# Zai Lab Ltd: Form 10-Q for the period ended Jun 30, 2025

- Company: [Zai Lab Ltd](/companies/zlab.md) (CIK 1704292)
- Form: 10-Q
- Filed: 2025-08-07
- Accepted by EDGAR: Aug 7, 2025, 10:23 ET
- Period: 2025-06-30
- Accession: 0001628280-25-038548
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1704292/000162828025038548/zlab-20250630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1704292/000162828025038548/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-04-01 to 2025-06-30 | $109.1m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2025-01-01 to 2025-06-30 | $214.7m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-04-01 to 2025-06-30 | $43.0m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2025-01-01 to 2025-06-30 | $81.5m | us-gaap:CostOfGoodsAndServicesSold |
| Research and development | 3 months, 2025-04-01 to 2025-06-30 | $50.6m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2025-01-01 to 2025-06-30 | $111.3m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2025-04-01 to 2025-06-30 | $71.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2025-01-01 to 2025-06-30 | $134.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-04-01 to 2025-06-30 | −$54.9m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2025-01-01 to 2025-06-30 | −$111.2m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-04-01 to 2025-06-30 | $1.3m | us-gaap:InterestExpenseNonoperating |
| Interest expense | 6 months, 2025-01-01 to 2025-06-30 | $2.4m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2025-04-01 to 2025-06-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2025-01-01 to 2025-06-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | −$40.7m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-01-01 to 2025-06-30 | −$89.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-04-01 to 2025-06-30 | −$0.04 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2025-01-01 to 2025-06-30 | −$0.08 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-04-01 to 2025-06-30 | −$0.04 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-01-01 to 2025-06-30 | −$0.08 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-04-01 to 2025-06-30 | 1,091,933,150 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2025-01-01 to 2025-06-30 | 1,086,413,130 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | −$92.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2025-01-01 to 2025-06-30 | $4.4m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-06-30 | $732.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-06-30 | $1.03bn | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-30 | $1.16bn | us-gaap:Assets |
| Current liabilities | at 2025-06-30 | $331.5m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-06-30 | $372.4m | us-gaap:Liabilities |
| Short-term borrowings | at 2025-06-30 | $174.5m | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2025-06-30 | $791.7m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 36,539 characters.

You should read the following discussion and analysis of our financial condition and results of operations together with our 2024 Annual Report and our unaudited condensed consolidated financial statements and the accompanying notes for the three and six months ended June 30, 2025 included in *Item 1. Financial Statements.*

### Overview

We are a patient-focused, innovative, commercial-stage, global biopharmaceutical company with a substantial presence in both Greater China and the United States. We 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. We intend to leverage our competencies and resources to positively impact human health in Greater China and worldwide. We currently have seven commercial programs – ZEJULA, VYVGART / VYVGART Hytrulo, NUZYRA, OPTUNE, QINLOCK, XACDURO, and AUGTYRO – with products that have received marketing approval and that we have commercially launched in one or more territories in Greater China. We also have multiple programs in late-stage product development and a number of ongoing pivotal trials across our portfolio.

Since our inception, we have incurred net losses and negative cash flows from our operations. Substantially all of our losses have resulted from funding our research and development programs and selling, general, and administrative costs associated with our operations. Developing high quality product candidates requires significant investment in our research and development activities over a prolonged period of time, and a core part of our strategy is to continue making sustained investments in this area. Our ability to generate profits and positive cash flow from operations depends upon our ability to successfully market our commercial products and to successfully expand the indications for these products and develop and commercialize our other product candidates. As discussed further below, we expect to continue to incur substantial costs related to our research and development and commercialization activities.

As we pursue our corporate strategic goals, we anticipate that our financial results will fluctuate from quarter to quarter and year to year depending in part on the balance between the success of our commercial products and the level of our research and development expenses. We cannot predict whether or when our product candidates will receive regulatory approval. Further, if we receive such regulatory approval, we cannot predict whether or when we may be able to successfully commercialize such products or whether or when such products may become profitable.

### Recent Developments

### Commercial Products

Net product revenue was $109.1 million for the second quarter of 2025, an increase of 9% compared to the prior year period, primarily due to higher sales of VYVGART, driven by an extension of duration of therapy and increasing market penetration, XACDURO, which was launched since the fourth quarter of 2024, and NUZYRA, supported by increasing market coverage and penetration. These higher sales were partially offset by softer sales of ZEJULA, due to evolving competitive dynamics within the PARPi class.

### Product Candidates

We continued to advance our product candidates through our research and development activities, including the following developments with respect to our clinical trials and regulatory approvals:

#### Oncology

- **ZL-1310 (DLL3 ADC):** In May 2025, the FDA granted Fast Track designation to ZL-1310 for the treatment of ES-SCLC, and in June 2025, we presented positive data from the ongoing global Phase Ia/Ib clinical trial evaluating ZL-1310 for the treatment of patients with ES-SCLC at the 2025 American Society of Clinical Oncology (“ASCO”) Annual Meeting. The data demonstrated clinically meaningful anti-tumor activity in the heavily pretreated population of patients with SCLC across dose escalation and expansion cohorts. In 2L SCLC, the objective response rate was 67% across all dose levels (n=33) and 79% at 1.6 mg/kg dose (n=14).

