Core Viewpoint - Zai Ding Pharma reported a 14% year-on-year increase in total revenue for Q3 2025, reaching $116.1 million, with a narrowed operating loss of $48.8 million, down 28% year-on-year, and an adjusted operating loss reduced by 42% to $28 million. The company has adjusted its full-year revenue guidance for 2025 to at least $460 million [1] Financial Performance - Total revenue for Q3 2025 was $116.1 million, a 14% increase compared to the previous year [1] - Product revenue net amounted to $115.4 million, up 13% from $101.8 million in the same period of 2024, with a 14% increase when adjusted for constant exchange rates [1] - The operating loss was $48.8 million, a reduction of 28% year-on-year, while the adjusted operating loss was $28 million, down 42% [1] Growth Drivers - The revenue growth was primarily driven by increased sales of Zocor and Dingyoule, partially offset by a slowdown in sales of Zele [1] - The company is entering a new growth phase, supported by its commercial capabilities in China and a robust pipeline of global projects [1] Future Outlook - The company is preparing for the upcoming launch of KarXT in the schizophrenia field, while continuing to strengthen the foundation for the launch of Aigamod in the myasthenia gravis area [1] - There is a steady increase in the number of new patients starting treatment and an extension in treatment duration for Aigamod, indicating growing confidence among doctors [1]

Core Insights - Zai Lab (09688) reported a 14% year-over-year increase in total revenue for Q3 2025, reaching $116.1 million, with operating losses narrowing by 28% to $48.8 million, and adjusted operating losses reduced by 42% to $28 million [1][1][1] - The company has adjusted its full-year revenue guidance for 2025 to at least $460 million [1] Revenue Breakdown - Product revenue netted $115.4 million, up 13% from $101.8 million in the same period of 2024, with a 14% increase when calculated at constant exchange rates (CER) [1][1] - Growth was primarily driven by increased sales of Zymeworks and Dingo, partially offset by a slowdown in sales of Zole [1] Management Commentary - The founder and CEO, Dr. Ying Du, stated that Zai Lab is entering a new growth phase, supported by a robust commercialization capability in China and a rapidly advancing global pipeline [1][1] - The company is advancing multiple differentiated global projects, showcasing the speed and scientific rigor of its R&D engine [1] - The President and COO, Josh Smiley, emphasized the strengthening foundation for the launch of Efgartigimod, with increasing new patient numbers and extended treatment durations in the myasthenia gravis field [1][1] - The company is preparing for the anticipated launch of KarXT in the schizophrenia space, while maintaining robust operations and positioning for significant future opportunities [1][1]

Financial Data and Key Metrics Changes - Total revenues for the third quarter were $116 million, representing a 14% year-over-year growth [14][19] - Adjusted loss from operations improved by 42% year-over-year to $28 million [20] - The company ended the quarter with $817 million in cash, providing flexibility for investments [21] Business Line Data and Key Metrics Changes - Vyvgart and Vyvgart Hytrulo contributed $27.7 million, with a $2.4 million reduction due to a voluntary price adjustment [14] - Demand for Nuzyra increased, supported by higher market coverage and penetration [19] - Zejula experienced a year-over-year decline amid competitive dynamics but grew sequentially [19] Market Data and Key Metrics Changes - Vyvgart remains the number one innovative drug by sales among all new launches in the past two years in China [15] - The average vials per patient for Vyvgart increased over 30% year-to-date versus last year [16] - The company expects continued growth in the China business, which is already commercially profitable [21] Company Strategy and Development Direction - The company aims to bring global innovations to patients in China and develop new innovations for global competition [4] - The focus is on advancing the global pipeline, particularly with ZL1310, which is expected to enter pivotal trials [4][12] - The company is strategically investing in R&D while maintaining financial discipline [21] Management's Comments on Operating Environment and Future Outlook - The management noted a complex and dynamic environment affecting growth pace but remains confident in long-term potential [5] - Regulatory reviews are becoming faster, and negotiations are more transparent, which is encouraging [5] - The company plans to provide updated financial guidance for 2026 in the next earnings report [21] Other Important Information - The company is expanding its global R&D organization to enhance speed and quality [5] - New Chief Business Officer, Dr. Shan He, is expected to play a central role in expanding the portfolio [14] - The company is on track for several important milestones across its global portfolio in the next 12 months [12] Q&A Session Summary Question: Revised revenue guidance and key growth drivers - Management highlighted that growth will be driven by Vyvgart, with expectations for continued patient additions and treatment duration [24][26] Question: Expectations for ZL1503 in atopic dermatitis - Initial data readout is expected in 2026, with a focus on efficacy endpoints and potential expansion into other TH2 diseases [28] Question: Shift in resource allocation towards internal pipeline - Management confirmed a strong focus on the internal pipeline while remaining open to external opportunities [30][32] Question: Opportunities in internal global pipeline - The most immediate opportunity is ZL1310, with strong activity and tolerability observed [35] Question: Strategy for KarXT launch in schizophrenia - The company plans a targeted sales force approach, anticipating significant market opportunity due to the lack of new mechanisms in over 70 years [40][41] Question: Challenges in achieving $2 billion revenue target by 2028 - Management acknowledged slower-than-expected growth in Vyvgart and Zejula but remains optimistic about the overall portfolio [43][45] Question: Pathway to approval for ZL1310 in neuroendocrine tumors - The company plans to conduct a single-arm trial with a focus on response rates, aiming for accelerated approval [47][48]

