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Zai Lab Ltd (NASDAQ:ZLAB) reported its Q3 2025 earnings, revealing an adjusted loss per share of $0.33, missing the forecast of $0.25. Revenue reached $116.1 million, falling short of the anticipated $150.5 million. This resulted in a negative surprise of 22.86%. The company’s stock reacted negatively, dropping 4.21% in the last trading session and a further 5.24% in premarket trading.
Key Takeaways
- Zai Lab’s Q3 revenue grew 14% year-over-year, driven by key products such as Vyvgart.
- The company revised its full-year revenue guidance to at least $460 million.
- Stock price declined by over 9% following the earnings announcement.
- Strong cash position of $817 million supports ongoing R&D efforts.
Company Performance
Zai Lab’s performance in Q3 2025 showcased a 14% year-over-year growth in revenue, primarily supported by the contributions from Vyvgart and Vyvgart Hytrulo. Despite the revenue increase, the company faced challenges in meeting market expectations, which impacted its stock performance. The focus remains on expanding its pipeline and enhancing its R&D capabilities, particularly in oncology and immunology.
Financial Highlights
- Revenue: $116.1 million, up 14% year-over-year
- Earnings per share: -$0.33, missing the forecast by $0.08
- Cash position: $817 million, supporting strategic initiatives
Earnings vs. Forecast
Zai Lab’s Q3 earnings per share of -$0.33 fell short of the forecasted -$0.25, resulting in a 32% negative surprise. The revenue miss was significant, with actual revenue at $116.1 million compared to the forecast of $150.5 million, a shortfall of 22.86%. This marks a challenging quarter for the company, as it navigates competitive pressures and market dynamics.
Market Reaction
Following the earnings release, Zai Lab’s stock price decreased by 4.21% in the regular trading session and an additional 5.24% in premarket trading. The stock is currently trading near its 52-week low of $23.82, reflecting investor concerns over the earnings miss and revised guidance. The broader market trends and sector performance also influenced the stock’s movement.
Outlook & Guidance
Zai Lab has revised its full-year revenue guidance to at least $460 million. The company remains optimistic about its long-term growth prospects, aiming for $2 billion in revenue by 2028. Key product developments and regulatory reviews, such as KarXT for schizophrenia, are expected to drive future growth.
Executive Commentary
Dr. Samantha Du, a leading figure at Zai Lab, emphasized the company’s vision: "Zai Lab was built on a clear vision to bring the best global innovation to patients in China." Dr. Yajing Chen highlighted the path to profitability, stating, "We are on a path to profitability," underscoring the company’s strategic focus on financial discipline and efficiency.
Risks and Challenges
- Competitive pressures in the global pharmaceutical market may impact growth.
- Regulatory hurdles could delay product launches and approvals.
- Market penetration challenges for Vyvgart in the myasthenia gravis market.
- Macroeconomic factors, such as exchange rate fluctuations, may affect financial performance.
- Supply chain disruptions could impact product availability and distribution.
Q&A
During the earnings call, analysts raised concerns about the slower-than-expected market ramp for Vyvgart and sought clarity on the company’s strategy for its global pipeline development. Discussions also centered around potential approval pathways for neuroendocrine cancer treatments, highlighting the company’s focus on expanding its therapeutic offerings.
Full transcript - Zai Lab Ltd (ZLAB) Q3 2025:
Conference Operator: Hello, ladies and gentlemen. Thank you for standing by, and welcome to Zai Lab’s Third Quarter 2025 Financial Results Conference call. At this time, all participants are in the listen-only mode. Later, we will conduct a question-and-answer session. Instructions will follow at that time. As a reminder, today’s call is being recorded. It is now my pleasure to turn the floor over to Christine Cho, Senior Vice President of Investor Relations. Please go ahead.
Christine Cho, Senior Vice President of Investor Relations, Zai Lab: Thank you, Operator. Hello and welcome, everyone. Today’s earnings call will be led by Dr. Samantha Du, Zai Lab’s founder, CEO, and Chairperson. She’ll be joined by Josh Smiley, President and Chief Operating Officer; Dr. Rafael Amado, President and Head of Global Research and Development; and Dr. Yajing Chen, Chief Financial Officer. As a reminder, during today’s call, we’ll be making certain forward-looking statements based on our current expectations. These statements are subject to numerous risks and uncertainties that may cause actual results to differ materially from what we expect due to a variety of factors, including those discussed in our SEC filings. We also refer to adjusted loss from operations, which is a non-GAAP financial measure. Please refer to our earnings release furnished with the SEC on November 6, 2025, for additional information on this non-GAAP financial measure.
At this time, it is my pleasure to turn the call over to Dr. Samantha Du.
