Group 1: Hong Kong Stocks - Photovoltaic stocks rose in the morning, with Xinyi Solar (00968) up over 3%, Fuyao Glass (03606) up over 3%, and GCL-Poly Energy (00451) up over 3%. Domestic leading polysilicon companies have raised prices, and the market is focused on the restructuring progress in the polysilicon industry [1] - Heng Rui Medicine (01276) increased by over 5% after announcing the approval of HRS-7172 tablets for clinical trials by the National Medical Products Administration on September 2 [1] - Qingdao Bank (03866) rose over 2% as its major shareholder plans to increase holdings by 233 million to 291 million shares, recognizing the long-term investment value of the bank's stock [1] - Zhaojin Mining (01818) increased by over 1%, with a total market value exceeding HKD 100 billion, and the company is accelerating overseas project construction, indicating future growth potential [1] - Zhongsheng Holdings (00881) rose over 4%, with management optimistic about the new car market and smooth progress in the company's new energy business [1] - Innovent Biologics (09969) increased by over 5% after disclosing its interim performance report, with core products driving growth and accelerating multiple self-immune phase III clinical trials [1] - United Laboratories (03933) rose over 6% after announcing a 27% year-on-year increase in profit attributable to shareholders in its half-year results, with key progress in several products in the formulation segment [1] Group 2: U.S. Stocks - NIO (NIO.US) rose 3.13%, with vehicle deliveries in August 2025 reaching 31,305 units, a year-on-year increase of 55.2%, and total deliveries since 2025 reaching 166,472 units, up 30.0% [3] - Hesai Technology (HSAI.US) fell 2.91% as it plans to list in Hong Kong after passing the hearing [3] - Eli Lilly (LLY.US) rose 0.36% after Novo Nordisk's weight loss drug Wegovy outperformed it in a real-world comparative study [3] - Zai Lab (ZLAB.US) increased by 0.73% after announcing that its drug was approved in Hong Kong for treating recurrent or metastatic cervical cancer [3] - Beike (BEKE.US) rose 4.89% after reporting a 11.3% year-on-year increase in net income for the second quarter, leading multiple institutions to reaffirm a "buy" rating [3] - Gold stocks rose against the trend, with Gold Resource (GORO.US) up 15.80%, Harmony Gold (HMY.US) up 7.53%, and Kinross Gold (KGC.US) up 2.68%, driven by expectations of U.S. interest rate cuts and a weak dollar [3] - Corning (GLW.US) rose 2.15% after UBS raised its target price from $65 to $84 and upgraded its rating from "neutral" to "buy" [4] - Li Auto (LI.US) rose 4.50% as the founder announced plans to fully enter the high-end pure electric SUV market [4]

Group 1 - Zai Lab (ZLAB.US) shares rose 1% in pre-market trading, reaching $33.43 [1] - The Hong Kong Department of Health has approved TIVDAK® (tisotumab vedotin) for the treatment of recurrent or metastatic cervical cancer in adult patients who have disease progression during or after chemotherapy [1] - Tisotumab vedotin is currently under review for a biological product license application by the National Medical Products Administration (NMPA) in China, with the application accepted in March 2025 [1] Group 2 - The closing price on August 29 was $33.10, with a pre-market price of $33.43 on September 2 [1] - The stock's highest price was $33.51, and the lowest was $32.59, with a trading volume of 378,300 shares [1] - The total market capitalization of Zai Lab is approximately $3.64 billion [1]

Core Viewpoint - The Hong Kong government has approved TIVDAK® (tisotumab vedotin) for the treatment of recurrent or metastatic cervical cancer in adult patients who have experienced disease progression during or after chemotherapy [1] Company Summary - The approval by the Hong Kong Department of Health marks a significant milestone for the company, as it expands the availability of TIVDAK® in the region [1] - TIVDAK® is currently undergoing the biological product license application review process with the National Medical Products Administration (NMPA) in China, with the application accepted in March 2025 [1]

於開曼群島註冊成立的有限公司 香港聯交所：9688 納斯達克：ZLAB 公司資料 董事會 執行董事 杜瑩博士 （董事長兼首席執行官） 2025 中期報告 獨立董事 John Diekman博士 （首席獨立董事） Richard Gaynor博士 梁頴宇女士 William Lis先生 Scott W. Morrison先生 Leon O. Moulder, Jr.先生 Michel Vounatsos先生 Peter Wirth先生 中國內地總部及主要營業地點 目錄 | 公司資料 | 2 | | --- | --- | | 前瞻性陳述 | 4 | | 管理層討論及分析 | 7 | | 其他資料 | 26 | | 未經審計簡明合併資產負債表 | 58 | | 未經審計簡明合併經營表 | 60 | | 未經審計簡明合併綜合虧損表 | 61 | | 未經審計簡明合併股東權益表 | 62 | | 未經審計簡明合併現金流量表 | 63 | | 未經審計簡明合併財務報表附註 | 65 | | 詞彙表 | 83 | 中國 上海市浦東新區 金科路4560號 金創大廈 1號樓4樓 郵編：201210 （直至2025年6月30日 ...

Core Viewpoint - Zai Ding Medical (09688) reported a total revenue of $216 million for the first half of 2025, representing a year-on-year increase of 15.35% [1] Financial Performance - The company recorded a net loss of $89.165 million, which is a 33.33% reduction compared to the previous year [1] - Earnings per share stood at a loss of $0.08 [1] Revenue Breakdown - Product revenue increased by $27.5 million (or 15%) to $215 million, driven by sales growth of Weiwei Jia due to extended treatment duration and improved market penetration [1] - Sales of Niu Zai Le also grew due to enhanced market coverage and penetration [1] - The newly launched Ding You Le, which started sales in Q4 2024, contributed to revenue growth [1] R&D Expenditure - Research and development expenses decreased by $4.9 million (or 4%) to $111 million, primarily due to ongoing resource optimization and efficiency improvements that reduced personnel and clinical trial costs [1] - This decrease was partially offset by an increase in licensing fees [1]

Core Viewpoint - Zai Ding Pharmaceutical reported a 15% year-on-year increase in product revenue net to $215 million for the first half of the year, indicating strong growth in its operations [1] Financial Performance - Product revenue net increased by 15% to $215 million [1] - Research and development expenses decreased by 4% to $111 million [1] - Net loss reduced by $44.6 million year-on-year to $89.2 million, primarily due to revenue growth outpacing net operating expenses [1] - Basic and diluted loss per share was $0.08 [1]

Core Viewpoint - Zai Ding Pharmaceutical (09688) reported a total revenue of $216 million for the first half of 2025, representing a year-on-year increase of 15.35% [1] Financial Performance - The company recorded a net loss of $89.165 million, which is a 33.33% reduction compared to the previous year [1] - Earnings per share stood at a loss of $0.08 [1] Revenue Breakdown - Product revenue increased by $27.5 million (or 15%) to $215 million, driven by sales growth of Weigeka due to extended treatment duration and improved market penetration, as well as increased sales of Niuzainuo from enhanced market coverage and penetration [1] - The sales growth of Dingyoule, which was launched in Q4 2024, also contributed to the overall revenue increase [1] Research and Development Expenses - R&D expenses decreased by $4.9 million (or 4%) to $111 million, primarily due to ongoing resource optimization and efficiency improvements that reduced personnel and clinical trial costs, partially offset by an increase in licensing fees [1]

[Company Information](index=6&type=section&id=Company%20Information) This section details the company's governance structure, key personnel, and global listing information [Board of Directors and Management](index=6&type=section&id=Board%20of%20Directors%20and%20Management) Zai Lab's Board comprises Dr. Du Ying (Chairperson and CEO) and eight independent directors, supported by various committees for robust corporate governance - The Board of Directors consists of Dr. Du Ying (Chairperson and Chief Executive Officer) and eight independent directors[11](index=11&type=chunk) - Committees include Audit, Remuneration, Nomination and Corporate Governance, Research and Development, and Commercial[13](index=13&type=chunk)[14](index=14&type=chunk) [Company Contact and Listing Information](index=6&type=section&id=Company%20Contact%20and%20Listing%20Information) The company maintains headquarters in mainland China, the US, and Hong Kong, with listings on HKEX (9688) and Nasdaq (ZLAB), audited by KPMG - Mainland China headquarters will relocate to Building B, No. 899 Halei Road, Pudong New Area, Shanghai, effective July 1, 2025[11](index=11&type=chunk) - The company is listed on the Hong Kong Stock Exchange (**9688**) and Nasdaq (**ZLAB**)[14](index=14&type=chunk) - KPMG is responsible for Hong Kong financial report audits, while KPMG LLP handles US financial report audits[14](index=14&type=chunk) [Forward-Looking