We are a patient-focused, innovative, commercial-stage, global biopharmaceutical company with a substantial presence in both Greater China and the United States. We are focused on
discovering, developing, and commercializing
therapiesproducts that address medical conditions with
significant unmet needs in
the areas of oncology, autoimmune disorders, infectious
diseases,disease, and neuroscience.
We intend to leverage our competencies and resources to positively impact human health in Greater China and worldwide. To that end, our experienced team has secured partnerships with leading global biopharmaceutical companies
in order to generate a broad pipeline,
of innovative marketedincluding multiple commercial products and
product candidates.multiple programs in late-stage clinical development. We have also built an
in-house
R&D team with strong product discovery and translational research capabilities and are establishing a pipeline of proprietary product candidates with global rights.
Our visionMission and Corporate Strategic Goals
Our mission is to become a leading global biopharmaceutical company discovering, developing, and commercializing products to extend, and improve the lives of patients worldwide.
Since the Company’s founding in 2014, we have taken steps to execute our strategy to become a fully integrated global biopharmaceutical company with substantial research and development, business development, and commercialization capabilities. To date, we have:
received approval for and commercialized four products (ZEJULA, Optune, QINLOCK and NUZYRA);
expanded our pipeline to increase our product candidates under development from four in 2015 to 28 today in oncology, autoimmune disorders, infectious diseases, and neuroscience, including 12 programs in late-stage clinical development;
partnered with established biopharmaceutical and leading healthcare companies such as GlaxoSmithKline (GSK), Novocure, argenx, Turning Point, Deciphera, Karuna, Blueprint, MacroGenics, Cullinan, and Amgen throughin-licensing
product candidates to position ourselves as a partner of choice for the development and commercialization of novel therapeutics in Greater China;achieved reimbursement for ZEJULA in mainland China through its inclusion on the National Reimbursement Drug List (NRDL);
built a commercial organization of approximately 945 employees;
increased our research and development team to approximately 788 employees;
assembled a leadership team of seasoned industry veterans with extensive pharmaceutical research, development, and commercialization experience in both global and Chinese biopharmaceutical companies;
advanced ourin-house
discovery pipeline and capabilities targeting global markets;built out our facilities in China to support our regulatory, clinical, manufacturing, and commercial infrastructure in eleven locations across Greater China and the United States;
acquiredland-use
rights for 50,851 square meters of land in Suzhou for the purpose of constructing and operating a manufacturing site and research center; andexpanded our U.S. footprint by opening a research facility in the San Francisco Bay area and a new corporate office in Cambridge, Massachusetts.
We are committed to our goal of becomingbe a leading global biopharmaceutical company focused on discovering, developing, and commercializing products to extend andinnovative therapies that improve the lives of patients worldwide. patients.
To execute on that mission, we have developed a corporate strategy with the following three pillars to help us drive innovation in China and beyond:
•Accelerate Medicines to Patients: We intendseek to advance our product pipeline by continuing to invest in research and development, including internal discovery activities;
•Expanding Our Pipeline: We seek to continue to pursue a strategy of growthexpand and development by: (i) expandingstrengthen our differentiated product candidate pipeline through synergistic regional and global collaborations and corporate development activities; (ii) capitalizing onand
•Continue Our Commercial Excellence and Execution: We seek to continue delivering strong financial performance, including by increasing access to our existing commercial
products and driving further increases in our efficiency and productivity as we continue preparations to launch multiple additional products or new indications for existing products in Greater China in the next 2-3 years. Through our efforts, we seek to achieve overall corporate profitability by the end of 2025.We also seek to build and maintain the trust of our stakeholders, including through our Trust for Life strategy, which includes three commitments: improve human health, create better outcomes, and act right now with ethical business practices and strong corporate governance. As part of our corporate strategy, and the actions taken in support of our corporate goals, we will continue to develop and integrate our Trust for Life strategy into our business and operations.
Our Commercial Products and Operations
We have license agreements and have received marketing approval in one or more territories in Greater China for five products: ZEJULA®, OPTUNE®, QINLOCK®, NUZYRA®, and VYVGART® (collectively, our “commercial products”). The success of our commercial products, and the scale and sophistication of our commercial operation, is crucial to our business.
We have invested, and will continue to invest, resources to strengthen our commercial infrastructure and to attract, retain, and train qualified marketing, sales, and other personnel in support of the sales of our commercial products. Our sales and marketing teams cover medical centers across Greater China, and our commercial team has capabilities that cover the product sales cycle, including medical affairs, market access, and distributor management. Our commercial team has a proven track record and experience from leading global pharmaceutical companies including AstraZeneca, Roche, Novartis, and Bristol-Myers Squibb Company (“BMS”), and we tailor our commercialization strategies according to our
individual products and their market potential. For example, we work to increase access for our commercial products, including through National Reimbursement Drug List (“NRDL”) inclusion or supplemental insurance coverage, increase brand perception and adoption, including through education and outreach efforts, and provide post-launch product support services for patients.
The following table provides an overview of Contentsour partners and the approved indications and current geographic markets for our commercial products:
| | | | | | | | | | | | | | | | | | | | |
Product | | Our Approved Indications | | Our Current Markets | | Partner |
| | 1st line and 2nd line ovarian cancer maintenance treatment Platinum sensitive relapsed ovarian cancer maintenance treatment | | Mainland China, Hong Kong, and Macau | | |
| | | | | | |
| | Newly diagnosed and recurrent glioblastoma multiforme (“GBM”) | | Mainland China, Hong Kong, Macau, and Taiwan | | |
| | | | | | |
| | 4th line gastrointestinal stromal tumors (“GIST”) | | Mainland China, Hong Kong, Macau, and Taiwan | | |
| | | | | | |
| | Community-acquired bacterial pneumonia (“CABP”) Acute bacterial skin and skin structure infections (“ABSSSI”) | | Mainland China | | |
| | | | | | |
| | Generalized myesthenia gravis (“gMG”) | | Mainland China | | |
The following sections include more information on our commercial products. Each of our commercial products has received approval and is currently marketed in regions outside of our licensed territory for similar approved indications to ours, such as in the United States. We are also evaluating other potential indications for our commercial products, as discussed in Our Oncology Pipeline and Our Autoimmune Disorder, Infectious Disease, and Neuroscience Pipeline.
ZEJULA (Niraparib)
ZEJULA is an orally administered poly (ADP-ribose) polymerase (“PARP”) 1/2 inhibitor. PARP is a protein that helps repair DNA damage in cells. PARP inhibitors block PARP from repairing DNA damage, such as may be caused by radiation and/or certain chemotherapies, which may lead to cancer cell death and slow the return or progression of cancer. Tumors that are deficient in key DNA damage repair pathways, such as BRCA1 mutant tumors, are particularly sensitive to ZEJULA. As maintenance therapy, ZEJULA is for women who have had prior chemotherapy treatment but are at high risk of cancer recurrence. ZEJULA is intended to avoid or slow a recurrence of the cancer if it is in remission after prior treatment. In the maintenance setting, ZEJULA does not require the addition of radiation or chemotherapies to kill tumor cells. We have an exclusive license from Tesaro Inc. (now a subsidiary of GlaxoSmithKline plc (“GSK”)) to develop and commercialize ZEJULA in mainland China, Hong Kong, and Macau. We purchase ZEJULA from GSK for commercial
use in Hong Kong. We are not otherwise obligated to purchase ZEJULA or other licensed products from GSK. For more information on this agreement, see Overview of Significant License and Collaboration Agreements – GSK (Niraparib).
Our primary market for ZEJULA is patients with epithelial ovarian, fallopian tube, or primary peritoneal cancer (collectively, “ovarian cancer”) in mainland China. Ovarian cancer is one of the most common gynecological cancers in China, with over 55,000 newly diagnosed cases and 37,000 deaths in China annually. We launched ZEJULA in mainland China in 2020, and have supported increased patient access through its inclusion in the NRDL since 2021, as a maintenance treatment for women with recurrent platinum-sensitive ovarian cancer and for adult patients with advanced ovarian cancer who are in a complete or partial response to first-line platinum-based chemotherapy, and since 2022, as a maintenance treatment for first-line ovarian cancer.
We also launched ZEJULA in Hong Kong in 2018 for adult patients with platinum-sensitive, relapsed high-grade, serous epithelial ovarian cancer who are in a complete response or partial response to platinum-based chemotherapy and in Hong Kong and Macau in 2021 as a maintenance treatment for adult patients with high-grade serous epithelial ovarian cancer who are in a complete response or partial response to first-line platinum-based chemotherapy.
OPTUNE (Tumor Treating Fields)
OPTUNE (“Tumor Treating Fields” or “TTFields”) is a cancer therapy that uses electric fields tuned to specific frequencies to kill tumor cells via a variety of mechanisms. TTFields therapy is delivered through a portable medical device. The complete delivery system for OPTUNE includes a portable electric field generator, arrays, rechargeable batteries, and accessories. We have an exclusive license from NovoCure Ltd. (“NovoCure”) to develop and commercialize any TTFields products in Greater China in the field of oncology. We purchase the licensed products exclusively from NovoCure. For more information on this agreement, see Overview of Significant License and Collaboration Agreements – NovoCure (Tumor Treating Fields).
Our primary market for OPTUNE is patients in mainland China with GBM, the most aggressive form of brain tumor. We estimate that there are more than 45,000 patients with GBM in China each year. We launched OPTUNE GIOTM, the OPTUNE product for the treatment of GBM, in mainland China in 2020 for the treatment of patients with newly diagnosed GBM in combination with temozolomide (“TMZ”), a chemotherapy drug, and as a monotherapy for the treatment of patients with recurrent GBM. We have also launched OPTUNE GIO for these GBM indications in Hong Kong, Taiwan, and Macau. Further, we have improved patient access to OPTUNE GIO in mainland China through supplemental insurance coverage.
