Zai Lab Ltd. Q1 FY2025 earnings call

• Samantha Du emphasized 2025 is a pivotal year, reaffirmed full-year revenue guidance of $560M to $590M, and highlighted the company's differentiated portfolio including VYVGART, povetacicept, bemarituzumab, KarXT, and TTFields.
• Josh Smiley discussed Q1 performance, noting VYVGART's sales growth expected to outpace total revenue, seasonality impacts in Q1 but strong rebound in March and April, and sequential growth in other products like ZEJULA and NUZYRA. Mentioned operating loss improvement and progress towards profitability by Q4.
• Rafael Amado provided pipeline updates, including progress on ZL-1310, ZL-6201, ZL-1222, and ZL-1503, and updates on late-stage regional programs like immunology and neuroscience.
• Yajing Chen highlighted total revenue growth, R&D and SG&A expenses as a percentage of revenue declining, and adjusted loss from operations improving year-over-year.

Total revenue grew 22% year-over-year to $106.5 million in the first quarter of 2025, driven by increased sales for VYVGART, ZEJULA, and NUZYRA. VYVGART was a key driver, with seasonal impacts in January and February but rebounding in March and April. Other products like ZEJULA, NUZYRA, AUGTYRO, and XACDURO also contributed, with XACDURO showing strong initial demand.

• Reaffirmed full-year revenue guidance of $560 million to $590 million.
• Anticipate accelerating sales growth in the next three quarters, leading to significant operating leverage and aiming for profitability by Q4 2025.
• Confident in delivering 2025 revenue targets and surpassing $2 billion by 2028.

• Uncertainties related to FDA changes and regulatory reviews, including potential impacts on approval timelines for products like ZL-1310.
• Geopolitical tensions and tariffs, though currently no significant impact anticipated on the business.

Q: On VYVGART, discuss sequential change, seasonality, and confidence in guidance; strategic question on bringing in more Chinese assets.

A: Josh Smiley noted seasonality in January and February due to Chinese New Year affecting patient utilization, but strong recovery in March and April, confident in VYVGART's progress for the year. Samantha Du mentioned the company has a strong BD team evaluating high-potential differentiated products for global and China rights.

Q: On BEMA study for gastric cancer, delay or read into data; impact of FDA and tariffs.

A: Rafael Amado stated data from the FORTITUDE-101 study is expected in the second quarter of 2025, no delay issue, just interim analysis. Josh Smiley mentioned no impact from tariffs on current business, and Rafael Amado noted FDA interactions have been productive with no major changes seen so far.

Q: Color on FDA changes and BD impact; scenario on ZL-1310 ASCO update.

A: Rafael Amado discussed FDA reshaping being early, no immediate impact on ZL-1310's accelerated approval pathway. He outlined the 1310 ASCO update will include data from dose escalation and optimization cohorts, focusing on promising doses for pivotal trials.

Q: SG&A initiatives and CTF strategy; R&D strategy shift.

A: Josh Smiley explained SG&A is rightsizing for optimized launches, with modest growth expected. Rafael Amado talked about R&D strategy being a blend of internal and BD assets, aiming for one IND submission per year, with LRRC15 and ZL-1503 entering Phase 1 this year.

Q: KarXT China market perspective; FDA impact on KarXT.

A: Rafael Amado stated KarXT is seen as a de novo treatment in China due to its favorable safety profile, with no impact from recent FDA changes on its approval timeline related to schizophrenia indication.