zlab-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

____________________

FORM 10-Q

____________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 001-38205

____________________

ZAI LAB LIMITED

(Exact Name of Registrant as Specified in its Charter)

____________________


Cayman Islands			98-1144595
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

4560 Jinke Road Bldg. 1, 4th Floor, Pudong Shanghai China			201210
314 Main Street 4th Floor, Suite 100 Cambridge, MA, USA			02142
(Address of Principal Executive Offices)			(Zip Code)

+86 216163 2588

+1 857 706 2604

(Registrant’s Telephone Number, Including Area Code)

____________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

American Depositary Shares, each representing 10 Ordinary Shares, par value $0.000006 per share

ZLAB

The Nasdaq Global Market

Ordinary Shares, par value $0.000006 per share*

9688

The Stock Exchange of Hong Kong Limited

*Included in connection with the registration of the American Depositary Shares with the Securities and Exchange Commission. The ordinary shares are not registered or listed for trading in the United States but are listed for trading on The Stock Exchange of Hong Kong Limited.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 2, 2025, 1,084,743,860 ordinary shares of the registrant, par value $0.000006 per share, were outstanding, of which 486,853,250 ordinary shares were held in the form of American Depositary Shares.

Table of Contents

Zai Lab Limited

Quarterly Report on Form 10-Q

For the First Quarter of 2025


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets as of March 31, 202 5 and December 31, 20 24	2
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31 , 202 5 and 202 4	3
	Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31 , 2025 and 2024	4
	Condensed Consolidated Statements of Shareholders’ Equity for the Three Months Ended March 31, 2025 and 2024	5
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31 , 2025 and 2024	6
	Notes to the Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	25
Item 4.	Controls and Procedures	27
PART II.	OTHER INFORMATION	28
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29
Signatures		30

SPECIAL NOTES REGARDING THE COMPANY

Forward-Looking Statements

This report contains certain forward-looking statements, including statements relating to our strategy and plans; potential of and expectations for our business, commercial products, and pipeline programs; the market for our commercial and pipeline products; capital allocation and investment strategy; clinical development programs and related clinical trials; clinical trial data, data readouts, and presentations; risks and uncertainties associated with drug development and commercialization; regulatory discussions, submissions, filings, and approvals and the timing thereof; the potential benefits, safety, and efficacy of our products and product candidates and those of our collaboration partners; the anticipated benefits and potential of investments, collaborations, and business development activities; our profitability and timeline to profitability; and our future financial and operating results. All statements, other than statements of historical fact, included in this report are forward-looking statements, and can be identified by words such as “aim,” “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these terms or similar expressions. Such statements constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees or assurances of future performance. Forward-looking statements are based on our expectations and assumptions as of the date of this report and are subject to inherent uncertainties, risks, and changes in circumstances that may differ materially from those contemplated by the forward-looking statements. We may not actually achieve the plans, carry out the intentions, or meet the expectations or projections disclosed in our forward-looking statements, and you should not place undue reliance on these forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including but not limited to the following:

• Our ability to successfully commercialize and generate revenue from our approved products;

• Our ability to obtain funding for our operations and business initiatives;

• The results of our clinical and pre-clinical development of our product candidates;

• The content and timing of decisions made by the relevant regulatory authorities regarding regulatory approvals of our product candidates;

• Changes in U.S. and China trade policies and relations, as well as relations with other countries, and/or changes in laws, regulations, and/or sanctions;

• Actions the Chinese government may take to intervene in or influence our operations;

• Economic, political, and social conditions in mainland China as well as governmental policies;

• Uncertainties in the Chinese legal system, including with respect to the anti-corruption enforcement efforts in mainland China and the Counter-Espionage Law, the Data Security Law, the Cyber Security Law, the Cybersecurity Review Measures, the Personal Information Protection Law, the Regulation on the Administration of Human Genetic Resources, the Biosecurity Law, the Security Assessment Measures, and other future laws and regulations or amendments to such laws and regulations;

• Approval, filing, or procedural requirements imposed by the China Securities Regulatory Commission or other Chinese regulatory authorities in connection with issuing securities to foreign investors under Chinese law;

• Any violation or liability under the U.S. Foreign Corrupt Practices Act or Chinese anti-corruption, anti-bribery, and anti-fraud laws;

• Restrictions on currency exchange;

• Limitations on the ability of our Chinese subsidiaries to make payments to us;

• Chinese requirements on the ability of residents in mainland China to establish offshore special purpose companies;

• Chinese regulations regarding acquisitions of companies based in mainland China by foreign investors;

• Any issues that our Chinese manufacturing facilities may have with operating in conformity with established GMPs and international best practices, and with passing FDA, NMPA, and EMA inspections;