The data also demonstrated a well-tolerated safety profile at target doses of less than 2.0 mg/kg, with Grade ≥ 3 treatment-related adverse events of 6%, no Grade ≥2 interstitial lung disease, and no drug discontinuations. We plan to initiate a pivotal trial in 2L SCLC later this year. In addition, in April 2025, we initiated a global Phase I/II study in patients with selected solid neuroendocrine tumors, allowing us to evaluate its therapeutic potential beyond SCLC.

- **Bemarituzumab:** In June 2025, we announced positive topline results for the Phase III FORTITUDE-101 clinical trial evaluating bemarituzumab in FGFR2b positive 1L gastric cancer. Bemarituzumab plus chemotherapy (mFOLFOX6) met its primary endpoint of overall survival at a pre-specified interim analysis, demonstrating a statistically significant and clinically meaningful improvement in OS as compared to placebo plus chemotherapy in people living with unresectable locally advanced or metastatic gastric or GEJ cancer with FGFR2b overexpression and who are non-HER2 positive. The most common treatment-emergent adverse events (\>25%) in patients treated with bemarituzumab plus chemotherapy were reduced visual acuity, punctate keratitis, anemia, neutropenia, nausea, corneal epithelium defect and dry eye. While ocular events were consistent with the Phase 2 experience and observed in both arms, they occurred with greater frequency and severity in the Phase 3 bemarituzumab arm. We plan to file for regulatory approval in China in the second half of 2025.
- **Tumor Treating Fields (TTFields):** In May 2025, our partner NovoCure presented results from the Phase III PANOVA-3 trial of TTFields therapy for pancreatic cancer at the 2025 ASCO Annual Meeting and simultaneously published in the Journal of Clinical Oncology. The Phase III PANOVA-3 trial evaluated the use of TTFields therapy concomitantly with gemcitabine and nab-paclitaxel as a first-line treatment for unresectable, locally advanced pancreatic adenocarcinoma compared to gemcitabine and nab-paclitaxel alone. The trial met its primary endpoint, demonstrating a statistically significant improvement in median overall survival for patients treated with TTFields. TTFields therapy concomitant with gemcitabine and nab-paclitaxel demonstrated improvement in several secondary endpoints including the one-year survival rate, improved quality of life, and extended pain-free survival. We plan to file for regulatory approval in China in the second half of 2025.
- **Repotrectinib:** In April 2025, China’s NMPA accepted the supplemental NDA for repotrectinib for the treatment of adult patients with NTRK+ solid tumors. The application is intended for patients whose disease is locally advanced or metastatic, or where surgical resection is likely to result in severe morbidity, and who have either progressed following prior therapies or have no satisfactory alternative treatment options.
- **ZL-6201 (LRRC15 ADC)**: In April 2025, we presented new data at the American Association for Cancer Research (“AACR”) Annual Meeting 2025 reflecting that ZL-6201 efficiently internalizes within and kills tumor cells, while also exhibiting a strong bystander killing effect in the tumor microenvironment. Based on these findings, we plan to initiate IND-enabling studies of ZL-6201 as a potential treatment for patients with sarcoma and other LRRC15-positive solid tumors, such as breast cancer and other malignancies, in 2025.
- **ZL-1222 (PD-1 / IL-12)**: In April 2025, we presented data at the AACR Annual Meeting 2025, marking the first public disclosure of this global asset. Findings from the pre-clinical studies demonstrate its potent antitumor activity in both anti-PD-1 sensitive and resistant tumor models, with improved systemic safety. These results indicate its potential to benefit patients who are unresponsive or resistant to the current immune-oncology therapies.

#### Immunology, Neuroscience, and Infectious Disease

- **Efgartigimod (FcRn):** In April 2025, our partner argenx announced that the FDA had approved VYVGART Hytrulo prefilled syringe (“PFS”) for self-injection in gMG and CIDP. PFS is the third approved administration option for efgartigimod, providing additional flexibility and convenience for patients. In July 2025, the China Guidelines for the Diagnosis and Treatment of Myasthenia Gravis (MG) (2025) was published, emphasizing the importance of Minimal Symptom Expression (“MSE”) as the primary treatment

goal in MG. The guidelines have highlighted VYVGART’s ability to achieve MSE rapidly and provide durable benefit. VYVGART is now recommended for early use in mild-to-moderate and highly active patients and for sustained long-term treatment to maximize potential benefit.