Dr. Samantha Du, Founder, CEO, and Chairperson, Zai Lab: Thank you, Christine. Good morning and good evening, everyone. Thank you for joining us today. Before we discuss the quarter, I want to take a moment to reflect on who we are, where we’re headed. Zai Lab was built on a clear vision to bring the best global innovation to patients in China and to discover and develop new innovations that can compete on the world stage. That vision remains unchanged. Today, our global pipeline is stepping to the forefront, becoming the next key chapter in Zai’s growth story. Josie, or ZL1310, has now entered the pivotal stage, less than two years from phase I IND. An extraordinary pace by any standard in our industry. We are on the path for our first global approval by 2027 or early 2028. Beyond Josie, we are expanding our global portfolio with other highly differentiated programs, including our L13, L31 bispecific, atopic dermatitis, L12.
PD-1 bispecific, and LRRC15 ADC for solid tumors. More importantly, we have built a global R&D organization that combines speed, scientific rigor, and quality expected of a global biopharma. On our commercial business in China, we are commercially profitable today and on a steady, profitable growth path. However, the pace has been slower than we expected. The environment is complex and dynamic. At the same time, there are encouraging signs of progress. Regulatory reviews are faster, and NRDL negotiations are more transparent. We have one of the strongest commercial teams in the industry, backed by a portfolio of differentiated high-potential assets. We remain confident in the long-term potential of this business. This next chapter will take focus and persistence. We have the right science, the right team, and the right vision.
Together, we’re building a company that will make a lasting difference for patients and create long-term value for our shareholders. With that, I’ll now hand the call over to Rafael, who will walk you through the progress of our R&D pipeline. Rafael?
Dr. Rafael Amado, President and Head of Global Research and Development, Zai Lab: Thank you, Samantha. I will begin with a few highlights from our global pipeline, starting with ZL1310, or Josie. Two weeks ago, at the TRIPLE meeting conference, we presented updated phase I data in previously treated extensive stage small cell lung cancer. This global study enrolled 115 patients across the U.S., Europe, and China. At baseline, 90% of patients had received a PD-1 or PD-L1 therapy, nearly one-third had brain metastases, and several had progressed on a prior DLL3 targeted therapy, including terlatamab, making this a very difficult-to-treat, heavily pretreated patient population. At the 1.6 milligrams per kilogram dose, we observed an overall response rate of 68% and a disease control rate of 94%, among the strongest efficacy signals reported in the second-line setting.
Importantly, we also saw robust activity in patients with brain metastases, including an 80% overall response rate in lesions which had received no prior treatment of any kind, suggesting that Josie may offer a new way to control both systemic as well as intracranial disease without interrupting therapy, a potential game changer in terms of speed to treatment for these patients whose tumors tend to be growing very fast. Across all doses and lines, the median duration of response was 6.1 months, and the median progression-free survival was 5.4 months, which is highly encouraging for a monotherapy in this refractory population across doses and lines of therapy. Data from the 1.2 and 1.6 milligrams per kilogram cohorts continue to mature as enrollment continues and patients remain on treatment. Josie also continues to demonstrate a best-in-class safety profile.
At the 1.6 milligrams per kilogram dose, grade 3 or higher treatment-related adverse events were observed in only 13% of patients, far below the 35%-50% rate seen with other ADCs in this setting. There were no drug-related discontinuations or deaths, and only two grade 1 interstitial lung disease cases across both expansion doses of 1.2 and 1.6 milligrams per kilogram. This combination of deep efficacy and favorable tolerability positions Josie as an ideal candidate for the first-line combinations, where safety is paramount. We’ve now begun enrollment in our registration of phase 3 trial in extensive stage small cell lung cancer, with the potential for an accelerated approval submission. We’re also advancing our first-line strategy with plans to initiate a phase 3 study next year following results of our ongoing combination study evaluating Josie plus PD-L1 with and without chemotherapy.
In addition, we see significant opportunity for Josie as a backbone therapy in novel mechanism combinations. We plan to initiate studies with agents with orthogonal and complementary mechanisms of action, and we will share details once the studies are posted on clinicaltrials.gov. Beyond small cell lung cancer, Josie is being evaluated in neuroendocrine carcinomas, or NECs, which have poor prognosis and no targeted therapies despite high DLL3 expression. Early data with ZL1310 are encouraging, and we plan to present results in the first half of next year and to move into a registration study thereafter. Beyond Josie, our next wave of innovative global assets continues to advance rapidly. ZL1503, our internally discovered IL-13, IL-31 bispecific antibody for atopic dermatitis, recently entered phase 1. Its dual mechanism targets both itch and inflammation, and its extended half-life offers potential for less frequent dosing. A subcutaneous formulation is being developed.