Statements](index=8&type=section&id=Forward-Looking%20Statements) This section outlines the company's forward-looking statements, emphasizing inherent uncertainties and potential material differences in actual results [Forward-Looking Statement Disclaimer](index=8&type=section&id=Forward-Looking%20Statement%20Disclaimer) This report contains numerous forward-looking statements regarding the company's strategy, product potential, and financial performance, which are subject to inherent uncertainties and risks - Forward-looking statements cover strategy, product potential, market, capital allocation, clinical development, regulatory approvals, collaboration benefits, and future financial performance[15](index=15&type=chunk) - Actual results may differ materially due to various factors, including commercialization capabilities, financing, clinical development outcomes, regulatory approvals, third-party performance risks, patent protection, trade policies, Chinese government intervention, geopolitical events, uncertainties in the Chinese legal system, and currency exchange rate fluctuations[15](index=15&type=chunk)[16](index=16&type=chunk) - The company has no obligation to update or revise any forward-looking statements, and investors should not place undue reliance on them[17](index=17&type=chunk) [Management Discussion and Analysis](index=11&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an in-depth review of the company's operational performance, financial position, and future strategic outlook [Overview](index=11&type=section&id=Overview) Zai Lab is a patient-centered global biopharmaceutical company focused on oncology, immunology, neuroscience, and infectious diseases, with seven commercialized products and ongoing R&D investments - The company is a patient-centered global biopharmaceutical company, focused on oncology, immunology, neuroscience, and infectious diseases[20](index=20&type=chunk) - Currently, it has seven commercialized products (ZEJULA, VYVGART/VYVGART Hytrulo, NUZYRA, OPTUNE, QINLOCK, TYVYT, and ONKAS) approved in at least one region in Greater China[20](index=20&type=chunk) - Since its inception, the company has generated net losses and negative cash flows from operations, primarily due to R&D and selling, general, and administrative expenses[20](index=20&type=chunk) [Recent Developments](index=11&type=section&id=Recent%20Developments) The company achieved a 15% year-over-year increase in commercial product net revenue, driven by VYVGART, NUZYRA, and TYVYT sales, alongside significant clinical and regulatory progress for multiple pipeline candidates 2025 First Half Product Net Revenue (Million USD) | Indicator | 2025 First Half (Million USD) | 2024 First Half (Million USD) | Change (Million USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Product Net Revenue | 214.7 | 187.2 | 27.5 | 15% | - ZL-1310 (DLL3 ADC) received FDA Fast Track designation for ES-SCLC, with Ia/Ib clinical study showing a **67% objective response rate** in second-line SCLC, and a pivotal study planned for later this year[23](index=23&type=chunk) - Bemarituzumab Phase III clinical study FORTITUDE-101 met its primary endpoint of significantly improved overall survival, with an NDA submission planned in China for the second half of 2025[23](index=23&type=chunk) - Tumor Treating Fields (TTFields) Phase III clinical study PANOVA-3 met its primary endpoint of significantly improved median overall survival, with an NDA submission planned in China for the second half of 2025[23](index=23&type=chunk) - Repotrectinib's supplemental NDA for adult patients with NTRK-positive solid tumors was accepted by the National Medical Products Administration[25](index=25&type=chunk) - Efgartigimod (FcRn) received FDA approval for self-administration in gMG and CIDP, and was recommended in the "Chinese Guidelines for Diagnosis and Treatment of Myasthenia Gravis (2025 Edition)" for early target-driven and long-term maintenance therapy[25](index=25&type=chunk) [Factors Affecting Our Operating Results](index=14&type=section&id=Factors%20Affecting%20Our%20Operating%20Results) The company's operating performance is influenced by commercial product sales, R&D investment, sales and administrative expenses, and the ability to commercialize pipeline candidates and leverage licensing agreements - Product revenue is expected to increase with enhanced market access for existing commercial products (e.g., inclusion in the National Reimbursement Drug List) and the launch of more commercial products[26](index=26&type=chunk) - R&D expenses are a key driver of long-term competitiveness and future growth, with the company continuing to invest heavily in internal discovery, clinical and preclinical trials, and business development[27](index=27&type=chunk) - Selling, general, and administrative expenses are expected to remain high to support commercial product sales and preparations for new product launches[29](index=29&type=chunk) - The company's ability to generate revenue from pipeline candidates depends on successful regulatory approval and commercialization[30](index=30&type=chunk) - Licensing and collaboration agreements involve upfront payments, milestone payments (development, regulatory, sales), and royalties; as of June 30, 2025, future development and regulatory milestone payments could reach up to **USD 211 million**, and sales milestone payments up to **USD 1.753 billion**[31](index=31&type=chunk) [Future and Outlook](index=16&type=section&id=Future%20and%20Outlook) Zai Lab aims to become a leading global biopharmaceutical company by accelerating patient access to medicines, expanding its pipeline, and maintaining commercial excellence, while integrating its "Trust for Life" strategy - The company's mission is to become a leading global biopharmaceutical company, focused on discovering, developing, and commercializing innovative therapies[32](index=32&type=chunk) - The corporate strategy has three pillars: accelerating patient access to medicines (investing in R&D), expanding and strengthening the pipeline (internal discovery, collaborations, business development), and maintaining commercial excellence and execution (strong financial performance, increased accessibility, efficiency, path to profitability)[34](index=34&type=chunk) - The company will develop its "Trust for Life" strategy, encompassing three commitments: improving human health, creating a better future, and acting immediately with ethical business practices and strong corporate governance[33](index=33&type=chunk) [Financial Review](index=17&type=section&id=Financial%20Review) For the six months ended June 30, 2025, Zai Lab's product net revenue grew 15% to USD 214.7 million, with total revenue increasing 15% to USD 216.5 million, while net loss significantly decreased by 33% to USD 89.2 million 2025 First Half Operating Results Overview (Compared to 2024 Same Period) (Thousand USD) | Indicator | 2025 First Half (Thousand USD) | 2024 First Half (Thousand USD) | Change (Thousand USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Product Revenue, Net | 214,735 | 187,255 | 27,480 | 15% | | Collaboration Revenue | 1,729 | 398 | 1,331 | 334% | | **Total Revenue** | **216,464** | **187,653** | **28,811** | **15%** | | Cost of Product Revenue | (81,455) | (68,767) | (12,688) | 18% | | Cost of Collaboration Revenue | (412) | (85) | (327) | 385% | | Research and Development Expenses | (111,343) | (116,270) | 4,927 | (4)% | | Selling, General and Administrative Expenses | (134,460) | (148,904) | 14,444 | (10)% | | Operating Loss | (111,206) | (146,373) | 35,167 | (24)% | | Interest Income | 17,449 | 18,988 | (1,539) | (8)% | | Interest Expense | (2,449) | (605) | (1,844) | 305% | | Foreign Exchange Gain (Loss) | 3,488 | (6,176) | 9,664 | (156)% | | Other Income, Net | 3,553 | 418 | 3,135 | 750% | | Loss Before Income Taxes | (89,165) | (133,748) | 44,583 | (33)% | | Income Tax Expense | — | — | — | —% | | **Net Loss** | **(89,165)** | **(133,748)** | **44,583** | **(33)%** | | Basic and Diluted Loss Per Share | (0.08) | (0.14) | - | (40)% | 2025 First Half Product Net Revenue Breakdown (Thousand USD) | Commercial Product | 2025 First Half | 2024 First Half | Change (USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | ZEJULA | 90,571 | 90,500 | 71 | —% | | VYVGART/VYVGART Hytrulo | 44,602 | 36,352 | 8,250 | 23% | | NUZYRA | 29,410 | 22,208 | 7,202 | 32% | | OPTUNE | 23,718 | 25,064 | (1,346) | (5)% | | QINLOCK | 17,045 | 13,131 | 3,914 | 30% | | TYVYT | 5,739 | — | 5,739 | NM | | ONKAS | 3,025 | — | 3,025 | NM | | Other | 625 | — | 625 | NM | | **Total Product