Zai Lab (NASDAQ:ZLAB) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.
This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.
View the webcast at https://edge.media-server.com/mmc/p/bpxrkoc6/
Summary
Zai Lab reported total revenue of $108.2 million for the third quarter of 2026, with net product revenue increasing 2% sequentially, reflecting stabilization in the China commercial business.
The company is advancing JOSI toward a potential US BLA submission in 2027, with expectations for a US launch in 2028, supported by recent $250 million financing.
Key strategic initiatives include a global Phase 3 study for JOSI in small cell lung cancer and ongoing T cell engager collaborations with Amgen and BI.
Positive data from the Phase 1 study of Zosi in small cell lung cancer showed a confirmed objective response rate of 81.8% and a progression-free survival of 81.9%, with plans to advance into a global Phase 3 study.
Zai Lab is also progressing its immunology pipeline, including CL1503 for atopic dermatitis, with Phase 2b development planned and potential expansion into other IL-13 and IL-31 mediated diseases.
The company emphasizes a disciplined cost structure with stable R&D and SG&A expenses, maintaining a strong cash position of $659.7 million.
Future growth is expected from new product launches and NRDL inclusion for existing brands, with a focus on increasing shareholder value and patient access.
Full Transcript
OPERATOR
Ladies and gentlemen, thank you for standing by and welcome to Zai Lab’s third quarter 2026 financial results conference call. At this time, all participants are in 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. It is now my pleasure to turn the floor over to Christine Cho, Senior Vice President of Investor Relations. Please go ahead.
Christine Cho (Senior Vice President of Investor Relations)
Thank you, operator. Hello and welcome, everyone. Today’s earnings call will be led by Dr. Samantha Du, Zai Lab’s founder, CEO and chairperson. She will be joined by Dr. Rafael Amado, President and Head of Global Research and Development, and Dr. Yajing Chen, Chief Financial Officer. Dr. Shan He, our Chief Business Officer, and Dr. Yujia Wang, our Operating Partner, will also be available to answer questions during the Q&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. Please refer to our earnings release furnished with the SEC on November 5, 2026 for additional information on this non-GAAP financial measure.
At this time, it is my pleasure to turn the call over to Dr. Samantha Du.
Samantha Du (Chief Executive Officer)
Thanks, Christine. Good morning and good evening, everyone. We’re entering one of the most important periods in Zai Lab’s history. I founded Zai Lab to discover and develop innovative medicines for patients around the world. We have spent years building the talent, scientific capabilities and infrastructure to make that possible. With JOSI advancing toward a potential US BLA submission next year, that vision is within our reach. Our first-line small cell lung cancer data strengthened our confidence that JOSI can become the ADC backbone in small cell lung cancer. We are advancing the doublet into a global Phase 3 study and building on it through our T cell engager collaborations with Amgen and BI. The next two years are pivotal. By year end, we expect three registrational studies underway across small cell lung cancer and neuroendocrine carcinomas. In 2027, we anticipate two registration results and our first potential U.S. BLA submission, positioning us for a U.S. launch as early as 2028.
This would be a defining achievement for our company. Our recent $250 million financing further strengthens our ability to deliver on the plan. Our ambition extends well beyond ZOSI. Next week we will present the first clinical data for CL1503, our internally developed bispecific for atopic dermatitis. We also expect three additional oncology and immunology assets in clinical development next year. Meanwhile, we continued to strengthen our China commercial business. Net product revenue grew 2% sequentially and our China business remained profitable. This performance is consistent with the stabilization we outlined on our second quarter call. We remain on track with that trajectory and continue to expect a return to year-over-year product revenue growth in 2027. I’m very proud of what our team has accomplished, but our most important achievements are still ahead of us and I look forward to updating you over the next year.
With that, I’ll turn the call over to Rafael. Thank you.
Rafael G. Amado (President)
Thank you, Samantha. I’ll focus on our two lead programs, SOSI and CL1503. Let me start with Zozi, our potential first- and best-in-class DLL3-targeting ADC. At ESMO, we presented first-line small cell lung cancer data from our global Phase 1 study of Zozi plus atezolizumab across 33 efficacy-evaluable, previously untreated patients at the selected 1.6 milligrams per kilogram dose. The doublet achieved a confirmed objective response rate of 81.8%.
