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ZL

Zai Lab Ltd (ZLAB)·Q2 2025 Earnings Summary

Executive Summary

  • Total revenues grew 9% year-over-year to $110.0M; product revenue rose 9% to $109.1M. Guidance was reaffirmed at $560–$590M for FY25, and management reiterated a path to adjusted profitability in Q4 2025 .
  • Against S&P Global consensus, revenue missed ($125.0M estimate vs $110.0M actual), while EPS was better than expected (consensus -$0.415 vs actual -$0.37). Bolded below as significant miss/beat. Values retrieved from S&P Global.
  • Commercial momentum was led by VYVGART, with record utilization and 46% q/q sales growth (to $26.5M), aided by updated national MG guidelines elevating use in both acute and maintenance settings .
  • Key catalysts: positive Phase 3 bemarituzumab OS benefit (FORTITUDE-101) with China submission targeted 2H25; DLL3 ADC (ZL-1310) advancing to a registrational 2L ES-SCLC study; NMPA reviews/submissions for KarXT, TTFields, and efgartigimod PFS supporting 2H25–2026 launches .

What Went Well and What Went Wrong

What Went Well

  • VYVGART delivered record patient utilization and 46% q/q sales growth to $26.5M, driven by longer treatment duration and growing maintenance adoption; July national MG guidelines further strengthen positioning for early and sustained treatment .
  • Operating discipline: loss from operations improved 28% y/y to $(54.9)M; adjusted operating loss improved 37% y/y to $(34.2)M, keeping Q4 adjusted profitability on track .
  • Pipeline execution: bemarituzumab plus chemo met OS at interim in FORTITUDE-101; ZL-1310 (DLL3 ADC) showed strong efficacy signals (67% ORR overall; 79% at 1.6 mg/kg) and FDA Fast Track, with pivotal 2L ES-SCLC initiation planned 2H25 .
    • “We are making meaningful progress…With multiple launches ahead, a robust pipeline, and profitability within reach, Zai Lab is executing on its vision…” — Dr. Samantha Du .
    • “With a 28% year-over-year reduction in operating loss…we are on track to achieve profitability in the fourth quarter.” — Josh Smiley .

What Went Wrong

  • Revenue missed consensus in Q2; ZEJULA softened to $41.0M (vs $45.0M in Q2 2024) amid evolving PARPi competitive dynamics .
  • XACDURO growth constrained by supply localization work; management flagged near-term 2025 growth limits despite strong underlying demand .
  • Revenue growth was primarily product-driven but collaboration revenue remained modest ($0.9M), limiting diversification of topline .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Total Revenues ($USD Millions)$109.070 $106.487 $109.977
Product Revenue, net ($USD Millions)$108.512 $105.650 $109.085
Collaboration Revenue ($USD Millions)$0.558 $0.837 $0.892
Cost of Product Revenue ($USD Millions)$41.782 $38.452 $43.003
R&D Expense ($USD Millions)$52.252 $60.729 $50.614
SG&A Expense ($USD Millions)$82.618 $63.422 $71.038
Loss from Operations ($USD Millions)$(67.891) $(56.311) $(54.895)
Adjusted Loss from Operations ($USD Millions)$(47.621) $(37.053) $(34.187)
Net Loss ($USD Millions)$(81.684) $(48.438) $(40.727)
Loss per Ordinary Share (Basic & Diluted) ($)$(0.08) $(0.04) $(0.04)
Cash + ST Investments + Current Restricted Cash ($USD Millions)$879.7 $857.3 $832.3

Product gross metrics (calculated from cited figures):

MetricQ4 2024Q1 2025Q2 2025
Product Gross Profit ($USD Millions)$66.730 (=108.512–41.782) $67.198 (=105.650–38.452) $66.082 (=109.085–43.003)
Product Gross Margin (%)61.5% 63.6% 60.6%

Segment/product breakdown:

Product Revenue ($USD Millions)Q4 2024Q1 2025Q2 2025
VYVGART (incl. Hytrulo)$30.0 $18.1 $26.5
ZEJULA$48.4 $49.5 $41.0
NUZYRA$11.0 $15.1 $14.3
XACDURO——$4.6

KPIs:

KPIQ2 2025
Operating Loss y/y Improvement (%)28%
Adjusted Operating Loss y/y Improvement (%)37%
VYVGART q/q Sales Growth (%)46%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2025$560–$590M $560–$590M Maintained
Adjusted ProfitabilityQ4 2025Achieve adjusted profitability in Q4 2025 On track to achieve adjusted profitability in Q4 2025 Maintained
Long-term Revenue Target2028~$2B by 2028 Not updated in Q2 materials—

