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Zai Lab Ltd (ZLAB)
NASDAQ:ZLAB
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Zai Lab
(NASDAQ:ZLAB)
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Rating:51Neutral
Price Target:
$20.00
▲(4.06% Upside)
Action:ReiteratedDate:02/27/26
The score is held back primarily by persistent cash burn and ongoing losses despite improving revenue and margins, with some added balance-sheet deterioration risk from rising debt and shrinking equity. Earnings call commentary was a positive offset due to strong cash, operating leverage improvements, and multiple pipeline/launch catalysts, while technicals are mildly supportive near term but still weak over longer timeframes. Valuation remains constrained by negative earnings and no dividend support.
Positive Factors
Sustained revenue scaling
Meaningful multi-year revenue growth demonstrates durable commercial traction and successful product penetration across multiple franchises. Scaling sales provide a foundation for incremental operating leverage, support continued investment in launches and global trials, and reduce execution risk over the next 2–6 months.
Strong cash runway
A near‑term cash balance of $790M materially increases optionality: it finances planned launches, global registrational trials, and commercialization build without immediate capital raises. That cushion lowers short-term dilution risk and supports execution through multiple 2026 catalysts and regulatory interactions.
Rapid R&D advancement (zoci)
Accelerated movement of zoci into a global registrational Phase III reflects strong R&D execution and an integrated U.S./China development model. Rapid clinical progress de-risks a high-value program's timeline and increases the probability of meaningful late‑stage value creation over the medium term.
Negative Factors
Persistent negative cash flow
Consistently negative operating and free cash flow indicate the business is not yet self‑funding and remains dependent on external financing or partnerships. Continued cash burn heightens refinancing and dilution risk if commercial ramps or approvals are delayed, pressuring sustainability beyond the current runway.
Rising leverage, shrinking equity
An increasing debt load alongside materially reduced equity erodes the balance sheet buffer and raises financial flexibility risk. If profitability or free cash flow do not improve, higher leverage could increase interest burden and limit ability to fund simultaneous global launches and trials without dilutive capital actions.
China pricing & procurement headwinds
NRDL renewals and hospital procurement timing are structural features of Chinese market access that can materially alter revenue timing and mix. Persistent pricing and channel volatility makes top-line forecasting and margin sustainability less predictable, particularly for key near-term products.
Zai Lab (ZLAB) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.16B
Dividend YieldN/A
Average Volume (3M)647.56K
Price to Earnings (P/E)―
Beta (1Y)0.90
Revenue Growth23.73%
EPS Growth30.16%
CountryUS
Employees1,869
SectorHealthcare
Sector Strength45
IndustryBiotechnology
Share Statistics
EPS (TTM)-0.46
Shares Outstanding112,812,805
10 Day Avg. Volume469,636
30 Day Avg. Volume647,560
Financial Highlights & Ratios
PEG Ratio0.29
Price to Book (P/B)2.70
Price to Sales (P/S)4.20
P/FCF Ratio-12.16
Enterprise Value/Market Cap0.77
Enterprise Value/Revenue3.61
Enterprise Value/Gross Profit6.16
Enterprise Value/Ebitda-10.49
Forecast
1Y Price Target
$36.13Price Target Upside87.98% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
EPS Forecast (FY)-1.48
Revenue Forecast (FY)$531.00M
Zai Lab Business Overview & Revenue Model
Company DescriptionZai Lab Limited develops and commercializes therapies to treat oncology, autoimmune disorders, infectious diseases, and neuroscience primarily in Mainland China and Hong Kong. The company's commercial products include Zejula, a once-daily small-molecule poly polymerase 1/2 inhibitor; Optune, a device that delivers tumor treating fields; NUZYRA for acute bacterial skin and skin structure infections, and community acquired bacterial pneumonia; and Qinlock to treat gastrointestinal stromal tumors. It also develops Odronextamab to treat follicular lymphoma, diffuse large B-cell lymphoma, and other B-celllymphomas; Repotrectinib, a tyrosine kinase inhibitor (TKI) to target ROS1 and TRK A/B/C in TKI-naïve- or -pretreated cancer patients; Margetuximab for the treatment of breast and gastroesophageal cancers; Adagrasib for treating KRAS-G12C-mutated NSCLC, colorectal cancer, pancreatic cancer, and other solid tumors; and Bemarituzumab to treat gastric and gastroesophageal junction cancer. In addition, the company develops CLN-081 for the treatment of patients with EGFR exon 20 insertion NSCLC; Elzovantinib, an orally bioavailable multi-targeted kinase inhibitor; Tebotelimab, a tetravalent IgG4 monoclonal antibody; Retifanlimab that inhibits interactions between PD-1 and its ligands; ZL-2309, an orally active, selective, and ATP-competitive cell division cycle 7 (CDC7) kinase inhibitor; ZL-1201, a humanized IgG4 monoclonal antibody; Efgartigimod to reduce disease-causing immunoglobulin G antibodies; ZL-1102, a human nanobody targeting interleukin- 17A; KarXT for the treatment of psychiatric and neurological conditions; ZL-2313, an investigational inhibitor of triple-mutant EGFR harboring; ZL-2314, an investigational inhibitor of double-mutant EGFR harboring; and Sulbactam/durlobactam for the treatment of serious infections caused by Acinetobacter. Zai Lab Limited was incorporated in 2013 and is headquartered in Shanghai, China.