• Expiration of, or changes to, financial incentives or discretionary policies granted by local governments in mainland China;

• Restrictions or limitations on the ability of overseas regulators to conduct investigations or collect evidence within mainland China;

• Significant business disruptions caused by events or developments outside of our control, such as pandemics, international war or conflict, natural disasters or extreme weather events, and other geopolitical events;

• Unfavorable tax consequences to us and our non-Chinese shareholders or ADS holders if we were to be classified as a Chinese resident enterprise for Chinese income tax purposes;

• Failure to comply with applicable Chinese, U.S., and Hong Kong regulations that could lead to government enforcement actions, fines, other legal or administrative sanctions, and/or harm to our business or reputation;

• Delays or obstacles for closing transactions, such as review by the CFIUS in our investments;

• Any inability to renew our current leases on desirable terms or otherwise locate desirable alternatives for our leased properties;

• Any inability of third parties on whom we rely, such as our licensors, CMOs, and others that supply certain of our products and product candidates; CROs that conduct or support some of our pre-clinical and clinical trials; and distributors that sell our commercial products, to successfully carry out their contractual duties or meet expected deadlines; and

• Any inability to obtain or maintain sufficient patent protection for our products and product candidates.

These factors should not be construed as exhaustive and should be read with the other cautionary statements and information in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report”), our Quarterly Reports on Form 10-Q, and our other filings with the U.S. Securities and Exchange Commission. Forward-looking statements are based on our management’s beliefs and assumptions and information currently available to our management. These statements, like all statements in this report, speak only as of their date. We anticipate that subsequent events and developments will cause our expectations and assumptions to change, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by law. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this report.

Usage of Terms

Throughout this report, we use certain acronyms and terms that are defined in the Glossary of our 2024 Annual Report. References to “Zai Lab,” the “Company,” “we,” “us,” and “our” refer to Zai Lab Limited, a holding company, and its subsidiaries, on a consolidated basis; and references to “Zai Lab Limited” refer to Zai Lab Limited, a holding company. Zai Lab Limited is the entity in which investors hold their interest.

Our operating subsidiaries consist of Zai Lab (Hong Kong) Limited, domiciled in Hong Kong; Zai Auto Immune (Hong Kong) Limited, domiciled in Hong Kong; Zai Anti Infectives (Hong Kong) Limited, domiciled in Hong Kong; Zai Lab (Shanghai) Co., Ltd., domiciled in mainland China; Zai Lab International Trading (Shanghai) Co., Ltd., domiciled in mainland China; Zai Lab (Suzhou) Co., Ltd., domiciled in mainland China; Zai Biopharmaceutical (Suzhou) Co., Ltd., domiciled in mainland China; Zai Lab Trading (Suzhou) Co., Ltd., domiciled in mainland China; Zai Lab (Taiwan) Limited, domiciled in Taiwan; Zai Lab (AUST) Pty. Ltd., domiciled in Australia; and Zai Lab (US) LLC, domiciled in the United States.

We own various trademarks, including various forms of the Zai Lab brand (in English and Chinese), as well as several domain names that incorporate such trademarks. Trademarks and trade names of other companies appearing in this report are the property of their respective holders. Solely for convenience, some of the trademarks and trade names in this report are referred to without the ® and ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend our use or display of other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of, any other company.

PART I – FINANCIAL INFORMATION

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the accompanying notes included in this report and the audited consolidated financial information and the accompanying notes included in our 2024 Annual Report.

Item 1. Financial Statements.

Zai Lab Limited

Unaudited Condensed Consolidated Balance Sheets

(in thousands of U.S. dollars (“$”), except for number of shares and per share data)


	Notes	March 31, 2025	December 31, 2024

Assets
Current assets
Cash and cash equivalents	3	757,263	449,667
Restricted cash, current		100,000	100,000
Short-term investments		—	330,000
Accounts receivable (net of allowance for credit losses of $22 and $25 as of March 31, 2025 and December 31, 2024, respectively)		76,555	85,178
Notes receivable		11,118	4,233
Inventories, net	4	53,054	39,875
Prepayments and other current assets		43,878	41,527
Total current assets		1,041,868	1,050,480
Restricted cash, non-current		1,113	1,114


Property and equipment, net	5	49,654	47,961
Operating lease right-of-use assets		19,081	21,496
Land use rights, net		2,882	2,907
Intangible assets, net	6	56,198	56,027