Responses were rapid, with nearly all observed in the first tumor assessment. We’re also seeing encouraging signs of durability. In all 33 patients, the estimated 6-month progression-free survival was 81.9% among the first 15 patients who had a median follow-up of 10 months. Median progression-free survival and median duration of response had not been reached at the data cutoff. Ten of these 15 patients have not progressed. For context, chemo-IO has historically delivered a median PFS of roughly five months.
What further differentiates SOSI is its potential to deliver this level of efficacy with substantially improved tolerability. With the 1.6 mg/kg doublet, Grade 3 or higher ZOSI-related adverse events occurred in 9.1% of patients. There was a single case of Grade 1 interstitial lung disease, which is consistent with our monotherapy experience. By comparison, Grade 3 or higher treatment-related adverse events occur in roughly 60% or more of patients with chemo-IO.
We believe these results are unprecedented in first-line small cell lung cancer in an unselected patient population. Together, these data challenge the conventional view of what an ADC-based regimen could achieve in first-line small cell lung cancer, both in terms of efficacy, durability and tolerability. On the strength of this data, we’re advancing ZOSI 1.6 milligrams per kilogram plus immunotherapy doublet into a global randomized Phase 3 study.
We’re also building on this backbone with T cell engagers. The scientific rationale is complementary: SOSI rapidly reduces tumor burden while the T cell engager provides durable immune-mediated control. Importantly, soci’s profile is particularly advantageous in these combinations, as T cell engagers carry their own toxicity risk. Our global Phase 1b study in small cell lung cancer with Amgen is moving rapidly and our collaboration with BI is also advancing beyond first-line disease. A registrational Phase 3 study is evaluating SOCI in second line and later disease, including patients previously treated with Talabama, contingent on enrolling sufficient postalata MAB in addition to second-line patients.
An interim analysis in 2027 could support a US BLA submission for accelerated approval. Turning to extrapulmonary neuroendocrine carcinomas, or EPNECs. This is an aggressive disease where there is no established standard of care beyond first-line chemotherapy. Historical response rates are between 10% to 20% and median overall survival is about six months. We have completed enrollment in our Phase 1b/2 second-line EPNEC study. Tomorrow at the North American Neuroendocrine Tumor Society Conference, we will present preliminary results showing activity observed across a diversity of EPNEC subtypes.
Based on the totality of the clinical data thus far and feedback from FDA, we plan to pursue a potential accelerated approval supported by this single-arm study. We expect final results in 2027 and a potential submission that same year. Now turning to immunology and CL1503, our internally discovered long-acting IL-13/IL-31 receptor alpha bispecific antibody for atopic dermatitis. ZL1503 is designed to address two major drivers of disease: IL-13-driven inflammation and IL-31-mediated itch. By simultaneously blocking both pathways, ZL1503 has the potential to break the itch-scratch inflammation cycle, providing more comprehensive disease control with a single biologic. ZL1503 also incorporates YTE modifications that extend its half-life, with the goal of enabling substantially less frequent dosing than currently available biologics.
Next week at the American College of Allergy, Asthma and Immunology meeting in Phoenix, we will present first-in-human data from the single ascending dose portion of our global Phase 1 study in healthy volunteers. The SAD study has met its prespecified endpoints and we will share results demonstrating its safety profile, pharmacokinetics, immunogenicity and sustained inhibition of the IL-13 inflammatory pathway. Two more data sets follow next year: first, clinical efficacy, including itch control, in patients with moderate to severe atopic dermatitis; and second, initial data from our fully enrolled IV-to-subcutaneous bridging study. We are planning Phase 2b development in atopic dermatitis while also evaluating the potential for ZL1503 across additional IL-13 and IL-31 mediated diseases.
Our next wave of global assets continue to advance. These include ZL6201, our LRRC15-targeted ADC; CL1311, our MAX17-targeting T cell engager; and CL1222, our PD1/IL12 immunocytokine. Lastly, with our China regional pipeline, we continue to progress multiple regulatory and development opportunities, including potential additional filings for F Cartigimab and the ongoing registrational development of Allegrobart in thyroid eye disease. And with that, I’ll hand it over to Yae Yin.