How the Company Makes MoneyZai Lab generates revenue primarily through the sale of its proprietary drugs and therapies once they receive regulatory approval. The company engages in commercializing its products in China and collaborates with global pharmaceutical firms to co-develop and market treatments, thus sharing revenue streams. Key revenue sources include product sales from its marketed drugs, milestone payments from partners upon achieving specific development or regulatory goals, and royalties from licensed products. Significant partnerships with established pharmaceutical companies enhance Zai Lab's pipeline and provide additional financial resources, contributing to its overall earnings.
Zai Lab Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 12, 2026
Earnings Call Sentiment Positive
The call conveyed strong operational and R&D momentum: double-digit revenue growth (Q4 +17%, FY +15%), a solid cash balance ($790M), improved operating leverage (R&D -6%, SG&A -12% Q4 / -7% FY), and rapid advancement of high-impact global programs (notably zoci's rapid move to Phase III and encouraging intracranial activity). Management also outlined several near-term commercial launches and late-stage regional catalysts. Offsetting these positives were near-term commercial and pricing headwinds (NRDL renewal effects, hospital procurement timing), supply constraints earlier in the year, generic competition in certain categories, and some uncertainty around 2026 guidance and regulatory/enrollment timing for global registrational programs. On balance, the highlights—particularly the strong financial momentum, large pipeline milestones, and robust cash runway—substantially outweigh the lowlights, though execution and regulatory risks remain.Q4-2025 Updates
Positive Updates
Revenue Growth (Q4 and Full Year 2025)
Fourth quarter total revenue of $127.6M, up 17% year-over-year; full year 2025 total revenue of $460.2M, up 15% year-over-year.
Strong Cash Position
Ended the quarter with $790M in cash, supporting near-term launches and global R&D investment.
Improved Operating Leverage and Expense Discipline
R&D expenses declined 6% year-over-year for the full year; SG&A expenses decreased 12% in Q4 and 7% for the full year. Loss from operations improved 19% to $229.4M and improved 25% on an adjusted (ex-noncash) basis.
Commercial Product Strength (XACDURO, NUZYRA, ZEJULA)
XACDURO and NUZYRA were cited as strong contributors to Q4 revenue. ZEJULA delivered a strong Q4 driven by first-line BRCA-positive new patient starts. XACDURO saw strong patient demand and expanding hospital adoption despite earlier supply constraints.
VYVGART Market Progress
Physician confidence and patient demand for VYVGART remain stable. Average cycles per patient improved >50% versus 2024 by year-end, with management targeting a guideline-supported minimum of 3 cycles per patient as a near-term objective.
Rapid Global R&D Progress — zoci (DLL3 ADC)
zoci advanced from IND to global registrational Phase III in less than 2 years. Global Phase III in 2L/3L SCLC initiated (approx. 480 patients). Clinical signals include an 80% objective response rate in 10 patients with untreated brain metastases; favorable safety profile with low rates of severe TRAEs. Management expects a potential accelerated approval submission in 2027 and first global approval in 2028 (subject to timelines).
