Zai Lab Announces Third Quarter 2023 Financial Results and Recent Corporate Updates
- Total product revenue of
$69.2 million for the third quarter of 2023, representing 22% y-o-y growth; 27% y-o-y growth at constant exchange rate (CER)
- VYVGART® (efgartigimod alfa injection) achieved
$4.9 million sales since its commercial launch in September inChina
- Strong balance sheet with a cash position of
$822.2 million as ofSeptember 30, 2023 , compared to$876.4 million as ofJune 30, 2023
- Company to host conference call and webcast on
November 8, 2023 , at8:00 a.m. ET
“During the third quarter, we achieved important milestones, including the successful launch of VYVGART in
“Our commercial team navigated macro-level challenges in the third quarter to achieve y-o-y net product revenue growth of 27% on a constant currency basis,” said
Third Quarter 2023 Financial Results
- Product revenues were
$69.2 million for the third quarter of 2023, compared to$57.0 million for the same period in 2022, representing 22% y-o-y growth and 27% y-o-y growth at CER. This increase was primarily driven by increased sales volumes, the launch of VYVGART, and decreased negative effects from the COVID-19 pandemic. Our revenue growth was slowed by the effects on hospital and physician practices from the recent industry-wide anti-corruption enforcement efforts inChina . Product revenues in the third quarter of 2023, compared to the same period in 2022, included:
$41.6 million for ZEJULA, which increased from$39.2 million , as ZEJULA, which is in its third year on the NRDL, continued to be the leading PARP inhibitor in hospital sales for ovarian cancer inChina ;$11.6 million for Optune, which increased from$10.7 million , supported by increased patient access to this product in the private-pay market;$5.7 million for QINLOCK, which increased from$5.5 million , supported by the NRDL listing inMarch 2023 ;$5.5 million for NUZYRA, which increased from$1.5 million , supported by the NRDL listing inMarch 2023 ; and$4.9 million for VYVGART, compared to nil, due to the launch of VYVGART inSeptember 2023 .
- Research and Development (R&D) expenses were
$58.8 million for the third quarter of 2023, compared to$99.5 million for the same period in 2022. This decrease was primarily due to a decrease in licensing fees in connection with decreased upfront and milestone payments for our licensed and collaboration agreements.
- Selling, General and Administrative expenses were
$68.6 million for the third quarter of 2023, compared to$66.6 million for the same period in 2022. This increase was primarily due to higher general selling expenses to support new product launches, partially offset by a decrease in professional services fees.
- Net loss was
$69.2 million for the third quarter of 2023, or a loss per ordinary share attributable to common stockholders of$0.07 , compared to a net loss of$161.2 million for the same period in 2022, or a loss per ordinary share of$0.17 . The decrease in net loss was primarily due to increase of product revenue, the decrease of licensing fees, and the shift from foreign currency loss to gain.
- Cash and cash equivalents, short-term investments and restricted cash totaled
$822.2 million as ofSeptember 30, 2023 , compared to$876.4 million as ofJune 30, 2023 .
Recent Product Highlights and Corporate Updates
Below are key product and corporate updates since our last earnings release:
Commercial Products
- VYVGART (efgartigimod, FcRn): In
September 2023 , we launched VYVGART as an add-on to standard therapy for the treatment of adult patients with gMG who are anti-acetylcholine receptor (AChR) antibody positive in mainlandChina , increasing our number of commercial products to five. We are in the negotiation process for VYVGART’s inclusion on the National Reimbursement Drug List (NRDL) to help support increased patient access for this therapy.
- ZEJULA (niraparib, PARP): In
September 2023 , we conducted the final overall survival (OS) analysis for the Phase 3 NORA study in Chinese patients with platinum-sensitive recurrent ovarian cancer, which supports the NMPA’s approval of ZEJULA for patients with recurrent ovarian cancer inChina . The final OS results showed that niraparib maintenance treatment in the recurrent setting provides a favorable trend in OS irrespective of gBRCA mutation status compared with placebo. We expect to present detailed results at an upcoming medical conference.