QINLOCK (Ripretinib)
QINLOCK is an orally administered switch-control tyrosine kinase inhibitor (“TKI”) that broadly inhibits KIT and platelet-derived growth factor receptor alpha (“PDGFRα”) tyrosine kinases, including wild-type and forms with multiple primary and secondary mutations. Switch-control tyrosine kinases KIT and PDGFRα regulate kinase activity through a main activation switch and an auxiliary inhibitory switch that control kinase conformation in either an “on” or “off” position. Oncogenic kinase mutations predominantly function by disrupting one or more regulatory switch mechanisms, leading to dysregulated function and loss of normal, physiologic conformational control. Blocking the switch pocket region and the activation switch region locks KIT and PDGFRα kinases in an inactive conformation by a dual mechanism of action that provides broad inhibition of KIT and PDGFRα kinase activity thereby preventing downstream signaling and cell proliferation. We have an exclusive license from Deciphera Pharmaceuticals, Inc. (“Deciphera”) to develop and commercialize QINLOCK in Greater China. We purchase the licensed products exclusively from Deciphera. For more information on this agreement, see Overview of Significant License and Collaboration Agreements – Deciphera (Ripretinib).
Our primary market for QINLOCK is patients with GIST in mainland China, where we believe QINLOCK is the standard of care. GISTs are the most common mesenchymal tumors of the gastrointestinal tract, accounting for about 0.1-3% of gastrointestinal tumors, with an estimated annual incidence of around 30,000 newly diagnosed patients per year in mainland China. We launched QINLOCK in mainland China in 2021 for the treatment of adult patients with advanced
GIST who have received prior treatment with three or more kinase inhibitors, including imatinib (“fourth-line GIST”). In January 2023, QINLOCK was included in the NRDL for this indication. We have also launched QINLOCK for fourth-line GIST in Hong Kong, Taiwan, and Macau.
NUZYRA (Omadacycline)
NUZYRA, a novel tetracycline-class antibacterial with both oral and IV formulations, is a broad spectrum antibiotic. We have an exclusive license from Paratek Pharmaceuticals, Inc. (“Paratek”) (subsequently acquired by Gurnet Point Capital and Novo Holdings A/S) to develop, manufacture, and commercialize NUZYRA in Greater China. For more information on this agreement, see Overview of Significant License and Collaboration Agreements – Novo Holdings (Omadacycline).
Our primary market for NUZYRA is patients with CABP or ABSSSI in mainland China. CABP is the most common type of pneumonia that is acquired outside of the hospital. It is one of the most common infectious diseases and is a significant cause of mortality and morbidity worldwide. ABSSSI are bacterial infections of skin and associated soft tissues, such as loose connective tissue and mucous membranes. ABSSSI are common and encompass a variety of disease presentations and degrees of severity. The World Health Organization has identified the worldwide development of resistance to currently available antibacterial agents as one of the greatest threats to human health. In 2020, the estimated incidence of CABP in mainland China was approximately 10 million patients, and in 2015, the estimated incidence of ABSSSI in mainland China was 2.8 million patients. We launched NUZYRA in mainland China in December 2021 for the treatment of adults with CABP and ABSSSI for both oral and intravenous (“IV”) formulation. NUZYRA was included in the NRDL for the treatment of adult patients with CABP and ABSSSI in January 2023 for its IV formulation and in January 2024 for its oral formulation.
NUZYRA is locally manufactured by Contract Manufacturing Organizations (“CMOs”) in mainland China. We have an exclusive promotion agreement with Huizheng (Shanghai) Pharmaceutical Technology Co., Ltd. (“Huizheng”), a subsidiary of Hanhui Pharmaceutical Co., Ltd. (“Hanhui”), one of the leading pharmaceutical companies for antibiotics in mainland China, which allows us to use Hanhui’s existing infrastructure for sales of NUZYRA in mainland China.
VYVGART (Efgartigimod)
Efgartigimod alfa fcab (“efgartigimod”) is a human IgG1 antibody fragment that binds to the neonatal fragment crystallizable receptor (“FcRn”). FcRn is widely expressed throughout the body and plays a central role in rescuing IgG antibodies from lysosomal degradation. Blocking FcRn prevents FcRn from binding IgG antibodies and rescuing them from lysosomal degradation resulting in a reduction in circulating IgG antibodies which may include pathogenic IgG antibodies that contribute to certain autoimmune diseases such as gMG. We have an exclusive license from argenx BV (“argenx”) to develop and commercialize efgartigimod in Greater China. We purchase the licensed products exclusively from argenx. For more information on this agreement, see Overview of Significant License and Collaboration Agreements – argenx (Efgartigimod).
Our primary market for VYVGART is patients with gMG in mainland China. There are approximately 200,000 patients in China living with myasthenia gravis (“MG”). Approximately 85% of people with MG progress to gMG within 18 months, and of those patients, 85% are estimated to have confirmed AChR antibodies. We launched VYVGART (efgartigimod alfa injection) in mainland China in September 2023 as an add on to standard therapy for the treatment of adult patients with gMG who are anti-acetylcholine receptor (“AChR”) antibody positive, and in January 2024, this product was added to the NRDL for this indication.
Our Pipeline of Product Candidates and R&D Activities
We believe research and development is important to our future growth and ability to remain competitive, and we are dedicated to discovering or licensing, and then developing and commercializing, innovative products that address significant unmet medical needs in Greater China and worldwide. We have a deep and differentiated pipeline of potential
first-in-class / best-in-class products across our therapeutic areas of oncology, autoimmune disorders, infectious disease, and neuroscience. Our pipeline includes certain additional indications for our approved products;commercial products as well as new products for which we may seek regulatory approval and (iii) investingcommercialization. Our pipeline includes both in-licensed assets as well as assets that we have internally developed. Our product candidates are in various stages of development, including several assets in late-stage development and various others in clinical and pre-clinical development.
The following table provides an overview of our significant product candidates, including key indications we are evaluating for those products, their clinical stage and related studies in which we are participating, and our partners and potential geographic markets:
| | | | | | | | | | | | | | |
Product | Description | Potential Indications and Clinical Stage (Studies) | Our Potential Markets | Partner |
Oncology Pipeline |
Tumor Treating Fields | Portable device for delivery of electric fields | 2L NSCLC – Phase III (LUNAR) Brain Met from NSCLC-Phase III (METIS) Pancreatic Cancer – Phase III (PANOVA) | Greater China | NovoCure |
Tisotumab vedotin | Tissue Factor ADC | 2L/3L Cervical Cancer – Phase III (innovaTV-301) | Greater China | Seagen (now owned by Pfizer) |
Adagrasib | KRASG12C inhibitor | 2L+ NSCLC – Phase III (KRYSTAL-12) 1L NSCLC – Phase III (KRYSTAL-7) 2L CRC – Phase III (KRYSTAL-10) | Greater China | Mirati (now owned by BMS) |
Bemarituzumab | Anti-FGFR2b antibody | Gastric/GEJ Cancer – Phase III (FORTITUDE-101 and FORTITUDE-102) | Greater China | Five Prime (now owned by Amgen) |
Repotrectinib | TKI targeting ROS1 oncogenic fusions | ROS1+ NSCLC – Phase I/II (TRIDENT-1) NTRK+ Solid Tumors – Phase I/II (TRIDENT-1) | Greater China | Turning Point (now owned by BMS) |
Autoimmune Disorder, Infectious Disease, and Neuroscience Pipeline |
Efgartigimod | FcRn blocker | CIDP – Phase II (ADHERE) | Greater China | argenx |
Sulbactam-Durlobactam | Combination of beta-lactam antibacterial and beta-lactamase inhibitor | HABP/VABP caused by susceptible isolates of carbapenem-resistant Acinetobacter baumannii-calcoaceticus – Phase III (ATTACK) | Asia Pacific | Entasis (now owned by Innoviva) |
Xanomeline-Trospium (KarXT) | Combination of muscarinic receptor agonist and antimuscarinic agent | Schizophrenia – Phase III (EMERGENT) ADP – Phase III (ADEPT) | Greater China | Karuna |
* NSCLC = non-small cell lung cancer; Brain Met = brain metastases; CRC = colorectal cancer; GEJ = gastroesophageal junction; CIDP = chronic inflammatory demyelinating polyneuropathy; Asia Pacific = Greater China, South Korea, Vietnam, Thailand, Cambodia, Laos, Malaysia, Indonesia, the Philippines, Singapore, Australia, New Zealand, and Japan; HABP/VABP = hospital acquired bacterial pneumonia and ventilator-associated bacterial pneumonia; and ADP = Alzheimer’s Disease with Psychosis.
The following sections include more information on significant late-stage product candidates in our oncology pipeline and our autoimmune disorder, infectious disease, and neuroscience pipeline. We will continue to evaluate the developmental possibilities of the programs in our pipeline. For example, our programs may have significant potential beyond those indications we are currently evaluating. We may in the future expand our research and development efforts to evaluate additional indications to those discussed below. In addition, we or our partners may decide to discontinue development of certain products based on a review of the competitive landscape and market opportunity or otherwise. In the fourth quarter of 2023, we decided to discontinue our development of margetuximab and odronextamab, and we provided notice to terminate our related license agreements with MacroGenics and Regeneron in accordance with their terms, effective on May 14, 2024 and December 20, 2024, respectively. In addition, our partner, Blueprint Medicines Corporation, has decided to de-prioritize its development of BLU-945.
We are also focused on building our global pipeline by advancingthrough our internally discovered novel therapeutics.internal discovery efforts and business development activities. We have assembled an integrated drug discovery and development team with extensive experience in discovery, translational medicine, and pre-clinical and clinical development in China and worldwide that has been directly involved in the discovery and development of several innovative product candidates with global rights, including ZL-1218, a humanized, IgG1 monoclonal antibody that binds to human CC chemokine receptor 8 (“CCR8”) that is in development for treatment of solid tumors and currently in a Phase I study, and ZL-1102, a fully human VH fragment that binds to human interleukin-17 (“IL-17”), for which we are preparing to initiate a Phase II study in mild-to-moderate chronic plaque psoriasis. We also plancollaborate with external research partners, such as leading Contract Research Organizations (“CROs”), academic institutions, and commercial partners, such as for execution of our pre-clinical and clinical trials. With respect to business development, we will continue to consider opportunities to expand our collaborationsportfolio through our regional and global collaboration efforts and corporate development activities. For example, we added ZL-1310, an early-stage next generation DLL3 antibody drug conjugate (“ADC”) program that is currently in a Phase I study, to our oncology portfolio in the first quarter of 2023 through a new collaboration with MediLink Therapeutics (Suzhou) Co., Ltd. DLL3 is an inhibitor of the Notch ligand that is overexpressed in small cell lung cancer and neuroendocrine tumors.