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
VYVGART adoption and durationStrong 2024 ramp; seasonal Q1 slowdown with rebound anticipated Record utilization; shift to maintenance; July MG guidelines elevate early and sustained use Accelerating adoption and duration
ZEJULA performanceMaintained leadership; strong Q4 Softer Q2 due to PARPi competition; stabilization expected in 2H Near-term pressure, recovery expected
XACDURO launchChina launch noted; Pfizer collaboration Robust demand; supply localization to address constraints Positive demand; operational bottlenecks
Pipeline – bemarituzumabAnticipated Phase 3 data; China submission planned OS met at interim; China regulatory submission planned 2H25 Major validation; regulatory momentum
Pipeline – ZL-1310 (DLL3 ADC)Strong early signals; ASCO update; orphan designation 67% ORR overall; 79% at 1.6 mg/kg; FDA Fast Track; pivotal 2L ES-SCLC in 2H25 Advancing to registrational
AI/technology initiativesNot highlightedManagement leveraging AI across trials and commercial analytics Emerging operational focus
Manufacturing & supply chainNot highlightedLocalizing manufacturing; field-force repurposing for launches Efficiency focus
Regulatory/commercial insuranceNRDL renewals across portfolio Policy changes expanding commercial insurance; used as bridge pre-NRDL Supportive macro tailwinds

Management Commentary

  • “Updated ASCO data for ZL-1310…reaffirm its best-in-class potential…With multiple launches ahead…profitability within reach, Zai Lab is executing on its vision to become a leading global biopharma company.” — Dr. Samantha Du .
  • “The July update to national MG guidelines further strengthens VYVGART’s role…we expect momentum to accelerate in the second half…With a 28% y/y reduction in operating loss…we are on track to achieve profitability in the fourth quarter.” — Josh Smiley .
  • “Bemarituzumab plus chemotherapy demonstrated a statistically significant and clinically meaningful improvement in OS…we plan to move rapidly toward regulatory submission in China.” — Dr. Rafael Amado on FORTITUDE-101 .

Q&A Highlights

  • Revenue trajectory and profitability: Management reaffirmed FY25 revenue guidance ($560–$590M) and Q4 adjusted profitability; expects accelerating 2H growth driven by VYVGART and ZEJULA stabilization .
  • Bemarituzumab opportunity: ~450k gastric cancer patients in China with ~30% FGFR2b overexpression; management framed a $1B+ potential over time and discussed ocular AEs manageable with monitoring .
  • VYVGART inventory and formulation: Q4 2024 channel stocking for Hytrulo; normal inventory build expected 2H25; Hytrulo expected to become a meaningful formulation post NRDL, with PFS submission planned .
  • ZL-1310 pivotal plan and partnering: Pursuing accelerated approval path; randomized pivotal to initiate 2H25; Zai Lab plans to self-sponsor while remaining open to partnerships .
  • Broader commercial franchise: NUZYRA and XACDURO expected to contribute to 2H growth; XACDURO constrained near-term by supply .

Estimates Context

MetricQ1 2025 EstimateQ1 2025 ActualQ2 2025 EstimateQ2 2025 Actual
Revenue ($USD)$115,855,720*$106,487,000 $125,020,300*$109,977,000
Primary EPS ($)-0.55*-0.45 -0.41502*-0.37
# of Estimates (Revenue)5*—7*—
# of Estimates (EPS)5*—6*—
  • Q2: revenue was a significant miss vs consensus; EPS was a beat. Expect models to adjust for lower near-term top-line but stronger operating leverage as SG&A and R&D fall y/y .
  • Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Mix shift toward VYVGART maintenance use and guideline support should drive 2H acceleration; watch for NRDL progress on subcutaneous Hytrulo and PFS submissions to deepen penetration .
  • Despite a revenue miss vs consensus, operating and adjusted losses improved materially y/y; the Q4 adjusted profitability target remains credible given cost discipline and launch readiness .
  • ZEJULA softness appears transient amid PARPi dynamics; management expects stabilization and renewed growth in first-line ovarian, supporting base business resilience .
  • Pipeline catalysts are stock-moving: bemarituzumab China submission (2H25) and detailed OS data; ZL-1310 pivotal initiation with compelling intracranial activity and favorable safety profile .
  • Near-term execution risks: XACDURO supply localization and competitive pressure in PARPi; monitor quarterly trajectory vs guidance and inventory normalization for VYVGART .
  • Medium-term thesis: scalable, resource-efficient commercial model for multiple launches (KarXT, bemarituzumab, TTFields) plus global innovation assets (DLL3 ADC, IL-13/IL-31 bispecific) can sustain revenue growth and margin expansion .
  • Trading implications: Expect sentiment to hinge on pipeline data flow (bema OS details, DLL3 updates) and confirmation of sequential revenue acceleration; EPS leverage may support downside protection despite top-line volatility .