- **ZL-1503 (IL-13 / IL-31R):** In June 2025, we announced new preclinical data highlighting the potential of ZL-1503 as a promising treatment for moderate-to-severe atopic dermatitis and other IL-13 and IL-31-driven diseases. The favorable preclinical safety profile, prolonged half-life and durable suppression of both the inflammatory and pruritogenic (itch-causing) pathways in atopic dermatitis support the continued advancement of ZL-1503 toward clinical development.

### Factors Affecting Our Results of Operations

### Our Commercial Products

We generate product revenue through the sale of our commercial products in Greater China, net of any related sales returns and rebates to distributors. Our cost of product revenue mainly consists of the costs of manufacturing ZEJULA and NUZYRA; costs of purchasing VYVGART / VYVGART Hytrulo, OPTUNE, QINLOCK, XACDURO, and AUGTYRO from our collaboration partners; any royalty fees incurred as a result of sales of our commercial products under our license and collaboration agreements; and amortization of capitalized post-approval milestone fees incurred under our license and collaboration agreements. We expect our product revenue to increase in coming years as we continue to focus on increasing patient access to our existing commercial products, such as through NRDL listing or increased supplemental insurance coverage in the private-pay market, and as we launch additional commercial products, if and when we obtain required regulatory approvals. We expect our cost of product revenue to increase as the volume of products sold increases.

### Research and Development Expenses

We believe our ability to successfully develop product candidates will be the primary factor affecting our long-term competitiveness, as well as our future growth and development. Developing high quality product candidates requires a significant investment of resources over a prolonged period of time. We are committed to advancing and expanding our pipeline of potential best-in-class and first-in-class products, such as through clinical and pre-clinical trials and business development activities. As a result, we expect to continue making significant investments in research and development, including internal discovery activities.

Elements of research and development expenditures primarily include:

- payroll and other related costs of personnel engaged in research and development activities;
- fees for exclusive development rights of products granted to the Company;
- costs related to pre-clinical testing of the Company’s technologies and clinical trials, such as payments to CROs and CMOs, investigators, and clinical trial sites that conduct our clinical studies; and
- costs to produce the product candidates, including raw materials and supplies, product testing, depreciation, and facility-related expenses.

### Selling, General, and Administrative Expenses

Our selling, general, and administrative expenses consist primarily of personnel compensation and related costs, including share-based compensation for commercial and administrative personnel. Other selling, general, and administrative expenses include product distribution and promotion costs, and professional service fees for legal, intellectual property, auditing, and tax services as well as other direct and allocated expenses for rent and maintenance of facilities, insurance, and other supplies used in selling, general, and administrative activities. We expect these costs to continue to be significant to support sales of our commercial products and preparation to launch and subsequent sales of additional product candidates if and when approved.

### Our Ability to Commercialize Our Product Candidates

We have multiple product candidates in late-stage clinical development and various others in clinical and pre-clinical development in Greater China and globally. Our ability to generate revenue from our product candidates is dependent on our receipt of regulatory approvals for and successful commercialization of such product candidates, which may not occur. Certain of our product candidates may require additional pre-clinical and/or clinical development, regulatory approvals in multiple jurisdictions, manufacturing supply, and significant marketing efforts before we generate any revenue from product sales.

### License and Collaboration Arrangements

Our results of operations have been, and will continue to be, affected by our license and collaboration agreements. In accordance with these agreements, we may be required to make upfront payments and milestone payments upon the achievement of certain development, regulatory, and sales-based milestones for the relevant products as well as certain royalties at tiered percentage rates based on annual net sales of the licensed products in the licensed territories. As of June 30, 2025, we may in the future be required to pay development and regulatory milestone payments of up to an additional aggregate amount of $211.0 million for our current clinical programs and $366.0 million for other programs. Such development and regulatory milestone payments are contingent on the progress of our product candidates prior to commercialization, and we see these payments as favorable because they indicate that product candidates are advancing. As of June 30, 2025, we also in the future may be required to pay sales-based milestone payments of up to an additional aggregate amount of $1,753.0 million as well as certain royalties at tiered percentage rates on annual net sales. Such sales-based milestone and royalty payments are contingent on the performance of our commercial products, and we see these payments as favorable because they signify that a product is achieving higher sales levels.

### Results of Operations

In this section, we discuss our results of operations for the three and six months ended June 30, 2025 compared to the same periods in 2024.