For information on risks related to our potential products and R&D activities, including clinical trials and reliance on third parties, see Risk Factors.
Our Oncology Pipeline
Additional Indications for Tumor Treating Fields (TTFields)
As discussed in Our Commercial Products and Operations, we have an exclusive license from NovoCure to develop and commercialize any TTFields products in Greater China in the field of oncology, and we have commercially launched TTFields in mainland China, Hong Kong, Taiwan, and Macau under the brand name OPTUNE GIO for certain GBM indications.
Significant additional indications for TTFields therapy that we are evaluating include solid tumor types in second-line non-small cell lung cancer (“NSCLC”), brain metastases from NSCLC, and pancreatic cancer.
•2L NSCLC: We participated in the Greater China portion of the Phase III pivotal LUNAR trial, which was intended for patients who had recently been diagnosed with progression of NSCLC during or after platinum-based therapy. The Phase III LUNAR trial met its primary endpoint, demonstrating a statistically significant and clinically meaningful improvement in overall survival (“OS”) for patients with metastatic NSCLC after platinum-based therapies, and a profound OS benefit from TTFields therapy was demonstrated in the immune checkpoint inhibitors (“ICI”) subgroup. TTFields therapy was well tolerated with no added systemic toxicities and few grade 3 (and no grade 4 or 5) device-related adverse events. Lung cancer has the highest total incidence of any cancer in mainland China. According to the World Health Organization, the incidence of lung cancer in mainland China in 2020 was 815,563 cases. Lung cancer consists of NSCLC in approximately 85% of cases and small cell lung cancer (“SCLC”) in approximately 15% of cases. In January 2024, NovoCure announced that the FDA had accepted its Premarket Approval (“PMA”) application seeking approval for the use of TTFields therapy together with standard systemic therapies for the treatment of NSCLC following progression on or after platinum-based therapy. We are preparing a similar submission for this indication, with a goal to submit an MAA to the NMPA in 2024.
•Brain Metastases from NSCLC: We are participating in the Greater China portion of the Phase III pivotal METIS study evaluating the efficacy of TTFields therapy following stereotactic radiosurgery for treatment of patients with brain metastases resulting from NSCLC. We estimate an annual incidence of around 13,000 such patients in China.
•Pancreatic Cancer: We participated in the Greater China portion of the Phase III pivotal PANOVA-3 trial evaluating the efficacy of TTFields therapy administered concomitantly with gemcitabine and nab-paclitaxel as front-line treatment for patients with unresectable, locally advanced pancreatic cancer. According to the World
Health Organization, pancreatic cancer was the eighth-leading cancer type in mainland China in 2020, with an estimated 125,000 newly diagnosed cases. The current median survival of patients with metastatic pancreatic cancer is four to six months, and the five-year survival rate is 7.2%.
Tisotumab Vedotin
Tisotumab vedotin is an ADC composed of Genmab’s human monoclonal antibody directed against cell surface tissue factor and Seagen’s ADC technology that utilizes a protease-cleavable linker that covalently attaches the microtubule-disrupting agent monomethyl auristatin E (“MMAE”) to the antibody. MMAE disrupts the microtubule network of actively dividing cells, leading academicto cell cycle arrest and apoptotic cell death of actively dividing cells. In vitro, tisotumab vedotin also mediates antibody-dependent cellular phagocytosis and antibody-dependent cellular cytotoxicity. We have an exclusive license from Seagen Inc. (“Seagen”) (a company later acquired by Pfizer Inc. (“Pfizer”)) to develop and commercialize tisotumab vedotin in Greater China. We purchase the licensed products exclusively from Pfizer. For more information on this agreement, see Overview of Significant License and Collaboration Agreements – Pfizer (Tisotumab Vedotin).
We are evaluating tisotumab vedotin for the treatment of adult patients in Greater China with recurrent or metastatic cervical cancer with disease progression on or after chemotherapy. Tisotumab vedotin has already been approved in the United States for this indication. We are participating in the Greater China portion of the global Phase III innovaTV 301 study in recurrent or metastatic cervical cancer with disease progression on or after front-line therapy who received tisotumab vedotin, compared with chemotherapy alone. In October 2023, our partner Seagen and Genmab A/S announced that the innovaTV 301 study met its primary endpoint of OS. An Independent Data Monitoring Committee determined that OS crossed the pre-specified efficacy boundary at interim analysis. The key secondary endpoints of investigator-assessed progression-free survival and objective response rate also demonstrated statistical significance. The safety profile of tisotumab vedotin in innovaTV 301 was consistent with the known safety profile of tisotumab vedotin as presented in the U.S. prescribing information, and no new safety signals were observed. We have completed patient enrollment in the Greater China portion of the innovaTV 301 study. We estimate that there are around 110,000 new cases of cervical cancer each year in China.
Adagrasib
Adagrasib is a highly selective and potent oral small-molecule inhibitor of KRASG12C for treating KRAS-G12C-mutated solid tumors, including NSCLC, colorectal cancer (“CRC”), and pancreatic cancer. We have an exclusive license from Mirati Therapeutics, Inc. (“Mirati”) (a company later acquired by BMS) to develop and commercialize adagrasib in Greater China. We purchase the licensed products exclusively from BMS. For more information on this agreement, see Overview of Significant License and Collaboration Agreements – BMS (Adagrasib).
We are evaluating adagrasib for the treatment of KRASG12C-mutated NSCLC and second-line colorectal cancer.
•Second-Line+ NSCLC: We are participating in the Greater China portion of the global Phase III KRYSTAL-12 study evaluating adagrasib in previously treated patients with KRASG12C-mutated NSCLC. Adagrasib has already been approved in the United States for the treatment of patients with NSCLC who harbor the KRASG12C mutation who have received at least one prior systemic therapy. We seek to leverage the global data package for the FDA approval, the ongoing PK study in China, and the global confirmatory KRYSTAL-12 study to obtain regulatory approval in China and are preparing to submit a New Drug Application (“NDA”) to the NMPA later this year.
•First-Line NSCLC:We are participating in the Greater China portion of the global Phase II KRYSTAL-7 study evaluating adagrasib in combination with pembrolizumab in first-line KRASG12C-mutated NSCLC patients. In October 2023, our partner Mirati announced updated results from this study, which demonstrate a manageable safety profile and early signs of durability of adagrasib in combination with a checkpoint inhibitor in the first-line NSCLC setting.
•2L Colorectal Cancer: We are participating in, and have completed enrollment for, the Greater China portion of the global Phase III KRYSTAL-10 trial of adagrasib in combination with cetuximab versus chemotherapy in patients with previously treated advanced KRASG12C-mutated colorectal cancer. In February 2024, Mirati announced that the FDA had accepted its supplemental NDA (“sNDA”) for priority review for adagrasib in combination with cetuximab for the treatment of patients with previously treated KRASG12C-mutated locally advanced or metastatic colorectal cancer, with a PDUFA goal date of June 21, 2024.
We estimate that there are around 42,000 patients in China each year with these NSCLC and colorectal cancer indications.
Bemarituzumab
Bemarituzumab is a humanized monoclonal antibody (IgG1 isotype) specific to the human fibroblast growth factor receptor 2 isoforma IIb (“FGFR2b”) that is in clinical development as a targeted therapy for gastric and gastroesophageal junction (“GEJ”) cancer patients whose tumors overexpress FGFR2b. We have an exclusive license from Five Prime Therapeutics, Inc. (“Five Prime”) (a company later acquired by Amgen Inc. (“Amgen”)) to develop and commercialize bemarituzumab in Greater China. We purchase the licensed products exclusively from Amgen. For more information on this agreement, see Overview of Significant License and Collaboration Agreements – Amgen (Bemarituzumab).
We are evaluating bemarituzumab for the treatment of gastric and GEJ cancer. We are participating in the Greater China portion of the global Phase III FORTITUDE-101 study of bemarituzumab plus chemotherapy, versus placebo plus chemotherapy, in first-line gastric cancer with FGFR2b overexpression. In addition, we are participating in the Greater China portion of the global Phase III FORTITUDE-102 study of bemarituzumab in combination with nivolumab and chemotherapy in first-line gastric or GEJ cancer. We estimate an annual incidence of around 126,000 first-line HER2- FGFR2b+ gastric cancer patients in China and around 76,000 of these patients have FGFR2b expression over 10%.
Repotrectinib
Repotrectinib is a next-generation tyrosine kinase inhibitor (“TKI”) that targets ROS1 oncogenic fusions. We have an exclusive license from Turning Point Therapeutics (a wholly owned subsidiary of BMS) to develop and commercialize repotrectinib in Greater China. We purchase the licensed products exclusively from BMS. For more information on this agreement, see Overview of Significant License and Collaboration Agreements – BMS (Repotrectinib).
We are evaluating repotrectinib for the treatment of ROS1+ NSCLC and NTRK+ solid tumors and are participating in the Greater China portion of the global Phase I/II TRIDENT-I study for the treatment of TKI-naïve and TKI-pretreated patients with ROS1-positive locally advanced or metastatic NSCLC and NTRK-positive advanced solid tumors.
•ROS1+ NSCLC: In August 2023, our partner BMS announced updated results from the registrational Phase I/II TRIDENT-1 study, demonstrating that repotrectinib continued to demonstrate high response rates and durable responses, including robust intracranial responses in patients with ROS1-positive locally advanced or metastatic NSCLC. In November 2023, based on results from the TRIDENT-1 trial, the FDA approved repotrectinib for the treatment of adult patients with locally advanced or metastatic ROS1-positive NSCLC. In August 2023, we submitted an NDA to the NMPA for repotrectinib for the same indication, which has been accepted with priority review. We estimate an annual incidence of around 14,000-21,000 patients in China with ROS1-positive metastatic NSCLC.