Preclinical results support its use in other inflammatory diseases. Nursing human data are expected in 2026. ZL-6201 is an internally discovered LRRC15 targeted antibody with a next-generation payload linker. It remains on track for a US IND submission by year-end and a global phase 1 study initiation early next year for patients with cancer that have tumor cell or tumor stroma expressed in this target. ZL-1222 is another internally discovered asset. It is a next-generation PD-1 IL-12 immunocytokine, designed to deliver cytokine signaling directly into the tumor microenvironment while preserving PD-1 checkpoint blockade. IND enabling work is underway, and we expect to move quickly towards an IND once data are available. Now turning to our key late-stage regional programs in immunology and neuroscience. The CAR-T pipeline continues to expand across multiple autoimmune indications.
The ADAPT SERUM study in seronegative GMG was positive, the first global phase 3 trial to show clinically meaningful improvements across all three GMG subtypes: MuSK plus, LRP4 plus, and triple seronegative. Three additional phase 3 readouts in ocular MG, myositis, and thyroid eye disease are expected next year, with China contributing to global enrollment. For inaxaplin, our partner Vertex recently received FDA breakthrough therapy designation for IgAN. Enrollment of the global RAINIER phase 3 is complete, with an interim analysis planned for the first half of 2026, where patients from China are included and potentially supporting an accelerated approval submission next year. The global pivotal phase 2/3 study in primary membranous nephropathy was initiated in October, and we’re on track to enroll patients in China this quarter.
Together, these achievements reflect the depth and quality of our pipeline, one that is advancing with speed and efficiency and with a clear focus on novel mechanisms and clinical differentiation. In summary, over the next 12 months, we expect to reach several important milestones across our global portfolio. For Josie, we expect a catalyst-rich year with updated intracranial data, first-line small cell lung cancer combination data, and results in neuroendocrine carcinoma in the first half. In parallel, we plan to initiate registration studies in first-line small cell lung cancer and other neuroendocrine carcinomas, as well as starting studies with novel combinations across line of therapy. Beyond Josie, we expect first-in-human data for ZL1503, or IL-13/IL-31, and to advance ZL6201, or LRRC15, into global phase 1 development. We’re also progressing ZL1222, or anti-PD-1 IL-12 agonist, and look forward to sharing additional data in the coming year.
With that, I’ll hand it over to Josh.
Josh Smiley, President and Chief Operating Officer, Zai Lab: Thank you, Rafael, and hello, everyone. Before we turn to our third-quarter results, I’d like to start by welcoming Dr. Shan He as our new Chief Business Officer. Shan brings both deep scientific expertise and investment experience and will play a central role in expanding our portfolio and in unlocking value through partnerships and outlicensing. I’d also like to sincerely thank Jonathan Wang for his many contributions over the past decade in helping build the strong foundation that now supports our next phase of growth. Now turning to our commercial performance. Total revenues were $116 million, representing 14% growth year over year. Vyvgart and Vyvgart Hytrulo contributed $27.7 million, which includes a $2.4 million reduction following a voluntary price adjustment on Hytrulo to align with NRDL guidelines ahead of national pricing negotiations. While this adjustment affected reported sales, the underlying fundamentals of the launch remain very strong.
Vyvgart continues to be one of the most successful immunology launches ever in China, ranking as the number one innovative drug by sales among all new launches in the past two years. More importantly, the trends beneath the headline numbers point to durable, long-term growth. There are two key growth drivers underpinning the trajectory of Vyvgart and GMG: patient demand and treatment duration, the latter of which is particularly important given the chronic nature of the disease. First, on demand. We continue to see steady new patient additions each month, with nearly 21,000 patients treated to date. Vyvgart penetration in GMG remains only around 12%, meaning we are still in the early stages of market development with significant room for expansion. Second, on treatment duration. The updated MG guidelines, published in July, have been a meaningful catalyst.
They emphasize both the importance of rapid symptom control, where Vyvgart has demonstrated strong efficacy, and a minimum of three treatment cycles to reduce the risk of relapse and maintain durable disease control. Since publication, we have seen clear signs of positive impact in real-world practice. Physicians are becoming receptive to maintaining patients on therapy even after achieving symptom control, signaling a shift from episodic to maintenance use. As a result of our efforts, the average vials per patient have increased over 30% year to date versus last year, with a notable acceleration in Q3. Vyvgart volumes have grown sequentially in the mid-teens. We see this level of growth as realistic and sustainable as we head into 2026. Now, admittedly, the pace of market build for this first-in-class therapy for chronic disease has been more measured than we initially anticipated.