The following table presents our results of operations ($ in thousands):

| Revenues | Three Months Ended June 30, 2025 | 2024 | Change $% |  | Six Months Ended June 30, 2025 | 2024 | Change $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Product revenue, net | 109,085 | 100,106 | 8,979 | 9% | 214,735 | 187,255 | 27,480 | 15% |
| Collaboration revenue | 892 | 398 | 494 | 124% | 1,729 | 398 | 1,331 | 334% |
| Total revenues | 109,977 | 100,504 | 9,473 | 9% | 216,464 | 187,653 | 28,811 | 15% |
| Expenses |  |  |  |  |  |  |  |  |
| Cost of product revenue | (43,003) | (35,148) | (7,855) | 22% | (81,455) | (68,767) | (12,688) | 18% |
| Cost of collaboration revenue | (217) | (85) | (132) | 155% | (412) | (85) | (327) | 385% |
| Research and development | (50,614) | (61,625) | 11,011 | (18)% | (111,343) | (116,270) | 4,927 | (4)% |
| Selling, general, and administrative | (71,038) | (79,710) | 8,672 | (11)% | (134,460) | (148,904) | 14,444 | (10)% |
| Loss from operations | (54,895) | (76,064) | 21,169 | (28)% | (111,206) | (146,373) | 35,167 | (24)% |
| Interest income | 8,843 | 9,330 | (487) | (5)% | 17,449 | 18,988 | (1,539) | (8)% |
| Interest expenses | (1,262) | (492) | (770) | 157% | (2,449) | (605) | (1,844) | 305% |
| Foreign currency gains (losses) | 2,837 | (4,108) | 6,945 | (169)% | 3,488 | (6,176) | 9,664 | (156)% |
| Other income (expense), net | 3,750 | (8,943) | 12,693 | (142)% | 3,553 | 418 | 3,135 | 750% |
| Loss before income tax | (40,727) | (80,277) | 39,550 | (49)% | (89,165) | (133,748) | 44,583 | (33)% |
| Income tax expense | — | — | — | —% | — | — | — | —% |
| Net loss | (40,727) | (80,277) | 39,550 | (49)% | (89,165) | (133,748) | 44,583 | (33)% |

### Revenues

### Product Revenue, Net

The following table presents net revenue by commercial program ($ in thousands):

|  | Three Months Ended June 30, 2025 | 2024 | Change $% |  | Six Months Ended June 30, 2025 | 2024 | Change $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| ZEJULA | 41,042 | 44,999 | (3,957) | (9)% | 90,571 | 90,500 | 71 | —% |
| VYVGART / VYVGART Hytrulo | 26,497 | 23,190 | 3,307 | 14% | 44,602 | 36,352 | 8,250 | 23% |
| NUZYRA | 14,292 | 12,295 | 1,997 | 16% | 29,410 | 22,208 | 7,202 | 32% |
| OPTUNE | 12,355 | 12,584 | (229) | (2)% | 23,718 | 25,064 | (1,346) | (5)% |
| QINLOCK | 8,536 | 7,038 | 1,498 | 21% | 17,045 | 13,131 | 3,914 | 30% |
| XACDURO | 4,622 | — | 4,622 | NM | 5,739 | — | 5,739 | NM |
| AUGTYRO | 1,399 | — | 1,399 | NM | 3,025 | — | 3,025 | NM |
| Other (i) | 342 | — | 342 | NM | 625 | — | 625 | NM |
| Total product revenue, net | 109,085 | 100,106 | 8,979 | 9% | 214,735 | 187,255 | 27,480 | 15% |

#### NM - Not Meaningful

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

Our product revenue is primarily derived from the sales of our commercial products primarily in mainland China, net of sales returns and rebates to distributors with respect to the sales of these products.

Our net product revenue increased by $9.0 million and $27.5 million in the three and six months ended June 30, 2025, respectively, primarily due to higher sales of VYVGART, driven by an extension of duration of therapy and increasing market penetration, XACDURO, which was launched since the fourth quarter of 2024, and NUZYRA, supported by increasing market coverage and penetration. These higher sales were partially offset by softer sales of ZEJULA, due to evolving competitive dynamics within the PARPi class.

### Cost of Product Revenue

Cost of product revenue increased by $7.9 million and $12.7 million in the three and six months ended June 30, 2025, respectively, primarily due to increasing sales volumes.

### Collaboration Revenue and Cost of Collaboration Revenue

In the three and six months ended June 30, 2025, collaboration revenue increased by $0.5 million and $1.3 million, respectively, and cost of collaboration revenue increased by $0.1 million and $0.3 million, respectively, which are related to promotional activities in mainland China.

### Research and Development Expenses

The following table presents the components of our research and development expenses ($ in thousands):

|  | Three Months Ended June 30, 2025 | 2024 | Change $% |  | Six Months Ended June 30, 2025 | 2024 | Change $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Personnel compensation and related costs | 22,447 | 31,209 | (8,762) | (28)% | 46,527 | 59,217 | (12,690) | (21)% |
| Licensing fees | — | — | — | NM | 19,997 | — | 19,997 | NM |
| CROs/CMOs/Investigators expenses | 19,935 | 24,305 | (4,370) | (18)% | 29,765 | 44,209 | (14,444) | (33)% |
| Other costs | 8,232 | 6,111 | 2,121 | 35% | 15,054 | 12,844 | 2,210 | 17% |
| **Total** | 50,614 | 61,625 | (11,011) | (18)% | 111,343 | 116,270 | (4,927) | (4)% |

#### NM - Not Meaningful

Research and development expenses decreased by $11.0 million and $4.9 million in the three and six months ended June 30, 2025, respectively, primarily due to:

- a decrease of $8.8 million and $12.7 million, respectively, in personnel compensation and related costs primarily driven by our resource prioritization and efficiency efforts,
- a decrease of $4.4 million and $14.4 million, respectively, in CROs/CMOs/Investigators expenses related to ongoing clinical trials; partially offset by,
- an increase of nil and $20.0 million, respectively, in licensing fees for our license and collaboration agreements.

