Zai Lab Q2 2025 Earnings Report

Zai Lab EPS Results

• Actual EPS: -$0.37
• Consensus EPS: -$0.37
• Beat/Miss: Met Expectations
• One Year Ago EPS: N/A

Zai Lab Revenue Results

• Actual Revenue: $109.98 million
• Expected Revenue: $125.66 million
• Beat/Miss: Missed by -$15.69 million
• YoY Revenue Growth: N/A

Zai Lab Announcement Details

• Quarter: Q2 2025
• Date: 8/7/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, August 7, 2025
• Conference Call Time: 8:00AM ET

Zai Lab (NASDAQ:ZLAB) Limited develops and commercializes therapies to treat oncology, autoimmune disorders, infectious diseases, and neuroscience. Its commercial products include Zejula, an orally administered poly polymerase 1/2 inhibitor; Optune, a cancer therapy that uses electric fields tuned to specific frequencies to kill tumor cells; NUZYRA for acute bacterial skin and skin structure infections, and community acquired bacterial pneumonia; Qinlock to treat gastrointestinal stromal tumors, and VYVGART, a human IgG1 antibody fragment for myesthenia gravis. The company also develops Tumor Treating Fields, a portable device for delivery of electric fields; Repotrectinib, a tyrosine kinase inhibitor (TKI) to target ROS1 and TRK A/B/C in TKI-naïve- or -pretreated cancer patients; Tisotumab vedotin, an antibody drug conjugate; Adagrasib for treating KRAS-G12C-mutated NSCLC, colorectal cancer, and pancreatic cancer; and Bemarituzumab to treat gastric and gastroesophageal junction cancer patients. In addition, it develops Sulbactam/durlobactam, a combination of a beta-lactam antibiotic and a beta-lactamase inhibitor for the treatment of serious infections caused by Acinetobacter; KarXT for the treatment of psychiatric and neurological conditions. It has license and collaboration agreement with Tesaro, Inc. to develop, manufacture, and commercialize niraparib; NovoCure to develop and commercialize Tumor Treating Fields; Deciphera to develop and commercialize ripretinib; Paratek Bermuda Ltd. to develop, manufacture, and commercialize omadacycline; argenx, to develop and commercialize efgartigimod; BMS to develop and commercialize tisotumab vedotin and repotrectinib; Mirati to research, develop, manufacture, and commercialize adagrasib; Amgen to develop and commercialize bemarituzumab; and Innoviva to develop and commercialize Sulbactam-Durlobactam; Karuna to develop and commercialize KarXT. The company was incorporated in 2013 and is headquartered in Shanghai, China.

Zai Lab Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: We reaffirmed our full-year revenue guidance of $560 million–$590 million and expect to reach profitability on an adjusted basis in Q4 2025 thanks to our efficient, scalable model.
• Positive Sentiment: VIBGART saw record patient utilization in gMG, benefited from July guideline updates in China, and remains on track for over $1 billion in peak sales with expanding label and subcutaneous launch plans.
• Positive Sentiment: Our global R&D pipeline advanced with GL1310 showing first-in-class, best-in-class data in small cell lung cancer at ASCO and new programs like ZL1503 and ZL60201 entering clinical development.
• Neutral Sentiment: Sales of Zejula softened in Q2 due to evolving PARP-class competition, though management reports stabilization and expects volume growth in first-line ovarian cancer in H2.
• Positive Sentiment: Operating leverage improved in Q2, reducing GAAP loss by 28% to $54.9 million and adjusted loss by 37% to $34.2 million, while cash and equivalents reached $832.3 million.

Presentation

[Operator]

Hello, ladies and gentlemen. Thank you for standing by, and welcome to Zai Lab Second Quarter twenty twenty five Financial Results Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, today's call is being recorded.

[Operator]

It is now my pleasure to turn the floor over to Christine Cho, Senior Vice President of Investor Relations. Please go ahead, ma'am.

[Christine Chiou, SVP & Head - Investor Relations at Zai Lab]

Thank you, operator. Hello, and welcome, everyone. Today's earnings call will be led by doctor Samantha Du, Zai Lab's founder, CEO, and chairperson. She will be joined by Josh Smiley, president and chief operating officer Doctor. Rafael Amato, President and Head of Global Research and Development and Doctor.

[Christine Chiou, SVP & Head - Investor Relations at Zai Lab]

Yajing Chen, Chief Financial Officer. Jonathan Wang, our Chief Business Officer will also be available to answer questions during the Q and A portion of the call. As a reminder, during today's call, we will 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 will also refer to adjusted loss from operations, which is a non GAAP financial measure.

[Christine Chiou, SVP & Head - Investor Relations at Zai Lab]

Please refer to our earnings release furnished with the SEC on 08/07/2025 for additional information on this non GAAP financial measure. At this time, it is my pleasure to turn the call over to Doctor. Samantha Du.

[Samantha Du, Founder, Chairperson, CEO & Director at Zai Lab]

Thank you, Christine. Good morning and good evening, everyone. Thank you for joining us today. As we reach the midpoint of 2025, Zai Lab is entering a pivotal phase, drilling our commercial business, advancing our global pipeline, and executing on the goals we outlined at the beginning of the year. Our long term vision of becoming a leading global biopharma remains strong, grounded on consistent execution and meaningful progress across the business.