With Vyvgart, we are shaping this new market thoughtfully, focusing not only on driving adoption but also on redefining how GMG is managed over the long term. Through physician education and real-world experience, we aim to change longstanding treatment patterns. While the ramp is slower than expected, the long-term potential of Vyvgart and GMG is substantial. Beyond GMG, we’re making progress in CIDP, expanding access across both supplemental and commercial health insurance plans. We will continue to add new layers of growth with new indications and formulations, with the most immediate being seronegative GMG and the prefilled syringe. Looking ahead, our next major launch opportunity is KarXT, currently under regulatory review. KarXT has the potential to redefine schizophrenia treatment in China, introducing the first new mechanism of action in more than 70 years.
Notably, it has already been included in the China Schizophrenia Prevention and Treatment Guidelines 2025 edition, the first national guideline globally to do so, underscoring its strong differentiation and anticipated clinical impact. Across the company, we remain disciplined in our operations, scaling efficiently while investing strategically in commercial execution and pipeline innovation. With that, I will now pass the call over to Yajing to take us through our financial results. Yajing?
Dr. Yajing Chen, Chief Financial Officer, Zai Lab: Thank you, Josh. Now, I will review highlights from our third-quarter 2025 financial results compared to the prior year period. Total revenue grew 14% year over year to $116.1 million in the third quarter, primarily driven by higher sales of Nuzyra, supported by increasing market coverage and penetration. Demand for XACDURO remains robust, and we aim to normalize supply by year-end. Zejula grew sequentially but declined year over year amid evolving competitive dynamics within the PARP class. Given this trend, as well as Vyvgart dynamics discussed earlier, we are updating our full-year total revenue guidance to at least $460 million. Our continued focus on financial discipline and efficiency was evident in our cost structure, with both R&D and SG&A as a percentage of revenue declining significantly year over year.
R&D expenses for the third quarter decreased 27% year over year, mainly due to a decrease in licensing fees in connection with upfront and milestone payments. ST&A expenses for the third quarter increased 4% year over year, mainly due to higher general selling expenses to support the growth of Nuzyra and Vyvgart, partially offset by lower selling expenses for Zejula. As a result, loss from operations improved 28% in the third quarter to $48.8 million, and the adjusted loss from operations, which excludes certain non-cash items, depreciation, amortization, and share-based compensation, was $28 million in the third quarter, a 42% improvement from the prior year. While we expect meaningful quarter-over-quarter improvement in adjusted operating loss, we now expect profitability to shift beyond the fourth quarter, reflecting the lower revenue base this year. Importantly, our fundamentals remain strong.
Our China business is already commercially profitable and growing, and we are executing strong financial discipline and investing strategically in R&D. We are on a path to profitability, and we’ll provide updated 2026 financial guidance when we report our four-year 2025 earnings. Zai Lab is at a major value inflection point. With a rapidly advancing global pipeline, a commercially profitable China business, and a path to profitability, we also maintain a strong financial foundation, ending the quarter with $817 million in cash, which provides us with the flexibility to invest in both innovation and disciplined execution. I would now like to turn the call back over to the operator to open up the line for questions. Operator.
Conference Operator: Thank you. We will now begin the question and answer session. To ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please limit to two questions at a time. If you have follow-up questions, please request to rejoin. Please stand by while we compile the Q&A roster. We will now take our first question from the line of Jonathan Wang from Leerink Partners. Please go ahead.
Jonathan Wang, Analyst, Leerink Partners: Hi guys. Thanks for taking the questions, and best wishes to Jonathan Wang. First question on the revised revenue guidance. How should we be thinking about the key drivers for growth and the path to profitability? Second question on ZL1503. Can you help set expectations for the initial data readout expected in 2026? How are you guys seeing the opportunity in atopic dermatitis? Thank you.
Josh Smiley, President and Chief Operating Officer, Zai Lab: Thanks, Jonathan. Hey, it’s Josh Smiley. Good morning, everybody, and good evening. Thanks for the questions. I’ll take the first one on revenue drivers, and then Rafael will talk about 1503. I think as we think about revenue headed into the fourth quarter here, drivers will continue to be Vyvgart. We expect continued good sequential growth driven by new patient additions and continued growth in durability or in terms of the number of doses patients get. We are seeing, as I mentioned in the opening remarks, we’re seeing good progress as a result of the national guidelines that were issued in July, which focus on getting patients into at least three courses of therapy. We expect to see continued growth there. Zejula, we are seeing a return to growth.