Yajing Chen (Chief Financial Officer)
Thank you, Rafael. Our financial priorities are clear: return our China commercial business to growth, maintain a disciplined cost structure and fund our highest-value global programs. Our third quarter results showed progress on all three. Total revenue was $108.2 million. Net product revenue increased 2% sequentially, reflecting continued stabilization of our China commercial business across our priority brands. The jeweler held its competitive position despite ongoing volume-based pricing-related dynamics and a competitive PARP inhibitor landscape.
Rivgard volumes continue to grow sequentially on new patient starts, and Cox T continued to gain traction ahead of potential NRDL inclusion. Next year we expect a return to year-over-year product revenue growth in 2027, driven by continued demand across our priority brands and a new NRDL listing. At the same time, we have maintained strong discipline in managing our operating expenses. Both R&D and SG&A expenses remained relatively stable compared with the prior year period, reflecting the operational efficiencies and resource optimization initiatives we have implemented across the organization.
Our China commercial business remained profitable, providing a strong operating foundation as we continue investing in our global development program. We ended the quarter with a cash position of $659.7 million as of September 30, 2026, and in October we raised approximately $250 million in equity at no discount to market, which further provides the financial flexibility to continue investing in the highest-value opportunities. In summary, we have a profitable commercial business, a disciplined cost structure and a balance sheet that supports our global innovative pipeline through its most important milestones.
With that, I will open it up for questions.
OPERATOR
Thank you. We will now begin the question and answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And our first question comes from the line of Anupam Rama from JP Morgan. Please go ahead. Anupam, your line is open.
Rafael G. Amado (President)
Hi, this is Rafael. Let me take that question, and thanks for it. We did have discussions with the agency to study the randomized trial with overall survival as the primary endpoint. But there is a possibility that there’s accelerated approval based on response rate. So to answer your question, the number of patients in the response-rate accelerated-approval analysis, which is a formal interim analysis, will include 200 patients. And this will be a mixture of patients that are after platinum progression or after platinum plus tarlatamab.
In terms of the length of follow-up, it would be six months after the first scan assessment so that we can assess durability of response. The other criteria is all patients must be accrued by the time this analysis is done. And in terms of assumptions, we don’t disclose assumptions, but with 200 patients the study is overpowered really for efficacy, given that historical rates are in the 20% range or so and we’ve disclosed data in the 60% overall response rate in the second-line plus.
So the reason for the 200 is so that we have a good safety database in addition to efficacy. So hopefully those details help you understand the interim analysis and the possibility of accelerated approval at that interim analysis.
OPERATOR
Thank you. We will now move to our next question. And our next question comes from Michael E from UBS. Please go ahead. Michael, your line is open.
Michael (Analyst at UBS)
Great, thanks. Yeah, so maybe two questions on the DLL3 opportunity. Clearly there is a multibillion-dollar horizon given what Amgen’s tarlatamab is showing this week. And yet they’re also partnering, or collaborating I should say, with your ADC. Can you talk a little bit about how that collaboration is going and what studies have started, or how you envision the two mechanisms perhaps working together such that you could maximize that multibillion-dollar opportunity?
So that’s question one. And then maybe the second question is, presuming that we do have great data next year and we’re going to file to the FDA, do you have any view on whether you would partner, launch yourself? How are you thinking about the different scenarios for your product? Thank you.
Samantha Du (Chief Executive Officer)
Thanks, Michael. I think Rafael will answer your first question. And this is Samantha. I’ll address your second one.
Rafael G. Amado (President)
Great. Thanks, Mike. With regards to the collaboration with Amgen, obviously the results of the DeLLphi-305 are, I think, practice-changing, and we’re pretty excited to see those results. At the same time, we presented data ourselves with the combination with IO where the PFS hadn’t been reached after 10 months. I think their PFS was in the order of about 7.4 months. So there’s a possibility of using Zosi with IO. But the big promise, I think, is a combination because, as you know, in the 305 there were a number of patients—a percentage of patients—that couldn’t really get maintenance because they progressed.