[Samantha Du, Founder, Chairperson, CEO & Director at Zai Lab]

We are reaffirming our full year revenue guidance of five sixty million dollars to $590,000,000 We remain on track to achieve profitability in the fourth quarter, a milestone made possible by the efficient, scalable model we have built over the years. In our original business, momentum is building as we head into a period of significant growth supported by multiple near term launches. This includes pipeline of product opportunities like Ziguard in multiple autoimmune indications and povitaxacet, a DUBAF APO inhibitor with broad potential. We also anticipate approvals for CAR XT in schizophrenia and TPAC in cervical cancer, both currently under regulatory views in China. We're preparing for submissions for other later stage assets, including Bimetuzumab for gastric cancer and tumor treating fields for pancreatic cancer.

[Samantha Du, Founder, Chairperson, CEO & Director at Zai Lab]

Combined with our broader regional pipeline, these programs position us well for long term growth. On the global R and D front, we're advancing a pipeline of innovative, globally competitive programs. GL1310, our DL380C, continues to demonstrate first in class and best in class potential in small cell lung cancer, as illustrated by the updated data presented at ASCO. We also see encouraging early signals in other difficult to treat tumors, such as neuroendocrine carcinomas. Beyond that, we're advancing our next wave of innovative global programs into the clinic, including ZL1503, a bispecific IL13 IL31 study for atopic dermatitis, and ZL60201, our LRRC15 ADC for solid tumors.

[Samantha Du, Founder, Chairperson, CEO & Director at Zai Lab]

This development continues to be a core pillar of our growth strategy. As global interest in China originated innovation crisis, Zai Lab is uniquely positioned to act as a bridge between China's thriving bio ecosystem and global markets. Our deep local know how and global R and D expertise allow us to source and develop high potential assets emerging from China and the rest of the world while continuing to expand our internally discovered global pipeline. We're also leveraging AI across the organization. For example, optimizing clinical trials, accelerating pipelines, and sharpening our commercial analytics.

[Samantha Du, Founder, Chairperson, CEO & Director at Zai Lab]

These ongoing efforts already improving our speed, precision, and efficiency. Going forward, we will apply more AI tools to accelerate our future growth. We remain disciplined in our operations, scaling efficiently while investing strategically in both commercial execution and pipeline innovation. The progress we have made this quarter reinforces our conviction in what Zai Lab is becoming a profitable, high growth company with global impact, powered by innovation, disciplined execution, and a deep commitment to delivering long term values for patients and shareholders alike. Now I turn the call over to Josh. Josh?

[Josh Smiley, President & COO at Zai Lab]

Thank you, Samantha, and hello everyone. Let me start with VIBGART where strong commercial execution continues to drive momentum in gMG. In the second quarter we saw record levels of patient utilization supported by a steady flow of new patient starts and increasing treatment duration. We are seeing a meaningful shift toward maintenance use, a reflection of growing physician confidence in Divgart's long term benefits. These positive trends are supported by ongoing physician education and patient support programs aimed at extending treatment duration.

[Josh Smiley, President & COO at Zai Lab]

We expect this momentum to further accelerate following the July update to China's National CMG guidelines, which meaningfully elevate DivGard's positioning. The new guidelines recognize minimal symptom expression or MSE as the primary treatment goal in gMG and highlight VIBGARTs ability to achieve MSE rapidly and durably. VIBGAR has the highest MSE rates ranging from forty to seventy three percent across clinical studies and stands out for its rapid onset and deep and sustained efficacy. VIBGART is now recommended for early use in mild to moderate and highly active patients and for sustained long term treatment to maximize benefit, marking a major step forward for biological adoption for treating gMG in China. We see significant long term potential for Vivgart.

[Josh Smiley, President & COO at Zai Lab]

Physicians are initiating treatment earlier and shifting away from steroids, yet Vivgart penetration in gMG is only ten percent. We are well positioned to drive broader adoption and to capture the substantial opportunity that lies ahead. Once listed on NRDL, we believe that subcutaneous formulation will further accelerate uptake by driving deeper market penetration and expanding patient access. The launch in CIDP is also underway with efforts focused on increasing supplemental health insurance coverage and driving awareness. Our planned submission of the prefilled syringe remains on track and will further differentiate the brand through added convenience and improved adherence.

[Josh Smiley, President & COO at Zai Lab]

Beyond gMG and CIDP, we are actively pursuing label expansion opportunities across a range of immunology indications with significant unmet need, including seronegative gMG, ocular MG, myositis, lupus nephritis and sograns. Taken together these efforts reinforce our view that DIVBARC can exceed $1,000,000,000 in peak sales and become a foundational immunology brand in China. Turning to the broader commercial portfolio, Zejula had a softer quarter due to evolving competitive dynamics within the PARP class. That said we are already seeing signs of stabilization entering the second half of the year. We anticipate continued volume expansion across the PARP class and expect Zejula sales to strengthen in first line ovarian cancer where it maintains a differentiated safety and efficacy profile supported by strong China patients data and first to market advantage.

[Josh Smiley, President & COO at Zai Lab]

We are confident in Zejula's return to growth later this year. Zakduro continues to see robust demand and highly positive feedback from physicians treating crab infections, a serious and underserved public health threat in China with approximately three hundred thousand Acinetobacter cases annually. As we work to localize manufacturing, supply constraints may modestly limit near term growth in 2025, but underlying demand remains strong. With OCHIRO we are taking a focused efficient approach to commercialization. While near term revenue is expected to be limited, we believe its best in class clinical profile in ROS1 positive non small cell lung cancer, including strong CNS activity and durability in both TKI naive and pretreated patients, positions Onctyro as an important treatment option for patients.

