ZAI LAB(ZLAB) - 2024 Q1 - Quarterly Report

Revenue and Sales Performance - Net product revenue for Q1 2024 was $87.1 million, a 39$62.8 million in Q1 2023, primarily driven by increased sales volume and the launch of VYVGART[89]. - Total product revenue for the first quarter of 2024 was $87.1 million, representing a 39$62.8 million in the same period of 2023[109]. - ZEJULA sales increased by 7% to $45.5 million, while QINLOCK saw a significant increase of 367$6.1 million[109]. - VYVGART was commercially launched in September 2023 and included in the NRDL in Q1 2024, contributing to revenue growth[106]. - QINLOCK and NUZYRA saw increased sales due to their inclusion in the NRDL, with QINLOCK added in Q1 2023 and NUZYRA's oral formulation added in Q1 2024[106]. - ZEJULA remained the leading PARP inhibitor in hospital sales for ovarian cancer in mainland China, with continued support from NRDL listings[106]. Expenses and Losses - The cost of sales increased by 58% to $33.6 million in Q1 2024 from$21.3 million in Q1 2023, reflecting higher product sales volume[103]. - Research and development expenses rose by 13% to $54.6 million in Q1 2024 compared to$48.5 million in Q1 2023, indicating continued investment in product development[103]. - Selling, general, and administrative expenses increased by 11% to $69.2 million in Q1 2024 from$62.5 million in Q1 2023, supporting commercial operations[103]. - The net loss for Q1 2024 was $53.5 million, a 9$49.1 million in Q1 2023[103]. - The company’s net loss increased by $4.3 million in Q1 2024, contributing to the rise in cash used in operating activities[140]. Cash Flow and Financial Position - As of March 31, 2024, the company had cash and cash equivalents of$750.8 million, expected to meet cash requirements for at least the next 12 months[136]. - The company reported a net decrease in cash, cash equivalents, and restricted cash of $39.4 million in Q1 2024, an improvement from a decrease of$128.4 million in Q1 2023[139]. - Net cash used in operating activities increased by $20.8 million to$90.1 million in Q1 2024, primarily due to a $24.7 million increase in net changes in operating assets and liabilities[140]. - Net cash provided by investing activities was$3.3 million in Q1 2024, a significant shift from net cash used of $54.0 million in Q1 2023, mainly due to a$100.0 million decrease in purchases of short-term investments[141]. - Net cash provided by financing activities was $47.5 million in Q1 2024, compared to net cash used of$3.9 million in Q1 2023, driven by $48.2 million in proceeds from short-term debts[142]. - The company had cash and cash equivalents of$650.8 million as of March 31, 2024, down from 790.2 million as of December 31, 2023[153]. Research and Development - Clinical program expenses within R&D increased by 50% to 18.8 million, driven by newly initiated studies[114]. - Research and development expenses rose by 13% to $54.6 million, primarily due to a$7.5 million increase in CROs/CMOs/Investigators expenses[112]. Debt and Obligations - As of March 31, 2024, the company may be required to pay up to $303.5 million in development and regulatory milestone payments for current clinical programs[101]. - The company entered into debt arrangements allowing subsidiaries to borrow up to approximately$164.5 million to support working capital needs[137]. Foreign Currency and Interest - Foreign currency losses amounted to $2.1 million in the first quarter of 2024, contrasting with a gain of$8.9 million in the same period of 2023[119]. - Interest income decreased by $0.6 million to$9.7 million due to reduced cash and cash equivalents[117]. Customer Concentration - As of March 31, 2024, accounts receivable from the two largest customers accounted for approximately 21% of total accounts receivable[154]. Accounting Standards - The company has not adopted any new accounting standards since December 31, 2023[144]. Foreign Exchange Risk - The company has not used derivative financial instruments to hedge foreign exchange risk, as it does not currently have significant direct exposure[147].