Other non-current assets		2,534	5,768
Total assets		1,173,330	1,185,753
Liabilities and shareholders’ equity
Current liabilities
Accounts payable		103,017	100,906
Current operating lease liabilities		6,574	8,048
Short-term debt	10	173,405	131,711
Other current liabilities	11	36,811	58,720
Total current liabilities		319,807	299,385
Deferred income		30,126	31,433
Non-current operating lease liabilities		12,319	13,712
Other non-current liabilities		325	325
Total liabilities		362,577	344,855
Commitments and contingencies (Note 17)
Shareholders’ equity
Ordinary shares (par value of $0.000006 per share; 5,000,000,000 shares authorized; 1,089,076,400 and 1,082,614,740 shares issued as of March 31, 2025 and December 31, 2024, respectively; 1,084,164,200 and 1,077,702,540 shares outstanding as of March 31, 2025 and December 31, 2024, respectively)		7	7
Additional paid-in capital		3,283,800	3,264,295
Accumulated deficit		(2,501,521)	(2,453,083)
Accumulated other comprehensive income		49,303	50,515
Treasury Stock (at cost, 4,912,200 shares as of both March 31, 2025 and December 31, 2024)		(20,836)	(20,836)
Total shareholders’ equity		810,753	840,898
Total liabilities and shareholders’ equity		1,173,330	1,185,753

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Zai Lab Limited

Unaudited Condensed Consolidated Statements of Operations

(in thousands of $, except for number of shares and per share data)


		Three Months Ended March 31,
	Notes	2025	2024
Revenues
Product revenue, net	7	105,650	87,149
Collaboration revenue	7	837	—
Total revenues		106,487	87,149
Expenses
Cost of product revenue		(38,452)	(33,619)
Cost of collaboration revenue		(195)	—
Research and development		(60,729)	(54,645)
Selling, general, and administrative		(63,422)	(69,194)

Loss from operations		(56,311)	(70,309)
Interest income		8,606	9,658
Interest expenses		(1,187)	(113)
Foreign currency gains (losses)		651	(2,068)
Other (expense) income, net	15	(197)	9,361
Loss before income tax		(48,438)	(53,471)
Income tax expense	8	—	—
Net loss		(48,438)	(53,471)
Loss per share - basic and diluted	9	(0.04)	(0.05)
Weighted-average shares used in calculating net loss per ordinary share - basic and diluted		1,080,825,300	973,145,760

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Zai Lab Limited

Unaudited Condensed Consolidated Statements of Comprehensive Loss

(in thousands of $)


	Three Months Ended March 31,
	2025	2024
Net loss	(48,438)	(53,471)
Other comprehensive income, net of tax of nil:
Foreign currency translation adjustments	(1,212)	1,542
Comprehensive loss	(49,650)	(51,929)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Zai Lab Limited

Unaudited Condensed Consolidated Statements of Shareholders’ Equity

(in thousands of $, except for number of shares)


	Ordinary Shares		Additional paid in capital	Accumulated deficit	Accumulated other comprehensive income	Treasury Stock		Total
	Number of Shares	Amount				Shares	Amount
Balance at December 31, 2024	1,082,614,740	7	3,264,295	(2,453,083)	50,515	(4,912,200)	(20,836)	840,898
Issuance of ordinary shares upon vesting of restricted shares	137,540	0	0	—	—	—	—	—
Exercise of share options	6,324,120	0	3,733	—	—	—	—	3,733
Issuance cost of the follow-on public offering	—	—	(28)	—	—	—	—	(28)

Share-based compensation	—	—	15,800	—	—	—	—	15,800
Net loss	—	—	—	(48,438)	—	—	—	(48,438)
Foreign currency translation	—	—	—	—	(1,212)	—	—	(1,212)
Balance at March 31, 2025	1,089,076,400	7	3,283,800	(2,501,521)	49,303	(4,912,200)	(20,836)	810,753


	Ordinary Shares		Additional paid in capital	Accumulated deficit	Accumulated other comprehensive income	Treasury Stock		Total
	Number of Shares	Amount				Shares	Amount

Balance at December 31, 2023	977,151,270	6	2,975,302	(2,195,980)	37,626	(4,912,200)	(20,836)	796,118
Issuance of ordinary shares upon vesting of restricted shares	1,046,440	0	0	—	—	—	—	—


Share-based compensation	—	—	17,980	—	—	—	—	17,980
Net loss	—	—	—	(53,471)	—	—	—	(53,471)
Foreign currency translation	—	—	—	—	1,542	—	—	1,542
Balance at March 31, 2024	978,197,710	6	2,993,282	(2,249,451)	39,168	(4,912,200)	(20,836)	762,169

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. “0” in above table means less than 1,000 dollars.