[Josh Smiley, President & COO at Zai Lab]

We will continue to pursue efficient ways to broaden our reach to realize the full value of its long term potential. Turning to our financial position, we continue to execute against our profitability plan, maintaining disciplined spending while investing in growth. For the 2025 operating loss improved by 28% to $54,900,000 On an adjusted basis which excludes certain non cash expenses, operating loss was reduced by 37% to $34,200,000 keeping us firmly on track to reach profitability on an adjusted basis in the fourth quarter. We also expect a strong set of near term regulatory milestones ahead. CarXt and TIVDAC are under review by the NMPA and we plan to submit applications for Vibgart's prefilled syringe for gMG and CIDP, bemarituzumab for gastric cancer and PT fields for pancreatic cancer in the coming months.

[Josh Smiley, President & COO at Zai Lab]

To support these potential near term launches we are leveraging a scalable resource efficient commercial model, repurposing teams where possible and targeting field force deployment in high impact areas. For example our Zejula team will support give back, our Kinloch team will lead efforts for bemrituzumab and we plan to cover eighty five percent of the schizophrenia market with a highly focused team of approximately 150 representatives for CAR XT. At the same time, we're advancing several operational efficiencies including scaling support for Vivgart, localizing manufacturing for key products and improving cost leverage across the portfolio, all of which will drive both strong top line growth and margin expansion. Business development remains a strategic priority. We are focused on three core areas: strengthening our global pipeline with externally sourced innovation, expanding our China portfolio with best in class assets, and pursuing out licensing and global partnerships to unlock the full value of our pipeline on the global stage.

[Josh Smiley, President & COO at Zai Lab]

With continued commercial momentum, an innovative and advancing pipeline and a path to profitability, we are confident in our ability to deliver meaningful long term growth and value. And with that, I will now pass the call over to Rafael to discuss the great progress within our pipeline.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

Thank you, Josh. I'll start with highlights from our global pipeline since our last earnings call and then cover upcoming milestones. Let's start with ZL-thirteen ten or sotilertodec palitikan or ZOZI for short, our first in class ELL3 targeting ADC for small cell lung cancer and other neuroendocrine tumors. At ASCO this year, we presented dose finding results in patients with previously treated extensive stage small cell lung cancer. Across all dose levels in the second line setting, the unconfirmed response rate was sixty seven percent and the disease control rate was ninety seven percent.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

The most promising combination of response and tolerability was observed at one point six milligrams per kilogram, which showed a 79 unconfirmed overall response rate and one hundred percent control rate of the disease, which is among the strongest efficacy response signals seen in this setting to date. At a median follow-up of three point four months, median duration of response had not yet been reached, and twenty nine of thirty eight responders remained on study. Importantly, we observed compelling intracranial activity and important unmet need in small cell lung cancer where up to seventy percent of patients developed brain metastases. Among these patients, the ORR was sixty eight percent, and it was eighty six percent in patients without prior cranial irradiation, again, the highest intracranial responses reported. SOSI also demonstrated a well tolerated and differentiated safety profile.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

At target doses below two milligrams per kilogram, there were no grade two or higher interstitial lung disease cases, and grade three and above treatment related adverse events occur in just six percent of patients with no drug related discontinuation. This data support the potential of SOCI as a clinically meaningful treatment for patients in second line small cell lung cancer and other lines of therapy, either as monotherapy or in combination. We're pleased to receive a Fast Track designation from the FDA in small cell lung cancer adding to the orphan drug designation granted earlier this year and are pursuing breakthrough therapy designation. We have aligned with the FDA on the accelerated approval pathway and are finalizing details on the pivotal study design in second line small cell lung cancer. We remain on track to initiate the registration of study later this year.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

Given its favorable safety profile at one point six milligrams per kilogram, Zosie is also well suited for use in the first line setting. We are rapidly enrolling patients in the combination dose escalation portion of the study, which will be followed by dose optimization and then a pivotal computation trial after the defined follow-up period. We expect to provide a clinical trial update of Xeluzica in combination with atezolizumab in the next year. Beyond small cell lung cancer, Zosika is also being studied in other neuroendocrine carcinomas where enrollment is ongoing in a global Phase III study, which may have registration potential pending regulatory discussions. We plan to present preliminary data at a medical conference in the first half of the next year.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

Moving to CL1503, our internally developed IL-thirteen and IL-thirty one bispecific antibody for atopic dermatitis. In June, we presented preclinical data showing durable dual inhibition of both itch and inflammation pathways. While IL-four, IL-thirteen inhibitors have markedly improved outcomes in atopic dermatitis, symptoms mediated by IL-thirty one often remain only partially alleviated, contributing to limited and incomplete clinical responses to currently available medications for many patients. TL1503 dual mechanism and extended half life may enable less frequent dosing and more comprehensive disease control. We are on track to initiate a Phase I study for moderate to severe atopic dermatitis later this year with both IV and subcutaneous formulations progressing as planned.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

Importantly, fifteen oh three exhibits immunomodulatory properties that are extending beyond atopic dermatitis with potential applications across a range of interleukin driven diseases laying the foundation for a top line of future indications. More broadly, across our global portfolio, we're advancing our internal discovery efforts in parallel. We are actively pursuing external opportunities to expand our pipeline with early stage compounds from China and beyond. Now turning to our regional programs, let's start with oncology. Remarituzumab, a first in class FGFR2b targeting therapy for gastric cancer.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