Revenue, Net** | **214,735** | **187,255** | **27,480** | **15%** | - Research and development expenses decreased by **USD 4.9 million (4%)**, primarily due to lower employee and clinical trial costs, partially offset by increased license fees[41](index=41&type=chunk) - Selling, general, and administrative expenses decreased by **USD 14.4 million (10%)**, mainly due to reduced personnel costs from resource optimization and efficiency improvements[44](index=44&type=chunk) - Foreign exchange gain was **USD 3.5 million**, compared to a loss of **USD 6.2 million** in the prior year period, primarily driven by the appreciation of RMB against the USD[47](index=47&type=chunk) [Discussion of Certain Key Balance Sheet Items](index=22&type=section&id=Discussion%20of%20Certain%20Balance%20Sheet%20Items) As of June 30, 2025, the company's cash, cash equivalents, and restricted cash totaled USD 833.4 million, with accounts receivable and inventories increasing to support sales growth, and short-term borrowings rising to USD 174.5 million Key Balance Sheet Item Changes (Thousand USD) | Indicator | June 30, 2025 | December 31, 2024 | Change (Thousand USD) | | :--- | :--- | :--- | :--- | | Cash, Cash Equivalents and Restricted Cash | 833,400 | 880,800 | (47,400) | | Accounts Receivable | 88,500 | 85,178 | 3,322 | | Inventories, Net | 61,700 | 39,875 | 21,825 | | Property and Equipment, Net | 50,160 | 47,961 | 2,199 | | Accounts Payable | 107,357 | 100,906 | 6,451 | | Other Current Liabilities | 44,051 | 58,720 | (14,669) | | Short-Term Borrowings | 174,509 | 131,711 | 42,798 | - Accounts receivable increased by **USD 3.3 million** to **USD 88.5 million**, primarily due to increased product revenue[53](index=53&type=chunk) - Inventories, net, increased by **USD 21.8 million** to **USD 61.7 million** to support anticipated sales growth[54](index=54&type=chunk) - Short-term borrowings increased by **USD 42.8 million** to **USD 174.5 million**, mainly due to net new borrowings in the first half of 2025[59](index=59&type=chunk) [Liquidity, Financial Resources and Capital Structure](index=23&type=section&id=Liquidity,%20Financial%20Resources%20and%20Capital%20Structure) As of June 30, 2025, the company's cash and cash equivalents and current restricted cash totaled USD 832.3 million, sufficient to meet cash needs for at least the next twelve months, with changes in cash flows reflecting reduced operating losses and increased investment proceeds Cash and Cash Equivalents, Short-Term Investments and Restricted Cash (Thousand USD) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and Cash Equivalents | 732,159 | 449,667 | | Current Restricted Cash | 100,111 | 100,000 | | Short-Term Investments | — | 330,000 | | Non-Current Restricted Cash | 1,114 | 1,114 | | **Total** | **833,384** | **880,781** | - As of June 30, 2025, the company's cash and cash equivalents and current restricted cash totaled **USD 832.3 million**, expected to be sufficient to meet cash needs for at least the next twelve months[62](index=62&type=chunk) Cash Flow Data (Thousand USD) | Indicator | 2025 First Half | 2024 First Half | Change (USD) | | :--- | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (92,723) | (132,279) | 39,556 | | Net Cash Provided by Investing Activities | 323,211 | 2,446 | 320,765 | | Net Cash Provided by Financing Activities | 51,990 | 69,870 | (17,880) | | Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash | 125 | (137) | 262 | | Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash | 282,603 | (60,100) | 342,703 | - Net cash used in operating activities decreased by **USD 39.6 million**, primarily due to a reduction in net loss[64](index=64&type=chunk) - Net cash provided by investing activities increased by **USD 320.8 million**, mainly due to increased proceeds from the maturity of short-term investments[65](index=65&type=chunk) - Net cash provided by financing activities decreased by **USD 17.9 million**, primarily due to the repayment of short-term bank borrowings[66](index=66&type=chunk) - The company has entered into debt arrangements with Chinese financial institutions to borrow up to approximately **USD 240.2 million**, with **USD 174.5 million** in outstanding short-term debt as of June 30, 2025[61](index=61&type=chunk) [Contractual Obligations and Commitments](index=26&type=section&id=Contractual%20Obligations%20and%20Commitments) As of June 30, 2025, the company had USD 1.1 million in purchase commitments, primarily for commercial production development and capital expenditures, with no significant legal proceedings or claims - As of June 30, 2025, the company had **USD 1.1 million** in purchase commitments related to commercial production development activities and capital expenditures, expected to be incurred within one year[69](index=69&type=chunk) - The company is not currently a party to any material legal proceedings and has not paid any indemnity claims[196](index=196&type=chunk)[197](index=197&type=chunk) [Disclosure Regarding Market Risk](index=26&type=section&id=Disclosure%20Regarding%20Market%20Risk) Zai Lab faces foreign exchange, credit, and interest rate risks, with RMB-USD fluctuations potentially impacting its RMB-denominated operations and USD/HKD-denominated securities, while credit risk is managed through monitoring, and interest rate changes are not expected to have a material impact - The company faces foreign exchange risk, credit risk, and interest rate risk[70](index=70&type=chunk) - Fluctuations in the exchange rate of RMB against the USD and other currencies may impact the company's RMB-denominated operations and the value of its American Depositary Shares and ordinary shares traded in USD/HKD[71](index=71&type=chunk)[74](index=74&type=chunk) - The company manages credit risk for accounts receivable by continuously monitoring outstanding balances and limiting credit exposure, with no significant credit losses historically[75](index=75&type=chunk) - Given the short-term nature of deposits and investments, sudden changes in market interest rates are not expected to have a material impact on the company's financial position and operating results[77](index=77&type=chunk) [Gearing Ratio](index=28&type=section&id=Gearing%20Ratio) As of June 30, 2025, Zai Lab's gearing ratio increased to 22% from 16% at December 31, 2024 Gearing Ratio | Date | Gearing Ratio | | :--- | :--- | | June 30, 2025 | 22% | | December 31, 2024 | 16% | [Material Investments Held and Future Plans](index=28&type=section&id=Material%20Investments%20Held%20and%20Future%20Plans) As of June 30, 2025, the company held no other material investments and had no future plans for significant investments or capital assets, nor did it undertake any major acquisitions or disposals of subsidiaries, associates, or joint ventures in the first half of 2025 - As of June 30, 2025, the company held no other material investments[80](index=80&type=chunk) - As of June 30, 2025, the company had no future plans for any material investments or capital assets[81](index=81&type=chunk) - In the first half of 2025, the company did not undertake any material acquisitions or disposals of subsidiaries, associates, or joint ventures[82](index=82&type=chunk) [Employees and Remuneration Policy](index=29&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the company had 1,850 full-time employees globally, with remuneration policies based on performance and market data, including equity incentive plans, and total compensation costs of USD 131.4 million for the first half of 2025 - As of June 30, 2025, the company's global team comprised **1,850 full-time employees**, an increase of 6 from December 31, 2024[83](index=83&type=chunk) - Remuneration policy is based on performance and market data, offering share options, share appreciation rights, and restricted shares through equity incentive plans[83](index=83&type=chunk) Total Compensation Costs (Thousand USD) | Period | Total Compensation Costs (Thousand USD) | | :--- | :--- | | 2025 First Half | 131,400 | | 2024 First Half | 153,400 | [Pledge of Group Assets and Contingent Liabilities](index=29&type=section&id=Pledge%20of%20Group%20Assets%20and%20Contingent%20Liabilities) As of June 30, 2025, the company pledged USD 100 million in restricted cash at Bank of China (Hong Kong) as collateral for a standby letter of credit, with no other significant contingent liabilities - As of June 30, 2025, the company pledged **USD 100 million** in restricted cash held at Bank of China (Hong Kong) as collateral for a standby letter of credit[85](index=85&type=chunk) - As of June 30, 2025, the company had no significant contingent