•NTRK+ Solid Tumors: In August 2023, the NMPA granted Breakthrough Therapy Designation (“BTD”) for repotrectinib for the treatment of patients with advanced solid tumors that have a neurotrophic tropomyosin-receptor kinase (“NTRK”) gene fusion who have progressed following treatment with TRK TKIs. NTRK+ is estimated to be an oncogenic driver in approximately 0.5% of patients with a variety of advanced solid tumors.
This is the fourth BTD granted by the NMPA for repotrectinib. The NMPA previously granted BTDs for repotrectinib for the treatment of patients with ROS1-positive metastatic NSCLC who have not been treated with a
ROS1 TKI; for the treatment of patients with ROS1-positive metastatic NSCLC who have received one prior line of ROS1 TKI and one prior line of platinum-based chemotherapy; and for the treatment of patients with ROS1-positive metastatic NSCLC who have received one prior line of ROS1 TKI and no chemotherapy or immunotherapy. These BTDs were supported by data from the TRIDENT-1 study.
In February 2024, BMS announced that, based on the results of the TRIDENT-1 trial, the FDA has accepted its sNDA for repotrectinib for the treatment of adult and pediatric patients 12 years of age and older with solid tumors that have a NTRK gene fusion, and are locally advanced or metastatic or where surgical resection is likely to result in severe morbidity. The application was granted priority review status, with a Prescription Drug User Fee Act (“PDUFA”) goal date of June 15, 2024.
Our Autoimmune Disorder, Infectious Disease, and Neuroscience Pipeline
Additional Opportunities for Efgartigimod
As discussed in Our Commercial Products and Operations, we have an exclusive license from argenx to develop and commercialize efgartigimod in Greater China, and we have commercially launched VYVGART (efgartigimod alfa injection) in mainland China for the treatment of adult patients with gMG. In addition, a subcutaneous formulation of efgartigimod (“SC efgartigimod”) is being evaluated for the treatment of adult patients with gMG, and we are evaluating significant additional indications including the treatment of chronic inflammatory demyelinating polyneuropathy (“CIDP”).
•gMG: In July 2023, the NMPA accepted our supplemental BLA (“sBLA”) for SC efgartigimod for the treatment of adult patients with gMG. In June 2023, our partner argenx announced that the FDA approved VYVGART Hytrulo (efgartigimod alfa and hyaluronidase-qvfc) injection for subcutaneous use in gMG in the United States.
•CIDP:In September 2023, the NMPA granted BTD for SC efgartigimod for the treatment of patients with CIDP. This BTD was supported by data from both global and Chinese patients enrolled in the ADHERE study. The ADHERE study met its primary endpoint, demonstrating a significantly lower risk of relapse with efgartigimod SC compared to placebo (p=0.000039). Efgartigimod SC demonstrated a 61% reduction (HR: 0.39 95% CI: 0.25; 0.61) in the risk of relapse versus placebo, and 67% of patients in open-label Stage A demonstrated evidence of clinical improvement, indicating that IgG autoantibodies play a significant role in the underlying biology of CIDP. The safety and tolerability profile was consistent with previous clinical trials and the confirmed safety profile of efgartigimod. We participated in the Greater China portion of this study. We estimate that there are around 50,000 CIDP patients diagnosed in China. In February 2024, argenx announced that the FDA had accepted its sBLA for efgartigimod SC in CIDP with priority review, with a PDUFA goal date of June 21, 2024. We plan to submit an sBLA to the NMPA for this indication later this year.
Sulbactam/Durlobactam
Sulbactam/durlobactam (“SUL-DUR”) is a combination of a beta-lactam antibiotic (sulbactam) and a beta-lactamase inhibitor (durlobactam). We have an exclusive license from Entasis Therapeutics, Inc. (“Entasis”), a wholly owned subsidiary of Innoviva, Inc. (“Innoviva”), to develop and commercialize durlobactam with sulbactam (the combination, SUL-DUR) in Greater China, Korea, Vietnam, Thailand, Cambodia, Laos, Malaysia, Indonesia, the Philippines, Singapore, Australia, New Zealand, and Japan. We purchase the licensed products exclusively from Innoviva. For more information on this agreement, see Overview of Significant License and Collaboration Agreements – Innoviva (SUL-DUR).
We are evaluating SUL-DUR for the treatment of serious infections caused by Acinetobacter, including multidrug-resistant (“MDR”) and carbapenem-resistant (“CRAB”) strains. Acinetobacter belongs to a group of bacteria commonly found in the environment, such as soil and water. Acinetobacter baumannii accounts for most Acinetobacter infections in humans; the organism can cause infections in all organs, but bloodstream infection and pneumonia are most dangerous and associated with high mortality. In recent years, Acinetobacter baumannii has become multi-drug resistant. For carbapenem-resistant Acinetobacter baumannii infections, treatment options are extremely limited because remaining antibiotics are either toxic or of limited efficacy. In mainland China, Acinetobacter baumannii infections are often seen in the hospital
setting. Based on the 2022 Annual Report of CARSS (China Antimicrobial Resistance Surveillance System), there were around 300,000 Acinetobacter infections reported in mainland China in 2022. According to recent surveillance data from China, overall resistance of Acinetobacter baumannii to the carbapenem class of antibiotics is approximately 53%, with some provinces as high as 70%.
We participated in the Greater China portion of the global Phase III registrational ATTACK trial evaluating the safety and efficacy of SUL-DUR versus colistin in patients with infections caused by Acinetobacter baumannii. The ATTACK trial met its primary efficacy endpoint, demonstrating a reduced mortality rate with SUL-DUR versus colistin in the CRAB population. SUL-DUR also met the primary safety objective of the study achieving statistically significant reduction in nephrotoxicity. In May 2023, our partner Innoviva announced that the FDA approved XACDURO for the treatment of adults with hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia caused by susceptible strains of Acinetobacter baumannii-calcoaceticus complex. Our NDA for the treatment of infections caused by Acinetobacter baumannii, including MDR and CRAB strains, was accepted by the NMPA in February 2023 and has been granted priority review status. Results of the ATTACK trial were published in Lacent Infectious Diseases [Kaye et al.]
Xanomeline-Trospium
Xanomeline-trospium (“Kar XT”) is a combination of an oral M1/M4-preferring muscarinic acetylcholine receptor agonist and an antimuscarinic agent, which combination is in development for the treatment of psychiatric and neurological conditions, including schizophrenia and dementia-related psychosis. Xanomeline-trospium preferentially stimulates muscarinic receptors in the central nervous system implicated in these conditions, as opposed to current antipsychotic medicines, which mostly target dopamine or serotonin receptors. Xanomeline-trospium has the potential to represent a new class of treatment for schizophrenia and dementia-related psychosis based on its differentiated mechanism of action. We have an exclusive license from Karuna Therapeutics, Inc. (“Karuna”) to develop, manufacture, and commercialize xanomeline-trospium in Greater China. For more information on this agreement, see Overview of Significant License and Collaboration Agreements – Karuna (Xanomeline-Trospium).
We are evaluating Kar XT for the treatment of schizophrenia and Alzheimer’s disease with psychosis (“ADP”).
•Schizophrenia:In November 2023, our partner Karuna announced that, supported by data from its three positive registrational EMERGENT trials, the FDA had accepted Karuna’s NDA for KarXT for the treatment of schizophrenia, with a PDUFA goal date of September 26, 2024. We are conducting a registrational bridging study in mainland China. We estimate that there are more than 8 million people living with schizophrenia in China.
•ADP: Our partner Karuna initiated the Phase III ADEPT program in ADP in the third quarter of 2023. We are preparing to join the Greater China portion of the global Phase III ADEPT-2 and ADEPT-3 trials. We estimate that around 8 million people are affected by Alzheimer’s disease in China and around 45% of these patients display psychotic symptoms.
Overview of Significant License and Collaboration Agreements
We have entered into various license and collaboration agreements with third parties, such as biopharmaceutical companies with innovative products in our therapeutic areas and external research parties, for the development and commercialization of our products and product candidates. We are generally required to make upfront payments upon our entry into such agreements and milestone payments upon the achievement of certain development, regulatory, and sales-based milestones for the licensed products under these agreements as well as certain royalties at tiered percentage rates based on annual net sales of the licensed products in the licensed territories. For a discussion of aggregate potential payments under our license and collaboration arrangements, see Note 16 and MD&A – License and Collaboration Arrangements.
These agreements may include intellectual property rights associated with the products or product candidates, including the responsibility for obtaining and maintaining patents as well as enforcement of those patents.
These agreements generally remain in effect, unless earlier terminated, until the expiration of the last-to-expire royalty term for the last licensed product. The royalty terms generally continue until the latest of: (i) the expiration of the last-to-expire valid claim with respect to licensed patent rights; (ii) the expiration of market or regulatory exclusivity; or (iii) or a specified period of time, generally around ten years, after the date of the first commercial sale of the licensed product. These agreements also contain customary provisions for termination by either party, including in the event of a material breach by the other party that remains uncured; by us for convenience upon a specified notice period; for certain bankruptcy, insolvency, or other similar events; and by our partners upon challenge of their licensed patent rights.
The following sections provide additional information on the license and collaboration arrangements for our commercial products and significant product candidates, such as the scope of the licensed products and licensed territories and any related supply arrangements. We have also entered into other license and collaboration arrangements that are not considered significant to our business at this time, such as because they relate to earlier stage assets. Such other license agreements may become material to our business in the future.
GSK (Niraparib)
In September 2016, we entered into a collaboration, development, and license agreement with Tesaro, Inc., a company later acquired by GSK, pursuant to which we obtained an exclusive sublicense under certain patents and know-how of GSK (including such patents and know-how licensed from Merck, Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc., and AstraZeneca UK Limited) to develop, manufacture, and commercialize GSK’s proprietary PARP inhibitor, niraparib (ZEJULA), for the diagnosis and prevention of any human diseases or conditions (other than prostate cancer) in mainland China, Hong Kong, and Macau. We also obtained the right of first negotiation to obtain a license to develop and commercialize certain follow-on compounds of niraparib being developed by GSK in the licensed territory. Under the agreement, we agreed not to research, develop, or commercialize certain competing products, and we also granted GSK the right of first refusal to license certain immuno-oncology assets developed by us. In February 2018, we entered into an amendment with GSK that eliminated GSK’s option to co-market niraparib in the licensed territory. We have agreed to purchase ZEJULA from GSK for commercial use in Hong Kong. We are not otherwise obligated to purchase ZEJULA or other licensed products from GSK.