In June, we announced positive top line results from the global Phase three forty two-one 101 study in first line FGFR2b positive gastric gastroesophageal junction cancer. Emiriduzumab plus chemotherapy demonstrated a statistically significant and clinically meaningful improvement in overall survival as compared to placebo plus chemotherapy in patients with unresectable, locally advanced, or metastatic gastric or gastroesophageal junction cancer with FGFR2b overexpression and who are non HER2 positive. FGFR2b overexpression was defined as two plus or three plus staining greater than 10% of tumor cells by centrally performed immunohistochemistry. The most common treatment effects adverse events in patients treated with vemiriduzumab plus chemotherapy were reduced visual acuity, keratitis, anemia, neutropenia, nausea, corneal epithelium defect, and dry eye. While ocular events were consistent with the Phase II experience and observed in both arms, they occur with greater frequency and severity in the Phase III of emeritusumab arm.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

This data, our partner Amgen plans to present at an upcoming medical meeting, support a regulatory submission in China. Meanwhile, we look forward to the top line results from our second global Phase III study, forty two thousand one hundred two, a Phase IbIII study of emiriduzumab plus chemotherapy and nivolumab in patients with first line gastric cancer. Phase three data readout is anticipated in the 2025 or the 2026. In pancreatic cancer, our partner NovoCure announced positive results from the Phase III PANOVA-three trial evaluating tumor treating fields with chemotherapy in newly diagnosed patients with unresectable, locally advanced pancreatic adenocarcinoma. The study met its primary endpoint of overall survival representing the first phase three study success in this setting.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

We believe this therapy could meaningfully expand treatment options for patients with limited alternatives in pancreatic cancer, and we expect to submit in China this year. Now moving to our key late stage regional programs in immunology. For escutigimod, we continue to explore its potential to treat other IgG mediated autoimmune indications, including private eye disease, or TED, myositis, terra negative gMG, ocular NG, Sjogren's disease, and lupus nephritis. In the second half of this year, we expect top line results from the global Phase III study of seronegative gMG and the Phase II study of lupus nephritis. In addition, we will join the registrational UNITY study of efgartigimod subcutaneously administered by prefilled syringe in Sjogren's disease in Greater China in the third quarter of this year.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

Ovitacisib is a dual antagonist of the BaF and Apryl pathway. China has already joined the global Phase III RENEERS trial in IgA nephropathy, and enrollment of the interim analysis cohort is now completed. Our partner Vertex will conduct an interim analysis once this cohort reaches thirty six weeks of treatment with the potential to file for accelerated approval in The U. S. In the 2026.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

We also plan to join the global pivotal Phase twothree study in primary membranous nephropathy expected to start in the second half of this year. Moving to VRDN003, an anti IGF-1R antibody, a potentially best in class therapy in tired eye disease. It has the same binding domain as religretag, and it is administered subcutaneously. Elicretag has consistently demonstrated reductions in proptosis, diplopia, and clinical activity score across both active and chronic thyroid eye disease in Phase III studies. The infrequent dosing regimen of every four weeks or every eight weeks presents significant potential as a transformative option for patients with TADS.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

The two global registrational REVEAL one and REVEAL two studies are enrolling, and our partner Viridian is expected to provide top line results in the 2026. We are working on initiating Phase I PK study in China and a Phase study in TED upon CDE agreement expected in the 2025. These updates underscore our continued focus on pipeline renewal, as well as discovery and development innovation and execution across oncology and immunology. I look forward to sharing further progress updates in the coming quarters. And now, Yajin will give an overview of our financial results. Yajing?

[Yajing Chen, Chief Financial Officer at Zai Lab]

Thank you, Rafael. Now I will discuss highlights from our second quarter twenty twenty five financial results compared to the prior year period. Total revenue grew 9% year over year to $110,000,000 in the second quarter, primarily driven by higher sales of Visiguard supported by duration of therapy extension and increasing market penetration, as well as ZACTURA, which was launched since the 2024. Our focus on financial discipline and efficiency efforts was also reflected on the expenses side. R and D and SG and A as a percentage of revenue declined significantly year over year.

[Yajing Chen, Chief Financial Officer at Zai Lab]

R and D expenses for the second quarter decreased 18% year over year, mainly due to decreased personnel costs and the clinical trial costs as a result of resource prioritization and the efficiency efforts. SG and A expenses for the second quarter decreased 11% year over year, mainly due to the strategic resource allocation and the efficiency improvements. As a result of operating leverage we are building into our business, our large farm operations decreased 28% for the second quarter to $54,900,000 When you adjust our loss from operations to exclude certain non cash items, specifically depreciation, amortization, and share based compensation, We had adjusted loss from operations of $34,200,000 in the second quarter, reflecting year over year improvement of 37%. Based on our operating plan and our anticipated revenue growth, We expect to achieve profitability on the adjusted basis by the fourth quarter of this year. Looking ahead, we expect to deliver quarter over quarter total revenue growth in 2025, with a meaningful acceleration anticipated in the later part of the year.

[Yajing Chen, Chief Financial Officer at Zai Lab]

We remain confident in reaffirming our full year 2025 total revenue guidance of $560,000,000 to $590,000,000 This revenue forecast reflects strong growth for Vicodar franchise, continued growth for our base business, and the contributions from newly launched products. We are in a strong financial position, ending the quarter with a cash position of $832,300,000 And with that, I would now like to turn the call back over to the operator to open up the line for questions. Operator?

[Operator]

Thank you. We will now open the line for questions. We will now take our first question from the line of Jonathan Chang from Leerink Partners. Please go ahead, Jonathan.

[Jonathan Chang, Senior MD & Senior Research Analyst at Leerink Partners]

Hi, guys. Thanks for taking the questions. First question, congrats on the positive FORTITUDE-one hundred one study results. Can you help us understand the potential opportunity for bema in frontline gastric cancer? What biomarker status and FGFR2b threshold would patients need for treatment with bema?

