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ZL

Zai Lab Ltd (ZLAB)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 delivered 22% y/y total revenue growth to $106.5M, with product net revenue up 21% y/y; adjusted operating loss improved 25% y/y to $37.1M as the company reaffirmed FY25 revenue guidance of $560–$590M and remains on track for adjusted operating profitability in Q4’25 .
  • Mixed vs consensus: revenue missed ($106.5M vs $115.9M*) while EPS (ADS) beat (-$0.45 vs -$0.55*) as VYVGART saw seasonal IV-related softness and Q4 inventory timing, followed by strong March/April utilization rebound that supports a return to sequential growth in the balance of 2025 .
  • Commercial portfolio broadened with continued ZEJULA and NUZYRA growth; early contributions from AUGTYRO and XACDURO, with multiple potential 2025 catalysts including bemarituzumab Phase 3 readouts, TTFields filing in China, and KarXT review progress .
  • Pipeline momentum building: ZL‑1310 (DLL3 ADC) ASCO update and FDA Fast Track; LRRC15 ADC (ZL‑6201) and IL‑13/IL‑31 bispecific (ZL‑1503) advancing toward first-in-human; cash and investments of $857.3M provide funding runway for catalysts and the profitability target .

Values retrieved from S&P Global for consensus estimates marked with an asterisk.

What Went Well and What Went Wrong

  • What Went Well

    • Y/y growth with operating leverage: total revenue +22% to $106.5M; GAAP operating loss improved 20% to $56.3M; adjusted operating loss improved 25% to $37.1M .
    • Commercial breadth: ZEJULA ($49.5M, +9% y/y) and NUZYRA ($15.1M, +53% y/y) continued to grow; VYVGART ($18.1M, +37% y/y) built on NRDL access and rising penetration .
    • Management confidence and catalysts: “We anticipate accelerating sales growth in the next 3 quarters… on track to achieve profitability by Q4” and reaffirmed FY25 revenue guidance; ZL‑1310 registrational trial expected 2H’25 .

  • What Went Wrong

    • Sequential softness and consensus miss: Q1 total revenue ($106.5M) below consensus ($115.9M*), with seasonal IV treatment patterns around Chinese New Year and Q4/Hytrulo inventory dynamics impacting VYVGART sequentially; management cites record April utilization and improving trends .
    • R&D step-up tied to BD: R&D rose to $60.7M (+11% y/y) primarily from $20.0M upfront license/collaboration fees; underlying R&D otherwise decreased due to prioritization .
    • Cash modestly lower q/q: cash, equivalents, short-term investments, and current restricted cash declined to $857.3M from $879.7M at YE’24 on operating spend and upfronts .

Financial Results

Headline P&L, margins, and estimate comparison

MetricQ3 2024Q4 2024Q1 2025Q1 2025 Consensus
Total Revenues ($M)$102.3 $109.1 $106.5 $115.9*
Product Revenue, net ($M)$101.8 $108.5 $105.7 —
EPS (ADS, $)-$0.42 -$0.80 -$0.45 -$0.55*
Loss from Operations ($M)-$67.9 -$67.9 -$56.3 —
Adjusted Loss from Operations ($M)-$48.2 -$47.6 -$37.1 —
Product Gross Margin %64.1% 61.5% 63.7% —

Notes: Product Gross Margin % computed as (Product revenue – Cost of product revenue) / Product revenue using cited figures .
Values retrieved from S&P Global for consensus estimates marked with an asterisk.

Segment breakdown (Q1 2025 vs Q1 2024)

ProductQ1 2024 ($M)Q1 2025 ($M)YoY %
VYVGART & VYVGART Hytrulo$13.2 $18.1 37%
ZEJULA$45.5 $49.5 9%
NUZYRA$9.9 $15.1 53%
Product Revenue, net$87.1 $105.7 21%

KPIs and OpEx

KPI/ExpenseQ3 2024Q4 2024Q1 2025
Cash + ST Investments + Current Restricted Cash ($M)$716.1 $879.7 $857.3
R&D Expense ($M)$66.0 $52.3 $60.7
SG&A Expense ($M)$67.2 $82.6 $63.4

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2025$560–$590M (2/27/25) $560–$590M (5/8/25) Maintained
Adjusted Operating ProfitabilityQ4 2025Target profitability in Q4’25 (non‑GAAP) On track for Q4’25 (non‑GAAP) Maintained
Product-level commentary2025—VYVGART growth expected to outpace total revenue growth (qualitative) New qualitative emphasis

