Zai Lab Third Quarter 2026 Financial Results - ZAI LAB LTD

Explicit Guidance:

• Revenue: Expect return to year-over-year product revenue growth in China in 2027, driven by demand across priority brands, new National Reimbursement Drug List (NRDL) listing, and relief of supply constraints on mature brands (e.g., Zegduro, VipGuard, SubQ, CarXT).
• Cash Position: Ended Q3 2026 with $659.7 million in cash; raised $250 million in October 2026 equity at no discount to market to fund global programs.
• Operating Expenses: R&D and SG&A expenses maintained at relatively stable levels compared to the prior year period through operational efficiencies.

Business-Segment Outlook:

• Oncology (JOSI/ZOSI):
  • Small Cell Lung Cancer (SCLC): Advancing ZOSI + immunotherapy doublet into a global Phase 3 study (expected enrollment completion with 200 patients for interim analysis).
  • Neuroendocrine Carcinomas (EPNEC): Completing Phase 1b-2 second-line enrollment; plan to pursue accelerated approval based on single-arm data with final results and potential submission expected in 2027.
  • Combination Strategies: Developing T-cell engager collaborations (with Amgen on Indeltra and with BI on BIA) to combine with ZOSI backbone; aiming to select a go-forward regimen based on early 2027 data.
• Immunology (ZL1503/DL1503):
  • Atopic Dermatitis: Presenting first-in-human Phase 1 data next week (in Phoenix); following with clinical efficacy and IV-to-SC bridging data next year (2027).
  • Development Path: Planning Phase IIb development in atopic dermatitis; evaluating potential in other IL-13/IL-31 mediated diseases.
• China Commercial:
  • Growth Drivers: Anticipate volume expansion from key brands (VipGuard, SubQ, CarXT) and patient share regain from Zedula prior to 2027 NRDL inclusion.
  • Regulatory: Progressing regulatory filings for efatizumab and thyroid eye disease (AllerGA BARC) registration.
• Pipeline Expansion: Expect three additional oncology and immunology assets entering clinical development next year (2027), including ZL6201 (ADC), CL1311 (T-cell engager), and CL1222 (immunocytokine).

Market and Competitive Outlook:

• SCLC Landscape: Anticipate a market shift away from traditional chemotherapy (Carboetoposide/Etoposide) toward ADC-based regimens (ZOSI) if data demonstrates superior safety and efficacy.
• Standard of Care: Positioning ZOSI to potentially replace or supplement Tarlatamab (Amgen) in first-line and maintenance settings; noting that ZOSI's tolerability profile is superior to chemo-IO combinations.
• Pricing Environment: Acknowledge ongoing volume-based pricing dynamics in China but remain confident in volume growth despite competitive pressure from PARP inhibitors.

Macro / Industry Outlook:

• China Market: View the current environment in China as favorable for an innovative portfolio, expecting a predictable and consistent growth trajectory in 2027.
• Regulatory Strategy: Engaged with FDA on accelerated approval pathways for EPNEC (based on single-arm data) and SCLC (interim analysis for ORR threshold); expect confirmatory studies to start early 2027 to support potential 2027 submissions.

Strategic Initiatives:

• Launch Plan: Targeting a US launch for ZOSI as early as 2028, following potential US BLA submission in 2027.
• Development Milestones: By end of 2026, expect three registrational studies underway across SCLC and EPNEC.
• Collaborations: Advancing Phase 1b studies with Amgen (Indeltra) and BI (BIA) for T-cell engager combinations; evaluating partnership options for ZOSI (currently planning to launch independently).
• Clinical Trials: Launching a frontline ZOSI doublet study against standard of care this year (2026).

Risks and Headwinds to Outlook:

• Regulatory Uncertainty: Accelerated approval is contingent on meeting specific interim analysis criteria (200 patients, 6-month follow-up) and FDA acceptance of single-arm data for EPNEC.
• Clinical Competition: Outcomes depend on the efficacy and tolerability of Amgen's Tarlatamab studies (Delphi-305/312); the market choice may be dictated by these external data points.
• Safety Profiles: While ZOSI shows improved tolerability vs. chemo-IO, combinations with T-cell engagers carry their own toxicity risks requiring careful management.
• Commercial Execution: Growth in 2027 relies on successful NRDL inclusion and the resolution of supply constraints for key brands.

Management Tone on the Future:

• Confidence: High confidence in the "defining achievement" of a US launch by 2028 and the pivotal nature of the next two years.
• Execution Focus: Management emphasizes that while global partners are interested in ZOSI, the current priority is aggressive execution of the internal development plan without changing the pace.
• Stabilization: Confident that the China commercial business has stabilized and is on track for growth, supported by a disciplined cost structure.

Miscellaneous:

• Disclaimer: Forward-looking statements are subject to risks and uncertainties discussed in SEC filings.
• Non-GAAP: References to "adjusted loss from operations" are based on non-GAAP measures detailed in the November 5, 2026, earnings release.