ZAI LAB(ZLAB) - 2025 Q2 - Quarterly Results

Executive Summary & Business Highlights Zai Lab's leadership emphasized innovation, strong execution, and financial discipline, marked by Q2 2025 revenue growth and pipeline progress CEO & COO Commentary Dr. Samantha Du and Josh Smiley highlighted Zai Lab's pivotal period of innovation, scale, and strong execution, emphasizing patient impact, global innovation, and financial discipline - CEO emphasizes Zai Lab's pivotal period, marked by innovation, scale, and strong execution, with progress in patient impact, global innovation, and financial discipline[3] - COO highlights VYVGART's record patient utilization and strengthened role in MG treatment due to updated national guidelines, expecting momentum to accelerate in H2 2025[3] - COO projects profitability by Q4 2025, supported by a 28% YoY reduction in operating loss (37% adjusted)[3] Second Quarter 2025 Key Highlights Zai Lab reported a 9% YoY total revenue growth to $110.0 million for Q2 2025, reaffirming full-year guidance, with VYVGART achieving record patient utilization and operating loss improving by 28% YoY Key Financial Highlights | Metric | Q2 2025 | YoY Growth | Full-Year 2025 Guidance | | :----- | :------ | :--------- | :---------------------- | | Total Revenues | $110.0 million | 9% | $560M - $590M | | Operating Loss | $54.9 million | (28)% | On track for profitability in Q4 2025 | | Adjusted Operating Loss | $34.2 million | (37)% | | - VYVGART reached record patient utilization in Q2 2025; updated national guidelines elevate its role as a treatment for both acute and maintenance gMG[4] - ZL-1310 (DLL3 ADC) data presented at ASCO 2025 showed a 67% ORR across all doses (n=33) and 79% at 1.6mg/kg (n=14) in 2L ES-SCLC, with a differentiated safety profile; registrational study to be initiated in H2 2025[4] - The global Phase 3 FORTITUDE-101 study of bemarituzumab met its primary endpoint of overall survival in first-line gastric cancer, with China regulatory submission expected in H2 2025[4] Second Quarter 2025 Financial Performance Zai Lab's Q2 2025 revenues grew 9% to $110.0 million, significantly reducing operating and net losses, supported by product sales and expense efficiencies Financial Results Overview Zai Lab's total revenues for Q2 2025 reached $109.977 million, a 9% increase from Q2 2024, primarily driven by product revenue, significantly reducing its loss from operations and net loss Consolidated Financial Summary | Metric | Q2 2025 (USD thousands) | Q2 2024 (USD thousands) | YoY Change (%) | | :---------------------- | :---------------------- | :---------------------- | :------------- | | Total Revenues | 109,977 | 100,504 | 9% | | Product Revenue, net | 109,085 | 100,106 | 9% (10% at CER) | | Collaboration Revenue | 892 | 398 | 124% | | Loss from Operations | (54,895) | (76,064) | (28)% | | Net Loss | (40,727) | (80,277) | (49.3%) | | Loss per share (basic & diluted) | (0.04) | (0.08) | (50%) | Product Revenue Analysis Product revenue, net, grew 9% YoY to $109.1 million in Q2 2025, primarily driven by strong sales of VYVGART, XACDURO, and NUZYRA, while ZEJULA sales softened due to competitive dynamics Product Sales Performance | Product | Q2 2025 Sales (USD millions) | Q1 2025 Sales (USD millions) | Q2 2024 Sales (USD millions) | QoQ Growth (%) | YoY Growth (%) | | :------ | :--------------------------- | :--------------------------- | :--------------------------- | :------------- | :------------- | | VYVGART & Hytrulo | $26.5 | $18.1 | N/A | 46% | N/A | | ZEJULA | $41.0 | N/A | $45.0 | N/A | (8.9)% | | XACDURO | $4.6 | N/A | N/A | N/A | N/A | | NUZYRA | $14.3 | N/A | $12.3 | N/A | 16.3% | - VYVGART sales growth was driven by extension of duration of therapy and increasing market penetration[7] - ZEJULA sales were softer due to evolving competitive dynamics within the PARPi class[7] Operating Expenses and Profitability Operating expenses saw significant reductions in Q2 2025, with R&D decreasing by 17.9% YoY to $50.6 million and SG&A falling by 10.9% YoY to $71.0 million, leading to a 28% YoY improvement in GAAP loss