liabilities[86](index=86&type=chunk) [Interim Dividends and Recent Accounting Pronouncements](index=29&type=section&id=Interim%20Dividends%20and%20Recent%20Accounting%20Pronouncements) The Board did not recommend any interim dividends for the first half of 2025 and 2024, and the company is currently evaluating the impact of recently issued but not yet adopted accounting pronouncements - The Board did not recommend any interim dividends for the first half of 2025 and 2024[87](index=87&type=chunk) - The company is evaluating the impact of ASU No. 2023-09 (Improvements to Income Tax Disclosures) and ASU No. 2024-03 (Disclosures by Public Entities about Expenses), expected to be adopted for the years ending December 31, 2025, and 2027, respectively[163](index=163&type=chunk)[164](index=164&type=chunk) [Other Information](index=30&type=section&id=Other%20Information) This section covers director and major shareholder interests, equity incentive plans, corporate governance, securities transactions, use of proceeds, accounting standard differences, and subsequent events [Directors' and Major Shareholders' Interests](index=30&type=section&id=Directors'%20and%20Major%20Shareholders'%20Interests) As of June 30, 2025, the company's directors and chief executive (including Dr. Du Ying) held long positions in shares and related shares, alongside major shareholders such as JPMorgan Chase & Co. and FMR LLC Directors' and Chief Executive's Shareholding Profile (As of June 30, 2025) | Director Name | Nature of Interest | Number of Shares | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Dr. Du Ying | Beneficial Owner | 49,127,910 | 4.42% | | John David Diekman | Beneficial Owner | 997,690 | 0.08% | | Peter Karl Wirth | Beneficial Owner | 3,937,500 | 0.35% | Major Shareholders' Shareholding Profile (As of June 30, 2025) | Major Shareholder Name | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of Equity in the Company | | :--- | :--- | :--- | :--- | | JPMorgan Chase & Co. | Approved Lending Agent | 86,801,595 | 7.81% | | FMR LLC | Interest of Corporation Controlled by You | 95,696,821 | 8.61% | | Qiming Corporate GP IV, Ltd. | Interest of Corporation Controlled by You | 66,329,320 | 5.97% | | The Capital Group Companies, Inc. | Interest of Corporation Controlled by You | 65,153,170 | 5.86% | [Share Incentive Schemes](index=33&type=section&id=Share%20Incentive%20Schemes) The company operates four share incentive schemes (2015, 2017, 2022, and 2024), with a maximum of 92,521,370 shares issuable under outstanding options as of June 30, 2025 - The company has four share incentive schemes: 2015, 2017, 2022, and 2024[96](index=96&type=chunk) - As of June 30, 2025, the maximum number of shares issuable under outstanding options granted but unexercised under all schemes is **92,521,370**[96](index=96&type=chunk) - During the reporting period, the number of shares potentially issuable under options and non-option awards granted under the 2024 Scheme represented **1.32%** of the weighted average number of issued shares during the period[96](index=96&type=chunk) [2015 Scheme](index=33&type=section&id=2015%20Scheme) The 2015 Scheme, approved on March 5, 2015, ceased new grants after the main conversion effective date, with 17,773,140 shares remaining under outstanding options as of June 30, 2025 2015 Scheme Share Option Balance (As of June 30, 2025) | Category of Grantees | Balance as of January 1, 2025 | Exercised During Reporting Period | Balance as of June 30, 2025 | | :--- | :--- | :--- | :--- | | Directors and Chief Executive of the Company | 21,157,450 | 3,927,780 | 19,638,700 | | Employee Participants (excluding Chief Executive) | 3,901,090 | 3,357,250 | 1,773,140 | | **Total** | **25,058,500** | **7,285,360** | **17,773,140** | [2017 Scheme](index=35&type=section&id=2017%20Scheme) The 2017 Scheme, approved on August 7, 2017, ceased new grants after the main conversion effective date, with 30,096,970 shares under outstanding options and 5,359,210 shares under unvested non-option awards as of June 30, 2025 2017 Scheme Share Option Balance (As of June 30, 2025) | Category of Grantees | Balance as of January 1, 2025 | Exercised During Reporting Period | Balance as of June 30, 2025 | | :--- | :--- | :--- | :--- | | Directors and Chief Executive of the Company | 11,870,000 | 0 | 11,870,000 | | Employee Participants (excluding Chief Executive) | 33,287,030 | 2,215,600 | 30,096,970 | | **Total** | **45,157,030** | **2,215,600** | **41,966,970** | 2017 Scheme Non-Option Awards Unvested (As of June 30, 2025) | Category of Grantees | Unvested as of January 1, 2025 | Vested During Reporting Period | Unvested as of June 30, 2025 | | :--- | :--- | :--- | :--- | | Directors and Chief Executive of the Company | 1,583,880 | 730,000 | 1,153,880 | | Employee Participants (excluding Chief Executive) | 9,978,860 | 3,955,570 | 5,359,210 | | **Total** | **11,562,740** | **4,685,570** | **6,513,090** | [2022 Scheme](index=40&type=section&id=2022%20Scheme) The 2022 Scheme, approved on June 22, 2022, ceased new grants after the adoption of the 2024 Scheme on June 18, 2024, with 37,313,970 shares under outstanding options and 12,788,630 shares under unvested non-option awards as of June 30, 2025 2022 Scheme Share Option Balance (As of June 30, 2025) | Category of Grantees | Balance as of January 1, 2025 | Exercised During Reporting Period | Balance as of June 30, 2025 | | :--- | :--- | :--- | :--- | | Directors and Chief Executive of the Company | 9,104,560 | 0 | 9,104,560 | | Employee Participants (excluding Chief Executive) | 42,461,860 | 2,081,550 | 37,313,970 | | **Total** | **51,566,420** | **2,081,550** | **46,418,530** | 2022 Scheme Non-Option Awards Unvested (As of June 30, 2025) | Category of Grantees | Unvested as of January 1, 2025 | Vested During Reporting Period | Unvested as of June 30, 2025 | | :--- | :--- | :--- | :--- | | Directors and Chief Executive of the Company | 931,320 | 308,310 | 623,010 | | Employee Participants (excluding Chief Executive) | 18,983,390 | 4,392,380 | 12,788,630 | | **Total** | **19,914,710** | **4,700,690** | **13,411,640** | [2024 Scheme](index=46&type=section&id=2024%20Scheme) The 2024 Scheme, approved on June 18, 2024, had 7,337,290 shares under outstanding options and 8,595,280 shares under unvested non-option awards as of June 30, 2025 2024 Scheme Share Option Balance (As of June 30, 2025) | Category of Grantees | Balance as of January 1, 2025 | Granted During Reporting Period | Balance as of June 30, 2025 | | :--- | :--- | :--- | :--- | | Directors and Chief Executive of the Company | 0 | 2,525,850 | 2,525,850 | | Employee Participants (excluding Chief Executive) | 208,080 | 4,609,400 | 4,811,440 | | **Total** | **208,080** | **7,134,210** | **7,337,290** | 2024 Scheme Non-Option Awards Unvested (As of June 30, 2025) | Category of Grantees | Unvested as of January 1, 2025 | Granted During Reporting Period | Unvested as of June 30, 2025 | | :--- | :--- | :--- | :--- | | Directors and Chief Executive of the Company | 2,776,930 | 974,790 | 1,869,180 | | Employee Participants (excluding Chief Executive) | 0 | 6,488,960 | 6,726,100 | | **Total** | **2,776,930** | **7,361,810** | **8,595,280** | [Corporate Governance and Securities Dealing Policy](index=52&type=section&id=Corporate%20Governance%20and%20Securities%20Dealing%20Policy) The company adheres to corporate governance codes, balancing the combined role of Chairperson and CEO with a Lead Independent Director, and all directors complied with the adopted securities dealing policy during the reporting period - The company complies with the Corporate Governance Code, balancing the role of Chairperson and Chief Executive Officer (Dr. Du Ying) by appointing a Lead Independent Director (Dr. John Diekman)[125](index=125&type=chunk) - The company has adopted a securities dealing policy no less stringent than the Model Code, and all directors complied with this policy during the reporting period[128](index=128&type=chunk)[129](index=129&type=chunk) [Dealings in Listed Securities and Changes in Directors' Information](index=53&type=section&id=Dealings%20in%20Listed%20Securities%20and%20Changes%20in%20Directors'%20Information) During the reporting period, the company did not purchase, sell, or redeem any listed securities, nor did it hold any treasury shares, with the only director information change being Ms. Liang Wing Yee's appointment to the Nomination and Corporate Governance Committee - During the reporting period, the company neither purchased, sold, nor redeemed any of its listed securities, nor did it hold any treasury shares[130](index=130&type=chunk)[131](index=131&type=chunk) - The