Earnings Call Themes & Trends

TopicQ3 2024 (Q-2)Q4 2024 (Q-1)Q1 2025 (Current)Trend
VYVGART trajectoryStrong launch; on track for blockbuster first NRDL year Franchise $93.6M FY24; Hytrulo approvals; continued momentum Seasonal IV softness and Q4 inventory timing; record April utilization; expect sequential growth resume Improving into 2H
Pricing/NRDLNRDL support for growth Continued NRDL leverage for portfolio Targeting IV renewal and initial SC NRDL listing for 2026 cycle Structurally supportive
Macro/tariffs——Tariffs seen as non-impactful given local mfg and non‑US sourcing; no change anticipated Neutral
Regulatory interactions—Guidance for 2025 catalysts (KarXT, TTFields, bemarituzumab) FDA interactions steady; ZL‑1310 path for randomized AA then OS confirmatory within same study Advancing
SG&A efficiency—Operating loss declined; cost discipline SG&A rightsized; modest growth expected; path to profitability reiterated Operating leverage
Manufacturing localization——Increasing localization to lower COGS and support launches Margin tailwind

Management Commentary

  • “We are reaffirming our full year revenue guidance of between $560 million to $590 million… and on track to achieve profitability by Q4 of this year.” — CEO Dr. Samantha (Ying) Du .
  • “First quarter sales reflected seasonal trends with Chinese New Year… patient volumes rebounded in March and April, and we anticipate a return to strong sequential growth throughout the rest of the year.” — President & COO Josh Smiley .
  • “We are on track to initiate a pivotal study [for ZL‑1310 in SCLC] later this year, positioning us for a potential accelerated approval in 2027.” — President & Head of Global R&D Dr. Rafael Amado .

Q&A Highlights

  • VYVGART sequential dip vs guidance: Management attributed Q1 softness to seasonality (weekly IV infusions deferred around Chinese New Year) and Q4 inventory movements; April showed the highest utilization to date, underpinning confidence in guidance and faster VYVGART growth than the company average .
  • Regulatory and tariffs: FDA interactions normal; no anticipated tariff impact due to China localization and non‑US sourcing for key products; plans to localize manufacturing for upcoming global assets (e.g., DLL3 ADC) .
  • ZL‑1310 registrational strategy: Randomized pivotal trial with interim response-rate analysis for accelerated approval and OS as confirmatory endpoint in the same study; targeting start in 2025 .
  • NRDL/pricing: IV and SC (Hytrulo) treated as separate products, offering pricing flexibility; expect modest discounts; aiming for 2026 NRDL cycle .
  • Cost structure: SG&A is rightsized to support current portfolio and launches; modest SG&A growth expected in 2025; adjusted operating loss of $37.1M includes $20M R&D upfronts, implying ~-$17M ex-upfronts .

Estimates Context

  • Q1 2025: Revenue $106.5M vs $115.9M consensus*; EPS (ADS) -$0.45 vs -$0.55 consensus* (revenue miss, EPS beat). EBITDA tracked negative as expected; operating loss improved y/y .
  • FY 2025: Company guidance $560–$590M exceeds Street revenue consensus of ~$471.7M*, suggesting potential upward revisions if execution and catalysts track to plan .

Values retrieved from S&P Global for consensus estimates marked with an asterisk.

Key Takeaways for Investors

  • Q1 print: revenue miss but EPS beat as seasonal IV dynamics and Q4 inventory timing weighed on VYVGART; March/April rebound and management commentary point to sequential acceleration from Q2 onward .
  • Guidance credibility: Reaffirmed $560–$590M FY25 with VYVGART outgrowing the company average; Street revenue is materially below guidance, setting up potential estimate revisions on sustained sequential growth .
  • Margin path: SG&A and R&D discipline plus manufacturing localization support margin expansion; adjusted operating profitability still targeted for Q4’25 despite Q1 R&D upfronts .
  • Pipeline catalysts: Near-term readouts/submissions (bemarituzumab FORTITUDE-101/102, TTFields China filing, KarXT review) and ZL‑1310 Fast Track + ASCO update provide multiple stock-moving events in 2025 .
  • China market dynamics: Growing NRDL coverage and potential 2026 NRDL event for VYVGART SC underpin sustained adoption; large gMG prevalence (~170k) leaves ample headroom even amidst new entrants .
  • Risk monitor: Execution on VYVGART duration/continuity initiatives, regulatory outcomes (bemarituzumab, TTFields, KarXT), and timing of ZL‑1310 registrational start are key to de‑risk FY25 targets .

Appendix: Additional Data and Disclosures

  • Cash and investments were $857.3M at 3/31/25 vs $879.7M at YE’24; current liabilities $319.8M; equity $810.8M .
  • Non-GAAP reconciliation: Adjusted loss from operations improves to -$37.1M (adds back D&A $3.5M and SBC $15.8M) .
  • Additional Q1 updates: NMPA sNDA acceptance for repotrectinib in NTRK+ tumors (Apr 21) and FDA Fast Track for ZL‑1310 (May 19) .

All cited figures are from company filings and communications: press release/8‑K (May 8, 2025), earnings call transcript (May 8, 2025), and prior quarter press releases. . Values retrieved from S&P Global for consensus estimates are marked with an asterisk.