NovoCure (Tumor Treating Fields)
In September 2018, we entered into a license and collaboration agreement with NovoCure, pursuant to which we obtained an exclusive license under certain patents and know-how of NovoCure to develop and commercialize any Tumor Treating Fields (OPTUNE) products in all human therapeutic and preventative uses in the field of oncology in Greater China. We will purchase the licensed products exclusively from NovoCure.
Deciphera (Ripretinib)
In June 2019, we entered into a license agreement with Deciphera, pursuant to which we obtained an exclusive license under certain patents and know-how of Deciphera to develop and commercialize products containing ripretinib (QINLOCK) in the field of prevention, prophylaxis, treatment, cure, or amelioration of any disease or medical condition in humans in Greater China. We will purchase the licensed products exclusively from Deciphera.
Novo Holdings (Omadacycline)
In April 2017, we entered into a license and collaboration agreement with Paratek Bermuda Ltd., a subsidiary of Paratek (which was subsequently acquired by Gurnet Point Capital and Novo Holdings A/S), pursuant to which we obtained both an exclusive license under certain patents and know-how of Paratek Bermuda Ltd. and an exclusive sub-license under certain intellectual property that Paratek Bermuda Ltd. licensed from Tufts University to develop, manufacture, and commercialize products containing omadacycline (NUZYRA) as an active ingredient in the field of all human therapeutic and preventative uses other than biodefense in Greater China. Under certain circumstances, our exclusive sub-license to certain intellectual property Paratek Bermuda Ltd. licensed from Tufts University may be converted to a non-exclusive license if Paratek Bermuda Ltd.’s exclusive license from Tufts University is converted to a
non-exclusive license under the Tufts Agreement. We also obtained the right of first negotiation to be Paratek Bermuda Ltd.’s partner to develop certain derivatives or modifications of omadacycline in our licensed territory. Paratek Bermuda Ltd. retains the right to manufacture the licensed product in our licensed territory to support development and commercialization of the same outside of our licensed territory. We also granted Paratek Bermuda Ltd. a non-exclusive license to certain of our intellectual property. Under the agreement, we agreed not to commercialize certain competing products in our licensed territory.
argenx (Efgartigimod)
In January 2021, we entered into a collaboration and license agreement with argenx, pursuant to which we obtained an exclusive license under certain patents and know-how of argenx to develop and commercialize products containing efgartigimod (including VYVGART) as an active ingredient in all human and animal uses for any preventative or therapeutic indications in Greater China. Under the terms of the agreement, we are responsible for recruiting patients in mainland China to argenx’s global registrational trials for the development of efgartigimod. We will purchase the licensed products exclusively from argenx.
Pfizer (Tisotumab Vedotin)
In September 2022, we entered into a collaboration and license agreement with Seagen (a company later acquired by Pfizer), pursuant to which we obtained an exclusive license to develop and commercialize tisotumab vedotin in Greater China. We will purchase the licensed products exclusively from Pfizer.
BMS (Adagrasib)
In May 2021, we entered into a collaboration and license agreement with Mirati (a company later acquired by BMS) pursuant to which we agreed to collaboratively develop MRTX849 (adagrasib) in Greater China. Under the agreement, we received the right to research, develop, manufacture, and exclusively commercialize adagrasib in all indications in Greater China, with BMS retaining exclusive rights for the development, manufacturing, and commercialization of adagrasib outside of Greater China as well as certain co-commercialization, manufacture, and development rights in Greater China. We will purchase the licensed products exclusively from BMS.
Amgen (Bemarituzumab)
In December 2017, we entered into a license and collaboration agreement with Five Prime (later acquired by Amgen), pursuant to which we obtained an exclusive license under certain patents and know-how of Five Prime to develop and commercialize products containing Five Prime’s proprietary afucosylated FGFR2b antibody known as bemarituzumab (FPA144) as an active ingredient in the treatment or prevention of any disease or condition in humans in Greater China. We will purchase the licensed products exclusively from Amgen.
Pursuant to the terms of the agreement, we are responsible for (i) developing and commercializing licensed products under a territory development plan; and (ii) performing certain development activities to support global development and registration of licensed products, including the global Phase III registrational trial of bemarituzumab (FPA144) in combination with FOLFOX in front-line gastric and gastroesophageal cancer (the “bemarituzumab FPA144-004 Study”) in the licensed territory under a global development plan. If we enroll and treat a specified number of patients in the bemarituzumab FPA144-004 Study in mainland China, we will be eligible to receive a low single-digit percentage quarterly royalty on annual net sales of the licensed products outside of the licensed territory until the tenth anniversary of the first commercial sale of each such licensed product outside of the licensed territory.
BMS (Repotrectinib)
In July 2020, we entered into an exclusive license agreement with Turning Point (a company later acquired by BMS) pursuant to which we obtained an exclusive license to develop and commercialize products containing repotrectinib as an
active ingredient in all human therapeutic indications in Greater China. We will purchase the licensed products exclusively from BMS.
Innoviva (Sulbactam-Durlobactam)
In April 2018, we entered into a license and collaboration agreement with Entasis, a wholly owned subsidiary of Innoviva, pursuant to which we obtained an exclusive license under certain patents and know-how of Entasis to develop and commercialize Entasis’s proprietary compounds, durlobactam with sulbactam (the combination, SUL-DUR) with the possibility of developing and commercializing a combination of such compounds with imipenem in all human diagnostic, prophylactic and therapeutic uses in Greater China, Korea, Vietnam, Thailand, Cambodia, Laos, Malaysia, Indonesia, the Philippines, Singapore, Australia, New Zealand, and Japan. Our rights to develop and commercialize the licensed products are limited to the lead product (Sulbactam) until such lead product receives initial FDA approval in the United States. We will purchase the licensed products exclusively from Innoviva.
Pursuant to the terms of the agreement, we are responsible for (i) developing and commercializing the licensed products in the territory under a mutually agreed development plan; and (ii) providing Entasis (or its CRO) with clinical and financial support in the territory for the global pivotal Phase III ATTACK clinical trial of SUL-DUR as set forth in mutually agreed development plans. We are also responsible for a portion of the costs of the global pivotal Phase III ATTACK clinical trial of SUL-DUR outside of the licensed territory.
Karuna (Xanomeline-Trospium)
In November 2021, we entered into a license agreement with Karuna, pursuant to which we agreed to collaboratively develop xanomeline-trospium (KarXT) in Greater China. Under the agreement, we obtained an exclusive license to develop, manufacture, and commercialize xanomeline-trospium in Greater China.
Intellectual Property
Our commercial success depends, in part, on our ability to obtain and maintain proprietary protection for our know-how and innovation pertaining to our commercial products and product candidates as well as our core technologies; to operate without infringing, misappropriating, or otherwise violating the proprietary rights of others; and to prevent others from infringing, misappropriating, or otherwise violating our proprietary rights. We expect that we will seek to protect our proprietary position by, among other methods, licensing or procuring patent rights to inventions that are important to the development and implementation of our business. We also rely on trade secrets, know-how, and confidential agreements with third parties to maintain our proprietary position. Additionally, we rely on continuing technological innovation to develop and maintain our proprietary position.
Patents
Patent rights are important in our industry to protect innovation pertaining to our commercial products, product candidates, and technologies. We hold patent rights to our commercial products, product candidates, and technologies, in part, through our licenses or other agreements. For our internally developed product candidates, we consider on a case-by-case basis whether to procure patent rights to protect certain innovation pertaining to our commercial products, product candidates and technologies.
As with other biotechnology and pharmaceutical companies, our ability to protect our commercial products, product candidates, and technologies will depend, in part, on our success in obtaining and maintaining effective patent rights. For more information regarding the risks related to our intellectual property, see Risk Factors – Risks Related to Intellectual Property.
The term of a patent depends upon the laws of the country in which it is issued. In most jurisdictions that we principally operate in, a patent term is 20 years from the earliest filing date of a non-provisional patent application. The laws of each jurisdiction vary, and patent term adjustment or patent term extension may not be available in any or all
jurisdictions in which we hold rights. For information on intellectual property included in our license and collaboration agreements for our commercial products, see Overview of Significant Licensed and Collaboration Arrangements.
Trade Secrets
In addition to patents, we rely upon unpatented trade secrets and know-how and continuing technological innovation to develop and maintain our competitive position. Such trade secrets and know-how can be difficult to protect. We seek to protect our proprietary information, in part, by executing confidentiality agreements with our partners, collaborators, scientific advisors, employees, consultants, and other third parties. These confidentiality agreements are designed to protect our proprietary information and generally include clauses requiring assignment of inventions to us to grant us ownership of technologies that are developed through our relationship with the respective counterparty. Such agreements may not provide adequate protection of our intellectual property and proprietary information rights. If any of the parties we contract with in this manner breaches or violates the terms of any such agreement or otherwise discloses our proprietary information, we may lose our competitive position and trade secret protection. For more information regarding the risks related to our trade secrets, see Risk Factors – Risks Related to Intellectual Property – If we are unable to maintain the confidentiality of our trade secrets, our business and competitive position may be harmed.
Trademarks and Domain Names
We conduct our business using trademarks with various forms of the “ZAI LAB” and “再鼎医药” brands, as well as domain names incorporating some or all of these trademarks.
Government Regulation
Chinese Government Regulation of Pharmaceutical Product Development, Approval, and Marketing
Since mainland China’s entry into the World Trade Organization in 2001, the Chinese government has made significant efforts to standardize regulations, develop its pharmaceutical regulatory system and strengthen intellectual property protection.
The Drug Administration Law and related implementing measures established the legal framework for the administration of pharmaceutical products, including the development and manufacturing of new drugs and the medicinal preparations by medical institutions. The Drug Administration Law also regulates the distribution, packaging, labels and advertisements of pharmaceutical products in mainland China, including the use of patients’ human genetic resources and derived data. These rules are highly complex and require significant resources, time, and expense for compliance.