only change in director information was the appointment of Ms. Liang Wing Yee as a member of the Nomination and Corporate Governance Committee, effective April 16, 2025[132](index=132&type=chunk) [Use of Net Proceeds](index=53&type=section&id=Use%20of%20Net%20Proceeds) The company has detailed the use of net proceeds from its April 2021, Global, and November 2024 offerings, with most funds allocated as planned for business development, clinical research, commercialization, and pipeline enhancement, and remaining funds expected to be fully utilized by late 2025 to 2027 Use of Net Proceeds from April 2021 Offering (As of June 30, 2025, Million USD) | Use | Percentage of Total | Net Proceeds from Offering | Unutilized as of January 1, 2025 | Utilized During Reporting Period | Actual Use as of June 30, 2025 | Unutilized as of June 30, 2025 | Expected Timeline | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Funding new business and corporate development and licensing opportunities | 30.0% | 245.4 | 245.4 | 25.9 | 25.9 | 219.5 | Through December 2027 | | Completing clinical studies and advancing new drug candidates | 30.0% | 245.4 | — | — | 245.4 | — | Not Applicable | | Expanding the company's commercialization efforts | 20.0% | 163.6 | — | — | 163.6 | — | Not Applicable | | Enhancing the company's global product pipeline | 15.0% | 122.7 | 87.1 | 15.0 | 50.6 | 72.1 | Through December 2027 | | Working capital and other general corporate purposes | 5.0% | 40.9 | 40.9 | — | — | 40.9 | Through December 2027 | | **Total** | **100.0%** | **818.0** | **373.4** | **40.9** | **485.5** | **332.5** | | Use of Net Proceeds from Global Offering (As of June 30, 2025, Million USD) | Use | Percentage of Total | Net Proceeds from Offering | Unutilized as of January 1, 2025 | Utilized During Reporting Period | Actual Use as of June 30, 2025 | Unutilized as of June 30, 2025 | Expected Timeline | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | For ZEJULA, to seek additional indications and hire high-end R&D personnel for its development, and to develop and improve the company's manufacturing facilities for ZEJULA commercialization | 7.2% | 61.6 | — | — | 61.6 | — | Not Applicable | | Funding ongoing and planned clinical studies and preparatory registration filings for Tumor Treating Fields in various solid tumor cancer indications | 6.2% | 52.7 | 28.7 | 1.1 | 25.1 | 27.6 | Through December 2027 | | For enhancing the company's commercialization capabilities for ZEJULA by recruiting additional sales and marketing personnel | 16.0% | 136.1 | — | — | 136.1 | — | Not Applicable | | Strengthening the commercialization of Tumor Treating Fields by recruiting key talent in relevant indication areas to support sales and future potential product launches | 8.0% | 68.1 | 7.3 | 4.3 | 65.1 | 3.0 | Through December 2025 | | Funding ongoing and planned clinical studies and preparatory registration filings for other pipeline candidates (especially late-stage candidates) | 20.6% | 174.9 | — | — | 174.9 | — | Not Applicable | | Exploring new global licensing and collaboration opportunities and introducing clinically validated global potential best-in-class/first-in-class assets that are synergistic with and aligned with the company's current product pipeline and expertise | 25.0% | 212.7 | 2.1 | 2.1 | 212.7 | — | Not Applicable | | Continuous investment and expansion of the company's internal R&D product pipeline and global talent recruitment and training | 7.0% | 59.6 | — | — | 59.6 | — | Not Applicable | | Funding working capital and other general corporate purposes | 10.0% | 85.1 | 30.7 | — | 54.4 | 30.7 | Through December 2027 | | **Total** | **100.0%** | **850.8** | **68.8** | **7.5** | **789.5** | **61.3** | | - The net proceeds from the November 2024 offering were approximately **USD 215 million**; as of June 30, 2025, **USD 143.3 million** has been utilized for general corporate purposes, primarily to advance pipeline candidates and product commercialization, with the remaining **USD 52 million** expected to be fully utilized by the end of 2025[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) [Differences in Accounting Standards and Review](index=58&type=section&id=Differences%20in%20Accounting%20Standards%20and%20Review) The company's financial statements are prepared under US GAAP and reviewed by the Audit Committee, with a reconciliation to IFRS provided, highlighting share-based compensation as a key difference, and KPMG performing a limited assurance engagement on the reconciliation - Financial statements are prepared in accordance with US Generally Accepted Accounting Principles (GAAP) and reviewed by the Audit Committee[141](index=141&type=chunk)[146](index=146&type=chunk) - The primary difference between US GAAP and International Financial Reporting Standards (IFRS) lies in the recognition method for share-based compensation (graded vesting versus straight-line, and forfeiture timing)[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) - KPMG performed a limited assurance engagement on the reconciliation statement, finding no material inconsistencies[144](index=144&type=chunk)[145](index=145&type=chunk)[148](index=148&type=chunk) [Subsequent Events After Reporting Period](index=61&type=section&id=Subsequent%20Events%20After%20Reporting%20Period) On August 6, 2025, the company entered into a new revolving credit facility with China Merchants Bank, replacing a previous expiring facility, increasing the maximum credit limit to RMB 500 million (approximately USD 69.6 million) for a two-year term - On August 6, 2025, the company entered into a new revolving credit facility with China Merchants Bank, replacing the previous RMB 250 million facility that expired in July 2025[207](index=207&type=chunk) - The new credit facility has a maximum limit of **RMB 500 million** (approximately **USD 69.6 million**) and is valid for two years[207](index=207&type=chunk) [Consolidated Financial Statements](index=62&type=section&id=Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, shareholders' equity, and cash flows [Unaudited Condensed Consolidated Balance Sheets](index=62&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, the company's total assets were USD 1.1641 billion, total liabilities were USD 372.4 million, and total shareholders' equity was USD 791.7 million, reflecting slight decreases in assets and equity and an increase in liabilities compared to December 31, 2024 Unaudited Condensed Consolidated Balance Sheets Overview (Thousand USD) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | 1,034,062 | 1,050,480 | | Total Assets | 1,164,101 | 1,185,753 | | Total Current Liabilities | 331,501 | 299,385 | | Total Liabilities | 372,366 | 344,855 | | Total Shareholders' Equity | 791,735 | 840,898 | [Unaudited Condensed Consolidated Statements of Operations](index=64&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) For the six months ended June 30, 2025, the company reported total revenue of USD 216.5 million, a net loss of USD 89.2 million, and basic and diluted loss per share of USD 0.08, indicating a significant reduction in net loss compared to the prior year period Unaudited Condensed Consolidated Statements of Operations Overview (Thousand USD) | Indicator | 2025 First Half | 2024 First Half | | :--- | :--- | :--- | | Total Revenue | 216,464 | 187,653 | | Operating Loss | (111,206) | (146,373) | | Net Loss | (89,165) | (133,748) | | Loss Per Share — Basic and Diluted | (0.08) | (0.14) | [Unaudited Condensed Consolidated Statements of Comprehensive Loss](index=65&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) For the six months ended June 30, 2025, the company's comprehensive loss was USD 93.3 million, comprising a net loss of USD 89.2 million and a foreign currency translation adjustment loss of USD 4.2 million Unaudited Condensed Consolidated Statements of Comprehensive Loss Overview (Thousand USD) | Indicator | 2025 First Half | 2024 First Half | | :--- | :--- | :--- | | Net Loss | (89,165) | (133,748) | | Foreign Currency Translation Adjustment | (4,167) | 5,147 | | **Comprehensive Loss** | **(93,332)** | **(128,601)** | [Unaudited Condensed Consolidated Statements of Shareholders' Equity](index=66&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) As of June 30, 2025, the company's total shareholders' equity was USD 791.7 million, a decrease from USD 840.9 million at December 31, 2024, primarily due to net loss and foreign currency translation adjustments Unaudited Condensed Consolidated Statements of Shareholders' Equity Overview (Thousand USD) | Indicator | Balance as of June 30, 2025 | Balance