[Jonathan Chang, Senior MD & Senior Research Analyst at Leerink Partners]

Can you help us characterize the safety profile observed in the 101 study?

[Josh Smiley, President & COO at Zai Lab]

Good morning, Jonathan. It's Josh. Thanks for the message. I'll start on commercial and then turn it over to Rafael to talk a little bit more about the profile. First, there's over four hundred and fifty thousand patients with gastric cancer in China, about a third of whom overexpress FGFR2b.

[Josh Smiley, President & COO at Zai Lab]

So very significant patient population. And I think given what we know of the clinical benefits of this product and potential treatment duration, we're quite excited and confident that there's over time a billion dollar sales potential opportunity in this potential indication. We're already in this space with Kinloch. We've got about 100 sales reps who promote Kinloch today. We'll use that sales force and build on it to take advantage of the opportunity here.

[Josh Smiley, President & COO at Zai Lab]

And again, we're quite excited by this product. It's gonna deliver significant benefits to a very big patient population in China. And I'll ask Rafael to make some more comments.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

Yeah, thanks, Josh, and thanks for the question. As I said in the prepared remarks, this is a drug for patients with overexpression of FGFR2b, and that's about a pair of patients, thirty percent or so. The cutoff is two plus to three plus at least ten percent of the cells. So, terms of patient numbers, it's, you know, close to one hundred and forty thousand, one hundred and fifty thousand new cases in China per year, which is very sizable, and we are preparing to launch this product with diagnostic as well. In terms of the toxicity, as I mentioned, the key toxicity was myelosuppression, which is probably more related to chemotherapy, and then ocular toxicity, which was expected, and it was seen in the Phase two study, FIGHT trial.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

So, toxicity greater than twenty five percent included mostly corneal toxicity that affected visual acuity. So, either contact dermatitis or epithelial defects, as well as dry eyes. And we saw this actually in the placebo arm as well, but it's more pronounced in the treatment arm and more common in the 101 study than it was seen in the phase two study. And that may be because we included a more comprehensive and standardized ocular monitoring in that trial. And this is expected, as I said, the receptor is expressed in epithelial cells in the cornea.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

It can be monitored by ocular consultation. Patients can be prophylaxed. It happens well into the treatment. So, it doesn't happen right away. And at least in the phase two study, they were reversible.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

So, the details of all the safety will be presented at an upcoming meeting Amgen has guided towards. And then in terms of, you know, how this will play out with regards to benefit risk, well, you know, it depends on the benefit that you will see when the presentation comes up. But these are patients that have a particularly poor prognosis. And there is a meaningful treatment effect that, you know, needs to be taken into account with this very aggressive form of cancer that has very limited treatment options.

[Jonathan Chang, Senior MD & Senior Research Analyst at Leerink Partners]

Understood. And maybe second question, if I may. Can you discuss your confidence levels in achieving your 2025 revenue guidance and profitability goal by year end? And how should we think about the contribution of Vivgard in achieving these goals? Thank you.

[Josh Smiley, President & COO at Zai Lab]

Thanks, Jonathan. It's Josh. First, we reaffirmed our top line guidance of $560,000,000 to $590,000,000 in sales. So obviously, we're confident in that range. And on profitability, we also have reconfirmed that we see us achieving profitability on a non GAAP basis in Q4.

[Josh Smiley, President & COO at Zai Lab]

So I think full speed ahead on both of those. As it relates to the sales, we do expect accelerating growth in the second half of this year, driven certainly by VipGuard as one of the big drivers here. We're pleased with our performance in the second quarter, saw record patient numbers in terms of patient starts. And we're seeing every month, we're seeing an increase in patient duration or numbers of doses or cycles per patient. We expect that to accelerate in the second half of the year, both as we continue to build experience with physicians and patients, but also leveraging the new national guidelines for gMG that were issued in July.

[Josh Smiley, President & COO at Zai Lab]

So, you should expect to see the kind of quarter over quarter acceleration or growth in sales for VIBGAR that we saw in the second quarter. And again, we're quite happy with those trends. ZEJULA, we expect growth in the second half of the year. We did see some declines in the second quarter, but I would say that's mostly related to the choppiness and disruption that comes with a major competitor going off patent that's Lynparza and new competitors coming on. But we're quite confident in our position with the jewel as the market leader in first line ovarian cancer.

[Josh Smiley, President & COO at Zai Lab]

And again, we are already seeing good recovery in the third quarter. So we'd expect to see sales growth there. So again, confident about the trajectory and the shape of the growth for the second half of the year. With that growth then, if you look at our overall operating expenses, that growth drives us towards profitability. And if you look historically quarter over quarter, we continue to see good improvement each quarter and have good confidence that we'll get there in the fourth quarter of this year. So thanks.

[Jonathan Chang, Senior MD & Senior Research Analyst at Leerink Partners]

Thanks for taking the questions.

[Operator]

Thank you. Our next question comes from the line of Anupam Rama from JPMorgan. Please go ahead, sir.

[Anupam Rama, Executive Director - Biotechnology Equity Research at JP Morgan]

Hey, guys. Thanks so much for taking the question. You talked about the second half growth levers with this guard and you talked about the stabilization of Zejula looking to the second half. But just wondering if there's any outsized growth expected from the broader commercial franchise in terms of NUZYRA or Xdura that might contribute meaningfully to getting to guidance and profitability by the end of the year?

[Josh Smiley, President & COO at Zai Lab]

Thanks, Annabalm. It's Josh. Yeah, I think first, if you look at Zacduro and Ogtiro, both products are in the beginnings of the launch phases. We're really excited about the potential of both products. I think with Zacduro, should expect to see continued good growth, as we mentioned in the beginning of the call.