Zai Lab Limited

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands of $)


	Three Months Ended March 31,
	2025	2024
Cash flows from operating activities
Net loss	(48,438)	(53,471)
Adjustments to reconcile net loss to net cash used in operating activities:
Allowance for credit losses	(3)	1
Inventory write-down	27	37
Depreciation and amortization expenses	3,458	3,012
Amortization of deferred income	(1,331)	(840)
Share-based compensation	15,800	17,980
Loss (gain) from fair value changes of equity investment with readily determinable fair value	1,912	(4,889)
Losses on disposal of property and equipment	—	407

Noncash lease expenses	2,466	2,069

Debt issuance costs	—	700
Foreign currency remeasurement impact	(651)	2,068
Changes in operating assets and liabilities:
Accounts receivable	8,737	(1,328)
Notes receivable	(6,885)	(9,239)
Inventories	(13,198)	6,818
Prepayments and other current assets	(1,601)	(1,253)
Other non-current assets	1,401	(271)

Accounts payable	2,720	(13,370)
Other current liabilities	(23,275)	(34,204)
Operating lease liabilities	(2,827)	(2,783)
Deferred income	(11)	(1,550)

Net cash used in operating activities	(61,699)	(90,106)
Cash flows from investing activities

Proceeds from maturity of short-term investment	330,000	16,300
Purchases of property and equipment	(1,534)	(974)

Acquisition of intangible assets	(2,333)	(12,034)


Net cash provided by investing activities	326,133	3,292
Cash flows from financing activities
Proceeds from short-term debt	101,890	48,248
Repayment of short-term bank borrowings	(60,904)	—
Payments of debt issuance costs	—	(700)
Proceeds from exercises of stock options	3,009	—

Payments of public offering costs	(854)	—

Net cash provided by financing activities	43,141	47,548
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	20	(104)
Net increase (decrease) in cash, cash equivalents and restricted cash	307,595	(39,370)
Cash, cash equivalents and restricted cash - beginning of period	550,781	791,264
Cash, cash equivalents and restricted cash - end of period	858,376	751,894
Supplemental disclosure on non-cash investing and financing activities
Payables for purchase of property and equipment	2,645	2,481
Payables for acquisition of intangible assets	2,075	78
Payables for public offering costs	168	—

Right-of-use asset acquired under operating leases	—	2,395
Receivable from sales of equity investments	1,203	—
Receivables for stock option exercise under equity incentive plans	794	—

Supplemental disclosure of cash flow information
Cash paid for interest	1,101	45

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Zai Lab Limited

Notes to the unaudited condensed consolidated financial statements

1. Organization and Principal Activities

Zai Lab Limited was incorporated on March 28, 2013 in the Cayman Islands as an exempted company with limited liability under the Companies Act of the Cayman Islands (as amended). Zai Lab Limited and its subsidiaries (collectively referred to as the “Company”) are focused on discovering, developing, and commercializing products that address medical conditions with significant unmet needs in the areas of oncology, immunology, neuroscience, and infectious disease.

The Company’s principal operations and geographic markets are in Greater China. The Company has a substantial presence in Greater China and the United States.

2. Basis of Presentation and Consolidation and Significant Accounting Policies

(a) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”), regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this report should be read in conjunction with the consolidated financial statements and accompanying notes included in the Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report”). The December 31, 2024 condensed consolidated balance sheet data included in this report were derived from the audited financial statements in the 2024 Annual Report.

The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments that are necessary to present fairly the results for the interim periods presented. Interim results are not necessarily indicative of the results for the year ending December 31, 2025.

(b) Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of Zai Lab Limited and its subsidiaries, which are wholly owned. All intercompany transactions and balances are eliminated upon consolidation.

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Areas where management uses subjective judgment include, but are not limited to, accrual of rebates, recognition of research and development expenses based on the Company’s estimates of the actual services performed by the CROs and CMOs, fair value of share-based compensation expenses, recoverability of deferred tax assets, and useful life of intangible assets for commercial products. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Actual results could differ from these estimates.

(d) Fair Value Measurements

Financial instruments of the Company primarily include cash and cash equivalents, current restricted cash, short-term investments, accounts receivable, notes receivable, prepayments and other current assets, non-current restricted cash, accounts payable, short-term debt, and other current liabilities. As of March 31, 2025 and December 31, 2024, the carrying values of cash and cash equivalents, current restricted cash, short-term investments, accounts receivable, prepayments and

Zai Lab Limited

Notes to the unaudited condensed consolidated financial statements

other current assets, accounts payable, short-term debt, and other current liabilities approximated their fair value due to the short-term maturity of these instruments, and the carrying value of notes receivable and non-current restricted cash approximated their fair value based on the assessment of the ability to recover these amounts.