Clinical Trials
Clinical trials conducted both within and outside of mainland China, and the data derived from those trials, may be used to obtain marketing approval in mainland China, subject to various rules and regulations. We participate in clinical trials in multiple geographic locations, and compliance with the complex regulations applicable to the conduct of such trials and the use of data derived therefrom is critical to our ability to obtain approval for our products in mainland China and in our other markets.
Clinical trials on investigational products must be approved by the relevant authorities before their commencement. Following approval of a Clinical Trial Application (“CTA”) approval, the applicant (i.e., sponsor) generally conducts the clinical trial at one or more institutions, subject to rules and regulations governing good practices associated with such clinical trial.
With certain governmental approvals, companies may simultaneously perform clinical trials in bothdifferent centers using the same clinical trial protocol through International Multi-Center Clinical Trials in China (the “IMCCTs”). Where the applicant plans to make use of the data derived from the IMCCTs, such IMCCTs shall satisfy certain requirements, including on-site inspections by Chinese regulatory authorities, in addition to other applicable regulatory requirements.
IMCCTs are required to adhere to certain principles and ethical requirements and are subject to governmental supervision and disclosure requirements.
Trial sponsors may also use the data of foreign clinical trials to support marketing authorization in mainland China, provided that sponsors satisfy the authenticity, completeness, accuracy, and traceability requirements, and that such data is obtained in accordance with the relevant principles and ethics requirements applicable to IMCCTs. Clinical trial sponsors must be attentive to potentially meaningful ethnic differences in the subject population.
In addition, investigational products approved outside of mainland China may be approved in mainland China on a conditional basis without pre-approval clinical trials being conducted in mainland China. Applicants are required to establish a risk mitigation plan and may be required to complete post-approval trials in mainland China.
Marketing
We must obtain approval of marketing authorizations before our products can be manufactured and sold in the mainland China market. An applicant may submit an application for marketing authorization to relevant governmental authorities. The NMPA, which monitors and supervises the administration of pharmaceutical products, medical appliances and equipment, and cosmetics, then determines whether to approve the application following a technical review process. Accelerated review and approval procedures are available for certain types of innovative products, such as products with distinctive clinical benefits, which have not been sold within or outside mainland China, and products using advanced technology, innovative treatment methods, or distinctive treatment advantages, and in cases of public health emergency.
Domestic pharmaceutical and medical research and development institutions and individuals are eligible to hold marketing authorizations without having to become manufacturers. The marketing authorization holder is responsible for their products throughout the life cycle, including nonclinical studies, clinical trials, production and distribution, post-market studies, and the monitoring, reporting, and handling of adverse reactions in connection with pharmaceuticals. The marketing authorization holders may engage contract manufacturers for manufacturing and distribution, subject to certain requirements. We serve as the marketing authorization holder and thus have primary regulatory responsibility for the development and approval of certain of our products in China.
Drug Manufacturing Operations
To manufacture pharmaceutical products in mainland China, a pharmaceutical manufacturing enterprise must first obtain a Pharmaceutical Manufacturing Permit issued by the relevant provincial medical products administration where the enterprise is located, which is effective for five years. The grant of such license is subject to annual inspection of the manufacturing facilities, production premises and facilities, equipment, hygiene conditions, production management, quality controls, product operation, raw material management, maintenance of sales records, and management of customer complaints and adverse event reports.
Pharmaceutical Distribution
To distribute pharmaceutical products in mainland China, including wholesale and retail distribution, a pharmaceutical distribution enterprise must first obtain a Pharmaceutical Distribution Permit, which is effective for five years. Any enterprise holding a Pharmaceutical Distribution Permit is subject to periodic review and inspection by the relevant regulatory authorities. Additional rules and regulations govern the process of procurement, storage, sales, and transportation.
Coverage and Reimbursement
Historically, most Chinese healthcare costs had been borne by patients out-of-pocket, which had limited the growth of more expensive pharmaceutical products. However, in recent years, the number of people covered by government and private insurance has increased. According to the National Healthcare Security Administration (“NHSA”), as of December 2022, approximately 1.34 billion residents in mainland China were enrolled in the Basic Medical Insurance scheme, representing a coverage rate of above 95% of the total population.
Under the applicable regulations, expenses of drugs listed in the Basic Medical Insurance Catalog, typically known in the industry as the “NRDL”, will be paid in full or part from the basic medical insurance fund in accordance with applicable provisions, and the drugs with the same generic names as those specified in the Basic Medical Insurance Catalog will be automatically regulated by the Basic Medical Insurance Catalog and shall also be eligible for the reimbursement by the basic medical insurance fund. The Chinese Ministry of Human Resources and Social Security, together with other government authorities, have the power to determine the medicines included in the NRDL. Admission to the NRDL depends on a number of factors, including on-market experience, scale of patient adoption, physician endorsement, cost effectiveness, and budget impact. Patients purchasing medicines included in the NRDL are entitled to reimbursement of the entire amount or a certain percentage of the purchase price. We currently have four products included in the NRDL: ZEJULA for certain ovarian cancer indications, QINLOCK for fourth-line GIST, NUZYRA for CABP and ABSSSI, and VYVGART (efgartigimod alfa injection) for gMG.
In addition to the NRDL, there is an evolving medical insurance system that makes innovative drugs more affordable and available to the Chinese population, which offers greater opportunities to drug manufacturers that focus on the research and development of innovative drugs, such as higher-cost cancer therapeutics. This system includes commercial health insurance and various forms of supplementary insurance. We have focused on increasing insurance coverage in the private-pay market for certain of our commercial products and indications, including OPTUNE for GBM.
Inclusion in the NRDL and supplemental insurance coverage can significantly increase the reach and visibility of, and potential market for, our products, and we continue to devote significant resources to increasing access to our products through NRDL listing and/or supplemental insurance coverage, which efforts may not be successful on our desired timeline or at all.
Price Negotiations
The Chinese government has initiated several rounds of price negotiations with manufacturers of patented drugs, drugs with an exclusive source of supply, and oncology drugs since 2016. Once the government agreed with the drug manufacturers on the supply prices, the drugs would be automatically listed in the NRDL and qualified for public hospital purchase. In 2023, the average price reduction of the 121 drugs participating in price negotiations was 61.7%, and in 2022, the average price reduction of the 111 drugs participating in negotiations was 60.1%.
Regulations Impacting Purchases of Pharmaceutical Products by Medical Institutions
Applicable regulations set forth rules for the tender process and negotiations of the prices of drugs, operational procedures, a code of conduct, and standards or measures of evaluating bids and negotiating prices for public hospitals in mainland China. Under the rules and related guidance, certain not-for-profit medical institutions owned by the government shall purchase pharmaceutical products by online centralized procurement. The centralized tender process takes the form of public tender operated and organized by provincial or municipal government agencies. Only pharmaceuticals that have won in the centralized tender process may be purchased by public medical institutions funded by the governmental or state-owned or -controlled enterprise in the relevant region. While participation in this process can increase the reach and acceptance of our products, it can also result in significant negotiated reductions in the price paid for the products by hospitals or consortiums of hospitals bidding as a group.
In addition, under the “two-invoice system,” there cannot be more than two invoices issued for drug products supplied by manufacturers to public hospitals. To meet this requirement, many drug manufacturers have reduced the tiers of distributors, or converted drug distributors into contracted service organizations. As a result, the system significantly limits the options for companies like us to use multiple distributors to reach a larger geographic area in mainland China. The reduction in distribution tiers resulted in a decrease in distribution mark-ups and an accompanying reduction in prices paid by public hospitals. Compliance with the two-invoice system is a prerequisite for pharmaceutical companies to participate in the tender and procurement processes of public hospitals, which currently provide most of Chinese healthcare services. Manufacturers and distributors that fail to implement the two-invoice system may lose their qualifications to participate in the tender and procurement process and may also be blacklisted from engaging in drug sales to public hospitals. The two-invoice system has been implemented in all provinces, each with its own regional implementation rules.
Regulation of Pharmaceutical Product Development and Approval Outside of China
In the United States, the FDA regulates drugs and biological products under the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act, and their implementing regulations. Drugs and biologics are also subject to other federal, state, and local statutes and regulations in the United States as well as laws, regulations, and rules in other applicable jurisdictions outside of mainland China. The process of obtaining marketing approvals and the subsequent compliance with applicable laws, regulations, and rules may require the expenditure of substantial time and financial resources. While we do not currently market our products outside of Greater China, we have certain pre-clinical and early-stage clinical products that are undergoing or will undergo testing in the United States and other jurisdictions, and we may in the future seek approval to commercialize our products in the United States and such other jurisdictions. As our business and the number of products we have in the trial and commercial stage grow, we expect that pharmaceutical laws and regulations in the United States and other jurisdictions will have a greater impact on us. Further, U.S. and other pharmaceutical regulations could impact the availability, reputation, and consumer acceptance of the products that we market and sell in our current markets.
Other Significant Regulations Affecting Our Business Activities in Mainland China
We are subject to additional regulations that apply broadly to companies doing business in mainland China, including those described below.
Data Privacy and Data Protection: Since our subsidiaries located in mainland China operate computer networks as part of their normal operations, we are required to comply with the requirements of mainland China’s cyber security, data protection, privacy, and data transfer laws and regulations. In addition, in the ordinary course of our business, we collect and store personal information, including personal information about our clinical trial subjects, customers, and employees in mainland China. We may need to share such personal information with our subsidiaries, licensors, partners, or contractors located outside of mainland China. Mainland China’s network and data protection regime is evolving, and we continue to face uncertainties as to whether our efforts to comply with these requirements will be sufficient. Although we develop and maintain compliance protocols and controls designed to maintain compliance with these requirements, development, implementation, improvement, and maintenance of these protocols and controls is costly and requires significant effort, resources, and time. In addition, in certain cases, our CROs, licensors, licensees, partners, contractors, and other third parties with which we do business are also required to comply with these laws, and our agreements with them require them to comply with these requirements, but there is a risk that they may not fully comply with them.
Foreign Investment: Chinese laws and regulations govern the establishment, operation, and management of corporate entities in mainland China, as well as investment activities by foreign investors in mainland China. To comply with these rules, we must periodically submit certain information regarding our Company and certain investment information to relevant administrative authorities.