from operations Operating Expenses Summary | Expense Category | Q2 2025 (USD thousands) | Q2 2024 (USD thousands) | YoY Change (%) | | :--------------- | :---------------------- | :---------------------- | :------------- | | R&D Expenses | (50,614) | (61,625) | (17.9)% | | SG&A Expenses | (71,038) | (79,710) | (10.9)% | | Loss from Operations (GAAP) | (54,895) | (76,064) | (28)% | | Adjusted Loss from Operations (Non-GAAP) | (34,187) | (54,485) | (37.2)% | - Decreases in R&D and SG&A expenses reflect reduced personnel and clinical trial costs, driven by ongoing resource prioritization and efficiency efforts[7] Net Loss and Cash Position Zai Lab's net loss for Q2 2025 significantly narrowed to $40.7 million, down from $80.3 million in Q2 2024, primarily due to product revenue growth outpacing net operating expenses, while maintaining a strong cash position Net Loss Performance | Metric | Q2 2025 (USD) | Q2 2024 (USD) | YoY Change | | :----- | :------ | :------ | :--------- | | Net Loss | $(40.7) million | $(80.3) million | (49.3)% | | Loss per Ordinary Share | $(0.04) | $(0.08) | (50)% | | Loss per ADS | $(0.37) | $(0.82) | (54.9)% | Cash Position | Cash Position (USD millions) | June 30, 2025 | March 31, 2025 | | :--------------------------- | :------------ | :------------- | | Cash & Cash Equivalents, Short-term Investments, Current Restricted Cash | $832.3 | $857.3 | Non-GAAP Financial Measures Zai Lab provides non-GAAP financial measures, including growth rates adjusted for constant exchange rates (CER) and adjusted loss from operations, to offer additional perspective on operational trends and greater transparency - Non-GAAP financial measures are used to provide an additional perspective on operational trends and greater transparency into historical and projected operating performance[26] Product Revenue and Loss from Operations (Non-GAAP) | Metric | Q2 2025 (USD thousands) | Q2 2024 (USD thousands) | As reported YoY Growth | At CER YoY Growth | | :---------------------- | :------ | :------ | :--------------------- | :---------------- | | Product revenue, net | $109,085 | $100,106 | 9% | 10% | | Loss from operations | $(54,895) | $(76,064) | (28)% | (28)% | Reconciliation of GAAP to Non-GAAP Loss from Operations | Metric | Q2 2025 (USD thousands) | Q2 2024 (USD thousands) | | :---------------------------------- | :---------------------- | :---------------------- | | GAAP loss from operations | (54,895) | (76,064) | | Plus: Depreciation and amortization expenses | 3,735 | 2,941 | | Plus: Share-based compensation | 16,973 | 18,638 | | Adjusted loss from operations (Non-GAAP) | (34,187) | (54,485) | Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements for Zai Lab Limited, including the Balance Sheets, Statements of Operations, and Statements of Comprehensive Loss for the specified periods - The unaudited condensed consolidated balance sheets provide a snapshot of assets, liabilities, and shareholders' equity as of June 30, 2025, and December 31, 2024[32] - The unaudited condensed consolidated statements of operations detail revenues, expenses, and net loss for the three and six months ended June 30, 2025, and 2024[33] - The unaudited condensed consolidated statements of comprehensive loss present the net loss and other comprehensive income/loss, primarily foreign currency translation adjustments, for the three and six months ended June 30, 2025, and 2024[34] Unaudited Condensed Consolidated Balance Sheets This section presents Zai Lab's unaudited balance sheets, detailing assets, liabilities, and equity for June 30, 2025, and December 31, 2024 Balance Sheet Highlights | Metric (USD thousands) | June 30, 2025 | December 31, 2024 | Change | | :--------------------- | :------------ | :---------------- | :----- | | Total Assets | 1,164,101 | 1,185,753 | (21,652) | | Total Liabilities | 372,366 | 344,855 | 27,511 | | Total Shareholders' Equity | 791,735 | 840,898 | (49,163) | | Cash and cash equivalents | 732,159 | 449,667 | 282,492 | | Short-term investments | — | 330,000 | (330,000) | | Short-term debt | 174,509 | 131,711 | 42,798 | Unaudited Condensed Consolidated Statements of Operations This section outlines Zai Lab's unaudited statements of operations, detailing revenues, expenses, and net loss for the three and six months ended June 30, 2025 and 2024 Statements of Operations Summary | Metric (USD thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--------------------- | :------ | :------ | :------ | :------ | | Total Revenues | 109,977 | 100,504 | 216,464 | 187,653 | | Loss from operations | (54,895) | (76,064) | (111,206) | (146,373) | | Net loss | (40,727) | (80,277) | (89,165) | (133,748) | | Loss per share - basic and diluted | (0.04) | (0.08) | (0.08) | (0.14) | Unaudited Condensed Consolidated Statements of Comprehensive Loss This section details Zai Lab's unaudited statements of comprehensive loss, presenting net loss and other comprehensive income/loss, including foreign currency adjustments, for the specified periods Statements of Comprehensive Loss Summary | Metric (USD thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--------------------- | :------ | :------ | :------ | :------ | | Net loss | (40,727) | (80,277) | (89,165) | (133,748) | | Foreign currency translation adjustments | (2,955) | 3,605 | (4,167) | 5,147 | | Comprehensive loss | (43,682) | (76,672) | (93,332) | (128,601) | Recent Pipeline Updates Zai Lab reported significant advancements across its oncology, immunology, and neuroscience pipelines, with positive clinical data and new registrational study plans Oncology Pipeline Zai Lab reported significant advancements in its oncology pipeline, with ZL-1310 showing strong efficacy in SCLC, bemarituzumab meeting its primary OS endpoint in gastric cancer, and TTFields demonstrating OS benefit in pancreatic cancer ZL-1310 (DLL3 ADC) ZL-1310 (DLL3 ADC) showed strong efficacy (67% ORR) and a well-tolerated safety profile in 2L ES-SCLC, receiving U.S. FDA Fast Track designation - ZL-1310 demonstrated an objective response rate (ORR) of 67% across all dose levels (n=33) and 79% at 1.6 mg/kg (n=14) in second-line extensive-stage small cell lung cancer (ES-SCLC)[8] - ZL-1310 exhibited a well-tolerated safety profile with 6% Grade ≥3 treatment-related adverse events (TRAEs) and no drug discontinuations[8] - The U.S. FDA granted Fast Track designation to ZL-1310 for treatment of ES-SCLC in May 2025[8] Bemarituzumab (FGFR2b) Bemarituzumab (FGFR2b) plus chemotherapy met its primary OS endpoint in Phase 3 FORTITUDE-101 for first-line gastric cancer, with China submission planned for H2 2025 - The Phase 3 FORTITUDE-101 clinical trial evaluating first-line bemarituzumab plus chemotherapy met its primary endpoint of overall survival (OS) at a pre-specified interim analysis[11] - Bemarituzumab plus chemotherapy significantly improved OS in patients with FGFR2b overexpression compared to chemotherapy alone[11] - Zai Lab plans to move rapidly toward regulatory submission in China in the second half of 2025 for bemarituzumab[11] Tumor Treating Fields (TTFields) Tumor Treating Fields (TTFields) therapy showed OS benefit and improved quality of life in pancreatic cancer, with China regulatory filing planned for H2 2025 - Phase 3 PANOVA-3 trial data demonstrated that TTFields therapy, when added to standard of care, achieved an OS benefit supported by significantly improved quality of life and extended pain-free survival in pancreatic cancer[11] - Zai Lab plans to file for regulatory approval in China in the second half of 2025 for TTFields in first-line pancreatic cancer[11] ZL-6201 (LRRC15 ADC) ZL-6201 (LRRC15 ADC) is advancing into global Phase 1 development, targeting sarcoma and other LRRC15-positive solid tumors - Zai Lab is advancing ZL-6201 (LRRC15 ADC) into global Phase 1 development[13] - ZL-6201 targets patients with sarcoma and potentially other LRRC15-positive solid tumors, such as breast cancer and other malignancies[13] Immunology Pipeline The immunology pipeline saw updates for Efgartigimod, with new China MG guidelines emphasizing its role, ZL-1503 showing promising preclinical data, and Povetacicept and VRDN-003 advancing to pivotal/registrational