Oncology Pipeline
- KRAZATI® (adagrasib, KRASG12C):
- First-line non-small cell lung cancer (NSCLC): In
October 2023 ,Zai Lab partner Mirati Therapeutics, Inc. (Mirati) announced updated results from the KRYSTAL-7 Phase 2 study evaluating adagrasib combined with pembrolizumab in first-line KRASG12C-mutated NSCLC at theEuropean Society of Medical Oncology Congress (ESMO) 2023. The results demonstrate a manageable safety profile and early signs of durability of adagrasib in combination with a checkpoint inhibitor in the first-line NSCLC setting. We are participating in the study in mainland China, Hong Kong, Macau and Taiwan (collectively, Greater China).
- Second-line+ NSCLC: In
September 2023 , Mirati presented two-year follow-up data from a pooled analysis of the Phase 1/1b Cohort and Phase 2 Cohort A for the KRYSTAL-1 study in previously treated patients with KRASG12C-mutated NSCLC at the 2023World Conference on Lung Cancer (WCLC). In the pooled analysis, adagrasib demonstrated durable efficacy and a manageable long-term safety profile. We are participating in the ongoing confirmatory Phase 3 KRYSTAL-12 study in previously treated patients with KRASG12C-mutated NSCLC inGreater China .
- First-line non-small cell lung cancer (NSCLC): In
- Repotrectinib (ROS1/TRK):
- NTRK-positive solid tumors: In
August 2023 , theCenter for Drug Evaluation (CDE) of the NMPA granted Breakthrough Therapy Designation (BTD) for repotrectinib for the treatment of patients with advanced solid tumors that have an NTRK gene fusion who have progressed following treatment with TRK tyrosine kinase inhibitors (TKIs). This BTD was supported by data from both global and Chinese patients enrolled in the Phase 1/2 TRIDENT-1 study.
- ROS1-positive NSCLC: In
August 2023 ,Zai Lab partnerBristol Myers Squibb (BMS) announced updated results from the registrational TRIDENT-1 study, demonstrating that repotrectinib continued to demonstrate high response rates and durable responses, including robust intracranial responses, in patients with ROS1-positive locally advanced or metastatic NSCLC who were TKI-naïve or previously treated with one TKI and no chemotherapy. We are participating in the study inGreater China .
- Based on results from the TRIDENT-1 trial, the
U.S. Food and Drug Administration (FDA) accepted the New Drug Application (NDA) submitted by BMS for repotrectinib in ROS1-positive NSCLC and granted Priority Review, with a Prescription Drug User Fee Act (PDUFA) goal date ofNovember 27, 2023 .
- The NDA we submitted to the NMPA for repotrectinib in ROS1-positive NSCLC has been accepted with priority review.
- Based on results from the TRIDENT-1 trial, the
- NTRK-positive solid tumors: In
- TIVDAK® (tisotumab vedotin): In
October 2023 ,Zai Lab partner Seagen Inc. and Genmab A/S presented results from the Phase 3 innovaTV 301 randomized global trial at the ESMO 2023Congress in recurrent or metastatic cervical cancer patients with disease progression on or after front-line therapy. TIVDAK demonstrated superior OS, progression-free survival (PFS) and objective response rate, compared to chemotherapy alone, and there were no new safety signals. We are participating in the global trial and extension study inGreater China .
- Odronextamab (CD20xCD3): In
September 2023 ,Zai Lab partner Regeneron announced that the FDA has accepted for Priority Review the Biologics License Application (BLA) for odronextamab to treat adult patients with relapsed/refractory (R/R) follicular lymphoma (FL) or R/R diffuse large B-cell lymphoma (DLBCL), who have progressed after at least two prior systemic therapies, with a PDUFA goal date ofMarch 31, 2024 . InAugust 2023 , theEuropean Medicines Agency (EMA) accepted for review the Marketing Authorization Application for odronextamab for the same indications.
- ZL-1211 (Claudin18.2): Based on a review of the competitive landscape and market opportunity, we decided to terminate ZL-1211 for internal development.
- Tumor Treating Fields: In
August 2023 ,Zai Lab partner NovoCure Limited announced that the Phase 3 INNOVATE-3 clinical trial of TTFields together with paclitaxel in patients with platinum-resistant ovarian cancer did not meet its primary endpoint of OS at the final analysis. We did not participate in this study.