[Josh Smiley, President & COO at Zai Lab]

I think the demand is strong. We're still working through supply and making sure we can fill as much of that demand as possible. So the more product we can get into the country, the better off we'll be. And we should expect to see continued good growth there, somewhat limited, I think, in the second half of the year by supply constraints. But I think long term for this product, we're quite excited.

[Josh Smiley, President & COO at Zai Lab]

I think with Oncairo, we're taking a focused approach to the launch here, but also would expect to see good growth in the second half of the year. We have good pricing on NRDL. And of course, this is a product for patients with the mutation that provides really significant benefit. So yes, I think as you look at your models, having more growth in the second half of the year from those products is important. NUZYRA continues to be a strong driver of growth for us and expect that to continue in the second half as well.

[Anupam Rama, Executive Director - Biotechnology Equity Research at JP Morgan]

Thanks so much for taking our question.

[Josh Smiley, President & COO at Zai Lab]

Thanks, Anupol. Thank

[Operator]

you. We will now take our next question from the line of Igor Notrebovitz from Citigroup. Please ask your question, Igor.

[Yigal Nochomovitz, Director at Citigroup]

Yes. Hi, thank you very much. I had a bunch of questions on the bema topic. So obviously, you can't tell us the data, but you have said that it's statistically significant and clinically meaningful. Obviously, in FIGHT, in the Phase II FIGHT trial, OS delta was over thirteen months.

[Yigal Nochomovitz, Director at Citigroup]

So can you just help put in perspective what the expectations should be around the OS data for forty two thousand one hundred one in terms of the expected delta? And then for 01/2002, given that it's with nivo, I'm also curious whether you would expect that the delta would be less because you have nivo on both sides of the equation? And then also in China, what's going to be the regimen that is more likely to get the uptake in gastric? Is it with the chemo or also with the nivo? Thank you.

[Yigal Nochomovitz, Director at Citigroup]

And then I have another one on PLL3. Thank you.

[Josh Smiley, President & COO at Zai Lab]

I'll ask Rafael to jump in here on the question to go. Thanks.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

Yeah, I mean, I think with regards to the magnitude of the treatment effect, I'm afraid I can't comment because it's embargoed until the presentation, obviously. But I think other than the qualitative statements I'm doing and I made with regards to the clinical of the differences between placebo and edema, I can't really say very much more. So, stay tuned for that. I think with regards to the differences in survival between what is seen in one hundred one and one hundred and two, again, I would be speculating. The difference in survival of neointastric and G junction tumors is not very pronounced.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

You know, it's about a couple of months or so. You know, if one maintains, you know, the same sort of survival difference with bema, you know, you could potentially have an additive effect of those two months, but again, difficult to speculate. And we will know when we see, you know, when we see the data. And then in terms of uptake in China, it's difficult to tell, but the 101 is a particularly important study for us in China. The use of Nivo is relatively low, but there are other PD-one inhibitors, and many patients are treated without PD-one as well.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

And so chemotherapy plus FEMA, if it's perceived to be a very important advance, it will be used. So, it remains to be seen how much traction PD-one inhibitor will have, but, you know, there will be a difference in time also of the launch of one versus the other, which may affect as well uptake of potential PD-one. So, I'm afraid I can't really give you a concise I mean, a concise and accurate answer, but this is sort of my qualitative statements.

[Yigal Nochomovitz, Director at Citigroup]

Okay. All right. And then for the DLL3, so it looks like the you're somewhere in the one point six mg per kg for the dose that you've done so far. So with the combo with Atezo, how are you thinking about the combo dose for DLL3? Do you think you can stay at the one point six or may you need to be a little lower potentially for combo tox?

[Yigal Nochomovitz, Director at Citigroup]

Or do you see that it's not you're not gonna have, you know, overlapping tox and it's fine just to go with what you saw already in the monotherapy?

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

It's a bit premature to say with certainty, but the toxicity of these two agents are very different. And actually at one point six, thirteen ten is very well tolerated. We only had 6% grade three and above. And so, with the non overlapping toxicities, we believe that the combinability with one point six is very possible, and we're working towards that. And then, in addition to that, we're also trying to do an etoposide sparing regimen as well, and we continue to study the triplet with carbo.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

So, all this data will, as it matures in terms of follow-up and response and safety, we will present it most likely in the first half of next year.

[Yigal Nochomovitz, Director at Citigroup]

Okay. And if I could have one for Josh. Josh, obviously, there's a lot of momentum with efgart, but you have these four new trials, the lupus seronegative gMG, myasthenia gravisorre's disease. I'm just kind of curious, when you put all those together, how does that change your perspective on the potential overall peak for this drug relative to the initial rollout of indications? Can you just kind of frame that so we can get a sort of a zip code of how much more that's going to drive the overall franchise long term? Thank you.

[Josh Smiley, President & COO at Zai Lab]

Sure. Thanks, Igor. First, we've said consistently that over time, we see a greater than billion dollar sales potential on an annual basis in China for VIBGART when you look at the various indications. And I think we're certainly on the way there. Of course, today, the opportunity is to drive penetration, usage and duration in GMG.

[Josh Smiley, President & COO at Zai Lab]

But I think if you look at the indications you mentioned, certainly those that are complementary in the GMG space can add somewhere in the range of twenty five percent or more sort of patient opportunity within gMG. So this would be ocular and then seronegative. Lupus, we're excited to see the data. That's a very big potential indication, but still more to come. I think myositis and Sorkin's, pretty big indications.