as of December 31, 2024 | | :--- | :--- | :--- | | Common Stock Amount | 7 | 7 | | Additional Paid-in Capital | 3,308,491 | 3,264,295 | | Accumulated Deficit | (2,542,248) | (2,453,083) | | Accumulated Other Comprehensive Income | 46,348 | 50,515 | | Treasury Stock Amount | (20,863) | (20,836) | | **Total Shareholders' Equity** | **791,735** | **840,898** | [Unaudited Condensed Consolidated Statements of Cash Flows](index=67&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities was USD 92.7 million, net cash provided by investing activities was USD 323.2 million, and net cash provided by financing activities was USD 52.0 million, resulting in an increase in period-end cash, cash equivalents, and restricted cash to USD 833.4 million Unaudited Condensed Consolidated Statements of Cash Flows Overview (Thousand USD) | Indicator | 2025 First Half | 2024 First Half | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (92,723) | (132,279) | | Net Cash Provided by Investing Activities | 323,211 | 2,446 | | Net Cash Provided by Financing Activities | 51,990 | 69,870 | | Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash | 125 | (137) | | Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash | 282,603 | (60,100) | | Cash, Cash Equivalents and Restricted Cash — End of Period | 833,384 | 731,164 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=69&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the unaudited condensed consolidated financial statements, covering organizational information, accounting policies, and specific financial item breakdowns [1. Organization and Principal Business](index=69&type=section&id=1.%20Organization%20and%20Principal%20Business) Zai Lab Limited, established in the Cayman Islands on March 28, 2013, focuses on discovering, developing, and commercializing innovative products in oncology, immunology, neuroscience, and infectious diseases, with significant operations in Greater China and the US - Zai Lab Limited was incorporated in the Cayman Islands on March 28, 2013[159](index=159&type=chunk) - The company is dedicated to discovering, developing, and commercializing innovative products to address unmet medical needs in oncology, immunology, neuroscience, and infectious diseases[159](index=159&type=chunk) - Its principal business operations and geographic markets are located in Greater China, with substantial operations in Greater China and the United States[160](index=160&type=chunk) [2. Basis of Presentation and Consolidation and Significant Accounting Policies](index=69&type=section&id=2.%20Basis%20of%20Presentation%20and%20Consolidation%20and%20Significant%20Accounting%20Policies) The unaudited condensed consolidated financial statements are prepared under US GAAP, reflecting normal recurring adjustments and management's accounting estimates, with the company evaluating the impact of recently issued accounting pronouncements - The financial statements are prepared in accordance with US Generally Accepted Accounting Principles (GAAP) and reflect normal recurring adjustments necessary for fair presentation[161](index=161&type=chunk) - Management makes accounting estimates regarding rebates, R&D expense recognition, fair value of share-based compensation, realizability of deferred tax assets, and useful lives of intangible assets[162](index=162&type=chunk) - The company is evaluating the impact of ASU No. 2023-09 (Improvements to Income Tax Disclosures) and ASU No. 2024-03 (Disclosures by Public Entities about Expenses), expected to be adopted for the years ending December 31, 2025, and 2027, respectively[163](index=163&type=chunk)[164](index=164&type=chunk) [3. Cash and Cash Equivalents](index=71&type=section&id=3.%20Cash%20and%20Cash%20Equivalents) As of June 30, 2025, the company's total cash and cash equivalents were USD 732.2 million, primarily denominated in USD, with RMB-denominated balances subject to Chinese government foreign exchange controls Cash and Cash Equivalents (Thousand USD) | Currency | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | USD | 718,384 | 429,887 | | RMB | 12,167 | 18,979 | | HKD | 606 | 114 | | AUD | 536 | 522 | | TWD | 466 | 165 | | **Total** | **732,159** | **449,667** | - Cash and bank balances denominated in RMB are deposited in banks in mainland China, and their conversion into foreign currency is subject to foreign exchange control rules and regulations promulgated by the Chinese government[166](index=166&type=chunk) [4. Accounts Receivable](index=72&type=section&id=4.%20Accounts%20Receivable) As of June 30, 2025, the company's net accounts receivable totaled USD 88.5 million, predominantly aged within three months, with strict controls and regular reviews in place to manage uncollected receivables, and no significant historical credit losses Accounts Receivable, Net (Thousand USD) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accounts Receivable, Gross | 88,525 | 85,203 | | Provision for Credit Losses | (26) | (25) | | **Accounts Receivable, Net** | **88,499** | **85,178** | Accounts Receivable Aging Analysis (Thousand USD) | Aging | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within 3 Months | 88,474 | 85,167 | | 3 to 6 Months | 25 | 11 | | **Total** | **88,499** | **85,178** | [5. Inventories, Net](index=72&type=section&id=5.%20Inventories,%20Net) As of June 30, 2025, the company's net inventories were USD 61.7 million, primarily consisting of finished goods and raw materials, with a **USD 0.3 million** write-down recorded in the first half of 2025 for excess, obsolete, or net realizable value below cost Inventories, Net Composition (Thousand USD) | Inventory Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Finished Goods | 36,534 | 24,063 | | Raw Materials | 21,232 | 13,268 | | Work-in-Progress | 3,934 | 2,544 | | **Inventories, Net** | **61,700** | **39,875** | - For the six months ended June 30, 2025, the company recorded inventory write-downs of **USD 0.3 million** included in cost of product revenue[169](index=169&type=chunk) [6. Property and Equipment, Net](index=73&type=section&id=6.%20Property%20and%20Equipment,%20Net) As of June 30, 2025, the company's net property and equipment totaled USD 50.2 million, primarily comprising laboratory equipment, production equipment, and buildings, with depreciation expense of USD 4.3 million for the first half of 2025 Property and Equipment, Net Composition (Thousand USD) | Category | June 30, 2025 Net Book Value | December 31, 2024 Net Book Value | | :--- | :--- | :--- | | Office Equipment | 1,237 | 1,230 | | Electronic Equipment | 9,279 | 9,211 | | Laboratory Equipment | 20,444 | 20,516 | | Production Equipment | 17,573 | 17,493 | | Buildings | 24,150 | — | | Construction in Progress | 1,242 | 25,129 | | **Property and Equipment, Net** | **50,160** | **47,961** | - For the six months ended June 30, 2025, depreciation expense was **USD 4.3 million**[170](index=170&type=chunk) [7. Intangible Assets, Net](index=73&type=section&id=7.%20Intangible%20Assets,%20Net) As of June 30, 2025, the company's net intangible assets were USD 56.5 million, primarily composed of commercial product-related assets and software, with a weighted average remaining amortization period of 9.2 years for commercial product assets and 2.8 years for software, and amortization expense of USD 2.9 million for the first half of 2025 Intangible Assets, Net Composition (Thousand USD) | Category | June 30, 2025 Net Book Value | December 31, 2024 Net Book Value | | :--- | :--- | :--- | | Commercial Products | 55,265 | 54,467 | | Software | 1,254 | 1,560 | | **Total** | **56,519** | **56,027** | - For the six months ended June 30, 2025, amortization expense was **USD 2.9 million**[172](index=172&type=chunk) - The weighted average remaining amortization period for commercial product-related intangible assets is **9.2 years**, and for software is **2.8 years**[172](index=172&type=chunk) [8. Accounts Payable](index=74&type=section&id=8.%20Accounts%20Payable) As of June 30, 2025, the company's total accounts payable amounted to USD 107.4 million, with the vast majority (USD 106.9 million) aged within three months, and these payables are non-interest bearing and repayable within the normal operating cycle Accounts Payable Aging Analysis (Thousand USD) | Aging | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within 3 Months | 106,870 | 100,456 | | 3 to 6 Months | 190 | 145 | | 6 Months to 1 Year | 56 | 23 | | Over 1 Year | 241 | 282 | | **Total** | **107,357** | **100,906** | [9. Revenue](index=74&type=section&id=9.