Autoimmune Disorders, Infectious Disease, and Neuroscience Pipeline
- Efgartigimod (FcRn): In
September 2023 , the CDE of China’s NMPA granted BTD for efgartigimod alfa injection (subcutaneous injection) (efgartigimod SC) in CIDP. This BTD was supported by positive data from both global and Chinese patients enrolled in the ADHERE study.
- KarXT (xanomeline-trospium, M1/M4-agonist):
- Schizophrenia: In
September 2023 ,Zai Lab partner Karuna Therapeutics, Inc. (Karuna) announced that it had submitted an NDA to the FDA for the treatment of schizophrenia, supported by data from three positive registrational trials. We continue to enroll patients in the registrational bridging study in mainlandChina .
- Alzheimer’s disease psychosis (ADP): Karuna initiated the Phase 3 ADEPT-2 and ADEPT-3 trials in ADP in the third quarter. We plan to participate in these studies in
Greater China next year.
- Schizophrenia: In
Corporate Update
- Organizational update: In
September 2023 ,Zai Lab appointedRobert J. Brown , M.D. as Chief Medical Officer, Oncology.Dr. Brown is an oncology drug development leader, with more than 16 years of translational, research, and clinical development expertise in the areas of oncology, immunology, and neurology.Dr. Brown reports to Dr.Rafael Amado , President, Head ofGlobal Oncology Research and Development atZai Lab , and provides strategic leadership and support with respect to the clinical development of our oncology pipeline.
Anticipated Major Milestones in 2023 / 2024
Oncology
ZEJULA (niraparib, PARP)
Zai Lab to present the final OS analysis for the Phase 3 NORA study in Chinese patients with platinum-sensitive recurrent ovarian cancer at an upcoming medical conference in 2024.
Tumor Treating Fields
- NovoCure to submit a Premarket Approval Application with the FDA in second-line+ NSCLC post-platinum progression by the end of 2023.
- NovoCure to provide a topline data readout from the phase 3 METIS clinical trial in brain metastases in the first quarter of 2024. We are participating in the study in
Greater China .
- NovoCure to provide a topline data readout from the phase 3 PANOVA-3 clinical trial in locally advanced pancreatic cancer in the second half of 2024. We are participating in the study in
Greater China .
Repotrectinib (ROS1/TRK)
- Potential NMPA approval of the NDA in locally advanced or metastatic ROS1-positive NSCLC in 2024.
KRAZATI (adagrasib, KRASG12C)
Zai Lab to submit an NDA to the NMPA in second-line+ KRASG12C-mutated NSCLC in 2024.
Bemarituzumab (FGFR2b)
Zai Lab to join the global Phase 3 FORTITUDE-102 study of bemarituzumab in combination with nivolumab and chemotherapy in first-line gastric or gastroesophageal junction cancer inGreater China in the first half of 2024.
ZL-1310 (DLL3 ADC)
Zai Lab to initiate a global Phase 1 study in relapsed and refractory second-line+ small cell lung cancer (SCLC) who have progressed after platinum-based treatment in the first quarter of 2024.
Autoimmune Disorders, Infectious Disease, and Neuroscience
Efgartigimod (FcRn)
- argenx to report topline data from the registrational Phase 3 ADVANCE-SC trial of efgartigimod SC in immune thrombocytopenia (ITP) in the fourth quarter of 2023. We are participating in the study in
Greater China .
- argenx to report topline data from the registrational Phase 3 ADDRESS trial of efgartigimod SC in pemphigus around year-end 2023. We are participating in the study in
Greater China .
- argenx to file the supplemental BLA in CIDP by the end of 2023.
- argenx to initiate a registrational study of efgartigimod in thyroid eye disease (TED) in the fourth quarter of 2023. We plan to participate in the program in
Greater China in 2024.
- Potential NMPA approval of the supplemental BLA for efgartigimod SC in gMG in 2024.
KarXT (xanomeline-trospium, M1/M4-preferring muscarinic agonist)
- Karuna to launch KarXT for the treatment of schizophrenia, if approved by the FDA, in the second half of 2024.
XACDURO® (Sulbactam-Durlobactam)
- Potential NMPA approval of the NDA in infections caused by susceptible isolates of Acinetobacter baumannii-calcoaceticus complex in 2024.
ZL-1102 (IL-17 Humabody®)
Zai Lab to initiate a global Phase 2 study in chronic plaque psoriasis in 2024.
