase one, two study, zero, zero, one, we've been enrolling patients in first line for some time. We started with a doublet with a tesolizumab and then a triplet adding carboplatin. And we hope to present mature data towards the second half of this year. You know, we have Just to give you a sense, we've treated about 60 patients or so, and we continue to follow these patients. I think once we have an idea of the activity, we will then make a decision of what the design of the frontline study should be. Our desire is for it to be one that spares chemotherapy, but also we have our eyes on how the frontline study sort of landscape is going to change with the entrance of Indelta potentially in front line and other TCEs in front line. And, you know, if we, you know, continue to see this high level of activity, we will be testing with other agents as well to see whether this combination offers even more activity for patients in first line. So, I think it's stay tuned to the data, but our final design will be when we actually see the entire durability and activity in first line with the data that we've been able to elicit from the phase one to study.
Josh Smiley: Thanks, Rafael. I'll talk about CAR-XT for a minute. We're really excited about this opportunity. It was approved without only product approved without a black box in this setting. First new mechanism in more than 70 years. So there's a really exciting introduction here. We'll launch the product commercially in the second quarter. So we're going through all the process now of getting product in and labeled and inspected and otherwise. So second quarter we'll be out with the product in the market. Of course, we don't have NRDL listing this year, just given the timing, but we do expect that in 2027. So this year's focus will be on getting physicians experience using the drug, you know, getting a commercial team up and running. I think, you know, prescribing here is really concentrated in China. So while there were, I think, in 2024, over 2 billion days of atypical antipsychotic prescription use, when we look at how that's prescribed and how it's managed probably 800 institutions, give or take, that make up a vast majority of that volume, at least from a, you know, sort of initial prescribing and monitoring perspective. So, we'll focus on those institutions at launch that generates, you know, something in the range of, you know, 100 plus or minus, you know, sort of commercial teams. So, very focused this year, and we'll, you know, we'll expand as necessary, but we do see this as a relatively efficient, big opportunity. And again, for this year, I think in terms of financials, I wouldn't expect significant sales. Again, this is going to be a non-NRDL product for patients who otherwise aren't going to have things like commercial insurance or other access to payment mechanisms. But for 2027, I think if you look at NRDL and how to think about this. If you look at the branded olanzapine, for example, you know, it's in the range, I think, of about $5 a day on NRDL, paliperidone, similar. So there's, I think, a pretty straightforward reference here. Final comment I'll make on CAR-XT is I do think this is a relatively straightforward opportunity. Atypical antipsychotics are monotherapy is like 90 plus percent of the standard of care today. This is a drug that brings great additional benefits in terms of safety and negative symptoms, and we'll be educating physicians on those points this year in preparation for what I think will be an exciting unlock in terms of financial value beginning in 2027. On business development, we've got Shan on the phone and Rafael. We're spending a lot of time around the world looking at opportunities, but certainly, you know, as you mentioned, I think if you look at the innovation happening in China, particularly in areas that we're interested in, oncology and immunology modalities like ADCs and T-cell engagers, there's a lot of good opportunities to pick from, and you should expect us to continue to do that. We announced recently a deal on the MUC program, which I mentioned earlier. And I think that's kind of our, you know, typical kind of deals you should think about from us would be late preclinical, you know, targets that are, you know, have some biological precedents and, you know, where we can move fast, leverage the clinical development expertise that Raphael talked about earlier and, you know, have a chance to introduce, you know, first and best in class products in oncology and immunology to the world. And we're really excited about that. Thanks.
Choi Choi: Thank you so much, Josh.
Operator: Thank you for the question. We will now take the last question from from Goldman Sachs. Please go ahead.
Unidentified Analyst: Thanks for taking my question. My question is around . The first one is regarding the phase three trial for the second line small cell lung cancer. Understood that the current clinical protocol does not take telotimab as a control arm, but it was allowed to be available both as a prior treatment option and a post-progression treatment option. So on that end, I want to collect your thoughts on the potential reason of having an elongated OS for the control arm, given that you're allowing telotimab both before and after the second-line treatment. That's the first question. And the second question is about the first line. Understood that you're going to share the Phase I trial data for both doublet and triplet in the second half. And just want to collect your detailed plans about when do you want to make a decision on what to choose from doublet versus triplet in first line. Thank you.
Dr. Rafael Amado: Go ahead, Rafael. Thanks for the question. Maybe let's start from the second one. In terms of first line, we would like to start the first line study, phase three study this year. So in spite of the fact that it may take some time for us to see durability, we may just use a landmark in terms of patients without progression at a given number of months, and then make a decision. And again, our strong desire is to spare chemotherapy because that's really what leads to most of the morbidity. And most patients can only get about four cycles of carbidoposide and a checkpoint inhibitor because they progress actually, the majority of them, some of them are intolerant. So if we're able to give more therapy with 1310 plus a checkpoint inhibitor with the kinds of responses that we see in second line, which should be better than first line, you know, we think we stand a good chance of actually having a positive trial. So that's for first line. I expect that we will launch a study by the end of the year. And then with regards to your question about Tarlatamab, I mean, the patients will be post-Tarlatamab in both arms, but they can only come in if they have progressed on Tarlatamab. So some may have responded and progressed, some may have been the novel resistant patients, but they will be equally in each arm, and the study stratified for post-Tarlatamab versus no Tarlatamab. So in that regard, I think each arm will perform equally. With regards to post-progression therapy, the same things apply. We obviously cannot control post-progression therapy. Some patients may get tarlatan, some may get LRV, some may get something else. But they should, because it's a sufficiently large study, get those therapies equally in each arm. So whatever advantage tarlatan may afford in terms of survival, it should be the same in each one of the arms. So we're not really concerned about bias here, particularly in the post-arlatima patients that enter the study because they're stratified. And again, they can only come in if they have progress. So I hope this answers your question.
Unidentified Analyst: Thank you. Just to quickly clarify that you're saying that you're not really concerned about bias between the two arms. Can you share a bit more? Because I would say if the patients use Zosi in the second line, would the physician still wish to use Talatamab after Zosi?
Dr. Rafael Amado: The physician may use Talatamab after Zosi, but so could they after Topoticum, for instance, or Lorvidectadine. So I guess what I was saying is that Terlatamab is a post-progression therapy, which, again, in survival studies, in any study, we cannot control. But they should be used equally frequently in both arms because once they progress, it's up to the investigator to decide what therapy to use.
Unidentified Analyst: Got it. Thank you so much.
Operator: Thank you for the question. We have come to the end of the question and answer session. With that, I would like to hand the call back to Samantha Du for closing remarks.
Dr. Samantha Du: Thank you, Operator. Thanks, everyone, for taking the time to join us on the call. We appreciate all your support and look forward to updating you again after the first quarter of 2026. Operator, you may now disconnect this call.
Operator: Thank you. That concludes today's conference call. Thank you all for participating. You may now disconnect your lines.