studies Efgartigimod (FcRn) China MG guidelines (2025) recommend VYVGART (efgartigimod) for early and sustained long-term treatment in myasthenia gravis, targeting Minimal Symptom Expression - The China Guidelines for the Diagnosis and Treatment of Myasthenia Gravis (MG) (2025) were published in July 2025, emphasizing Minimal Symptom Expression (MSE) as the primary treatment goal[11] - VYVGART (efgartigimod) is now recommended for early use in mild-to-moderate and highly active MG patients and for sustained long-term treatment[11] ZL-1503 (IL-13/IL-31R) ZL-1503 showed promising preclinical data for moderate-to-severe atopic dermatitis, supporting global Phase 1 advancement in H2 2025 with favorable safety - New preclinical data for ZL-1503 highlights its potential as a promising treatment for moderate-to-severe atopic dermatitis and other IL-13 and IL-31-driven diseases[11] - ZL-1503's favorable preclinical safety profile, prolonged half-life, and durable suppression of inflammatory and pruritogenic pathways support its continued advancement[11] - Zai Lab plans to advance ZL-1503 into a global Phase 1 study in moderate-to-severe atopic dermatitis in the second half of 2025[12] Povetacicept (APRIL/BAFF) Zai Lab will partner with Vertex to initiate a global pivotal Phase 2/3 study of povetacicept in pMN in Greater China in H2 2025 - Zai Lab plans to partner with Vertex to execute the global pivotal Phase 2/3 study of povetacicept in Primary Membranous Nephropathy (pMN) in Greater China[17] - The povetacicept study in pMN is expected to start in the second half of 2025[17] VRDN-003 (IGF-1R, subcutaneous) Zai Lab will initiate a registrational study for VRDN-003 in thyroid eye disease in Greater China in H2 2025, with global results expected in H1 2026 - Zai Lab will initiate a registrational study for VRDN-003 in thyroid eye disease in Greater China in the second half of 2025[21] - Partner Viridian is expected to provide topline results from the global registrational REVEAL-1 and REVEAL-2 studies in the first half of 2026[21] Neuroscience Pipeline In the neuroscience pipeline, Zai Lab's partner Bristol Myers Squibb is expected to provide data readout from the Phase 3 ADEPT-2 study of Xanomeline-Trospium (KarXT) in Alzheimer's Disease Psychosis in H2 2025 Xanomeline-Trospium (KarXT) Zai Lab's partner Bristol Myers Squibb expects data readout from the Phase 3 ADEPT-2 study of KarXT in Alzheimer's Disease Psychosis in H2 2025 - Zai Lab partner Bristol Myers Squibb to provide data readout from the Phase 3 ADEPT-2 study of KarXT in Alzheimer's Disease Psychosis in the second half of 2025[15] Anticipated Major Milestones (2025 & H1 2026) Zai Lab anticipates multiple NMPA submissions and approvals, alongside key clinical developments and data readouts across its pipelines through H1 2026 Upcoming Potential NMPA Submissions Zai Lab plans to submit for NMPA approval in H2 2025 for bemarituzumab in first-line gastric cancer, Tumor Treating Fields in first-line pancreatic cancer, and efgartigimod (prefilled syringe) for gMG and CIDP - NMPA submission for Bemarituzumab (FGFR2b) in first-line gastric cancer in H2 2025[11] - NMPA submission for Tumor Treating Fields (TTFields) in first-line pancreatic cancer in H2 2025[11] - NMPA submission for Efgartigimod (FcRn) for prefilled syringe in gMG and CIDP in H2 2025[11] Upcoming Potential NMPA Approvals Zai Lab expects potential NMPA approvals for Xanomeline-Trospium (KarXT) in schizophrenia, Tisotumab Vedotin (Tissue Factor ADC) in recurrent or metastatic cervical cancer, and Repotrectinib (ROS1/TRK) in NTRK+ solid tumors - Potential NMPA approval for Xanomeline-Trospium (KarXT) in schizophrenia[11] - Potential NMPA approval for Tisotumab Vedotin (Tissue Factor ADC) in recurrent or metastatic cervical cancer following progression on or after chemotherapy[11] - Potential NMPA approval for Repotrectinib (ROS1/TRK) in NTRK+ solid tumors[11] Expected Clinical Developments and Data Readouts Key clinical developments include initiating a global registrational study for ZL-1310 in 2L ES-SCLC and a global