Conference Call and Webcast Information
Details are as follows:
Registration Link: https://register.vevent.com/register/BI87a7a83f6a6441279fddbaae217dd092
All participants must use the link provided above to complete the online registration process in advance of the conference call. Dial-in details will be in the confirmation email which the participant will receive upon registering.
A replay will be available shortly after the call and can be accessed by visiting the Company's website.
About
Zai Lab (NASDAQ: ZLAB; HKEX: 9688) is an innovative, research-based, commercial-stage biopharmaceutical company based in China and the
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Non-GAAP Measures
In addition to results presented in accordance with GAAP, we disclose growth rates that have been adjusted to exclude the impact of changes due to the translation of foreign currencies into
Zai Lab Forward-Looking Statements
This press release contains forward-looking statements relating to our strategy and plans; potential of and expectations for our business and pipeline programs; clinical development programs and related clinical trials; clinical trial data, data readouts, and presentations; risks and uncertainties associated with drug development and commercialization; regulatory discussions, submissions, filings, and approvals and the timing thereof; the potential benefits, safety, and efficacy of our products and product candidates and those of our collaboration partners; the anticipated benefits and potential of investments, collaborations, and business development activities; our future financial and operating results; and financial guidance, including with respect to our planned sources and uses of cash and our expected path to profitability. All statements, other than statements of historical fact, included in this press release are forward-looking statements, and can be identified by words such as “aim,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “plan,” “possible,” “potential,” “will,” “would,” and other similar expressions. Such statements constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees or assurances of future performance. Forward-looking statements are based on our expectations and assumptions as of the date of this press release and are subject to inherent uncertainties, risks, and changes in circumstances that may differ materially from those contemplated by the forward-looking statements. We may not actually achieve the plans, carry out the intentions, or meet the expectations or projections disclosed in our forward-looking statements, and you should not place undue reliance on these forward-looking statements. Actual results may differ materially from those indicated by forward-looking statements as a result of various important factors, including but not limited to (1) our ability to successfully commercialize and generate revenue from our approved products; (2) our ability to obtain funding for our operations and business initiatives; (3) the results of our clinical and pre-clinical development of our product candidates; (4) the content and timing of decisions made by the relevant regulatory authorities regarding regulatory approvals of our product candidates; (5) risks related to doing business in
Our
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Unaudited Condensed Consolidated Balance Sheets
(In thousands of
2023 |
2022 |
|||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | 788,806 | 1,008,470 | ||||
Short-term investments | 31,600 | — | ||||
Accounts receivable (net of allowance for credit loss of |
41,596 | 39,963 | ||||
Notes receivable | 23,679 | 8,608 | ||||
Inventories, net | 44,229 | 31,621 | ||||
Prepayments and other current assets | 29,821 | 35,674 | ||||
Total current assets | 959,731 | 1,124,336 | ||||
Restricted cash, non-current | 1,792 | 803 | ||||
Long term investments | 4,466 | 6,431 | ||||
Prepayments for equipment | 144 | 1,396 | ||||
Property and equipment, net | 55,282 | 57,863 | ||||
Operating lease right-of-use assets | 16,398 | 19,512 | ||||
Land use rights, net | 3,057 | 6,892 | ||||
Intangible assets, net | 1,568 | 1,511 | ||||
Long-term deposits | 1,256 | 1,396 | ||||
Total assets | 1,043,694 | 1,220,140 | ||||
