Zai Lab Ltd.

11/05/2026 | Press release | Distributed by Public on 11/05/2026 05:42

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our 2025 Annual Report and our unaudited condensed consolidated financial statements and the accompanying notes for the three and nine months ended September 30, 2026 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. We currently have eight commercial programs - ZEJULA, VYVGART / VYVGART Hytrulo, NUZYRA, OPTUNE, QINLOCK, XACDURO, AUGTYRO, and KarXT - with products that have received marketing approval and that we have commercially launched in 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 $107.6 million for the third quarter of 2026, a decrease of 7% compared to the prior year period, primarily driven by decreased revenue for ZEJULA, due to a shift in hospital utilization patterns following volume-based procurement for generic olaparib, OPTUNE, due to evolving competition in the glioblastoma market, and VYVGART, primarily due to a pricing adjustment related to NRDL renewal. These decreases were partially offset by increased sales for NUZYRA, supported by increased market coverage and penetration, increased sales for XACDURO, driven by strong patient demand and expanding hospital adoption but partially constrained by supply limitations, and KarXT, which was launched in June 2026.
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
•Zocilurtatug Pelitecan (Zoci, DLL3-Targeting ADC) (formerly ZL-1310): In October 2026, we presented promising data at the European Society for Medical Oncology Congress 2026 from the ongoing Phase 1 study evaluating zoci in combination with atezolizumab as a 1L treatment for ES-SCLC. At the selected zoci dose of 1.6 mg/kg, the zoci plus atezolizumab doublet achieved a confirmed objective response rate of 81.8% and
an estimated 6-month progression-free survival rate of 81.9% among 33 efficacy evaluable patients in 1L ES-SCLC. Among the first 15 patients with at least six months of follow-up, who had a median follow-up of 10.0 months, median progression-free survival had not been reached. The doublet regimen was generally well tolerated, with 9.1% of patients experiencing Grade 3 or higher adverse events attributed to zoci and only one reported case of Grade 1 interstitial lung disease or pneumonitis. Based on the encouraging efficacy and favorable safety profile, Zai Lab is advancing the zoci 1.6 mg/kg plus atezolizumab doublet into a global Phase 3 study in 1L ES-SCLC.
Immunology, Neuroscience, and Infectious Disease
•ZL-1503 (IL-13/IL-31Rα): We expect to share initial first-in-human data from the single ascending dose (SAD) portion of the global Phase 1/1b study of ZL-1503 for atopic dermatitis in healthy volunteers at the American College of Allergy, Asthma & Immunology (ACAAI) 2026 Annual Scientific Meeting, taking place November 12-16, 2026. Findings will include pharmacokinetic data following single-dose administration, as well as pharmacodynamic data on atopic dermatitis-related biomarkers across a range of ZL-1503 doses. The presentation will also include initial safety and immunogenicity data. In August 2026, we initiated enrollment for a global Phase 1 intravenous-to-subcutaneous bioavailability bridging study.
•Efgartigimod (FcRn): In August 2026, we and our partner argenx announced positive topline results from the Phase 3 ALKIVIA study evaluating VYVGART Hytrulo in adults with autoimmune myositis. The study met its primary endpoint of mean Total Improvement Score at week 52 in the combined study population of immune-mediated necrotizing myopathy ("IMNM") and dermatomyositis ("DM") patients (p=0.0011). Patient improvements were observed early and sustained throughout the study, with a consistent treatment effect across IMNM and DM. We participated in the ALKIVIA study in Greater China.

In October 2026, argenx announced that it will discontinue the Phase 3 UNITY study of efgartigimod SC in adults with moderate-to-severe Sjögren's disease. The decision is based on a recommendation from an Independent Data Monitoring Committee to stop the study for futility following an interim analysis, having concluded that the UNITY study is unable to meet its primary endpoint. Safety was consistent with efgartigimod's established profile, and no new safety signals were identified.
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, AUGTYRO, and KarXT 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 to 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 to launch additional commercial products, if and when we obtain required regulatory approvals.
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 September 30, 2026, we may in the future be required to pay development and regulatory milestone payments of up to an additional aggregate amount of $231.0 million for our current clinical programs and $421.0 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 September 30, 2026, we also in the future may be required to pay sales-based milestone payments of up to an additional aggregate amount of $2,351.0 million as well as certain royalties at tiered percentage rates on annual net sales. Such sales-based milestone and royalty payments are contingent on the performance of our commercial products, and we see these payments as favorable because they signify that a product is achieving higher sales levels.
