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]