(e) Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). This ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. This ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is permitted. This ASU will result in additional disclosure in the consolidated financial statements, once adopted. The Company is currently evaluating the impact of this ASU and expects to adopt it for the year ending December 31, 2025.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires disclosure in the notes to financial statements of specified information about certain costs and expenses. This ASU will be effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this ASU and expects to adopt it for the year ending December 31, 2027.

For additional information on the Company’s significant accounting policies, refer to the notes to the consolidated financial statements in the 2024 Annual Report.

3. Cash and Cash Equivalents

The following table presents the Company’s cash and cash equivalents ($ in thousands):


	March 31, 2025	December 31, 2024

Cash	756,089	448,508
Cash equivalents (i)	1,174	1,159
	757,263	449,667
Denominated in:
US$	734,857	429,887
Renminbi (“RMB”) (ii)	21,245	18,979
Hong Kong dollar (“HK$”)	306	114
Australian dollar (“A$”)	521	522
Taiwan dollar (“TW$”)	334	165
	757,263	449,667

(i)Cash equivalents represent short-term and highly liquid investments in a money market fund.

(ii)Certain cash and bank balances denominated in RMB were deposited with banks in mainland China. The conversion of these RMB-denominated balances into foreign currencies is subject to the rules and regulations of foreign exchange control promulgated by the Chinese government.

Zai Lab Limited

Notes to the unaudited condensed consolidated financial statements

4. Inventories, Net

The following table presents the Company’s inventories, net ($ in thousands):


	March 31, 2025	December 31, 2024

Finished goods	33,432	24,063
Raw materials	15,317	13,268
Work in progress	4,305	2,544
Inventories, net	53,054	39,875

The Company writes down inventory for any excess or obsolete inventory or when the Company believes that the net realizable value of inventory is less than the carrying value. The Company recorded write-downs in inventory, which were included in cost of product revenue, of insignificant amounts in the first quarter of 2025 and 2024.

5. Property and Equipment, Net

The following table presents the components of the Company’s property and equipment, net ($ in thousands):


	March 31, 2025	December 31, 2024

Office equipment	1,231	1,230
Electronic equipment	9,498	9,211
Vehicle	196	196
Laboratory equipment	20,537	20,516
Manufacturing equipment	17,525	17,493
Leasehold improvements	11,324	11,306
Building	24,084	—
Construction in progress	4,274	25,129
	88,669	85,081
Less: accumulated depreciation	(39,015)	(37,120)
Property and equipment, net	49,654	47,961

Depreciation expense was $2.0 million and $2.2 million in the first quarter of 2025 and 2024, respectively.

6. Intangible Assets, Net

The following table presents the components of the Company’s intangible assets, net ($ in thousands):


	March 31, 2025			December 31, 2024
	Gross Carrying Amount	Accumulated Amortization	Net Carrying Value	Gross Carrying Amount	Accumulated Amortization	Net Carrying Value
Finite-lived intangible assets
Commercial products	58,744	(3,953)	54,791	57,104	(2,637)	54,467
Software	4,366	(2,959)	1,407	4,360	(2,800)	1,560
Total	63,110	(6,912)	56,198	61,464	(5,437)	56,027

Intangible assets for commercial products include capitalized post-approval milestone fees and acquired commercial manufacturing know-how and related development costs. The Company is amortizing intangible assets for commercial products as cost of product revenue over the estimated remaining useful life of the related products. Intangible assets for externally purchased software are amortized over three to five years on a straight-line basis.

Zai Lab Limited

Notes to the unaudited condensed consolidated financial statements

Amortization expense was $1.5 million and $0.7 million in the first quarter of 2025 and 2024, respectively.

7. Revenues

Product Revenue, Net

The Company’s product revenue is derived from the sales of its commercial products in Greater China. The table below presents the Company’s gross and net product revenue ($ in thousands):


	Three Months Ended March 31,
	2025	2024

Product revenue - gross	112,333	93,112
Less: Rebates and sales returns	(6,683)	(5,963)
Product revenue - net	105,650	87,149

Sales rebates are offered to distributors in mainland China, and the amounts are recorded as a reduction of product revenue. Estimated rebates are determined based on contracted rates, sales volumes, and level of distributor inventories.

The following table presents the Company’s net revenue by commercial program ($ in thousands):


	Three Months Ended March 31,
	2025	2024

ZEJULA	49,529	45,501
VYVGART / VYVGART Hytrulo	18,105	13,162
NUZYRA	15,118	9,913
OPTUNE	11,363	12,480
QINLOCK	8,509	6,093
XACDURO	1,117	—
AUGTYRO	1,626	—
Other (i)	283	—
Product revenue - net	105,650	87,149

(i)Other includes product candidates sold in patient programs prior to commercialization.