Results of Operations
In this section, we discuss our results of operations for the three and nine months ended September 30, 2026 compared to the same periods in 2025.
The following table presents our results of operations ($ in thousands):
Three Months Ended September 30, Change Nine Months Ended September 30, Change
2026 2025 $ % 2026 2025 $ %
Revenues
Product revenue, net 107,648 115,361 (7,713) (7) % 308,955 330,095 (21,140) (6) %
Collaboration revenue 560 734 (174) (24) % 5,175 2,464 2,711 110 %
Total revenues 108,208 116,095 (7,887) (7) % 314,130 332,559 (18,429) (6) %
Expenses
Cost of product revenue (51,305) (46,764) (4,541) 10 % (137,782) (128,219) (9,563) 7 %
Cost of collaboration revenue - (119) 119 (100) % (20) (531) 511 (96) %
Research and development (49,810) (47,928) (1,882) 4 % (177,167) (159,271) (17,896) 11 %
Selling, general, and administrative (70,071) (70,106) 35 - % (208,013) (204,566) (3,447) 2 %
Loss from operations (62,978) (48,822) (14,156) 29 % (208,852) (160,028) (48,824) 31 %
Interest income 5,731 8,345 (2,614) (31) % 18,057 25,794 (7,737) (30) %
Interest expenses (1,577) (1,400) (177) 13 % (4,801) (3,848) (953) 25 %
Foreign currency gains 10,528 6,422 4,106 64 % 40,430 9,909 30,521 308 %
Other income (expense), net 288 (508) 796 (157) % 5,735 3,045 2,690 88 %
Loss before income tax (48,008) (35,963) (12,045) 33 % (149,431) (125,128) (24,303) 19 %
Income tax benefit 1,872 - 1,872 NM 1,454 - 1,454 NM
Net loss (46,136) (35,963) (10,173) 28 % (147,977) (125,128) (22,849) 18 %
NM - Not Meaningful
Revenues
Product Revenue, Net
The following table presents net revenue by commercial program ($ in thousands):
Three Months Ended September 30, Change Nine Months Ended September 30, Change
2026 2025 $ % 2026 2025 $ %
ZEJULA 32,284 42,432 (10,148) (24) % 94,330 133,002 (38,672) (29) %
VYVGART / VYVGART Hytrulo 24,071 27,727 (3,656) (13) % 65,488 72,329 (6,841) (9) %
NUZYRA 21,089 15,430 5,659 37 % 54,448 44,840 9,608 21 %
OPTUNE 7,821 12,657 (4,836) (38) % 32,093 36,375 (4,282) (12) %
QINLOCK 8,829 8,901 (72) (1) % 27,404 25,946 1,458 6 %
XACDURO 8,421 6,445 1,976 31 % 24,950 12,184 12,766 105 %
AUGTYRO 2,822 1,677 1,145 68 % 6,827 4,702 2,125 45 %
KarXT 2,015 - 2,015 NM 2,567 - 2,567 NM
Other (i) 296 92 204 222 % 848 717 131 18 %
Total product revenue, net 107,648 115,361 (7,713) (7) % 308,955 330,095 (21,140) (6) %
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 in mainland China, net of sales returns and rebates to distributors with respect to the sales of these products.
Our net product revenue decreased by $7.7 million and $21.1 million in the three and nine months ended September 30, 2026, respectively, primarily driven by decreased revenue for ZEJULA, due to a shift in hospital utilization patterns following volume-based procurement for generic olaparib, OPTUNE, due to evolving competition in the glioblastoma market, and VYVGART, primarily due to a pricing adjustment related to NRDL renewal. These decreases were partially offset by increased sales for NUZYRA, supported by increased market coverage and penetration, increased sales for XACDURO, driven by strong patient demand and expanding hospital adoption but partially constrained by supply limitations, and KarXT, which was launched in June 2026.
Cost of Product Revenue
Cost of product revenue increased by $4.5 million and $9.6 million in the three and nine months ended September 30, 2026, primarily due to a shift in product mix and the inventory write-down in 2026.
Collaboration Revenue and Cost of Collaboration Revenue
In the nine months ended September 30, 2026, collaboration revenue increased by $2.7 million, mainly related to a regional license and collaboration arrangement. Collaboration revenue was insignificant in the three months ended September 30, 2026. Cost of collaboration revenue was insignificant in the three and nine months ended September 30, 2026.