They had less than stable disease on platinum/etoposide and IO. So being able to get everybody on maintenance should be superior to that study because the disease control rate using Zosi is pretty high, approaching 100%. With regards to how things are going, the study is progressing well. We started with tarlatamab progressors to make sure there was combinability. We started with two different doses. We’re pretty confident we can get to the standard dose of 1.6 milligrams per kilogram for combinability. And we look forward to the results of treating patients that are treatment-naive with the triplet, and then continue to discuss with Amgen options going forward. But we believe that both Zosi plus IO and Zosi plus TCE plus IO would be options for patients that would move the field beyond even what 305 has done.
Samantha Du (Chief Executive Officer)
Yeah, Michael, in terms of your second question about whether partnering or not, I think our current plan is to take Zosi forward ourselves, and that planning is already underway. Our priority today is execution. We’re advancing our global program of Zosi aggressively and remain fully committed to deliver the key clinical milestones we outlined. That said, we’re also disciplined. As you mentioned, global partners are interested in these assets, and we’ll evaluate any option that could accelerate patient access or increase shareholder value.
Those evaluations are independent of our development plans, and I don’t think they will change the pace or urgency with which we are advancing the program. Thank you, Michael.
Michael (Analyst at UBS)
Great. Thank you.
OPERATOR
Thank you. We will now move to our next question. And our next question comes from Lee Wasick from Cantor Fitzgerald. Please go ahead, Lee. Your line is open.
Lee Wasick (Analyst)
Hey, good morning, and congrats on the progress. Two questions from me. So in terms of Zosi in second-line EP-NEC, can you talk a little bit about your alignment with FDA on the AA submission and what the bar is? And then in terms of the confirmatory study, what would be the design and timing of that? For example, do you need to enroll a certain number of patients before you file for AA? And then second, in terms of the TCE combinations, you have two partners here. When will you be in a position to select a go-forward regimen, and what goes into that decision? Thanks.
Rafael G. Amado (President)
This is Rafael. I’ll take both questions. With regards to EP-NEC, or EP-Next, we will present tomorrow at the NEXT conference in Las Vegas the latest data set of about 60 patients. It’s an update from what we presented at AACR. Just to give you a sense, there’s really no standard second line for extrapulmonary endocrine carcinoma, and people treat with a variety of regimens. Generally the response rate is between 10% to 20%. The progression-free survival is in the order of two months.
So essentially the next time that patients are scanned, most of them have progressed. So the bar is really low. We present a response rate approaching 40% and durability between five and six months. This is really being perceived as an advance in the field, particularly given that the tolerability is quite good. In second-line plus small cell lung cancer, the treatment-related adverse events are in the mid-teens. So those are the discussions we’ve had with the agency. We have two sets of single-arm data that amount to about 100 patients, and depending on how the results read out after waiting for six months after the first scan, that will determine whether or not we’ll be able to file for accelerated approval based on those single-arm studies. As you said, there will need to be a confirmatory study. We have discussed a design with the agency that was accepted.
The design will be in frontline. We will get into more detail as we get that study going, but we need to get it well underway before the action date. So the study will start early next year so that there’s no delay to the potential accelerated-approval file that we expect to submit next year. With regard to the TCE, we’re working with both companies—tarlatamab and BI’s molecule, respectively. Obviously, Amgen has got a very dominant position in this space, and we will follow the development path of both compounds. My sense is that the combination with Imdelltra may move faster, but we will just have to see. All I can say is that it’s a very fruitful collaboration, and I described before what the makeup of the Phase 2 study is, and we will take the data from there and, if it is positive, discuss with our partners how to advance the field with that combination.
So that’s where we are at the moment. But our desire is to move to the most active combination with the best benefit-risk as soon as possible.
Lee Wasick (Analyst)
Thank you.
OPERATOR
Thank you. And our next question comes from the line of Eagle Nocho Movicz from Citigroup. Please go ahead. Eagle, your line is open.