As we’ve mentioned throughout the year, the quarterly numbers, I think, will be a little bit choppy because of the generic entries for Limparza, but we do expect VBP to kick in in the fourth quarter here, and that gives us a chance to gain share in this class, and we’re confident we will. We’d expect to see some growth there. The rest of the portfolio continues to do well. We are excited about the progress we’re seeing with XACDURO but still face supply constraints, so we’ll be somewhat limited as we come into the fourth quarter here or there. Overall, good momentum in the portfolio and good growth drivers will give more specific guidance for 2026 as we get into next year. Obviously, we’re looking forward to the launch of KarXT, the potential approval of TIVDAC, and continued growth in the core part of the portfolio.
As it relates to profitability, again, our profitability will be driven by growth in the business in China. The China business, of course, is profitable today, and as we continue to drive top-line growth, that profitability will be enough to cover the R&D and corporate costs that we have. We’re still on that path. We just need the growth to continue in the portfolio. With that, I’ll turn it to Rafael to talk about 1503.
Dr. Rafael Amado, President and Head of Global Research and Development, Zai Lab: Thanks, Josh. Thanks, Jonathan. 1503, we’re really excited about this molecule. As you know, it’s both dual IL-13 and 31 inhibitors. It traps IL-13, and we know that that is a proven pathway. 31 is a very potent pathway in initiating pruritus. Within the combination, plus the long half-life, it’s going to translate into a really brisk effect, which is very fast and sustained. We have initiated the IND already. We plan to do a multi-country study. Obviously, it’s a first-in-human study. We will do single ascending dose in normal volunteers and then multiple doses in patients with atopic dermatitis. In the lab, we’ve been looking at other models of TH2 diseases, and we are very encouraged with what we’re seeing on asthma, rhinitis, and other disorders that affect T helper 2. In addition to this, we’re going to be looking at efficacy endpoints.
Given the half-life that is long, we think that we will be able to see effects on easy scores as well as IgA/ID. This is going to be measured very frequently. We hope to have the data available by the middle of next year, but it will obviously accumulate throughout next year, and we will present when we have sufficient data. It is a placebo-controlled trial, so we will be able to have comparisons, and obviously, we know what the landmarks are here with other products. A very large opportunity. This is a very common disease. Even a fraction % of capturing in AD would be a large opportunity. Also, the possibility of expanding into other TH2 diseases, I think, makes this a very promising product.
Conference Operator: Thank you. We will now take our next question from the line of Anupam Rama from JPMorgan. Please go ahead.
Hi, this is Joyce Owen for Anupam. Thanks for taking our question. The press release today really led with progress on your own internal global development programs. Is this a shift in how you’re thinking about the resource allocation in terms of your prior focus on external BD versus now the internal pipeline? Thanks so much.
Josh Smiley, President and Chief Operating Officer, Zai Lab: Thanks. It’s Josh. I’ll start. First, we are very excited about the pipeline that we have today with the global emphasis, and of course, that will be a priority to invest in. Rafael outlined our near-term focus in terms of 1310 and getting the registration trial up and running and expanding into first-line and into neuroendocrine tumors. That’s going to be a focus. We’ve got a really exciting global portfolio behind that. We think we have the capacity here to fully invest in those programs. We have a strong balance sheet with plenty of cash to continue to pursue on a targeted basis the right kind of external opportunities to bring in both on a global and regional basis.
We have the capacity within the income statement on the R&D side to, I think, fully invest behind these exciting opportunities and still manage, I think, an R&D budget that is within the range of what we have seen the last few years. Priorities are advance the pipeline, continue to build the pipeline, and continue to drive the commercial business in China, which is profitable today and will be increasingly profitable over time.
Conference Operator: Thank you. We will now take our next question from the line of Yigal Nochomovitz from Citi. Please go ahead, Yigal.
Hi, this is Caroline on for Yajing Chen. Thanks for taking our question. We were wondering where you’re seeing the greatest opportunity and greatest likelihood for success for your internal global pipeline among LRRC15 and PD-1, IL-12, and others. The second question, if okay. Thanks.
Josh Smiley, President and Chief Operating Officer, Zai Lab: Rafael, jump in on this one, please.
Dr. Rafael Amado, President and Head of Global Research and Development, Zai Lab: Sure. Obviously, the most immediate one is 1310. I mean, it clearly is quite active. It is well tolerated. Very few related grade 3 and above treatment effects, treatment side effects. Strong, brisk effect on brain metastases, even untreated brain metastases. Again, very high % of patients responding. We are starting up the phase 3 study for second line. We’ve had recent discussions with FDA, and we’re sharpening the design to the point that it’s already started. We will continue to do some work on the dose, but I think that is going to finish pretty quickly. With regards to the rest of the products, obviously, 1503, I mean, these are proven pathways. The bar for activity is pretty low. Also, the characteristics of the product with FC modification for long half-life makes it very ideal for patients with these chronic diseases.