The following table presents our research and development expenses by program ($ in thousands):

|  | Three Months Ended June 30, 2025 | 2024 | Change $% |  | Six Months Ended June 30, 2025 | 2024 | Change $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Clinical programs | 16,967 | 21,348 | (4,381) | (21)% | 45,059 | 40,136 | 4,923 | 12% |
| Pre-Clinical programs | 5,069 | 3,139 | 1,930 | 61% | 8,383 | 5,188 | 3,195 | 62% |
| Unallocated research and development expenses | 28,578 | 37,138 | (8,560) | (23)% | 57,901 | 70,946 | (13,045) | (18)% |
| **Total** | 50,614 | 61,625 | (11,011) | (18)% | 111,343 | 116,270 | (4,927) | (4)% |

Research and development expenses attributable to clinical programs decreased by $4.4 million in the three months ended June 30, 2025, primarily driven by a decrease in CROs/CMOs/Investigators expenses related to ongoing clinical trials.

Research and development expenses attributable to clinical programs increased by $4.9 million in the six months ended June 30, 2025, primarily driven by an increase in licensing fees for our license and collaboration agreements, partially offset by a decrease in CROs/CMOs/Investigators expenses related to ongoing clinical trials.

Although we manage our external research and development expenses by program, we do not allocate our internal research and development expenses by program because our employees and internal resources may be engaged in projects for multiple programs at any given time.

### Selling, General, and Administrative Expenses

The following table presents our selling, general and administrative expenses by category ($ in thousands):

|  | Three Months Ended June 30, 2025 | 2024 | Change $% |  | Six Months Ended June 30, 2025 | 2024 | Change $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Personnel compensation and related costs | 42,679 | 48,279 | (5,600) | (12)% | 83,322 | 94,173 | (10,851) | (12)% |
| Other costs | 28,359 | 31,431 | (3,072) | (10)% | 51,138 | 54,731 | (3,593) | (7)% |
| **Total** | 71,038 | 79,710 | (8,672) | (11)% | 134,460 | 148,904 | (14,444) | (10)% |

Selling, general, and administrative expenses decreased by $8.7 million and $14.4 million in the three and six months ended June 30, 2025, respectively, primarily due to decreases in personnel compensation and related costs related to our resource prioritization and efficiency efforts.

### Interest Income

Interest income decreased by $0.5 million and $1.5 million in the three and six months ended June 30, 2025, respectively, primarily due to decreased interest rates.

### Interest Expenses

Interest expense increased by $0.8 million and $1.8 million in the three and six months ended June 30, 2025, respectively, primarily due to higher levels of short-term debt.

### Foreign Currency Gains (Losses)

Foreign currency gains were $2.8 million and $3.5 million in the three and six months ended June 30, 2025, respectively, primarily driven by remeasurement gain due to appreciation of the RMB against the U.S. dollar, compared to foreign currency losses of $4.1 million and $6.2 million in the three and six months ended June 30, 2024, respectively, primarily driven by remeasurement loss due to depreciation of the RMB against the U.S. dollar.

### Other Income (Expense), Net

Other income, net was $3.8 million in the three months ended June 30, 2025, compared to other expense, net of $8.9 million in the three months ended June 30, 2024, primarily due to higher government grants of $3.3 million and decreased loss on our equity investment in MacroGenics of $10.0 million.

Other income, net increased by $3.1 million to $3.6 million in the six months ended June 30, 2025, primarily due to decreased loss on our equity investment in MacroGenics.

### Income Tax Expense

Income tax expense was nil in both the three and six months ended June 30, 2025 and 2024.

### Net Loss

Net loss was $40.7 million in the three months ended June 30, 2025, or a loss per ordinary share attributable to common stockholders of $0.04 (or loss per ADS of $0.37), compared to a net loss of $80.3 million in the three months ended June 30, 2024, or a loss per ordinary share of $0.08 (or loss per ADS of $0.82).

Net loss was $89.2 million in the six months ended June 30, 2025, or a loss per ordinary share attributable to common stockholders of $0.08 (or loss per ADS of $0.82), compared to a net loss of $133.7 million in the six months ended June 30, 2024, or a loss per ordinary share of $0.14 (or loss per ADS of $1.37).