Collaboration Revenue

Collaboration revenue was $0.8 million in the first quarter of 2025 and related to promotional activities in mainland China. We had no such collaboration revenue in the first quarter of 2024.

8. Income Tax

No provision for income taxes has been required to be accrued because the Company is in a cumulative loss position for the periods presented.

The Company recorded a full valuation allowance against deferred tax assets of all its consolidated entities because all entities were in a cumulative loss position as of March 31, 2025 and December 31, 2024. No unrecognized tax benefits and related interest and penalties were recorded in the periods presented.

Zai Lab Limited

Notes to the unaudited condensed consolidated financial statements

9. Loss Per Share

The following table presents the computation of the basic and diluted net loss per share ($ in thousands, except share and per share data):


	Three Months Ended March 31,
	2025	2024

Numerator:
Net loss	(48,438)	(53,471)
Denominator:
Weighted average number of ordinary shares - basic and diluted	1,080,825,300	973,145,760
Net loss per share - basic and diluted	(0.04)	(0.05)

As a result of the Company’s net loss in the first quarter of 2025 and 2024, share options and non-vested restricted shares outstanding in the respective periods were excluded from the calculation of diluted loss per share as their inclusion would have been anti-dilutive.


	March 31,
	2025	2024
Share options	98,164,510	104,244,590
Non-vested restricted shares	32,537,760	29,893,540

10. Borrowings

The Company has debt arrangements with the Bank of China, SPD Bank, CMB, BOCOM, and Ningbo Bank to support its working capital needs in mainland China. The following table presents the Company’s short-term debt as of March 31, 2025 ($ in thousands):


	Weighted average interest rate per annum		March 31, 2025
Bank of China Working Capital Loans	2.60	%	48,132
SPD Bank Working Capital Loans	2.80	%	41,793
China Merchant Bank Working Capital Loans	2.91	%	34,799
Bank of Communications Working Capital Loans	2.75	%	41,793
Ningbo Bank Electronic Commercial Draft Discounting Agreement	1.90	%	6,888
Total short-term debt	2.72	%	173,405

Bank of China Working Capital Loan Facility

On February 5, 2024, the Company entered into an uncommitted facility letter with the Bank of China (Hong Kong) Limited (“BOC HK”) pursuant to which BOC HK will provide standby letters of credit for loans of up to $100.0 million for a term of one year. In connection with this agreement, the Company paid a one-time, non-refundable fee of $0.7 million in the first quarter of 2024. In accordance with this agreement, the Company also maintained restricted deposits of $100.0 million, which are presented as restricted cash-current on the unaudited condensed consolidated balance sheet, to secure the standby letters of credit. On June 20, 2024 and January 22, 2025, upon the Company’s application, BOC HK provided standby letters of credit in favor of the Bank of China Pudong Development Zone Branch (“BOC Pudong Branch”) for $23.0 million and $27.0 million, respectively, which are or may become payable by the Company’s wholly-owned subsidiary, Zai Lab (Shanghai) Co., Ltd. (“Zai Lab Shanghai”). BOC HK and BOC Pudong Branch are collectively

Zai Lab Limited

Notes to the unaudited condensed consolidated financial statements

referred to as Bank of China. As of March 31, 2025, the aggregate principal amount outstanding was RMB345.5 million (approximately $48.1 million). Each working capital loan has a one-year term and is subject to a floating interest rate, which is subject to adjustment every six months.

SPD Bank Working Capital Loan Facility

On February 6, 2024, the Company entered into a maximum-amount guarantee contract with the Shanghai Pudong Development Bank Co., Ltd. Zhangjiang Hi-Tech Park Sub-Branch (“SPD Bank”) pursuant to which the Company will guarantee working capital loans of up to RMB300.0 million (approximately $42.0 million) from SPD Bank to Zai Lab Shanghai over a three-year period. As of March 31, 2025, the aggregate principal amount outstanding was RMB300.0 million (approximately $41.8 million). Each working capital loan has a one-year term and is subject to a fixed interest rate.

China Merchants Bank Working Capital Loan Facility

On July 5, 2024, the Company issued a maximum-amount irrevocable letter of guarantee to China Merchants Bank Co., Ltd., Shanghai Branch (“CMB”) pursuant to which the Company will guarantee working capital loans of up to RMB250.0 million (approximately $34.4 million) from CMB to Zai Lab Shanghai, and Zai Lab Shanghai entered into a Credit Agreement with CMB with respect to the RMB250.0 million facility. The credit facility will be available for one year. As of March 31, 2025, the aggregate principal amount outstanding was RMB249.8 million (approximately $34.8 million) under this debt facility. Each working capital loan has a one-year term and is subject to a floating interest rate, which is subject to adjustment every three months.