With regards to some of the other ones, LRRC15 is particularly interesting because it would be the first time where a tumor is being targeted where the target is not necessarily in the tumor. There will be these two groups of patients, like sarcoma patients, where the tumor does express LRRC15, but others in which the tumor only expresses the target in fibroblasts. If that is the case, if we can actually aggregate tumors where the tumor is negative but the tumor microenvironment is positive, then it opens a whole host of tumor types. Pretty excited about this, and I think we are, with others, leading in ADC, which is one of our focus in oncology. I’ll finish with PD-1, IL-12. It’s been very hard to target IL-12 because it’s toxic. We’ve been able to engineer an IL-12-stimulated moiety, which actually.
Is attenuated, so it doesn’t really cause side effects of T cell activation. At the same time, we have full blockade of PD-1. In animal models, we can see that we can actually restore PD-1-resistant tumors, which would be pretty exciting to see. We are seeing, as you know, more enhancements on PD-1 as a checkpoint with other molecules, and we think that IL-12 would be one of them. I’ll just finish by saying that we can move these things pretty quickly. We’ll have two INDs this year. One of them will enroll this year. The other one will start enrolling in January. PD-1, IL-12 is a candidate that will have an IND next year and hopefully the first patient as well in the second half. Yeah, we’re excited about all of them, but obviously.
Our strongest focus right now is making sure that we capitalize on ZL1310.
Got it. Thank you. On my second question, we’re wondering what you’re doing to set yourself up for a strong KarXT launch, and what more have you learned about the schizophrenia market in China to best position KarXT in the marketplace? Thanks.
Josh Smiley, President and Chief Operating Officer, Zai Lab: Thanks. It’s Josh. Yeah, we’re quite excited about the opportunity with KarXT. Regulatory reviews are going well, so we are hopeful for an approval sometime in the near term here. First, I think if you look in China, there’s a huge opportunity. Of course, there haven’t been any new mechanisms approved in severe mental illness or schizophrenia in more than 70 years. The opportunity for a mechanism like KarXT that provides both efficacy on positive symptoms, negative symptoms, and cognition is, I think, well anticipated, and thought leaders are anxious for this drug to come. We’ll launch with a targeted sales force. I think the difference in China versus what we see in some of the Western markets, certainly in the US, is it’s a more concentrated approach. Patients tend to be in bigger institutions.
With a relatively targeted sales force and education program, we should be able to touch a significant portion of the market at launch. Again, just to remind people, the opportunity here is quite significant with millions of patients today suffering from schizophrenia. Obviously, it is a lifelong disease. We are anxious to get the approval first, to get up and running in 2026, and then move toward NRDL listing in 2027.
Conference Operator: Thank you. Our next question comes from the line of Li Watsek from Cantor. Please go ahead.
Hi, good morning, guys. Thanks for taking our questions. I have one commercial, one pipeline question. I guess just given some of the complex commercial dynamics in China and your revised guidance, can you provide your updated views on the $2 billion revenue target by 2028? The second is for ZL1310. Sounds like you’re expanding to neuroendocrine tumors next year. I wonder if you can just talk a little bit about the pathway to approval and what will be the bar.
Josh Smiley, President and Chief Operating Officer, Zai Lab: Thanks, Li. It’s Josh. I think first on the $2 billion 2028 goal, we will look at all the moves that we’ve had in the portfolio, and we’ll provide a more fulsome update next year, maybe starting at JPMorgan. To comment, we feel really good about the portfolio we have today. As Samantha mentioned upfront, I think the most exciting piece is the opportunity for sales outside of China in 2028. We mentioned that 1310, we see a path for an approval as early as late 2027. To have some significant sales in 2028 coming from the US in small cell lung cancers, I think quite exciting and certainly represents a new inflection point and phase of growth for us. The portfolio in China continues to grow.
We have talked about the dynamics with Vyvgart, which we expect over the course of the next number of years to continue to grow at a good and steady rate, supplemented by additional indications. Since we have talked about that revenue goal, we have added POVI and Velli, both of which can launch in the 2028 timeframe. We are quite excited about the long-term growth potential of the portfolio and most excited this year about the progress on 1310 and what it means for sales, not just in China, but outside of China within this timeframe. Yes. Rafael, you can, yeah, jump in, please.