Research and Development Expenses
The following table presents the components of our research and development expenses ($ in thousands):
Three Months Ended September 30, Change Nine Months Ended September 30, Change
2026 2025 $ % 2026 2025 $ %
Personnel compensation and related costs 16,678 21,539 (4,861) (23) % 57,861 68,067 (10,206) (15) %
Licensing fees - - - NM 37,000 19,997 17,003 85 %
CROs/CMOs/Investigators expenses and other costs 33,132 26,389 6,743 26 % 82,306 71,207 11,099 16 %
Total 49,810 47,928 1,882 4 % 177,167 159,271 17,896 11 %
NM - Not Meaningful
Research and development expenses remained relatively flat in the three months ended September 30, 2026, due to
•a decrease of $4.9 million in personnel compensation and related costs primarily driven by our resource prioritization and efficiency efforts; partially offset by
•an increase of $6.7 million in CROs/CMOs/Investigators expenses and other clinical and pre-clinical costs.
Research and development expenses increased by $17.9 million in the nine months ended September 30, 2026, primarily due to:
•an increase of $17.0 million in licensing fees in connection with increased upfront and milestone fees for our license and collaboration agreements;
•an increase of $11.1 million in CROs/CMOs/Investigators expenses and other clinical and pre-clinical costs; partially offset by
•a decrease of $10.2 million in personnel compensation and related costs primarily driven by our resource prioritization and efficiency efforts.
The following table presents our research and development expenses by program ($ in thousands):
Three Months Ended September 30, Change Nine Months Ended September 30, Change
2026 2025 $ % 2026 2025 $ %
Clinical programs 25,902 18,179 7,723 42 % 71,782 63,236 8,546 14 %
Pre-Clinical programs
3,296 1,982 1,314 66 % 34,621 10,365 24,256 234 %
Unallocated research and development expenses 20,612 27,767 (7,155) (26) % 70,764 85,670 (14,906) (17) %
Total 49,810 47,928 1,882 4 % 177,167 159,271 17,896 11 %
In the three months ended September 30, 2026, research and development expenses attributable to clinical and pre-clinical programs increased by $7.7 million and $1.3 million, respectively, primarily driven by an increase in trial costs based on the progress of our studies.
In the nine months ended September 30, 2026, research and development expenses attributable to clinical programs increased by $8.5 million, primarily driven by an increase in trial costs based on the progress of our studies. Research and development expenses attributable to pre-clinical programs increased by $24.3 million, primarily driven by an increase in licensing fees for our license and collaboration agreements.
Although we manage our external research and development expenses by program, we do not allocate our internal research and development expenses by program because our employees and internal resources may be engaged in projects for multiple programs at any given time.
Selling, General, and Administrative Expenses
The following table presents our selling, general, and administrative expenses by category ($ in thousands):
Three Months Ended September 30, Change Nine Months Ended September 30, Change
2026 2025 $ % 2026 2025 $ %
Personnel compensation and related costs 39,210 41,320 (2,110) (5) % 124,978 124,642 336 - %
Other costs 30,861 28,786 2,075 7 % 83,035 79,924 3,111 4 %
Total 70,071 70,106 (35) - % 208,013 204,566 3,447 2 %
Selling, general, and administrative expenses remained relatively flat in the three and nine months ended September 30, 2026, compared to the prior year periods, reflecting continued efforts to streamline the organization, optimize resource allocation, and enhance operating efficiency.
Interest Income
Interest income decreased by $2.6 million and $7.7 million in the three and nine months ended September 30, 2026, respectively, primarily due to decreased interest rates.
Interest Expense
Interest expense increased by $0.2 million and $1.0 million in the three and nine months ended September 30, 2026, respectively, primarily due to higher levels of short-term debt.
Foreign Currency Gains
Foreign currency gains increased by $4.1 million and $30.5 million in the three and nine months ended September 30, 2026, respectively, primarily due to appreciation of the RMB against the U.S. dollar.
Other Income (Expense), Net
Other income (expense), net was insignificant during three months ended September 30, 2026 and 2025. Other income, net increased by $2.7 million in the nine months ended September 30, 2026, primarily due to higher government grants.
Income Tax Benefit
Income tax benefit was $1.9 million and $1.5 million in the three and nine months ended September 30, 2026, respectively, primarily due to the deferred tax benefit related to the inventory provision. Income tax expense was nil in both the three and nine months ended September 30, 2025 as the Company's subsidiaries were in cumulative loss positions.