Bank of Communications Working Capital Loan Facility

On January 2, 2025, the Company entered into a guarantee contract with Bank of Communications Co., Ltd. Shanghai Zhangjiang Sub-Branch (“BOCOM”) pursuant to which the Company will guarantee working capital loans from BOCOM to Zai Lab Shanghai, and Zai Lab Shanghai entered into a working capital loan contract with BOCOM with respect to a revolving credit facility of up to RMB300.0 million (approximately $41.1 million). As of March 31, 2025, the aggregate principal amount outstanding was RMB300.0 million (approximately $41.8 million) under this debt facility. The working capital loan has a one-year term and is subject to a floating interest rate, which is subject to adjustment every three months.

Ningbo Bank Working Capital Loan Facility

On February 6, 2024, the Company’s wholly-owned subsidiary, Zai Lab (Suzhou) Co., Ltd. (“Zai Lab Suzhou”), entered into a maximum credit contract with Bank of Ningbo Co., Ltd. Suzhou Sub-branch (“Ningbo Bank”) as well as an Electronic Commercial Draft Discounting Master Agreement and Online Working Capital Loan Master Agreement (collectively, the “Ningbo Bank Agreements”). The Ningbo Bank Agreements permit Zai Lab Suzhou to utilize, including through discounting or working capital loan agreements and subject to the terms and conditions in related master agreements, up to RMB230.3 million (approximately $32.4 million), of which Zai Lab Suzhou is authorized to utilize up to RMB160.0 million (approximately $22.5 million). In March 2025, pursuant to the Ningbo Bank Agreements, Zai Lab Suzhou entered into an electronic commercial draft discounting agreement with Ningbo Bank, and discounted RMB49.4 million (approximately $6.9 million) of its intercompany receivables. The cash proceeds from the discounting arrangement were classified as short-term debt. The discounted bill has a 6-month term.

Zai Lab Limited

Notes to the unaudited condensed consolidated financial statements

11. Other Current Liabilities

The following table presents the Company’s other current liabilities ($ in thousands):


	March 31, 2025	December 31, 2024

Accrued payroll	12,168	30,198
Accrued professional service fee	3,475	5,728
Payables for purchase of property and equipment	2,645	449
Accrued rebate to distributors	11,773	10,839
Tax payables	3,770	5,154
Other (i)	2,980	6,352
Total	36,811	58,720

(i)Other primarily includes accrued travel, business-related expenses, and advance payments from partners.

12. Related Party Transactions

In January 2025, the Company entered into a license agreement with Zenas BioPharma (HK) Limited (“Zenas”), pursuant to which the Company obtained a license under certain patents and know-how of Zenas to develop and commercialize products containing a differentiated humanized monoclonal antibody targeting IGF-1R as an active ingredient in Greater China. One of the members of the Company’s Board of Directors, Mr. Moulder, is also the Chairman of the Board of Directors and Chief Executive Officer of Zenas. The Company recorded a $10.0 million upfront fee into research and development expenses in the first quarter of 2025. As of March 31, 2025, the Company may be required to pay an additional aggregate amount of up to $117.0 million in development and sales-based milestones as well as certain royalties at tiered percentage rates ranging from high-single digits to mid-teens on annual net sales of the licensed products in the licensed territories.

13. Share-Based Compensation

During the first quarter of 2025, the Company granted share options to purchase up to 5,062,710 ordinary shares and restricted shares representing 1,825,540 ordinary shares under its equity incentive plans. The share options granted have a contractual term of ten years. Share options granted since April 2023 generally vest ratably over a four-year period, and share options granted prior to April 2023 generally vest ratably over a five-year period, with 25% or 20% of the awards vesting on each anniversary of the grant date, respectively, subject to continued employment/service with the Company on the vesting date. The restricted shares granted generally vest ratably over a specified period on the anniversary of the grant date, subject to continued employment/service with the Company on the vesting date. For a description of the Company’s equity incentive plans and more details on the terms of the share-based awards, see Note 15 of the 2024 Annual Report.

The following table presents the share-based compensation expense that has been reported in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss as follows ($ in thousands):


	Three Months Ended March 31,
	2025	2024

Selling, general and administrative	10,226	11,036
Research and development	5,574	6,944
Total	15,800	17,980

Zai Lab Limited

Notes to the unaudited condensed consolidated financial statements

As of March 31, 2025, there was unrecognized share-based compensation expense related to unvested share options and unvested restricted shares of $71.9 million and $69.0 million, respectively, which the Company expects to recognize over a weighted-average period of 2.60 years and 2.28 years, respectively.