### Critical Accounting Policies and Significant Judgments and Estimates

We prepare our financial statements in conformity with U.S. GAAP, which requires management to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. Some of those judgments can be subjective and complex. Actual results could differ from our estimates.

Our most critical accounting policies and estimates, including those that require the most difficult, subjective, or complex judgments and are the most inherently uncertain, are described below.

### Revenue Recognition

We sell our products to distributors (our customers), who ultimately sell the products to healthcare providers, primarily in mainland China. We recognize revenue when the performance obligations are satisfied upon the product’s delivery to distributors.

We offer rebates to our distributors to compensate the distributors consistent with pharmaceutical industry practices. We are required to establish a provision for rebates in the same period the related product sales are recognized. The estimated amount of rebates, if any, is recorded as a reduction of revenue.

Significant judgments are required in making these estimates. In determining the appropriate accrual amount, we consider our contracted rates, sales volumes, levels of distributor inventories, and historical experiences and trends. If actual results vary from our estimates or our expectations change, we will adjust these estimates accordingly, which would affect net product revenue and earnings in the period such variances become expected or known.

### Research and Development Expenses

We have a significant amount of research and development expenses, including with respect to pre-clinical and clinical trials for our product candidates. Such costs are expensed as incurred when they have no alternative future uses.

We contract with third parties to perform various pre-clinical and clinical trial activities on our behalf in the ongoing development of our product candidates. Expenses related to pre-clinical and clinical trial activities are accrued based on the Company’s estimates of the actual services performed by the third parties, such as CROs and CMOs.

Significant judgments are required in estimating the actual services performed by the third parties for the respective period and the related expense accruals. In determining the appropriate accrual, we consider a variety of factors, including contractual requirements with respect to services to be provided, related rates, and our assessment of services performed during the period and progress with respect to any contractual milestones when we have not yet been invoiced or otherwise notified by third parties of actual costs. If the actual status and timing of services performed vary from our estimates, our reported expenses and earnings for the corresponding period may be affected.

### Share-Based Compensation

We grant share-based awards, including share options and restricted shares, to eligible employees, non-employees, and directors. Such share-based awards are measured at grant date fair value.

Significant assumptions are required in determining the fair value of share options, which we estimate using the Black-Scholes option valuation model. These assumptions include: (i) the volatility of our ADS price, (ii) the periods of time over which grantees are expected to hold their options prior to exercise (expected term), (iii) the expected dividend yield on our ADSs, and (iv) risk-free interest rates. Since we do not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior, the expected term is derived from the average midpoint between the weighted-average vesting and the contractual term, also known as the simplified method. The expected dividend yield is zero as we have never paid dividends and do not currently anticipate paying any in the foreseeable future, and risk-free interest rates are based on quoted U.S. Treasury rates for securities with maturities approximating the expected term. If actual results vary from our estimates or our expectations change, our reported expenses and earnings for the corresponding period may be affected.

### Income Taxes

We recognize deferred tax assets and liabilities for temporary differences between the financial statement and income tax bases of assets and liabilities, which are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some or all of a deferred tax asset will not be realized. Significant judgements are required when evaluating tax positions in accordance with ASC 740, *Income Taxes.*

We recognize in our financial statements the benefit of a tax position if the tax position is “more likely than not” to prevail based on the facts and technical merits of the position. Tax positions that meet the “more likely than not” recognition threshold are measured at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement. We estimate our liability for unrecognized tax benefits which are periodically assessed and may be affected by changing interpretations of laws, rulings by tax authorities, changes and/or developments with respect to tax audits, and the expiration of the applicable statute of limitations. The ultimate outcome for a particular tax position may not be determined with certainty prior to the conclusion of a tax audit and, in some cases, appeal or litigation process.

We consider positive and negative evidence when determining whether some or all of our deferred tax assets will not be realized. This assessment considers various factors, including the nature, frequency, and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carry-forward periods, our historical results of operations, and our tax planning strategies. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Our estimates may be affected by changing interpretations of laws, rulings by tax authorities, changes and/or developments with respect to tax audits, and expiration of the statute of limitations. If actual benefits vary from our estimates or our expectations change, we will adjust the recognition and measurement estimates accordingly, which would affect reported expenses and earnings in the corresponding period.

### Liquidity and Capital Resources

To date, we have financed our activities primarily through private placements and public offerings, including our September 2017 initial public offering and various follow-on offerings on Nasdaq and our September 2020 secondary listing and initial public offering on the Hong Kong Stock Exchange. We have raised approximately $164.6 million in private equity financing and approximately $2,677.8 million in net proceeds from public offerings after deducting underwriting commissions and the offering expenses payable by us. Our operations have consumed substantial amounts of cash since inception. The net cash used in our operating activities was $92.7 million and $132.3 million in the six months ended June 30, 2025 and 2024, respectively. For information on our research and development activities and related expenditures, see the *Research and Development Expenses, Selling, General, and Administrative Expenses, License and Collaboration Arrangements,* and *Results of Operations* sections above. In addition, as of June 30, 2025, we had commitments of $1.1 million related to commercial manufacturing development activities and capital expenditures.