Broader Innovation Pipeline Momentum
Multiple programs advanced: ZL-6201 (LRRC15 ADC) received U.S. IND clearance and initiated global Phase I; ZL-1222 (PD-1/IL-12) in IND-enabling studies; ZL-1311 (MUC17 TCE) IND planned by year-end; ZL-1503 (IL-13/IL-31 bispecific) Phase I/Ib enrolling with first-in-human data expected later this year.
Late-Stage Regional Catalysts
Povetacicept interim analysis for the global RAINIER Phase III in IgAN planned in H1 2026; elegrobart global REVEAL-1 top-line in Q1 2026 and REVEAL-2 in Q2 2026; efgartigimod continuing label-expansion efforts across autoimmune indications.
Product Approvals and Upcoming Launches
TIVDAK expected to be approved in China in H1 2026; COBENFY commercial launch planned in Q2 2026; KarXT commercial launch planned in Q2 2026 (NRDL expected in 2027). FDA approval of Optune Pax for locally advanced pancreatic cancer achieved earlier in the month.
Negative Updates
Short-term Commercial Dynamics and Pricing Pressure
Q4 VYVGART revenues were impacted by channel dynamics related to NRDL renewal and hospital purchasing patterns. Management flagged near-term measured growth for VYVGART in 2026 due to pricing dynamics, competition and potential IV price adjustments and rebate dynamics.
Supply Constraints Limited Demand Realization
XACDURO supply constraints during the year limited the full realization of underlying demand despite strong patient/hospital adoption.
Competition and Procurement Headwinds
ZEJULA faces a generic market for olaparib (Lynparza) and volume-based procurement dynamics that may drive early-year variability. Overall market access and procurement timing (hospital budgeting/purchasing) create near-term volatility.
No 2026 Full-Year Financial Guidance / Profitability Timing Unclear
Management did not provide full-year 2026 guidance. Corporate profitability/cash-flow breakeven remains a stated objective but timing depends on top-line growth and R&D investments; management declined to commit that 2026 will be the profitability year.
Regulatory and Enrollment Uncertainties for Global Programs
zoci timelines and regulatory path carry uncertainty (e.g., finish-enrollment/analysis timing described variably; regulatory discussions ongoing on NEC whether single-arm would suffice). Post-progression treatment heterogeneity (e.g., use of tarlatamab) could complicate OS interpretation, though study stratification was described to mitigate bias.
Near-term Variability from Hospital & Channel Purchasing
Management repeatedly cited hospital budgeting and procurement behavior as a moving piece that may produce variability in revenue timing throughout 2026.
Company Guidance
Management framed 2026 as a year of execution and preparation and gave several quantitative guideposts: Q4 revenue was $127.6M (+17% YoY) and full‑year 2025 revenue was $460.2M (+15% YoY); R&D expense declined 6% YoY, SG&A fell 12% in Q4 and 7% for the full year, loss from operations improved 19% to $229.4M (improving 25% on an adjusted basis excluding non‑cash items), and cash totaled $790M at year‑end. They did not provide full‑year 2026 revenue guidance because of moving pieces (VYVGART IV price adjustment, rebate dynamics and hospital purchasing), but expect measured near‑term growth from VYVGART, continued strength in ZEJULA and XACDURO, and planned launches (KarXT commercial launch/COBENFY in Q2 2026; TIVDAK later in 2026) with modest incremental SG&A for launches and R&D broadly stable. Key clinical milestones and timelines included zoci moving from IND to global Phase III in <2 years with a ~480‑patient registrational study (China ~1/3, U.S. ~30%), an 80% ORR reported in 10 patients with untreated brain mets, plans for a potential accelerated submission in 2027 and first global approval in 2028 plus a first‑line pivotal study this year; additional 2026 catalysts cited were zoci data in brain mets/NEC/1L SCLC, first‑in‑human ZL‑1503 data, a povetacicept interim for IgAN in H1 2026, REVEAL‑1 topline in Q1 2026 and REVEAL‑2 in Q2 2026, and expected China approval for TIVDAK in H1 2026.Zai Lab Financial Statement Overview
Summary