Competition Laws: Under Chinese laws governing competition, commercial bribery is prohibited and subject to criminal liability. Further, under certain circumstances, a pharmaceutical company’s products may not be purchased by public medical institutions where that pharmaceutical company is involved in a criminal investigation or administrative proceedings related to bribery. These laws also protect “trade secrets,” meaning technical and business information that is unknown to the public that has utility and may create business interests or profits for its legal owners or holders and is maintained as a secret by its legal owners or holders. Unlawfully obtaining or disclosing trade secrets is prohibited. Additionally, a company whose concentration of business violates the anti-monopoly rules in mainland China may be subject to fines of up to 10% of the last year’s sales revenue, in addition to other remedial measures.
Product Liability: In addition to the strict new drug approval process, certain Chinese laws have been promulgated to protect the rights of consumers and to strengthen the control of medical products in mainland China. Under current Chinese law, manufacturers, and vendors of defective products in mainland China may incur civil and liability for loss and injury caused by such products as well as revocation of business licenses.
Tort Law: Under the PRC Civil Code, producers and sellers of defective products are required to take remedial measures such as the issuance of a warning, the recall of products, etc. in a timely manner, and may be held liable under tort law for any failure to do so, or to do so timely.
Intellectual Property Rights: Mainland China has comprehensive legislation governing intellectual property rights, including patents, trademarks, copyrights, and domain names. We hold patent rights from third parties for some of our programs as described in the Overview of Significant License and Collaboration Agreements. Under certain of our agreements, we rely on third parties to file and prosecute patent applications, maintain patents, and otherwise protect the licensed intellectual property.
Labor Protection: Under applicable rules in mainland China, employers must establish a comprehensive management system to protect the rights of their employees and ensure manufacturing safety, including a system governing occupational health and safety to provide employees with occupational training to prevent occupational injury, and employers are required to truthfully inform prospective employees of the job description, working conditions, location, occupational hazards, and status of safe production as well as remuneration and other conditions. Employers are also required to contribute, on behalf of their employees, to a number of social security funds, including funds for basic pension insurance, unemployment insurance, basic medical insurance, work-related injury insurance, and maternity insurance. Additionally, manufacturers of pharmaceutical products are required to establish production safety and labor protection measures in connection with the operation of their manufacturing equipment and manufacturing process.
Regulations Relating to Foreign Exchange: Approval from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of mainland China to pay capital expenses such as repayment of foreign currency-denominated loans. For more information, see Dividends and Other Distributions.
Regulations on Securities Offering and Listing Outside of China: Laws in mainland China regulate overseas securities offering and listing activities by domestic companies. These regulations include the requirement to submit filing documents including the offering prospectus to the CSRC. Overseas offering and listing are prohibited under certain circumstances, including where (i) the offering and listing are expressly forbidden by applicable Chinese laws, regulations, and rules; (ii) the intended overseas securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council; or (iii) there are material disputes with regard to the ownership of the equity held by the domestic company’s controlling shareholder or by other shareholders that are controlled by the controlling shareholder and/or actual controller. If domestic companies fail to fulfill the above-mentioned filing procedures or offer and list in an overseas market against the prohibited circumstances, they may be warned and fined up to RMB10 million. The controlling shareholders and actual controllers of such domestic companies that organize or instruct the aforementioned violations may be fined up to RMB10 million and directly liable persons-in-charge and other directly liable persons may be fined up to RMB5 million.
Rules for the Regulations on Supervision and Administration of Medical Devices: Laws and regulations in mainland China govern certain aspects of the production, distribution, and clinical trials of medical devices, including reporting, establishment, and maintenance of quality management and quality control measures covering the distribution process, self-inspection, and ethics review.
Other Chinese National- and Provincial-Level Laws and Regulations: We are subject to changing requirements under many other laws and regulations administered by governmental authorities at the national, provincial, and municipal levels, some of which are or may become applicable to our business. For example, regulations control the confidentiality of patients’ medical information and the circumstances under which patient medical information may be released for inclusion in our databases or by us to third parties. We are also subject to numerous additional national and provincial laws relating to matters such as safe working conditions, manufacturing practices, environmental protection, and fire hazard control.
Anti-Corruption Laws and Regulations: We are subject to anti-corruption laws and rules in China and the United States, including the FCPA. These laws generally prohibit companies and their representatives from making improper payments to government officials for the purpose of obtaining or retaining business or to otherwise obtain favorable treatment or influence a person working in an official capacity. The health care professionals we regularly interact with
may be considered government officials under Chinese anti-corruption laws or the FCPA. In 2023, Chinese authorities increased their anti-corruption enforcement efforts with respect to the health care sector.
Our Customers
We rely on independent third-party distributors in Greater China to sell our commercialized products, which is consistent with the pharmaceutical industry norm. This allows us to execute marketing strategies that are specifically tailored to each product and the geographic location of the hospitals located within the distribution territories of our customers across mainland China. During 2023 and 2022, our five largest customers accounted for approximately 35.0% and 37.7% of our total product revenue, respectively.
We select distributors based on their business qualifications and distribution capabilities, such as distribution network coverage, quality, number of personnel, cash flow conditions, creditworthiness, logistics, compliance standard, past performance, and capacity for customer management. We offer rebates to our distributors, consistent with pharmaceutical industry practice. We retain no ownership control over the products sold to our distributors, and all significant risks (including inventory risks) and rewards associated with the products are generally transferred to our distributors upon delivery to and acceptance by the distributors.
Manufacturing, Suppliers, and Quality Control
As discussed below, we manufacture or source from third parties our commercial products, product candidates, and materials. We have our own independent quality control system and devote significant attention to quality control for the designing, manufacturing, and testing of our commercial products and product candidates.
Our Manufacturing Facilities
We currently manufacture or have rights to manufacture our internally developed products and certain of our licensed commercial products and product candidates under the terms of our licensing agreements, including ZEJULA (other than for commercial use in Hong Kong), NUZYRA, and xanomeline-trospium.
We operate two manufacturing facilities in Suzhou, China, which support the commercial and clinical production of certain of our products and product candidates, including ZEJULA.
•We have a small molecule facility that manufactures ZEJULA. The oral solids production line is cGMP-compliant and is capable of performing the entire production process, including blending, granulation (i.e., wet granulation process, fluidized bed process, and roller compaction), tableting, coating, and packaging for oral solid drug products. The facility has capacity to produce up to 50 million units per year for oral solid dosage form. We also have an early clinical manufacturing workshop for oral solids with additional capacity to produce approximately 30,000 units/batch.
•We have a large molecule facility for which we have successfully obtained permits and passed inspections to manufacture supplies for certain product candidates. The facility has a biological processing / formulation production line with an annual production capacity of up to 12 to 22 200L or 1000L clinical batches, respectively. The production line consists of a 1000L drug substance production line from Cytiva and a self-clean / autoclave automatic drug product production line from Tofflon Science.
Our two manufacturing facilities comply with both the PRC and PIC/S drug manufacturing standards. We procure our manufacturing equipment from leading domestic and international suppliers.
We believe our two manufacturing facilities are sufficient to support our commercial and clinical needs and our business growth in the near term.
Contract Manufacturing Organizations
We outsource to a limited number of external contract manufacturing organizations (“CMOs”) the production of certain drug substances and products to meet pre-clinical, clinical, and commercial requirements of our products and product candidates. For example, we have obtained the necessary licenses and engaged CMOs to locally manufacture NUZYRA and ZL-1102 in mainland China. By outsourcing a portion of our manufacturing activities, we can increase our focus on core areas of competence such as product candidate development, commercialization, and research. We have adopted procedures to promote compliance by our CMOs with relevant regulatory requirements and internal guidelines with respect to production qualifications, facilities, and processes. When selecting our CMOs, we consider a number of factors, including their qualifications, relevant expertise, production capacity, geographic proximity, reputation, track record, product quality, reliability, and proposed terms for the production arrangement. Our CMOs provide services to us on a short-term and project-by-project basis. Our agreements with CMOs typically specify requirements, including product quality or service details, technical standards or methods, delivery terms, agreed price and payment, and product inspection and acceptance criteria. Our CMOs procure the necessary raw materials themselves.
Suppliers
Our suppliers may consist of (i) third-party licensors from which we have licenses for commercial products and product candidates; (ii) suppliers of raw materials in our supply chain; and (iii) CROs to support our clinical trials.
•Licensors: We are dependent on some of our third-party partners for the manufacture and supply of certain of our commercial products and product candidates. For example, we source OPTUNE from NovoCure, QINLOCK from Deciphera, VYVGART from argenx, tisotumab vedotin from Pfizer, adagrasib and repotrectinib from BMS, bemarituzumab from Amgen, and SUL-DUR from Innoviva.
•Other Suppliers: We are dependent on third parties for certain raw materials in our supply chain. For example, we obtain raw materials for our clinical trial activities from multiple suppliers who we believe have sufficient capacity to meet our demands. We also believe we would have access to adequate alternative sources for such supplies, if needed. We typically order raw materials and services on a purchase order basis and do not enter into long-term dedicated capacity or minimum supply arrangements. While we experience price fluctuations associated with our raw materials, we have not experienced material disruptions in the supply of our raw materials. We have suppliers in both China and the United States.
•CROs: We may depend on certain CROs to support our clinical trials.
Quality Control and Assurance
We have established a strict quality control system in accordance with NMPA regulations. We monitor our operations in real time throughout the entire production process, from inspection of raw and auxiliary materials to manufacture and delivery of finished products to clinical testing at hospitals. Our quality assurance team is also responsible for our compliance with applicable regulations, standards, and internal policies. Our senior management team is actively involved in setting quality policies and managing the internal and external quality performance of the Company.
For information on risks related to our manufacturing and commercialization activities as well as our reliance on third parties, including our third-party partners, CMOs, and suppliers, see Risk Factors.
Competition
Competition in the biopharmaceutical industry is intense. There are many companies, including biotechnology and pharmaceutical companies, engaged in developing products for the approved indications of our commercial products and the therapeutic areas we are targeting with our research and development activities. Some of our competitors may have substantially greater financial, marketing, research and development, and other resources than we do.