Caroline (Analyst)
Hi, this is Caroline on for Seagull. Thanks for taking our question. We noticed Nuzyra came in stronger than expected this quarter. Can you help us understand what drove this upside, and has anything changed in your view of the product’s longer-term growth outlook? Thanks.
Samantha Du (Chief Executive Officer)
Yajing, can you take that question?
Yajing Chen (Chief Financial Officer)
Yeah. Can you repeat the first line? My audio is a little bit choppy here. Which revenue?
Caroline (Analyst)
Sure. I was saying Nuzyra came in stronger than expected this quarter. Could you help us understand what drove this upside and whether your long-term view has changed?
Yajing Chen (Chief Financial Officer)
You mean the Nuzyra total revenue sales?
Samantha Du (Chief Executive Officer)
Yajing, she’s asking about Nuzyra sales.
Yajing Chen (Chief Financial Officer)
Oh, Nuzyra. Sorry, really the choppy—I really apologize. Yes, I think it’s really about our strong partnership with our partners. The Nuzyra sales are a little bit stronger. But again, as I said, I think we should be looking at our business in its totality. We do believe that Nuzyra could be one of the drivers for our total business going forward. Yes. So we believe this trend will continue.
Caroline (Analyst)
Great, thank you.
OPERATOR
Thank you. And our next question comes from the line of Dana Graybosch from Leerink Partners. Please go ahead. Dana, your line is open.
Dana Graybosch (Analyst)
Hi, thanks for the question. I wonder if you could talk about a frontline strategy should Amgen’s DeLLphi-312, where they’re giving tarla an induction of traditional chemo, be successful. If that’s great and you have a traditional chemo option in frontline, how do you envision moving forward in frontline with Zosi and tarla? Thank you.
Rafael G. Amado (President)
Yeah, great question. And I think this is really what happens when a drug is being developed in the midst of a field that’s evolving. So Imdelltra for some patients will become a frontline drug, either in the maintenance setting or, if that study is positive, in the induction setting. I think the question will be how positive that study is, what the tolerability is of full-dose chemotherapy plus IO—at least four cycles—plus tarlatamab, and again how that compares to the maintenance data and the data with the ADCs.
We still see, we’re pretty confident, that the efficacy that we’ve seen with IO is pretty strong. The response rates are incredibly high, in the 80% range, and long PFS. And then we’ll have to see what the overall survival is eventually. We’re launching that study this year, the frontline doublet study against standard of care. So I think the data will really dictate what physicians and patients will choose. My sense is that we will have to evaluate what the safety of that induction combination is. And the tolerability of Zosi is superior to carboplatin/etoposide plus IO by a really big margin. So if that triplet with a chemotherapy-sparing type of approach is at least equal or superior to chemotherapy plus tarlatamab plus IO—and by IO I mean checkpoint inhibitor—I think it would be a preferred regimen to use Zosi than to use carboplatin/etoposide.
Carboplatin/etoposide is a very old regimen, over 40 years old. And my sense, and the sense of many of the experts that I talk to in this space, is that the field will move away from chemotherapy if we can demonstrate that an ADC, either with IO or in combination with tarlatamab plus IO, is superior and is safer. So it’s a great question, but the data are not yet there. The hope is that we can simplify the regimen, make it safer, and more effective.
Dana Graybosch (Analyst)
Great, thank you.
OPERATOR
As a reminder before we move to our next question, please press star 11 if you wish to ask a question now. And our next question comes from the line of Lin Hai Chao from Gomez X. Please go ahead. Lin Hai, your line is open.
Lin Hai (Analyst at Goldman Sachs)
Thanks. This is Lin Hai from Goldman. Thanks for the opportunity. So, regarding our sales growth outlook in 2027, can you bridge the key drivers required to deliver the anticipated resumed growth in 2027, including the access expansion like NRDL coverage, the new launches, and the stabilization of the mature product portfolio? Thanks. Thank you.
OPERATOR
Thank you. I am showing no further questions. I’ll now turn the conference back to Dr. Samantha Du for her closing comments.
Samantha Du (Chief Executive Officer)
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 fourth quarter of 2026. Operator, you may now disconnect the call. Thank you.
OPERATOR
Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect your lines.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
Recent Comments