Third Quarter 2025 Financial Results and Recent Corporate Updates November 2025 Forward-Looking Statements This presentation contains forward-looking statements, including statements relating to our strategy and plans; potential of and expectations for our business, commercial products, and pipeline programs; our goals, objectives, and priorities and our expectations under our growth strategy (including our expectations regarding our commercial products and launches, clinical stage products, revenue growth ...

Core Insights - Zai Lab is a global biopharmaceutical company with a focus on oncology, immunology, neuroscience, and infectious diseases, currently having seven products approved in China [1][2] - The company expects significant revenue growth, projecting total revenue to reach US$2.0 billion by 2028, driven by the sales ramp-up of existing products and the approval of new products [1][2] Group 1: Product Portfolio and Revenue Growth - Zai Lab's first commercial product, ZEJULA, was approved in China in 2019, and the company currently has seven commercialized products [1] - In 2024, the company's total revenue is projected to be US$399 million, representing a 50% year-over-year increase, primarily due to the sales ramp-up of new products like VYVGART and NUZYRA [1] - Efgartigimod, an FcRn antagonist, is expected to become a blockbuster product, with domestic sales reaching US$94 million in 2024, an increase of 835% year-over-year [2] Group 2: Pipeline Development and Future Prospects - The company is actively expanding its product pipeline, focusing on areas such as antibody-drug conjugates (ADCs) and bispecific antibodies (biAbs), with several products granted Fast Track Designation by the FDA [2] - ZL-1310 has shown promising results in clinical trials, with plans to initiate a global pivotal trial in the second half of 2025 [2] - The company anticipates filing at least one new IND application annually, indicating a robust pipeline development strategy [2] Group 3: Financial Projections - The company is projected to achieve non-GAAP operating profit in the fourth quarter of 2025, with revenue estimates of US$553 million in 2025, US$802 million in 2026, and US$1.203 billion in 2027 [3] - A net loss of US$134 million is expected in 2025, transitioning to a net profit of US$15 million in 2026 and US$173 million in 2027 [3] - The target price derived from DCF valuation is HK$35.2, indicating a 39% upside potential [3]

Core Viewpoint - UBS has initiated coverage on Zai Lab (09688) with a target price of HKD 33.5, indicating a 1x and 1.6x multiple on peak sales, highlighting the market's oversight of the company's short-term growth potential, including VYVGART and new product launches [1] Group 1: Product Potential - UBS believes VYVGART, a first-in-class FcRn drug, has the potential to become a blockbuster in immunology, with peak sales in China projected to reach USD 1.8 billion [2] - Potential blockbuster candidates in the pipeline include Bemarituzumab for gastric cancer, Povetacicept for autoimmune diseases, VRDN-003 for thyroid eye disease, and KarXT for schizophrenia [2] Group 2: Financial Outlook - UBS anticipates that Zai Lab will achieve profitability through revenue growth and operational efficiency improvements, with guidance for non-GAAP operational breakeven by Q4 2025 and for the full year of 2026 [2] - The company expects improved gross margins due to local manufacturing, reduced selling costs from VYVGART's capacity expansion, and potential global product launches [2] - Zai Lab plans to limit R&D spending growth by prioritizing high-value projects, while maintaining moderate growth in sales, general, and administrative expenses [2]

Group 1 - UBS sets a target price of HKD 33.5 for Zai Lab (09688) based on discounted cash flow (DCF) analysis, indicating 1x and 1.6x unadjusted/adjusted peak sales multiples [1] - UBS believes the market is overlooking Zai Lab's short-term growth potential, including the launch of VYVGART and new products, as well as the business development potential of DLL3ADC and ZL-1503 [1] - UBS expects VYVGART to continue expanding its indications and increasing sales, with several key candidate drugs anticipated to receive approval [1] Group 2 - UBS identifies VYVGART as a first-in-class FcRn drug with the potential to become a blockbuster in immunology, predicting peak sales in China to reach USD 1.8 billion [2] - Potential blockbuster candidates include Bemarituzumab for gastric cancer, Povetacicept for autoimmune diseases, VRDN-003 for thyroid eye disease, and KarXT for schizophrenia [2] - Zai Lab is expected to achieve profitability through revenue growth and operational efficiency improvements, with guidance for non-GAAP operational breakeven by Q4 2025 and for the full year 2026 [2] Group 3 - UBS believes that local manufacturing and reduced selling costs due to VYVGART's capacity expansion will improve overall gross margins [2] - The company plans to limit R&D spending growth by prioritizing high-value projects, while sales, general, and administrative expenses are expected to grow moderately [2]