We have also identified opportunities to access capital through debt arrangements on favorable commercial terms. As of June 30, 2025, we had such debt arrangements with Chinese financial institutions that allow certain of our subsidiaries to borrow up to approximately $240.2 million (or RMB1,721.7 million) to support our working capital needs in mainland China. As of June 30, 2025, we had short-term debt outstanding of $174.5 million (or RMB1,244.7 million) pursuant to these debt arrangements. These debt arrangements provide us with additional capital capacity that will give us enhanced flexibility to execute on our corporate strategic goals. For more information, see *Note 10.*

As of June 30, 2025, we had cash and cash equivalents, current restricted cash, and short-term investments of $832.3 million, which we expect will enable us to meet our cash requirements including the funding of operating expenses, capital expenditures, and debt obligations for at least the next 12 months.

Although we believe that we have sufficient capital to fund our operations for at least the next twelve months, we may, from time to time, utilize debt arrangements on favorable commercial terms or consider additional funding sources to bring to fruition our strategic objectives. There can be no assurances that such funding will be made available to us on acceptable terms or at all.

The following table presents information regarding our cash flows ($ in thousands):

|  | Six Months Ended June 30, 2025 | 2024 | Change $ |
| --- | ---: | ---: | ---: |
| Net cash used in operating activities | (92,723) | (132,279) | 39,556 |
| Net cash provided by investing activities | 323,211 | 2,446 | 320,765 |
| Net cash provided by financing activities | 51,990 | 69,870 | (17,880) |
| Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | 125 | (137) | 262 |
| Net increase (decrease) in cash, cash equivalents and restricted cash | 282,603 | (60,100) | 342,703 |

### Net Cash Used in Operating Activities

Net cash used in operating activities decreased by $39.6 million in the six months ended June 30, 2025, primarily due to a decrease of $44.6 million in net loss and an increase of $11.5 million in net changes in operating assets and liabilities, partially offset by a decrease of $16.5 million in other adjustments to reconcile net loss to net cash used in operating activities.

### Net Cash Provided by Investing Activities

Net cash provided by investing activities increased by $320.8 million in the six months ended June 30, 2025, primarily due to an increase of $313.7 million in proceeds from the maturity of short-term investments, a decrease of $8.5 million from acquisitions of intangible assets, and an increase of $1.2 million in proceeds from the sale of our equity investment in MacroGenics, partially offset by an increase of $2.7 million in purchases of property and equipment.

### Net Cash Provided by Financing Activities

Net cash provided by financing activities decreased by $17.9 million in the six months ended June 30, 2025, primarily due to $82.8 million in repayment of short-term bank borrowings and $0.9 million in payments of public offering costs, partially offset by an increase of $54.4 million in short-term debt proceeds and an increase of $11.4 million in proceeds from exercises of stock options.

### Recently Issued Accounting Standards

For more information regarding recently issued accounting standards, see *Part II – Item 8. Financial Statements and Supplementary Data – Recent Accounting Pronouncements* in our 2024 Annual Report. The Company has not adopted any new accounting standards in the three and six months ended June 30, 2025.

## Market risk

As filed, 7,348 characters.

We are exposed to market risk including foreign exchange risk, credit risk, and interest rate risk.

### Foreign Exchange Risk

Renminbi, or RMB, is not a freely convertible currency. The State Administration of Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of RMB into foreign currencies. The value of RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. The cash and cash equivalents of the Company included aggregated amounts of $12.2 million and $19.0 million, which were denominated in RMB, representing 2% and 4% of the cash and cash equivalents as of June 30, 2025 and December 31, 2024, respectively.

While our financial statements are presented in U.S. dollars, our business mainly operates in mainland China with a significant portion of our transactions settled in RMB, and as such, we do not believe that we currently have significant direct foreign exchange risk and have not used derivative financial instruments to hedge our exposure to such risk. Although, in general, our exposure to foreign exchange risk should be limited, the value of your investment in our ADSs and ordinary shares will be affected by the exchange rate between the U.S. dollar and the RMB and between the HK dollar and the RMB, respectively, because the value of our business is effectively denominated in RMB, while ADSs and ordinary shares are traded in U.S. dollars and HK dollars, respectively.

The value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in Greater China’s political and economic conditions. The conversion of RMB into foreign currencies, including U.S. dollars, has been based on rates set by the People’s Bank of China.

The value of our ADSs and our ordinary shares will be affected by the foreign exchange rates between U.S. dollars, HK dollars, and the RMB. For example, to the extent that we need to convert U.S. dollars or HK dollars into RMB for our operations or if any of our arrangements with other parties are denominated in U.S. dollars or HK dollars and need to be converted into RMB, appreciation of the RMB against the U.S. dollar or the HK dollar would have an adverse effect on the RMB amount we receive from the conversion. Conversely, if we decide to convert RMB into U.S. dollars or HK dollars for the purpose of making payments for dividends on ordinary shares or ADSs or for other business purposes, appreciation of the U.S. dollar or the HK dollar against the RMB would have a negative effect on the conversion amounts available to us.

