Research published by Blue Lotus Research on September 2, 2022

(4 Pages, 3 graphs and tables)
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  • Zai Lab reported 2Q22 revenue of US$ 48mn, in line with consensus and (3.24%) lower than our estimate, mainly due to lockdown impact and lowered selling prices of QINLOCK and NUZYRA.
  • Efgartigimod has already submitted BLA for the treatment of gMG domestically in July and is expected to be approved in 2023, SUL-DUR is expected to submit BLA at the end of 2022 as well.
  • Considering lockdown lifting, possible NRDL inclusion in 2H22 and positive data read-outs, we raise TP from US$ 43 to US$ 58.
Q2 revenue slightly lower than expectation, improvement in 2H
Zai Lab reported 2Q22 revenue of US$ 48mn, with 1) ZEJULA sales growing by 15.1% QoQ and 45.7% YoY, missing our est. by (2.79%), mainly due to lockdown impact; 2) QINLOCK sales decreasing by (78.9%) QoQ and (84.6%) YoY, missing our est. by (82.8%), mainly due to lowered selling price; 3) OPTUNE sales decreasing by (9.42%) QoQ and increasing by 21.6% YoY, beating our est. by 13.2%; 4) NUZYRA sales increasing by 76.2% QoQ, beating our est. by 44.2%. We expect total revenue to see improvement in 2H22, due to lockdown lifting and possible expanded NRDL inclusion.
Blockbuster drug upcoming, multiple catalysts in pipelines
As the most anticipated innovative drug in 2022, Efgartigimod (whose exclusive license agreement in Greater China is owned by Zai LAB) generated 1H22 revenue of US$ 96mn in the U.S. after approval by FDA early this year, much higher than market expectation. In China, its BLA has already been submitted for the treatment of gMG and it is expected to be launched in 2023. Also, SUL-DUR expects to submit BLA at the end of 2022 domestically. Other catalysts include Phase III data read-out of KarXT and the TTF NSCLC therapy. Self-developed ZL-1102 is also about to launch an international multi-center Phase II clinical trial. 
Maintain BUY and raise TP from US$43 to US$58
We increase 2022E revenue growth estimate from 51% to 59% and raise TP to US$ 58. We maintain BUY rating to reflect: 1) lifting lockdown impact in 2H22; 2) possible inclusion of QINLOCK and NUZYRA into NRDL to improve product accessibility; 3) positive read-outs of multiple products.

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