[Josh Smiley, President & COO at Zai Lab]

So I think if you look at the total patient population, then add in thyroid eye disease, we go from a starting point of about one hundred and seventy thousand patients with gMG in China, to something well over five hundred thousand when you start to put these indications together. So, as we've said, the $1,000,000,000 type of opportunity, you don't have to assume huge penetration rates or otherwise. And again, I think the data that we've seen so far that have been released, give us a lot of confidence that there's going to be significant benefits across the various indications here. But for us today, it's drive penetration in gMG, look forward to the supplementary indications that can build out that patient population. For 2026, get Hytrulo approved through NRDL.

[Josh Smiley, President & COO at Zai Lab]

We think that'll bring significant patient benefits, then supplement that with the prefilled syringe, which we'll work towards submitting later this year. So a lot to come in VIMGART and a lot to be excited about in terms of date, the current performance and things to look forward to.

[Yigal Nochomovitz, Director at Citigroup]

Got it. Okay. Thank you very much.

[Operator]

Thank you. We will now take our next question from the line of Zhiyi Cheng from Goldman Sachs. Please go ahead, Zhiyi.

[Ziyi Chen, Research Analyst at Goldman Sachs]

Hi, thank you for taking my questions. Two questions from me. The first one is for Vivint Gard. I understand that management mentioned in first quarter, there has been some inventory management that into weaker sales. And I'm wondering was Vivint Gard still under this type of inventory management in second quarter?

[Ziyi Chen, Research Analyst at Goldman Sachs]

And how should we look into the second half and particularly in July? What has been the momentum versus previous quarter previous months in the first half? And also, we look at our arginx, they observed very strong, you know, subQ formulation uptake. And what will be the strategy in China between subcu and IV formulation for Vifgar from your perspective? And my second question is regarding the DIR-three ADC.

[Ziyi Chen, Research Analyst at Goldman Sachs]

Now the asset is going to be moving into pivotal study pretty soon. So at this juncture, we're trying to understand a bit more about the company strategy in The US market. Are you still actively looking for a partner for clinical development, or the stress is going to be pivoting towards self sponsoring the pivotal study, and potentially future commercialization to capture all the economics? Thank you.

[Josh Smiley, President & COO at Zai Lab]

Thanks. I'll start on DevGuard and then turn it to Rafael for the discussion on DLL3. I think first on the inventory piece, I just would remind you that in 2024 was our first year of launch. And as you would in any new launch product on NRDL, built inventory through the year to keep up with demand. And at the end of

[Josh Smiley, President & COO at Zai Lab]

Q4, stock the channel for the approval of Hytrolo. So you do have some inventory build in the 2024 numbers, again, as you would expect. I think first half of this year for Vivgart, we tried to manage that inventory closely. And I would say in the second half of the year, you should expect normal types of build to prepare for 2026 and what we presume will be robust sales, including, as I mentioned in the last discussion or question, our expectation that High Trullo will be added to NRDL. And then I think to your question, I think from what we see around the world where High Trullo is available, it becomes a very important treatment option and treatment choice relative to IV.

[Josh Smiley, President & COO at Zai Lab]

So I think we would expect over time that Hytrolo would become a very meaningful formulation for patients with the gMG. And again, we'll pursue NRDL appropriately in that regard. So I think as you get into 2026, you should expect to see a shift from, of course, today almost exclusively IV use to significant high trulo and then certainly followed in coming years by the PFS version as well. I'll ask Rafael to comment then on DLL3.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

Yeah, so with regards to the pivotal trial, we have said before that we've been in discussions with FDA, and this accelerated approval pathway is still viable. It will be a randomized trial, and we're on track to initiate this trial before the end of the year. We have to align on the dose, but as we present at ASCO, one point six mg per kilogram is looking very strong and probably the best sort of combination on benefit risk. We will continue to generate data. We will present some data as well on the durability, But our goal is to get agreement on the dose and initiate this trial.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

And, you know, with regards to partnership, our initial pursuit is going to be to go ahead and launch this trial ourselves. And, you know, with the discussions, I think we may remain open, but we're pretty committed to moving this forward by ourselves, and this study will be launched by us.

[Ziyi Chen, Research Analyst at Goldman Sachs]

Got it. Thank you.

[Operator]

Thank you. Our next question comes from Lee Watson from Cantor. Please go ahead, Lee.

[Li Watsek, Director at Cantor Fitzgerald]

Hey, good morning, guys. Thanks for taking our questions. I have two pipeline questions. First on BIMA, just wondering what steps are left to file in China. And is it possible to get an RDL listing in 2027, or should we assume it's more of a 2028 event?

[Li Watsek, Director at Cantor Fitzgerald]

And then for DL3 ADC, how are you guys thinking about the data from Henry DL3 program next month? Any re suit you're on program? And for data update later this year, what additional information do you hope to share relative to the ASCO update? Thank you.

[Josh Smiley, President & COO at Zai Lab]

Thanks, Lee. I think first on Bema, and Rafael can provide some more comments here. But our focus now is to get the file submitted and approved. And as you know, NRDL timing is dependent on when you're approved during the year, and that always changes and everything else. So, we're just focused right at this point on getting that product approved as quickly as possible, and then moving as quickly as possible into NRDL listing.