Dr. Rafael Amado, President and Head of Global Research and Development, Zai Lab: Yeah. Thanks, Caroline. I’ll talk a bit about NEC. The study that we have has two cohorts of carcinomas. These are highly proliferative tumors that have a poor prognosis. One are gastroenteropancreatic tumors or GEPs, and the others are other NECs that can arise from other sites, other organs. We are seeing responses in both groups. It’s still early days, obviously, and we’re accumulating more and more evidence of activity. These are patients that have had more than one line of therapy, which tends to be platinum-based therapy. There really isn’t any standard for these patients. The tumors tend to grow fast, and actually, mortality is quite high. In terms of how we want to proceed with this, the idea would be to sort of circumscribe the tumors that have similar natural history like GEPs, large cell.
Non-small cell lung cancer, and also tumors of unknown primary. Do a study, a single-arm trial, and try to characterize the response rate. I think anything above 30-40% would be of great interest because there really isn’t any therapy. Many of these patients go to clinical trials with reasonable durability. We would plan to have discussions with regulatory authorities to see whether, given their med need, a single-arm trial with these kinds of results could result in an accelerated approval. The alternative is to do a physician choice comparator, which also we would be prepared to launch. Given the activity that we are seeing, if it continues, it wouldn’t be a very large study, particularly given the large med need. The fact that this is an orphan indication. Pretty excited about what the agency will see.
Opine once we have sufficient follow-up and sufficient patients to characterize the activity.
Conference Operator: Thank you. As a reminder, before we take our next, it is star 11 on your telephone keypad if you wish to ask a question. Our next question comes from the line of Zi Chun from Goldman Sachs. Please go ahead.
Dr. Samantha Du, Founder, CEO, and Chairperson, Zai Lab: Thank you for taking my questions. Can you hear me?
Josh Smiley, President and Chief Operating Officer, Zai Lab: Yes.
Dr. Samantha Du, Founder, CEO, and Chairperson, Zai Lab: Oh, great. Thank you, Josh. Two questions. The first one is regarding the guidance. We try to understand a bit more about. Compared to the expectations set in any guidance previously, in which areas has the company encountered deeper than anticipated challenges in China environments, particularly for Vyvgart and Zejula? Could you elaborate a bit more? I think beginning of the year, in terms of the guidance. Not only about the top line, but also you mentioned about. Fourth-quarter cash break-even target. Is that still intact? That’s my first one. Second is regarding the R&D because Zai Lab is really pivoting towards a global. R&D company. In terms of the pipeline build-up, particularly for the early-stage pipeline build-up, now we got oncology, ADCs. We have. Two different ADCs. We have PD-1, IL-12, and we also have immunology. We try to understand a bit more about.
The strategy, the portfolio strategy, when you’re deciding what to go after and what not to do. Could you provide a bit more color on that? Thank you.
Josh Smiley, President and Chief Operating Officer, Zai Lab: Sure. Thanks, Li. First, on the performance this year, I would say relative to our initial expectations. Vyvgart, while growing well, and we’re pleased with the underlying dynamics, as we’ve mentioned throughout the call, it’s just taking longer to get to the rate of treatment that we see in the US market, for example. We are focused now on getting patients up to at least three cycles of treatment, and we’re seeing progress there. It’s just slow. I would say that’s our sort of on the Vyvgart piece, that’s the piece that has been the slowest relative to our expectations. Again, I think this is what we’re realizing is it’s a long-term build-the-market opportunity. We have the long term with this product, and we’re seeing good response to things like the national guidelines and our continued promotional and educational efforts.
Just a slower ramp to get to the kind of treatment duration that we see in the Western markets. On Zejula, we expect to gain share as a function of Limparza going generic, and we saw some delays there relative to our initial expectations relative to VBP. Again, we expect that to kick in beginning in the fourth quarter and set us up well for next year. Certainly, again, there are dynamics related to affordability and hospital purchasing and otherwise that may make that a bit choppy, but I think the underlying opportunity for Zejula is to gain share from what had been Limparza as it goes to generic. The third piece for us is then just XACDURO. We’ve talked about this through the year. It’s a great product, and our partner, Pfizer, is seeing really great response and demand in the hospital setting for this drug.
We have had more supply constraints than we anticipated at the beginning of the year. We are working through those, and we are hopeful that as we come into 2026, those will be resolved and we will be able to fully meet the demand that we are seeing in the marketplace. Those things together, of course, will help and drive profitability. I think if you look at our path to profitability and focus on the non-cash—I mean, on the cash sort of earnings, which is our non-cap number—you see continued good progress in that regard. That progress should continue. We will give you an update for 2026, but really, it is just going to be a function of continued growth on the top line. I think at the numbers that we are suggesting here for the fourth quarter, we probably will not quite get there, but we will still.
Show good improvement, and we’ll be on that path as we head into 2026. Rafael, if you can talk about how we think about the portfolio and the next opportunities.