%20Revenue) For the six months ended June 30, 2025, the company's product net revenue was USD 214.7 million and collaboration revenue was USD 1.7 million, with product revenue primarily derived from commercial product sales in Greater China, led by ZEJULA, VYVGART/VYVGART Hytrulo, and NUZYRA Gross and Net Product Revenue (Thousand USD) | Indicator | 2025 First Half | 2024 First Half | | :--- | :--- | :--- | | Product Revenue — Gross | 228,863 | 199,723 | | Less: Rebates and Sales Returns | (14,128) | (12,468) | | **Product Revenue — Net** | **214,735** | **187,255** | Net Revenue by Commercial Product (Thousand USD) | Commercial Product | 2025 First Half | 2024 First Half | | :--- | :--- | :--- | | ZEJULA | 90,571 | 90,500 | | VYVGART/VYVGART Hytrulo | 44,602 | 36,352 | | NUZYRA | 29,410 | 22,208 | | OPTUNE | 23,718 | 25,064 | | QINLOCK | 17,045 | 13,131 | | TYVYT | 5,739 | — | | ONKAS | 3,025 | — | | Other | 625 | — | | **Product Revenue — Net** | **214,735** | **187,255** | - Collaboration revenue, primarily related to promotional activities in mainland China, was **USD 1.7 million** for the first half of 2025, a significant increase from the prior year period[176](index=176&type=chunk) [10. Income Taxes](index=75&type=section&id=10.%20Income%20Taxes) No income tax provision was recorded for the reporting period due to the company's accumulated loss position, and a full valuation allowance has been recorded against deferred tax assets for all consolidated entities - No income tax provision was recorded for the reporting period due to the company's accumulated loss position[177](index=177&type=chunk) - The company recorded a full valuation allowance against deferred tax assets for all consolidated entities[177](index=177&type=chunk) [11. Loss Per Share](index=76&type=section&id=11.%20Loss%20Per%20Share) For the six months ended June 30, 2025, the company's basic and diluted loss per share was USD 0.08, an improvement from USD 0.14 in the prior year period, with anti-dilutive effects of share options and unvested restricted shares excluded from diluted loss per share calculation due to the net loss position Calculation of Basic and Diluted Net Loss Per Share (Thousand USD, except for share and per share data) | Indicator | 2025 First Half | 2024 First Half | | :--- | :--- | :--- | | Net Loss | (89,165) | (133,748) | | Weighted Average Number of Common Shares — Basic and Diluted | 1,086,413,130 | 974,541,780 | | **Net Loss Per Share — Basic and Diluted** | **(0.08)** | **(0.14)** | - Due to the company incurring a net loss, outstanding share options and unvested restricted shares were excluded from the calculation of diluted loss per share for the relevant periods, as their inclusion would have been anti-dilutive[178](index=178&type=chunk) [12. Borrowings](index=76&type=section&id=12.%20Borrowings) As of June 30, 2025, the company's total short-term borrowings amounted to USD 174.5 million, with a weighted average annual interest rate of 2.66%, primarily from Chinese banks to support working capital needs in mainland China Short-Term Borrowings (As of June 30, 2025, Thousand USD) | Bank | Weighted Average Annual Interest Rate | Amount (Thousand USD) | | :--- | :--- | :--- | | Bank of China Working Capital Loan | 2.42% | 48,891 | | SPD Bank Working Capital Loan | 2.80% | 41,908 | | China Merchants Bank Working Capital Loan | 2.87% | 34,895 | | Bank of Communications Working Capital Loan | 2.75% | 41,908 | | Bank of Ningbo Discounted Bills | 1.90% | 6,907 | | **Total Short-Term Borrowings** | **2.66%** | **174,509** | - The company has entered into debt arrangements with several Chinese financial institutions to support its working capital needs in mainland China[180](index=180&type=chunk) - The Bank of China working capital loan is secured by **USD 100 million** in restricted deposits[181](index=181&type=chunk) [13. Other Current Liabilities](index=78&type=section&id=13.%20Other%20Current%20Liabilities) As of June 30, 2025, the company's total other current liabilities were USD 44.1 million, primarily comprising accrued payroll, accrued distributor rebates, and taxes payable Other Current Liabilities Composition (Thousand USD) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accrued Payroll | 18,004 | 30,198 | | Accrued Professional Service Fees | 3,532 | 5,728 | | Payables for Property and Equipment | 2,498 | 449 | | Accrued Distributor Rebates | 10,453 | 10,839 | | Taxes Payable | 4,762 | 5,154 | | Other | 4,802 | 6,352 | | **Total** | **44,051** | **58,720** | [14. Related Party Transactions](index=78&type=section&id=14.%20Related%20Party%20Transactions) In January 2025, the company entered into a licensing agreement with Zenas for the development and commercialization of an IGF-1R targeted product in Greater China, with a **USD 10 million** upfront payment recognized as R&D expense and potential future milestone payments of up to **USD 117 million** - In January 2025, the company entered into a licensing agreement with Zenas to obtain rights for the development and commercialization of an IGF-1R targeted product in Greater China[187](index=187&type=chunk) - Mr. Moulder, a member of the company's Board of Directors, also serves as the Chairman and Chief Executive Officer of Zenas[187](index=187&type=chunk) - The company recognized a **USD 10.0 million** upfront payment as R&D expense, with potential future development and sales-based milestone payments of up to **USD 117 million**[187](index=187&type=chunk) [15. Share-Based Compensation](index=78&type=section&id=15.%20Share-Based%20Compensation) For the six months ended June 30, 2025, the company granted options to purchase 7,134,210 ordinary shares and restricted stock representing 7,361,810 ordinary shares under its equity incentive plans, with total share-based compensation expense of USD 32.77 million - For the six months ended June 30, 2025, the company granted options to purchase up to **7,134,210 ordinary shares** and restricted stock representing **7,361,810 ordinary shares**[188](index=188&type=chunk) Share-Based Compensation Expense (Thousand USD) | Category | 2025 First Half | 2024 First Half | | :--- | :--- | :--- | | Selling, General and Administrative | 21,470 | 21,456 | | Research and Development | 11,303 | 15,162 | | **Total** | **32,773** | **36,618** | - As of June 30, 2025, unrecognized share-based compensation expense related to unvested share options and unvested restricted shares was **USD 64.7 million** and **USD 75.4 million**, respectively, expected to be recognized over **2.52 years** and **2.46 years**[189](index=189&type=chunk) [16. License and Collaboration Agreements](index=79&type=section&id=16.%20License%20and%20Collaboration%20Agreements) The company has various licensing and collaboration agreements for product development and commercialization; for the six months ended June 30, 2025, no new material agreements or milestone fees were incurred, though **USD 20 million** in upfront payments for other non-material agreements was recognized as R&D expense - For the six months ended June 30, 2025, the company did not enter into any new material license or collaboration agreements, nor did it incur any milestone fees under existing material license and collaboration agreements[191](index=191&type=chunk) - For the six months ended June 30, 2025, the company recognized **USD 20.0 million** in upfront payments as R&D expense for individually non-material license and collaboration agreements[192](index=192&type=chunk) [17. Other Income, Net](index=80&type=section&id=17.%20Other%20Income,%20Net) For the six months ended June 30, 2025, the company's net other income was USD 3.6 million, primarily from government grants and a reduced loss on equity investments in MacroGenics Other Income, Net (Thousand USD) | Category | 2025 First Half | 2024 First Half | | :--- | :--- | :--- | | Government Grants | 3,866 | 3,325 | | Loss on Equity Investments at Fair Value Through Profit or Loss | (1,912) | (5,147) | | Other Miscellaneous Income | 1,599 | 2,240 | | **Total** | **3,553** | **418** | [18. Net Assets Restricted](index=80&type=section&id=18.%20Net%20Assets%20Restricted) Chinese laws and regulations restrict the company's ability to receive fund distributions from its Chinese subsidiaries, including statutory reserve requirements and foreign exchange controls, with **USD 506 million** in restricted paid-in capital as of June 30, 2025 - Chinese laws and regulations restrict the company's ability to receive fund distributions from its Chinese subsidiaries, including statutory reserve fund requirements and foreign exchange controls[194](index=194&type=chunk) - As of June 30, 2025, the restricted amount included in the paid-in capital of the company's subsidiaries in mainland China was **USD 506.0 million**[194](index=194&type=chunk) [19. Commitments and Contingencies](index=81&type=section&id=19.