Phase 1 study for ZL-1503 in atopic dermatitis in H2 2025, with various data readouts expected across the pipeline - ZL-1310: Global registrational study of monotherapy in 2L ES-SCLC to be initiated in H2 2025; data readout for dose escalation of doublet in combination with atezolizumab in 1L ES-SCLC[18] - ZL-1503: Global Phase 1 study in moderate-to-severe atopic dermatitis to advance in H2 2025[12] - Bemarituzumab: Detailed results from Phase 3 FORTITUDE-101 study and potential data readout from Phase 1b/3 FORTITUDE-102 study in first-line gastric cancer[19] - Efgartigimod: Topline results from Phase 2 study in Lupus Nephritis (Q4 2025), Phase 3 ADAPT-SERON study in seronegative gMG (H2 2025), and Phase 3 ADAPT-OCULUS study in ocular myasthenia gravis (H1 2026)[19] - Povetacicept: Global pivotal Phase 2/3 study in Primary Membranous Nephropathy (pMN) in Greater China expected to start in H2 2025[17] - VRDN-003: Registrational study in thyroid eye disease in Greater China to be initiated in H2 2025; topline results from global registrational REVEAL-1 and REVEAL-2 studies in H1 2026[21] - KarXT: Data readout from Phase 3 ADEPT-2 study in Alzheimer's Disease Psychosis in H2 2025[15] - IgA Nephropathy (IgAN): Interim analysis of global Phase 3 RAINIER study following 36 weeks of treatment with potential for U.S. accelerated approval filing in H1 2026[20] Additional Company Information This section provides details on Zai Lab's conference call, company overview, non-GAAP measures, forward-looking statements, and investor/media contacts Conference Call and Webcast Zai Lab hosted a live conference call and webcast on August 7, 2025, to discuss financial results and corporate updates, with a replay available on the company's website - Conference call and webcast held on August 7, 2025, at 8:00 a.m. ET (8:00 p.m. HKT)[2] - Access to live webcast via http://ir.zailaboratory.com; registration required for dial-in[22][28] About Zai Lab Zai Lab Limited is an innovative, research-based, commercial-stage biopharmaceutical company operating in China and the United States, focused on developing and commercializing innovative products for unmet medical needs - Zai Lab is an innovative, research-based, commercial-stage biopharmaceutical company based in China and the United States[24] - Focus areas include oncology, immunology, neuroscience, and infectious disease, addressing significant unmet medical needs[24] Non-GAAP Measures Definition Zai Lab uses non-GAAP financial measures, such as constant exchange rate (CER) adjusted growth rates and adjusted loss from operations, to provide a clearer understanding of business performance and operational trends - Non-GAAP measures include growth rates adjusted for constant exchange rates (CER) and adjusted loss from operations[26] - Adjusted loss from operations excludes depreciation, amortization, and share-based compensation[26] - These measures provide additional perspective on operational trends and greater transparency but should not be considered an exclusive alternative to GAAP[26] Forward-Looking Statements & Disclaimers The press release contains forward-looking statements regarding Zai Lab's strategy, pipeline potential, commercialization, financial guidance, and future results, which are subject to inherent uncertainties and risks - The press release contains forward-looking statements relating to Zai Lab's strategy, plans, potential of its business, commercial products, and pipeline programs, including revenue growth and profitability[27] - Forward-looking statements are subject to inherent uncertainties, risks, and changes in circumstances that may differ materially from those contemplated[27][29] - Investors should not place undue reliance on these statements, and the company undertakes no obligation to update or revise them, except as may be required by law[29] Investor & Media Contacts Contact information for Zai Lab's Investor Relations and Media teams is provided for further inquiries - Investor Relations contacts: Christine Chiou / Lina Zhang[31] - Media contacts: Shaun Maccoun / Xiaoyu Chen[31]