Since 1983, the Hong Kong Monetary Authority has pegged the HK dollar to the U.S. dollar at the rate of approximately HK$7.80 to US$1.00. However, there is no assurance that the HK dollar will continue to be pegged to the U.S. dollar or that the HK dollar conversion rate will remain at HK$7.80 to US$1.00. If the HK dollar conversion rate against the U.S. dollar changes and the value of the HK dollar depreciates against the U.S. dollar, our assets denominated in HK dollars will be adversely affected. Additionally, if the Hong Kong Monetary Authority were to repeg the HK dollar to, for example, the RMB rather than the U.S. dollar, or otherwise restrict the conversion of HK dollars into other currencies, then our assets denominated in HK dollars will be adversely affected.

### Credit Risk

Financial instruments that are potentially subject to significant concentration of credit risk consist of cash and cash equivalents, restricted cash, short-term investments, accounts receivable, and notes receivable.

The carrying amounts of cash and cash equivalents and short-term investments represent the maximum amount of losses due to credit risk. As of June 30, 2025 and December 31, 2024, we had cash and cash equivalents of $732.2 million and $449.7 million, respectively, restricted cash of $101.2 million and $101.1 million, respectively, and short-term investments of nil and $330.0 million, respectively. As of June 30, 2025 and December 31, 2024, all of our cash and cash equivalents, restricted cash, and short-term investments were held by major financial institutions located in mainland China and international financial institutions outside of mainland China which we believe are of high credit quality and for which we monitor continued credit worthiness.

Accounts receivable are typically unsecured and are derived from product revenue. We manage credit risk related to our accounts receivable through ongoing monitoring of outstanding balances and limiting the amount of credit extended based upon payment history and credit worthiness. Historically, we have collected receivables from customers within the credit terms with no significant credit losses incurred. As of June 30, 2025, our two largest customers accounted for approximately 20% of our total accounts receivable collectively.

Certain accounts receivable balances are settled in the form of notes receivable. As of June 30, 2025, such notes receivable included bank acceptance promissory notes that are non-interest bearing and due within six months. These notes receivable were used to collect the receivables based on an administrative convenience, given these notes are readily convertible to known amounts of cash. In accordance with the sales agreements, whether to use cash or bank acceptance promissory notes to settle the receivables is at our discretion, and this selection does not impact the agreed contractual purchase prices.

### Interest Rate Risk

We are exposed to risks related to changes in interest rates on our cash and cash equivalents, restricted cash, and short-term investments. As of June 30, 2025 and December 31, 2024, we had cash and cash equivalents of $732.2 million and $449.7 million, respectively, restricted cash of $101.2 million and $101.1 million, respectively, and short-term investments of nil and $330.0, respectively. Our investment portfolio, which relates to cash equivalents and short-term investments, primarily consists of time deposits. The primary objectives of our investment activities are to preserve principal, provide liquidity, and maximize income without significantly increasing risk. Given the short‑term nature of our deposits and investments, we believe that a sudden change in market interest rates would not be expected to have a material impact on our financial condition and/or results of operation. For example, a hypothetical 10% relative change in interest rates during any of the periods presented would not have a material impact on future interest income.

We are also exposed to risks related to changes in interest rates on our short-term debt, which is currently subject to a mix of fixed and floating interest rates. As of June 30, 2025 and December 31, 2024, we had short-term debt of $174.5 million and $131.7 million, respectively. A 100-basis point increase in interest rates would not materially increase our interest expense. Our interest rate exposure from short-term debt is also offset by our exposure in cash and cash equivalents, restricted cash, and short-term investments, as discussed above. For more information on our short-term debt, see *Note 10.*

## Controls and procedures

As filed, 1,448 characters.

### Management’s Evaluation of Our Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Our disclosure controls and procedures are designed to ensure that the information required to be disclosed in the reports that we file or furnish under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective. Based upon that evaluation, our management has concluded that, as of June 30, 2025, our disclosure controls and procedures were effective.

### Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such item is defined in Rules 13a-15(f)) during the fiscal quarter ended June 30, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 339 characters.

We are subject to risks and uncertainties that could, directly or indirectly, adversely affect our business, results of operations, financial condition, liquidity, cash flows, strategies, and/or prospects. There have been no material changes in our risk factors from those disclosed in the “Risk Factors” section of our 2024 Annual Report.

Filed Aug 7, 2025.
Source: SEC EDGAR, the filing index for accession 0001628280-25-038548. Last ingested by Listed: Oct 24, 2026, 15:15 ET. No prices; not investment advice.