[Josh Smiley, President & COO at Zai Lab]

So, we'll have more to come there as we move through the regulatory process. I think Rafael, if you could jump in on both of the questions.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

Yeah, so with regards to be now, we have breakthrough designation, and we will be working with Amgen, our partner in potential registration in China expeditiously. We obviously will have to do a pre BLA meeting and get feedback from CVE. And so, this is a priority for us. And again, we're in discussions with Anjin as to the initiation of the submission. With regards to the competition from Hungary, yeah, we know, I think what everybody knows, which is that they're presenting word lung later on next month.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

And I would just only highlight the fact that, you know, products can, especially AUC is gonna be differentiated by many factors, including the type of antibody, the epitope, the ability, the payload, the linker, etcetera. We think that we have the best in class antibody as we showed at ASCO a couple of months ago with seventy nine percent response rate, which is, yes, confirmed and unconfirmed, but among the highest that has ever been seen and great activity in the brain as well. And we are really advanced already with regards to, you know, getting the dose ready for execution of the Phase three study, as I mentioned before. So, we have, you know, good time difference with the rest of the competition. And in terms of what we will present, there will be another four months worth of data, which will include updated response and time to event endpoints, both durability of response, as well as progression free survival.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

And importantly, we will also we're characterizing these responses in the brain because they are really unprecedented, and it's something that we're hearing a lot from our investigators in terms of the high incidence and the durability. So, you will see run on, which is the way that brain metastases are assessed as well as response for the brain metastases in the totality of the population. And we may present some data on biomarker as well. But I think the principal update will be updated responses on the dose optimization, as well as durability.

[Operator]

All right. Thank you. We will now take our next question from the line of Jack Lin from Morgan Stanley. Please go ahead, Jack.

[Jack Lin, Equity Research Analyst at Morgan Stanley]

Hi. Thank you for taking my question. I have two brief questions. First one regarding the DIL three. I just would hope to, I think, clarify a bit on the the catalyst or data timeline.

[Jack Lin, Equity Research Analyst at Morgan Stanley]

So if I could confirm again in terms of when we might expect the next data update from the second line treatment and especially, I think, on the expansion cohort. And also, I think it was mentioned previously at the ASCO call, you know, we also have first line data upcoming. I just like to reconfirm on the timeline to expect for that. And and the second one, I think, briefly on whether the company has any view or update in terms of, you know, some of the new the policy news update regarding commercial insurance ramp up, and if there's any implications or changes to our commercial strategy for products like Optune? Just these two questions. Thank you.

[Josh Smiley, President & COO at Zai Lab]

Rafael, why don't you go ahead? Yeah. So,

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

for DLO-three thirteen-ten, we expect to provide this update before the end of the year on second line, as you mentioned, I explained before what the nature of the update will be. We had 89 patients at ASCO. Here we will have upwards of 110 patients, and obviously, more months of follow-up, as I mentioned. With regards to first line, because we are prioritizing this second line study, we continue to enroll in the first line cohorts, both with Adezo and Adezo Encargo. If we have meaningful data, then perhaps it will be this year, but most likely it will be next year, early next year that we will provide that information.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

We are spending timing enrolling in the second line and standing up the phase three study. So, I hope this helps with cadence of data. And then just to mention that we are doing well on the neuroendocrine carcinoma and neuroendocrine tumors. These are distinct cohorts, and we will provide an update as soon as we have meaningful information on that. But so far, the accrual has been very favorable.

[Rafael Amado, President and Head of Global Research & Development at Zai Lab]

So, we think that it will be relatively quickly. We want to wait until we see enough durability before we actually, you know, so that we can present a meaningful update.

[Josh Smiley, President & COO at Zai Lab]

And Jack, I think on the commercial insurance policy changes, we're quite encouraged by the trend here. You know, keep in mind, I know you know this, you know, the reimbursement or funding for innovative drugs in China through a commercial insurance channel is considerably less than 10% today. So I think as we look at policy changes to try to drive that number higher, it certainly benefits us as we launch new innovative products, not just Optune or TT Fields, but any of the products we've discussed today. There's always a lag between when they're approved through NMPA and when they are eligible for NRDL listing. So I think that time period as commercial insurance expands gives us a really good opportunity as we get drugs like BMA approved or CAR XT or others to leverage these channels and drive good experience and sales in that stub period between approval and NRDL listing.

[Josh Smiley, President & COO at Zai Lab]

So, I think that's important. Certainly, as it relates to Optune, and as we think about Panova or the opportunity in pancreatic cancer, I think that's one that we'll certainly be able to time that well with some of these policy changes. So again, I think positive for all companies who are bringing innovative drugs to market in China. And we look forward to participating and taking advantage of those policy changes.

[Jack Lin, Equity Research Analyst at Morgan Stanley]

Got it. Thank you so much.

[Operator]

All right. Thank you. We have now come to the end of the question and answer session. Thank you all very much for your questions. I'd now like to turn the conference back to doctor Samantha Du for her closing comments.

[Samantha Du, Founder, Chairperson, CEO & Director at Zai Lab]

Thank you, operator. 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 you again after the 2025. Operator, you may now disconnect this call.

[Operator]

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.

Participants

Executives

• Christine Chiou, SVP & Head - Investor Relations
• Samantha Du, Founder, Chairperson, CEO & Director
• Josh Smiley, President & COO
• Rafael Amado, President and Head of Global Research & Development
• Yajing Chen, Chief Financial Officer

Analysts

• Jonathan Chang, Senior MD & Senior Research Analyst at Leerink Partners
• Anupam Rama, Executive Director - Biotechnology Equity Research at JP Morgan
• Yigal Nochomovitz, Director at Citigroup
• Ziyi Chen, Research Analyst at Goldman Sachs
• Li Watsek, Director at Cantor Fitzgerald
• Jack Lin, Equity Research Analyst at Morgan Stanley