---
title: "2024 Earnings Report | After a slowdown in revenue growth, ZAI LAB, with $800 million in hand, \"cuts off three arms\" voluntarily."
type: "News"
locale: "zh-HK"
url: "https://longbridge.com/zh-HK/news/108889688.md"
description: "Cutting the pipeline with tears in my eyes."
datetime: "2024-02-29T02:56:20.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/108889688.md)
  - [en](https://longbridge.com/en/news/108889688.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/108889688.md)
---

> 支持的語言: [简体中文](https://longbridge.com/zh-CN/news/108889688.md) | [English](https://longbridge.com/en/news/108889688.md)


# 2024 Earnings Report | After a slowdown in revenue growth, ZAI LAB, with $800 million in hand, "cuts off three arms" voluntarily.

On February 28th, ZAI LAB (9688.HK), well-known in the innovative drug industry for its "license-in" strategy, released its 2023 performance to the market.

In 2023, ZAI LAB's product revenue and net loss were $267 million and $335 million respectively, with revenue increasing by 25% compared to the previous year.

Specifically, ZAI LAB's core product, the PARP inhibitor "Niraparib" for ovarian cancer treatment, generated $169 million in revenue in 2023, a 16% year-on-year growth, showing a slowdown of nearly 40 percentage points compared to 2022.

Challenges for Niraparib are quietly approaching. As a competitor in the same category, the core compound patent of Olaparib is about to expire. Several pharmaceutical companies have already submitted applications for generic Olaparib, which may lead to a loss of market share for Niraparib.

Nevertheless, undeterred by challenges, ZAI LAB has set a profit target for 2025.

"Our goal is to achieve company profitability by the end of 2025 through revenue growth, continuous focus on efficiency, and productivity improvement," said Josh Smiley, President and Chief Operating Officer of ZAI LAB.

In this scenario, starting from the fourth quarter of 2023, ZAI LAB has cut three pipelines, with some drugs on the verge of commercialization.

Currently, ZAI LAB still has $808 million in cash and cash equivalents, short-term investments, and restricted cash, which can support the simultaneous development of 8 pipelines.

## Entry of Generic Drugs

In 2023, ZAI LAB's revenue and losses showed synchronous changes.

The revenue and net loss for the period were $267 million and $335 million respectively, with revenue growing by 25% year-on-year, while losses narrowed by nearly a quarter.

However, this revenue growth rate has slowed down compared to before. Revenue growth rates in 2021 and 2022 were 194.77% and 49.01% respectively.

The main reason is the slowing down of the PARP inhibitor Niraparib, which has been a major contributor to ZAI LAB's revenue for ovarian cancer patients.

In 2023, Niraparib's sales were $169 million, a 16% year-on-year growth, slowing down by 39.2 percentage points compared to 2022.

ZAI LAB pointed out that due to product price reductions after medical insurance renewal, rebates to distributors offset some of the growth.

"The sales growth is due to the increase in in-hospital sales of ovarian cancer frontline maintenance therapy and the extension of treatment duration, partially offset by sales rebates related to NRDL (China's medical insurance) renewal," ZAI LAB stated.

Public data shows that the price for Niraparib's medical insurance renewal in 2023 was 1735 yuan per box, a 62.15% decrease from 2022. The pressure faced by Nilarapril is not solely from medical insurance pricing.

More crucially, the competitive landscape for Nilarapril is becoming intense.

In 2020, apart from Nilarapril, domestically there is only one PARP inhibitor on the market - AstraZeneca's Olaparib, used to treat various diseases such as ovarian cancer, breast cancer, and prostate cancer.

However, domestically approved PARP inhibitors on the market also include Hengrui Medicine's Fluzoparib and BeiGene's Pamiparib, two original innovative drugs.

Competition for ovarian cancer market among these 4 PARP inhibitors may not be considered intense.

But with the core compound patent of Olaparib expiring in March 2024, domestic generic drugs and original drugs will soon compete head-to-head.

Public data shows that Qilu Pharmaceutical's generic Olaparib has been approved for market by the NMPA, becoming the first generic drug in the country. Similarly, KELUN PHARMACEUTICAL (002422.SZ) has also been approved for market in early January 2024; during the same period, many companies including Jiangsu LITAIER Pharmaceutical, Huadong Medicine (000963.SZ), and CSPC Pharmaceutical Group (1093.HK) have all submitted applications for the market approval of Olaparib generic drugs.

In 2024, Nilarapril may face even more severe challenges.

## Can self-immunity make up for it?

ZAI LAB is also looking for a relay baton.

In September 2023, ZAI LAB introduced the Efgartigimod α injection from the company Argenx, which focuses on the treatment of autoimmune diseases. The injection was approved for market, becoming the first and currently the only FcRn antagonist approved for the treatment of patients with generalized myasthenia gravis in China.

In less than 4 months after its market launch, the Efgartigimod α injection has already generated revenue of 100 million USD.

"Thanks to positive feedback from doctors and patients, as well as the accelerated access to hospitals, the accessibility for more patients has improved. It is estimated that nearly 1,000 patients received treatment with Efgartigimod α injection in January 2024 alone," ZAI LAB pointed out.