Dr. Rafael Amado, President and Head of Global Research and Development, Zai Lab: Sure. The portfolio will continue to grow as a blend of both internal as well as external opportunities. I’m really proud of the fact that many of the products that are now in development came from our protein science laboratories, which have been very productive. In terms of strategy in oncology, we will continue with antibody-drug conjugates, and we will continue to innovate there. There are other antibodies that we haven’t mentioned that are in the pipeline at the moment, and we spend a lot of time trying to characterize the antibody vis-à-vis the target and then use the right payload linker. That’s going to continue to grow. We also have an interest in immunocytokines, which I mentioned before. We have other immunocytokines that will come after the PD-1, IL-12. T-cell engagers, we’ve made an effort in T-cell engagers, and we will.
Be reporting with time some of these candidates entering the clinic. Outside of oncology, you’re right. I mean, we have been focusing on autoimmunity, neuroscience, and immunology. In autoimmunity, we’re focusing on cytokines, both antibodies or bispecifics. Perhaps cell depletion as well, and then signal transduction of some of these cytokine pathways, which involve small molecules as well. Overall, we will remain opportunistic, obviously, for either regional or global opportunities that have novel mechanisms of action, have differentiation, and really make a big difference for patients. The guardrails, if you will, are the ones that I just described to you. Thanks for the question.
Conference Operator: Yeah. I think, Ji, just like Rafael was saying. Even though our pipeline in China, regional pipelines has oncology, autoimmune, and neuro, and anti-infectious. For our global pipeline, we are focusing on oncology and autoimmune and anti-inflammatory specifically, like Rafael was saying. Internally for global development pipelines, we are only focused on those two areas.
Great. Thank you. Our last question today comes from the line of Clara Dong from Jefferies. Please go ahead, Clara.
Hi. Good morning. Thanks for taking our questions. This is Jenna for Clara. We have two questions, if we may. First, on Vyvgart. I think previously we were under the impression that sales will be back half-loaded. I was just curious what kind of visibility or leading indicators you may have for Q4 and 2026. More specifically, can you comment on, for example, pace, number of cycles on average patients are getting today? How does the pace look like over the next few years to reach the three average doses? Our second question is on BEMA in the context of the Amgen announcement. I was just curious if it’s still possible to have a path forward for just China based on the trials you’re running or the data you have in hand. Thank you so much.
Josh Smiley, President and Chief Operating Officer, Zai Lab: Thanks. I’ll start with Vyvgart, and then Rafael can talk about BEMA. I think on Vyvgart, what we’re seeing is good underlying growth in terms of duration or number of vials or cycles patients get. I think as we started the year, on average, we were probably close to one cycle per year, or per patient per year. That represented the fact that at launch, we were getting lots of the acute patients. Vyvgart, of course, works really well in an acute setting, but to get the full benefit for patients with GMG that allows them to work and live their lives fully, you need to get the maintenance benefits, which kick in at least three cycles. Through this year, we’re seeing progress towards an average of two cycles per year.
As you mentioned in your question, the goal is to get to at least three, and over time, aspirations toward five, where we see the full benefits in clinical trial and real-world setting. I think as we look into next year, we’d expect the underlying growth to continue probably at what we’re seeing in terms of volume, so sort of number of vials in total, is sequential quarterly growth in the sort of low teens. I think that’s reasonable to expect as we head into next year and continue to sort of climb towards that on average, three cycles of use, again, supplemented by or accelerated by the national guidelines that were issued in July and our efforts to educate physicians in that regard.
We’re looking forward to the continued underlying growth here, and I think expect that to continue on a good basis as we head into 2026. Rafael, if you want to talk about BEMA?
Dr. Rafael Amado, President and Head of Global Research and Development, Zai Lab: Sure. We’re still digesting the data. You saw the data at ESMA that was presented with the primary analysis of 096, and then the final analysis with this attenuated treatment effect. Amgen announced that 098 was a negative study in terms of not meeting statistical significance. We’re looking with Amgen, our partner, at translational markers and subgroups. We will be doing this in the upcoming weeks and make a decision. Our opinion is that it will be very challenging to get an approval in China with this data set. As such, we’re thinking about how to deploy these resources to the rich pipeline that we’ve been discussing today and try to capitalize on the fact that we will have this opportunity of time, people, resources, and effort to advance the current pipeline.
Conference Operator: Thank you. We have come to the end of the question and answer session. Thank you all very much for your questions. I’ll turn the conference back to Dr. Samantha Du for her closing comments.
Thank you, Arpujo. I want to thank everyone for taking the time to join us on the call today. We appreciate your support and look forward to updating again after the fourth quarter of 2025. Arpujo, you may now disconnect this call.
Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect your lines.
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