Income statement trends are improving with strong revenue growth and solid gross margins, and operating losses have narrowed, but the company remains meaningfully unprofitable. Balance sheet leverage is still manageable, though debt has risen while equity has contracted. Cash flow is the main weakness: operating cash flow and free cash flow remain consistently negative, implying ongoing funding dependence.Income Statement
Revenue has scaled meaningfully over time (from $49M in 2020 to $460M in 2025), and gross profit margins are consistently strong in recent years (~59–66% from 2021–2025), indicating solid product-level economics. The key weakness remains profitability: the company is still reporting sizeable operating and net losses (2025 net margin around -38%), although losses have narrowed materially versus 2021–2023. Overall, the income statement shows improving trajectory, but not yet a sustainable earnings profile.48
Neutral
Balance Sheet
Leverage appears manageable with debt still below equity (2025 debt-to-equity ~0.31), which is not excessive for a growth biotech. However, the trend is worsening: debt increased sharply in 2024–2025 while equity declined from ~$1.38B (2021) to ~$716M (2025), reflecting ongoing losses and/or capital actions. The balance sheet is supportive today, but the direction of rising leverage and shrinking equity is a notable risk if profitability does not continue improving.60
Neutral
Cash Flow
Cash generation remains a clear pressure point: operating cash flow and free cash flow are negative every year shown, including 2025 (operating cash flow about -$151M; free cash flow about -$159M). While cash burn improved versus 2024, free cash flow still declined year over year in 2025 (more negative than 2024 on the provided growth figure), highlighting volatility and ongoing funding needs. The company’s cash profile is improving at times, but it is not yet self-funding.34
Negative
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 460.16M | 398.99M | 266.72M | 215.04M | 144.31M |
| Gross Profit | 269.64M | 251.13M | 170.90M | 141.02M | 92.07M |
| EBITDA | -158.25M | -234.57M | -365.11M | -434.84M | -689.46M |
| Net Income | -175.54M | -257.10M | -334.62M | -443.29M | -704.47M |
Balance Sheet | |||||
| Total Assets | 1.17B | 1.19B | 1.04B | 1.22B | 1.61B |
| Cash, Cash Equivalents and Short-Term Investments | 689.57M | 779.67M | 806.45M | 1.01B | 1.41B |
| Total Debt | 224.26M | 153.47M | 15.15M | 20.39M | 15.54M |
| Total Liabilities | 456.88M | 344.86M | 240.18M | 174.54M | 230.00M |
| Stockholders Equity | 715.50M | 840.90M | 796.12M | 1.05B | 1.38B |
Cash Flow | |||||
| Free Cash Flow | -158.89M | -276.39M | -206.67M | -392.63M | -568.18M |
| Operating Cash Flow | -150.79M | -214.87M | -198.18M | -367.64M | -549.23M |
| Investing Cash Flow | 307.87M | -375.19M | -10.78M | 420.02M | 249.96M |
| Financing Cash Flow | 72.35M | 349.89M | -6.43M | -1.73M | 820.20M |
Zai Lab Technical Analysis
Negative
19.22
Price Trends
18.34
Positive
21.19
Negative
27.84
Negative
Market Momentum
0.39
Negative
52.73
Neutral
52.09
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ZLAB, the sentiment is Negative. The current price of 19.22 is above the 20-day moving average (MA) of 18.74, above the 50-day MA of 18.34, and below the 200-day MA of 27.84, indicating a neutral trend. The MACD of 0.39 indicates Negative momentum. The RSI at 52.73 is Neutral, neither overbought nor oversold. The STOCH value of 52.09 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ZLAB.
Zai Lab Risk Analysis
Zai Lab disclosed 100 risk factors in its most recent earnings report. Zai Lab reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Zai Lab Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $8.06B | 40.27 | 18.91% | ― | 54.51% | 275.94% | |
75 Outperform | $4.19B | 10.73 | 39.89% | ― | 12.69% | 100.80% | |
65 Neutral | $5.64B | 8.81 | ― | ― | 97.54% | ― | |
64 Neutral | $6.65B | -28.06 | -47.18% | ― | -76.96% | -425.41% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% | |
51 Neutral | $2.16B | ― | -28.97% | ― | 23.73% | 30.16% |
* Healthcare Sector Average
ZLAB
Zai Lab
19.22
-15.42
-44.52%
ACAD
ACADIA Pharmaceuticals
24.56
4.96
25.31%
PTCT
PTC Therapeutics
68.19
12.93
23.40%
KRYS
Krystal Biotech
275.64
96.39
53.77%
ACLX
Arcellx Inc
113.79
48.97
75.55%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.