The Efgartigimod α injection still has growth potential in 2024.

On one hand, starting from January 1, 2024, the Efgartigimod α injection has been included in the medical insurance catalog, which may bring in more revenue.

On the other hand, ZAI LAB is advancing clinical research on the use of Efgartigimod α injection for chronic inflammatory demyelinating polyneuropathy (CIDP) and thyroid eye disease (TED).

CIDP indication has entered phase 2 clinical trials, and ZAI LAB plans to submit a supplementary market approval application to the NMPA within the year; they also plan to conduct a global phase 3 registration study for TED.

It is worth noting that there is currently no approved targeted drug for TED in China, but there are approximately 4.2 million patients with this disease in the country. When comparing with the situation abroad, the targeted IGF-1R antibody biopharmaceutical, teprotumumab, used to treat TED, has shown impressive sales performance. In 2022, its sales reached $1.966 billion, a growth of 139.76% compared to its first year on the market in 2020.

However, Sinobioway Biomedicine (1801.HK) has taken the lead.

On February 20th, Sinobioway Biomedicine announced that its independently developed recombinant anti-insulin-like growth factor 1 receptor (IGF-1R) antibody injection, RESTORE-1, has completed Phase 3 clinical trials and plans to submit an application for market approval. It is expected to become the first targeted drug for TED in China.

In fact, as the world's second-largest disease, the market prospects for drugs treating autoimmune diseases have attracted widespread attention. For example, Novartis' fully human IL-17A monoclonal antibody, Cosentyx, used to treat diseases like psoriasis, achieved sales of $3.68 billion in the first three quarters of 2023.

Looking at the pipeline under development, ZAI LAB currently has two drugs in the field of autoimmune diseases, Ajagamode alpha injection and IL-17A monoclonal antibody "ZL-1102".

ZL-110 is mainly used to treat psoriasis and will enter Phase 2 clinical trials in the middle of the year.

## Three Pipeline Cuts

Maintaining the autoimmune pipeline is not easy for ZAI LAB.

Compared to the pipeline disclosed in the 2022 financial report, ZAI LAB's 2023 financial report shows that Margetuximab, Odronextamab, and BLU-945, a total of three drugs, have disappeared from the list of candidate drugs.

ZAI LAB also admitted to terminating the development of these three drugs.

"In the fourth quarter of 2023, we decided to stop the development of Margetuximab and Odronextamab and issued notices to terminate agreements with MacroGenics and Regeneron, effective on May 14, 2024, and December 20, 2024, respectively, according to their terms. In addition, our partner Blueprint Medicines has decided to cancel the priority sequence for the development of BLU-945," ZAI LAB pointed out.

TradeWind01 noted that Margetuximab is just a step away from commercialization.

In September 2023, Margetuximab was approved by the regulatory authority for the treatment of HER2-positive metastatic breast cancer in adults who have received two or more prior anti-HER2 therapy regimens, with at least one for metastatic breast cancer indication. Odronextamab is already in the market approval stage in the United States. In September 2023, the FDA granted priority review status to the biologics license application for Odronextamab for the treatment of relapsed/refractory follicular lymphoma and diffuse large B-cell lymphoma in adult patients.

Regarding the termination of the development of two upcoming drugs, ZAI LAB simply stated that it was based on considerations of the competitive landscape.

"We will continue to evaluate the development potential of the projects we are working on. For example, our plans may have tremendous potential beyond the indications we are currently evaluating," ZAI LAB pointed out. "In addition, we or our partners may decide to discontinue the development of certain products based on a review of the competitive landscape and market opportunities or other circumstances."

On February 28th, Xin Feng (ID: TradeWind01) sent an email to ZAI LAB to inquire about the specific reasons for terminating the development of Margetuximab, Odronextamab, and BLU-9453, but had not received a response as of the time of publication.

In the harsh winter of the pharmaceutical industry, ZAI LAB has set a profit target for 2025. In this context, "cutting pipelines" to reduce research and development expenses may be necessary.

In 2023, ZAI LAB's research and development expenses were $266 million, a decrease of 7.12% year-on-year. As of the end of December 2023, the total cash, cash equivalents, short-term investments, and restricted cash amounted to $808 million.

It is worth mentioning that in addition to driving the development of its pipeline, ZAI LAB has also taken on the role of an agent.

According to media reports, Bristol Myers Squibb has granted ZAI LAB the sales rights for the PD-1 monoclonal antibody "Nivolumab" (O drug) in certain provinces in the Greater China region.

ZAI LAB not only has the strength to promote the sales of the O drug but is also advancing a global Phase 3 study of the humanized monoclonal antibody targeting FGFR2b, Bemarituzumab, in combination with the O drug and chemotherapy for first-line treatment of gastric cancer or gastroesophageal junction cancer. The first patient in China is expected to start treatment in the first quarter of 2024.

### 相關股票

- [ZAI LAB (09688.HK)](https://longbridge.com/zh-HK/quote/09688.HK.md)
- [Zai Lab (ZLAB.US)](https://longbridge.com/zh-HK/quote/ZLAB.US.md)

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