We believe that this strategy, supported bycompetition and leadership in the above actions we have takenindustry is based on managerial and technological excellence and innovation as well as established patent and other actionsproprietary positions through research and development. The achievement of a leadership position also depends largely upon our ability to maximize the approval, acceptance, and use of our product candidates and the availability of adequate financial resources to fund facilities, equipment, personnel, clinical testing, manufacturing, and marketing. Another key aspect of remaining competitive in the industry is recruiting, motivating, and retaining global leaders and top talent to support our research, development, and commercial activities.
Competition among approved products may be based, among other things, on patent position, product efficacy, safety, patient convenience, delivery devices, reliability, availability, reimbursement, and price. In addition, early entry of a new pharmaceutical product into the market may have important advantages in gaining product acceptance and market share. Accordingly, the relative speed with which we plancan develop products, complete the testing and approval process and supply commercial quantities of products can have a significant impact on our competitive position.
The introduction of new products or technologies, including the development of new processes or technologies by competitors or new information about existing products or technologies, results in increased competition for, and pricing pressure on, our commercial products. The development of new or improved treatment options or standards of care in our therapeutic areas could reduce or eliminate the use of our products or may limit the utility and application of ongoing clinical trials for our product candidates.
We also face increased competitive pressures from the introduction of generic versions, prodrugs and biosimilars of existing products and products approved under abbreviated regulatory pathways. Such products are likely to take, will bring us closerbe sold at substantially lower prices than branded products, which may significantly reduce both the price that we are able to achievingcharge for our goalproducts and the volume of becomingproducts we sell. In addition, in some markets, when a generic or biosimilar version of one of our products is commercialized, it may be automatically substituted for our product and significantly reduce our revenues in a short period of time.
We believe our long-term competitive position depends upon our success in discovering and developing innovative, cost-effective products that serve unmet medical needs, along with our ability to manufacture products efficiently and to launch and market them effectively in a highly competitive environment.
For information on significant risks we face from competition, see Risk Factors.
Insurance
We maintain insurance policies that are required under Chinese laws and regulations as well as based on our assessment of our operational needs and industry practice. We maintain liability insurance for certain clinical trials, which covers the patient human clinical trial liabilities such as bodily injury, product liability insurance, general insurance policies covering property loss due to accidents or natural disasters, and director and officer (“D&O”) insurance. We do not maintain insurance to cover intellectual property infringement or misappropriation.
Human Capital Resources
Our employees are integral to our success, and we are committed to building and maintaining a strong and engaged workforce that is focused on delivering on our mission to become a leading global biopharmaceutical company.company and to positively impact human health in China and beyond. We seek to attract, retain, and motivate our employees through competitive compensation programs, professional development opportunities, and employee engagement. In evaluating our human capital management, we consider various factors, including employee performance, development, and our ability to recruit well qualified employees to support our business and operations.
As of January 31, 2024, we had 2,175 full-time employees, of which 2,088 were located in Greater China. The number of full-time employees by function as of such date was as follows:
| | | | | | | | |
By Function | | Number of Employees |
Research and Development | | 757 |
Commercial | | 1,178 |
Manufacturing | | 70 |
General and Administrative* | | 170 |
Total | | 2,175 |
* Includes finance, legal, human resources, information technology, and other general and administrative functions.
Our management executive team is comprised of our CEO and her direct reports who, collectively, have management responsibility for our business. Our management team places significant focus and attention on matters concerning our human capital assets, with a focus on being an employer of choice as well as on diversity, employee capabilities and growth, and succession planning.
The competition for top talent in our industry is intense. To help attract, motivate, and retain well qualified employees, we strive to provide competitive compensation programs and benefits, including cash compensation, stock-based compensation, and other benefits to support the financial, physical, and emotional health of our employees. For our employees in China, consistent with Chinese regulations, we participate in a housing fund and various employee social security plans that are organized by applicable local municipal and provincial governments, including housing, pension, medical, work-related injury, maternity, and unemployment benefit plans, under which we make contributions at specified percentages of the salaries of our employees. For our U.S.-based employees, in addition to our health and welfare benefits and parental leave, we provide retirement benefits in the form of certain matching contributions to tax-qualified 401(k) plans.
We provide professional development and training opportunities to our employees to help enhance their competencies and capabilities. These opportunities include formal and comprehensive company-level and department-level training for new employees followed by on-the-job training; periodic trainings to promote awareness and compliance with our policies and procedures; and cross-functional trainings to strengthen and reinforce employee collaborations across different functions, groups, and departments that work together to support our day-to-day operations. We have a performance management and talent development process through which managers provide regular feedback and coaching to develop employees. This process also helps the Company identify our pipeline of talent as well as areas in potential need of additional resources or support. We also engage our employees through employee resource groups, such as our women’s leadership community and local diversity, equity, and inclusion committees.
We seek to bring together employees with different backgrounds and expertise to support our growth while also creating an inclusive culture. We are proud of the diversity, skills, and achievements that our employees bring to our business from various parts of the world. In addition, we are committed to being an equal opportunity employer, where everyone is treated equally and respected, regardless of their gender, nationality, marital status, age, disability, or religious belief. Our commitment to diversity is reflected in the composition of our workforce. For example, with respect to gender diversity, the majority of our full-time employees are women, and the majority of STEM-related positions are held by women.
Our worldwide teams are united by a common mission to improve human health. We strive to maintain a good working relationship with our employees. We are committed to encouraging a culture of open communication where employees can ask questions, raise concerns, and contribute creative solutions. Our management team routinely makes themselves available to all employees, including in regular town hall events that encourage open dialogue. None of our employees are represented by a labor union or covered by a collective bargaining agreement, and we have not experienced any material work stoppages or labor disputes. Further, we have been able to recruit strong employees to support our business and operations.
Risk Management
We are committed to acting ethically, which includes identifying and responsibly managing risk. As a result, we have adopted a consolidated risk management methodology and program, which includes a three lines of defense risk management framework to identify, assess, evaluate, and monitor key risks associated with our strategic objectives on an on-going basis, and a risk governance structure that includes oversight by the Board of Directors (the “Board”), the Audit Committee of the Board of Directors (the “Audit Committee”), and management. Management oversight includes a Risk Coordination Council that is comprised of leaders of governance and quality functions along with operational line leaders and serves as a forum to discuss and monitor risks across the organization as well as other regional, divisional, or functional risk management committees or working groups, as deemed appropriate.
We conduct an annual enterprise risk assessment to identify our top tier risks and, based on that assessment, will develop an enterprise risk management strategy and plans to manage those risks. Our risk management strategy takes into account various factors including our corporate strategic goals and objectives, our risk tolerance levels and thresholds, and applicable legal and regulatory requirements. We also develop and implement risk strategies for new or evolving risks during the year, as deemed appropriate. Management discusses with the Board of Directors or the Audit Committee the results of its annual enterprise risk assessments as well as its enterprise risk management methodology and guidelines and key risk-related developments.
The following provides additional information on our three lines of defense framework:
•First Line of Defense: Our business functions areprimarily responsible for identifying and evaluating risks in their areas of responsibility and for developing and implementing a risk management program, including appropriate controls and procedures, to monitor, manage, and communicate to management key information with respect to these risks. Such risk management program should be consistent with our corporate business objectives and should adhere to risk policies, controls, and guidelines established by management and the Board of Directors or Audit Committee, including risk tolerance levels. Our business functions are also responsible for monitoring ongoing risks in their areas and communicating to management, as appropriate.
•Second Line of Defense: Our Legal and Ethics and Compliance functions oversee implementation of our enterprise risk management program and monitoring of business activities aligned with the risk outcomes identified during the annual risk assessment process. For example, our Chief Legal Officer, supported by our Chief Compliance Officer, is responsible for: developing and updating our enterprise risk management program and targets; reviewing and approving management or mitigation plans for major risk management issues; overseeing implementation of risk management measures; providing guidance and support on our risk management approach to the relevant departments in the Company; and reporting to management, the Board of Directors, and the Audit Committee, as deemed appropriate.
•Third Line of Defense: Our Internal Audit function is responsible for evaluating the design, adequacy, operational effectiveness, and efficiency of our enterprise risk management program, including our risk governance structure, processes for enterprise risk identification and management, and risk control processes.
The following provides additional information on certain components of our risk governance structure:
•Risk Coordination Council: The Risk Coordination Council, which is co-chaired by the Chief Compliance Officer and another rotating member and is comprised of governance function leaders as well as business operations leaders, provides a forum to discuss and identify, monitor, and manage risks across the organization. Potential risks identified through this forum are escalated and managed both at the functional line level and through the Chief Compliance Officer directly to executive leadership and/or the Audit Committee, as deemed appropriate.
•Audit Committee: The Audit Committee is responsible for assisting the Board of Directors in its oversight of the Company’s risk management and internal controls; the integrity of our financial statements; compliance with
applicable legal and regulatory requirements; the qualifications, independence, and performance of our auditors; and our internal audit and compliance functions.
•Board of Directors: The Board of Directors oversees the management of risks inherent in the operation of our business and the implementation of our business strategies and is responsible for establishing our enterprise risk management and internal control system and reviewing its effectiveness. The Board of Directors performs its oversight role through several different levels of review. For example, management reports to the Board on our business strategies, operations, and corporate functions, and each of the Board’s Committees reports to the Board on the risks within their areas of responsibility.
Investment Risk Management
To help meet our liquidity needs without significantly increasing our risk, we have an investment policy, which was approved by the Audit Committee and provides guidelines and specific instructions for the investment of our funds. Our investment strategy aims to minimize risks by reasonably and conservatively matching the maturities of the portfolio to anticipated operating cash needs. We make our investment decisions on a case-by-case basis after considering a number of factors, including, but not limited to, our cash flow levels, operational needs, and capital expenditures; the macro-economic environment; general market conditions; and the expected profit or potential loss of the investment. In accordance with our investment policy, we may engage in short-term investments with surplus cash on hand. Our investment portfolio primarily consists of time deposits. We are prohibited from investing in high-risk products, and proposed investments must not interfere with our business operations or capital expenditures.
DividendsOur Oncology Pipeline
Additional Indications for Tumor Treating Fields (TTFields)
As discussed in Our Commercial Products and Other Distributions