Liabilities and shareholders’ equity | ||||||
Current liabilities: | ||||||
Accounts payable | 55,020 | 65,974 | ||||
Current operating lease liabilities | 6,886 | 7,050 | ||||
Other current liabilities | 62,990 | 66,818 | ||||
Total current liabilities | 124,896 | 139,842 | ||||
Deferred income | 27,686 | 21,360 | ||||
Non-current operating lease liabilities | 9,808 | 13,343 | ||||
Other non-current liabilities | 325 | — | ||||
Total liabilities | 162,715 | 174,545 | ||||
Commitments and contingencies | ||||||
Shareholders’ equity | ||||||
Ordinary shares (par value of |
6 | 6 | ||||
Additional paid-in capital | 2,954,362 | 2,893,120 | ||||
Accumulated deficit | (2,100,551 | ) | (1,861,360 | ) | ||
Accumulated other comprehensive income | 47,952 | 25,685 | ||||
Treasury Stock (at cost, 4,893,130 and 2,236,280 shares as of |
(20,790 | ) | (11,856 | ) | ||
Total shareholders’ equity | 880,979 | 1,045,595 | ||||
Total liabilities and shareholders’ equity | 1,043,694 | 1,220,140 |
Unaudited Condensed Consolidated Statements of Operations
(In thousands of $, except for number of shares and per share data)
Three Months Ended |
Nine Months Ended |
|||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Revenues: | ||||||||||||
Product revenue, net | 69,228 | 56,963 | 200,889 | 150,633 | ||||||||
Collaboration revenue | — | 577 | — | 1,806 | ||||||||
Total revenues | 69,228 | 57,540 | 200,889 | 152,439 | ||||||||
Expenses: | ||||||||||||
Cost of sales | (25,479 | ) | (20,044 | ) | (70,579 | ) | (53,094 | ) | ||||
Research and development | (58,767 | ) | (99,524 | ) | (183,920 | ) | (219,462 | ) | ||||
Selling, general, and administrative | (68,552 | ) | (66,555 | ) | (198,982 | ) | (186,947 | ) | ||||
Gain on sale of intellectual property | — | — | 10,000 | — | ||||||||
Loss from operations | (83,570 | ) | (128,583 | ) | (242,592 | ) | (307,064 | ) | ||||
Interest income | 9,172 | 3,872 | 29,493 | 5,235 | ||||||||
Foreign currency gain (loss) | 4,852 | (40,442 | ) | (26,315 | ) | (73,052 | ) | |||||
Other income (expense), net | 394 | 3,963 | 223 | (6,415 | ) | |||||||
Loss before income tax and share of loss from equity method investment | (69,152 | ) | (161,190 | ) | (239,191 | ) | (381,296 | ) | ||||
Income tax expense | — | — | — | — | ||||||||
Share of loss from equity method investment | — | — | — | (221 | ) | |||||||
Net loss | (69,152 | ) | (161,190 | ) | (239,191 | ) | (381,517 | ) | ||||
Net loss attributable to ordinary shareholders | (69,152 | ) | (161,190 | ) | (239,191 | ) | (381,517 | ) | ||||
Loss per share - basic and diluted | (0.07 | ) | (0.17 | ) | (0.25 | ) | (0.40 | ) | ||||
Weighted-average shares used in calculating net loss per ordinary share - basic and diluted | 968,767,730 | 959,085,960 | 965,060,570 | 957,439,910 | ||||||||
Loss per American Depositary Shares (“ADS”) - basic and diluted | (0.71 | ) | (1.68 | ) | (2.48 | ) | (3.98 | ) | ||||
Weighted-average ADSs used in calculating net loss per ADS - basic and diluted | 96,876,773 | 95,908,596 | 96,506,057 | 95,743,991 |
Unaudited condensed consolidated statements of comprehensive loss
(In thousands of $)
Three Months Ended |
Nine Months Ended |
|||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Net loss | (69,152 | ) | (161,190 | ) | (239,191 | ) | (381,517 | ) | ||||
Other comprehensive income, net of tax of nil: | ||||||||||||
Foreign currency translation adjustments | (4,228 | ) | 35,062 | 22,267 | 63,194 | |||||||
Comprehensive loss | (73,380 | ) | (126,128 | ) | (216,924 | ) | (318,323 | ) |
Non-GAAP Measures
(In thousands of $)
Three Months Ended |
Year over Year % Growth | Nine Months Ended |
Year over Year % Growth | |||||||||||||||||||||
2023 | 2022 | As reported | At CER* | 2023 | 2022 | As reported | At CER* | |||||||||||||||||
Product revenue, net | 69,228 | 56,963 | 22 | % | 27 | % | 200,889 | 150,633 | 33 | % | 41 | % | ||||||||||||
Loss from operations | (83,570 | ) | (128,583 | ) | (35 | )% | (33 | )% | (242,592 | ) | (307,064 | ) | (21 | )% | (17 | )% |
* The growth rates at constant exchange rates (CER) were calculated assuming the same foreign currency exchange rates were in effect for the current and prior year periods.
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Source: Zai Lab Limited