Investment Rating - The investment rating for the pharmaceutical and biotechnology industry is "Positive" (maintained) [2] Core Insights - The MFN pricing progress has exceeded expectations, particularly regarding global pricing dynamics for innovative drugs. Pfizer and AstraZeneca have reached agreements with the Trump administration on various pricing aspects, which are expected to significantly impact the market [6][15] - In the third week of October 2025, the pharmaceutical and biotechnology sector experienced a decline of 2.48%, underperforming the CSI 300 index by 0.26 percentage points, ranking 16th among 31 sub-industries [8][17] Summary by Sections MFN Pricing Developments - Pfizer's agreement includes pricing for both existing and new drugs, direct sales, and tariffs, with notable points such as only applying MFN pricing to the Medicaid channel, which accounts for a low revenue share of 4.5% [6][15] - The potential for raising prices in other developed countries to maintain U.S. pricing levels is supported by recent announcements from BMS and AbbVie, indicating a trend that could enhance global sales forecasts for innovative drugs [7][16] Market Performance - The overall market trend from early 2025 has been upward, but the pharmaceutical and biotechnology sector has faced a downturn recently, with specific sub-sectors like offline pharmacies showing the highest gains at 0.59% [8][17] - The medical research outsourcing sector saw the largest decline at 6.46%, while other sectors like medical devices and vaccines also reported significant drops [21][22] Stock Recommendations - Monthly stock recommendations include companies such as Sanofi, Innovent Biologics, and Stone Pharmaceutical, while weekly recommendations feature companies like Kelun-Biotech and Shanghai Yizhong [9]

Core Viewpoint - The report from Shenwan Hongyuan indicates that Zai Lab (09688) is expected to achieve non-GAAP operating profit by Q4 2025, driven by the commercialization of products and localized production [1] Financial Projections - Revenue projections for Zai Lab from 2025 to 2027 are estimated at $553 million, $802 million, and $1.203 billion respectively, with net profit attributable to the parent company expected to be -$134 million, $15 million, and $173 million for the same years [1] - The target price set at HKD 35.2 implies a 39% upside potential, reflecting confidence in the company's innovative pipeline [1] Product Portfolio and Commercialization - Zai Lab is a global biopharmaceutical company in the commercialization stage, with seven products approved in China, including four oncology products and one immunology product [2] - Since the approval of its first commercial product, Niraparib, in 2019, Zai Lab has seen significant sales growth, with total revenue projected to reach $399 million in 2024, a 50% increase year-on-year [3] New Product Development - The company has submitted applications for new products, including KarXT and TF ADC, to the NMPA, with plans to submit for Bemarituzumab for 1L gastric cancer in the second half of the year [3] - Zai Lab anticipates revenue could reach $2 billion by 2028, supported by the sales of existing products and the approval of new products [3] Expansion of Indications - Efgartigimod, the first FcRn antagonist globally, has received approvals for multiple indications, with sales expected to reach $94 million in 2024, reflecting an 835% year-on-year growth [4] - The company is exploring additional indications for Efgartigimod, which could broaden its market reach across various medical fields [4] Global Pipeline Development - Zai Lab is actively expanding its global pipeline, focusing on ADCs and bispecific antibodies, with several products showing potential for first-in-class (FIC) or best-in-class (BIC) status [5] - The company plans to initiate global pivotal studies for ZL-1310, which has shown promising clinical activity and safety [5]

Core Viewpoint - Zai Ding Pharma is expected to achieve non-GAAP operating profit by Q4 2025, driven by the commercialization of products and localized production [1] Financial Projections - Revenue projections for Zai Ding Pharma are $553 million, $802 million, and $1.203 billion for 2025, 2026, and 2027 respectively [1] - Net profit projections for the company are -$134 million, $15 million, and $173 million for 2025, 2026, and 2027 respectively [1] - The target price is set at HKD 35.2, indicating a potential upside of 39% [1] Product Portfolio and Pipeline - Zai Ding Pharma has seven products approved for sale in China, including four oncology products, one immunology product, and two infectious disease products [2] - The company has seen a 50% year-on-year revenue growth in 2024, reaching $399 million, primarily due to the sales increase of existing products [3] - New product applications have been submitted to NMPA, with expectations for further approvals in the near future [3] Key Product Developments - Efgartigimod (艾加莫德) is being explored for additional indications beyond its current approvals, with significant sales growth anticipated [4] - The product is expected to generate $94 million in domestic sales in 2024, reflecting an 835% increase [4] Global Pipeline Expansion - The company is actively expanding its global pipeline, focusing on ADCs and bispecific antibodies [5] - ZL-1310 has received Fast Track designation from the FDA, with positive clinical data expected to be presented at the 2025 ASCO annual meeting [5] - The company plans to initiate global pivotal studies for ZL-1310 in the near future [5]