Net Loss
Net loss was $46.1 million in the three months ended September 30, 2026, or a loss per ordinary share attributable to shareholders of $0.04 (or loss per ADS of $0.41), compared to a net loss of $36.0 million in the three months ended September 30, 2025, or a loss per ordinary share of $0.03 (or loss per ADS of $0.33).
Net loss was $148.0 million in the nine months ended September 30, 2026, or a loss per ordinary share attributable to shareholders of $0.13 (or loss per ADS of $1.32), compared to a net loss of $125.1 million in the nine months ended September 30, 2025, or a loss per ordinary share of $0.11 (or loss per ADS of $1.15).
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 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 judgments 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
Our operations have consumed substantial amounts of cash since inception. The net cash used in our operating activities was $133.2 million and $124.8 million in the nine months ended September 30, 2026 and 2025, 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 September 30, 2026, we had commitments of $0.7 million related to capital expenditures.
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. As of September 30, 2026, 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.
We have also identified opportunities to access capital through debt arrangements on favorable commercial terms. As of September 30, 2026, we had such debt arrangements with Chinese financial institutions that allow certain of our subsidiaries to borrow up to approximately $320.0 million (or RMB2,271.7 million) to support our working capital needs in mainland China. As of September 30, 2026, we had short-term debt outstanding of $252.4 million (or RMB1,699.7 million) pursuant to these debt arrangements. These debt arrangements provide us with additional capital capacity that will give us enhanced flexibility to execute our corporate strategic goals. For more information, see Note 10.
As of September 30, 2026, we had cash and cash equivalents, current restricted cash, and short-term investments of $659.7 million. Additionally, in October 2026, we entered into a securities purchase agreement with certain accredited investors and raised net proceeds of approximately $241.2 million from a private placement, after deducting placement agent fees and other offering expenses. We intend to use the net proceeds from this private placement to fund the development of pipeline assets and for working capital and other general corporate purposes. For more information, see Note 18. We believe we have sufficient capital to meet our cash requirements including the funding of operating expenses, capital expenditures, and debt obligations for at least the next 12 months.
Although we believe that we have sufficient capital to fund our operations for at least the next twelve months, we may, from time to time, utilize debt arrangements on favorable commercial terms, subject to lenders' assessment of our financial position including our cash balances, or consider additional funding sources to bring to fruition our strategic objectives. There can be no assurances that such funding will be made available to us on acceptable terms or at all.
The following table presents information regarding our cash flows ($ in thousands):
Nine Months Ended
September 30, 		Change
2026 2025 $
Net cash used in operating activities (133,186) (124,767) (8,419)
Net cash (used in) provided by investing activities (36,386) 319,162 (355,548)
Net cash provided by financing activities 38,330 72,783 (34,453)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash 1,330 311 1,019
Net (decrease) increase in cash, cash equivalents and restricted cash (129,912) 267,489 (397,401)
Net Cash Used in Operating Activities
Net cash used in operating activities increased by $8.4 million in the nine months ended September 30, 2026, primarily due to a decrease of $34.6 million in other adjustments to reconcile net loss to net cash used in operating activities and an increase of $22.8 million in net loss, partially offset by an increase of $49.1 million in net changes in operating assets and liabilities.
Net Cash (Used in) Provided by Investing Activities
Net cash used in investing activities was $36.4 million in the nine months ended September 30, 2026, compared to net cash provided by investing activities of $319.2 million in the nine months ended September 30, 2025, primarily due to a decrease of $330.0 million in proceeds from the maturity of short-term investments, an increase of $28.5 million from
acquisitions of intangible assets, and a decrease of $1.2 million in proceeds from the sale of an equity investment, partially offset by a decrease of $4.0 million in purchases of property and equipment.
Net Cash Provided by Financing Activities
Net cash provided by financing activities decreased by $34.5 million in the nine months ended September 30, 2026, primarily due to an increase of $70.2 million in repayment of short-term bank borrowings, a decrease of $8.9 million in proceeds from exercises of stock options, partially offset by an increase of $40.3 million in short-term debt proceeds and a decrease of $3.5 million in employee taxes paid related to net share settlement of equity awards.
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 2025 Annual Report. The Company has not adopted any new accounting standards in the three and nine months ended September 30, 2026.
Zai Lab Ltd. published this content on November 05, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 05, 2026 at 11:43 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]