%20Commitments%20and%20Contingencies) As of June 30, 2025, the company had **USD 1.1 million** in purchase commitments related to commercial production development and capital expenditures, expected to be incurred within one year, and was not a party to any significant legal proceedings or claims - As of June 30, 2025, the company had contracted but not yet reflected in the unaudited condensed consolidated financial statements **USD 1.1 million** in commitments related to commercial production development activities and capital expenditures[195](index=195&type=chunk) - The company is not currently a party to any material legal proceedings and has not paid any claims[196](index=196&type=chunk)[197](index=197&type=chunk) [20. Segment Information](index=81&type=section&id=20.%20Segment%20Information) The company operates as a single operating segment, focusing on the discovery, development, and commercialization of products in oncology, immunology, neuroscience, and infectious diseases, with the CEO assessing performance and allocating resources based on consolidated expenses and net income - The company operates as a single operating segment, engaged in discovering, developing, and commercializing products to address significant unmet medical needs in oncology, immunology, neuroscience, and infectious diseases[198](index=198&type=chunk) - The Chief Executive Officer, as the chief operating decision maker, assesses performance and allocates resources based on significant expenses and net income on a consolidated basis[198](index=198&type=chunk) Classified Expenses (Thousand USD) | Category | 2025 First Half | 2024 First Half | | :--- | :--- | :--- | | Total Research and Development Expenses | 111,343 | 116,270 | | Total Selling, General and Administrative Expenses | 134,460 | 148,904 | [21. Reconciliation of US GAAP to IFRS](index=83&type=section&id=21.%20Reconciliation%20of%20US%20GAAP%20to%20IFRS) The company's financial statements are prepared under US GAAP, with a reconciliation to IFRS provided, primarily highlighting differences in share-based compensation recognition, while lease accounting differences are not material Consolidated Statements of Operations Reconciliation (For the Six Months Ended June 30, 2025, Thousand USD) | Indicator | Amount Reported Under US GAAP | IFRS Adjustment (Share-Based Compensation) | Amount Reported Under IFRS | | :--- | :--- | :--- | :--- | | Research and Development Expenses | (111,343) | 4,727 | (106,616) | | Selling, General and Administrative Expenses | (134,460) | 711 | (133,749) | | Net Loss | (89,165) | 5,438 | (83,727) | Consolidated Balance Sheets Reconciliation (As of June 30, 2025, Thousand USD) | Indicator | Amount Reported Under US GAAP | IFRS Adjustment (Share-Based Compensation) | Amount Reported Under IFRS | | :--- | :--- | :--- | :--- | | Additional Paid-in Capital | 3,308,491 | 43,601 | 3,352,092 | | Accumulated Deficit | (2,542,248) | (43,601) | (2,585,849) | | Total Shareholders' Equity | 791,735 | — | 791,735 | - Under US GAAP, the company has elected to recognize compensation expense for graded vesting awards granted to employees using the straight-line method; under IFRS, compensation expense must be recognized using the graded vesting method[203](index=203&type=chunk)[204](index=204&type=chunk) - Based on the company's assessment, the lease differences recognized under US GAAP and IFRS do not have a material impact on the condensed consolidated financial statements[206](index=206&type=chunk) [22. Subsequent Events](index=86&type=section&id=22.%20Subsequent%20Events) On August 6, 2025, the company signed a new two-year revolving credit facility with China Merchants Bank, increasing the maximum credit limit to RMB 500 million (approximately USD 69.6 million), replacing the previous RMB 250 million facility that expired in July 2025 - On August 6, 2025, the company signed a new revolving credit facility with China Merchants Bank, replacing the previous RMB 250 million credit facility that expired in July 2025[207](index=207&type=chunk) - The new credit facility has a maximum limit of **RMB 500 million** (approximately **USD 69.6 million**) and is valid for two years[207](index=207&type=chunk) [Glossary](index=87&type=section&id=Glossary) This section provides definitions for acronyms and defined terms used throughout the report, covering professional terminology across pharmaceutical, financial, regulatory, and corporate governance domains [Definitions of Terms](index=87&type=section&id=Definitions%20of%20Terms) This glossary includes acronyms and defined terms used in this report to aid reader comprehension - The glossary includes acronyms and defined terms used in this report[209](index=209&type=chunk)

Core Viewpoint - The company reported a revenue of $216 million and a net loss of $89 million for the first half of 2025, while maintaining its full-year revenue guidance of $560 million to $590 million, indicating confidence in accelerated sales of existing products in the second half of the year [1][2]. Group 1: Financial Performance - The company achieved a revenue of $216 million in the first half of 2025, with a net loss of $89 million [1]. - The management reiterated the full-year revenue guidance of $560 million to $590 million, reflecting confidence in the sales growth of products like Weiweijia, Weiliqia, Zele, Dingyoule, and Niuzailai in the second half of 2025 [1]. Group 2: Upcoming Milestones - Several key milestones are anticipated in the second half of 2025, including the submission of new drug applications to the NMPA for various products [1][2]. - Expected submissions include: - Bematinib (FGFR2b) for first-line gastric cancer treatment - Tumor electric field therapy for first-line pancreatic cancer treatment - Efgartigimod for gMG and CIDP [1]. - Recently, the company expects to receive NMPA approval for: - KarXT for schizophrenia - TIVDAK for recurrent or metastatic cervical cancer - Repotrectinib for NTRK-positive solid tumors [2]. Group 3: Clinical Development and Data Releases - The company plans to update data on ZL-1310 (DLL3 ADC) for second-line ES-SCLC and initiate global registration studies in the second half of 2025 [2]. - ZL-1503 (IL-13/IL-31R) is set to advance to a global Phase 1 clinical study for moderate to severe atopic dermatitis [2]. - ZL-6201 (LRRC15 ADC) will also move forward with global Phase 1 clinical development for sarcoma and other potential LRRC15-positive solid tumors [2]. Group 4: Investment Outlook - The company is projected to generate revenues of 4.01 billion, 5.48 billion, and 7.49 billion yuan from 2025 to 2027, with net profits of -1.11 billion, 0.06 billion, and 0.59 billion yuan respectively [3]. - Given the potential for existing and upcoming products, along with a robust clinical development pipeline, the company's future growth prospects are considered promising [3].

Investment Rating - The report assigns a "Buy-A" investment rating to the company, with a 6-month target price of HKD 33.87 [6]. Core Insights - The company maintains its full-year revenue guidance for 2025, projecting revenue between USD 560 million and USD 590 million, reflecting confidence in the accelerated sales of its already launched products in the second half of the year [2][3]. - Several key milestones are anticipated in the second half of 2025, including submissions for new drug applications and expected approvals for existing products, which could significantly impact revenue growth [3][4]. Financial Projections - Revenue projections for 2025, 2026, and 2027 are estimated at CNY 4.01 billion, CNY 5.48 billion, and CNY 7.49 billion, respectively, with net profits expected to improve from a loss of CNY 1.11 billion in 2025 to a profit of CNY 590 million by 2027 [4][9]. - The company is expected to achieve a gross margin of 65% in 2025, increasing to 70% by 2027, indicating improving profitability [11][15]. Market Performance - The company's stock price as of August 22, 2025, was HKD 26.80, with a 12-month price range of HKD 13.78 to HKD 34.55 [6]. - The report notes a relative return of -15.4% over the past month and an absolute return of 94.5% over the past year, indicating significant volatility but also potential for recovery [7]. Clinical Development Pipeline - The company has a robust clinical development pipeline, with several key products expected to enter clinical trials or receive regulatory approvals in the near future, which could enhance its market position [3][4].