14. License and Collaboration Agreements

The Company has entered into various license and collaboration agreements with third parties to develop and commercialize product candidates.

Significant License and Collaboration Arrangements

For a description of the material terms of the Company’s significant license and collaboration agreements, see Note 16 of the 2024 Annual Report. During the first quarter of 2025, the Company did not enter into any new significant license or collaboration agreements or incur any milestone fees under our existing significant license and collaboration agreements.

Other License and Collaboration Arrangements That Are Not Individually Significant

The Company recorded upfront fees of $20.0 million into research and development expenses in the first quarter of 2025 for license and collaboration agreements that are not individually significant.

15. Other (Expense) Income, Net

The following table presents the Company’s other income, net ($ in thousands):


	Three Months Ended March 31,
	2025	2024
Government grants	16	2,791
(Loss) Gain on equity investments with readily determinable fair value	(1,912)	4,889
Other miscellaneous gain	1,699	1,681
Total	(197)	9,361

16. Restricted Net Assets

The Company’s ability to pay dividends may depend on the Company receiving distributions of funds from its Chinese subsidiaries. Relevant Chinese laws and regulations permit payments of dividends by the Company’s Chinese subsidiaries only out of its retained earnings, if any, as determined in accordance with Chinese accounting standards and regulations. The results of operations reflected in the unaudited condensed consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Company’s Chinese subsidiaries.

In accordance with the Company Law of the People’s Republic of China, a domestic enterprise is required to provide statutory reserves of at least 10% of its annual after-tax profit until such reserve has reached 50% of its respective registered capital based on the enterprise’s Chinese statutory accounts. A domestic enterprise may provide discretionary surplus reserve, at the discretion of the Board of Directors, from the profits determined in accordance with the enterprise’s Chinese statutory accounts. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. The Company’s Chinese subsidiaries were established as domestic enterprises and therefore are subject to the above-mentioned restrictions on distributable profits.

No appropriation to statutory reserves was made in the first quarter of 2025 and 2024 because the Chinese subsidiaries had substantial losses during such periods.

Zai Lab Limited

Notes to the unaudited condensed consolidated financial statements

As a result of these Chinese laws and regulations, subject to the limits discussed above that require annual appropriations of 10% of after-tax profit to be set aside, prior to payment of dividends, as a general reserve fund, the Company’s Chinese subsidiaries are restricted in their ability to transfer out a portion of their net assets.

Foreign exchange and other regulation in mainland China may further restrict the Company’s subsidiaries in mainland China from transferring out funds in the form of dividends, loans, and advances. As of March 31, 2025 and December 31, 2024, amounts restricted included the paid-in capital of the Company’s subsidiaries in mainland China and were $506.0 million.

17. Commitments and Contingencies

(a) Purchase Commitments

As of March 31, 2025, the Company’s commitments related to commercial manufacturing development and facilities construction and improvement activities that are contracted but not yet reflected in the unaudited condensed consolidated financial statements were $3.8 million and were expected to be incurred within one year.

(b) Legal Proceedings

The Company is not currently a party to any material legal proceedings.

In the normal course of business, the Company enters into agreements that indemnify others for certain liabilities that may arise in connection with a transaction or certain events and activities. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations.

18. Segment Information

The Company operates as a single operating segment that is engaged in discovering, developing, and commercializing products that address medical conditions with significant unmet needs in the areas of oncology, immunology, neuroscience, and infectious disease. A global research and development organization and a supply chain organization discover, develop, manufacture, and supply our products. A global commercial organization markets, distributes, and sells the products. The business is also supported by global corporate staff functions. The Company’s CODM is the Chief Executive Officer, who assesses performance and allocates resources based on the significant expenses and net income on a consolidated basis. The significant expenses that are regularly provided to the CODM include those amounts that are also reported on the consolidated statement of operations as well as below additional disaggregated measures. The CODM also reviews cash position (which are cash and cash equivalents, current restricted cash, and short-term investments) that are also reported on the consolidated balance sheets when making operating decisions. In accordance with ASC 280, the Company has only one reportable segment.

The following tables present disaggregated expenses that are regularly provided to the CODM:


	Three Months Ended March 31,
	2025	2024
Personnel compensation and related costs	24,079	28,008
Licensing fees	19,997	—
CROs/CMOs/Investigators expenses	9,830	19,904
Other costs	6,823	6,733
Total research and development expenses	60,729	54,645

Zai Lab Limited

Notes to the unaudited condensed consolidated financial statements

Three Months Ended March 31,

2025

2024

SEC Form 10-Q filed by Zai Lab Limited