Company Spotlight: Zai Lab, China

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Probably one of the most recognisable Chinese biotechs globally, Zai Lab may only be seven years old but the company has progressed rapidly in becoming a NASDAQ-listed company with not just one but two commercial assets through a stunningly effective strategy of forming productive collaborations with the most innovative biopharma companies globally and in-licensing clinically validated assets for the Greater China market. This was in large part made possible through the management team’s extensive global industry experience, particularly founder, Chairman and CEO Dr Samantha Du.

 

Dr Du spent seven years with Pfizer in the US before co-founding and helming another iconic Chinese biopharma company, Chi-Med, as CSO and subsequently CEO, for a decade in total. She then joined Sequoia Capital for a couple of years before venturing out to set up Zai Lab. The company also saw a leadership revamp between 2017 and 2018, which was when most of the members of its current executive team joined the company.

 

There remains the need to bring new and transformative therapies to China

Samantha Du, Zai Lab

 

As listed in their 2019 SEC filing, “Zai Lab was built on the vision that, despite having a significant addressable market and sizable growth potential, China has historically lacked access to many innovative therapies available in other parts of the world and its drug development infrastructure has been underutilized. There remains the need to bring new and transformative therapies to China.” Driven by these goals, Zai Lab has formed partnerships with a number of leading US biotechs including Incyte, MacroGenics, Paratek Pharmaceuticals and Entasis Therapeutics, with their portfolio focusing on oncology and infectious diseases.

 

By the time Zai Lab IPOed on NASDAQ in September 2017, it already had four clinical-stage assets in its portfolio and its first product, ZEJULA®, was launched just a year later for the treatment of ovarian cancer, first in the Hong Kong market and subsequently Macau and mainland China. ZEJULA® is in-licensed from Tesaro (now part of GSK). Their second commercial product, OPTUNE®, in-licensed from Novocure, was again first launched in Hong Kong in December 2018 for glioblastoma, and has since been approved by the China NMPA as well, becoming the first innovative treatment for glioblastoma to be approved in mainland China in over 15 years. Zai Lab has since built up a commercial team of around 300 employees.

 

As Dr Du explained in her 2019 interview with us, “we made the decision to launch our products in Hong Kong with a pure-play commercial platform, and this is the strategy we will take with our future launches in the mainland Chinese market.” Despite their still-diminutive size compared to most of the other cancer players in the market, she was confident that Zai Lab had the right strategy to penetrate the market, highlighting, “in China, the top 100 hospitals account for approximately 80 percent of innovative oncology products so our sales and marketing efforts can be very focused and science-based. The commercial platform we are developing is driven by medical information and education. It is very important for doctors to be educated by qualified medical representatives rather than simply relying on a commercial distribution network and including it on hospital procurement lists. Chinese patients rely on their doctors and respect their opinions and knowledge, so it is very important the biopharma companies like us provide correct and informative medical education on our products.”

 

She also pointed out, “incidentally, this would help Big Pharma multinationals as well because they have historically not focused on penetrating lower-tier cities and community hospital centres. If local companies like us with the reach invest in such efforts, it raises the medical awareness in the entire ecosystem.”

 

According to company-provided data, ZEJULA® overtook its main competitor, AstraZeneca’s LYNPARZA® to capture 71 percent of the market (by value) in 2019. Total revenue for both products in 2019 reached USD 13 million. With two China NMPA approvals and a number of successful launches across the Greater China markets under their belt, Zai Lab has certainly positioned themselves as the “gateway to China for innovative assets” and continue to sign high-profile in-licensing deals, the latest being with Regeneron for their CD20xCD3 bispecific under clinical development for a range of blood cancers.

 

Complementing its commercial capabilities, Zai Lab has also built a commercial small-molecule oral solid dosage manufacturing facility and a biologics pilot manufacturing facility in Suzhou.

 

Where Zai Lab has been overtaken by many of her contemporaries is in terms of their in-house discovery pipeline, though the company is working hard to remedy this, having established discovery operations in 2016 and 2018 in Shanghai and San Francisco respectively. To boost their efforts, they are also working with leading academic institutions in China like the Shanghai Institute of Materia Medica and Tsinghua University. However, 2020 might be the year for them as they have stated that they expect to file at least one IND this year for their internally-discovered assets.

 

This remains an important priority for the company, given Dr Du’s fervent belief in the necessity of China developing its own homegrown innovations. She has exhorted, “as a country rises to the position of the second-largest global pharma market, I believe it becomes responsible to not only benefit from other countries’ innovations but also to bring innovations to the world! When Japan became the second-largest pharma market in the world, we started to see the Japanese pharma multinationals emerge. China needs those kinds of companies too and today we are fully capable of moving in this direction.” After all, she added, “we have the talent, the financial engine and the patient population to run accelerated clinical programs.”

 

Her final message to the global industry community? “As a leader, we always need room to learn, adapt and grow. We have somehow become a reference for the Chinese biotech industry. Last year, there was a lot of talk about the ‘Zai Model’, ‘Zai Better, ‘Zai 2.0’ and so on. But Zai Lab itself is already a Zai 5.0! We are always innovating.” Having proven its late-stage development and commercialization capabilities, we look forward to seeing how Zai Lab continues on its transformative journey further upstream into the deeper waters of discovery R&D.

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