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Chinese Market Opportunity Could Drive Zai Lab’s Revenue Growth

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Sep. 27 2018, Updated 12:22 p.m. ET

Zai Lab’s target price

Headquartered in Shanghai, China, Zai Lab (ZLAB) is focused on the development of therapies in areas such as immunology, oncology, and infectious diseases. The company targets the high unmet demand in the Chinese market in which the incidence rate across multiple oncology indications is significantly higher than in the US market.

Zai Lab reported a year-to-date return of -9.8%. The 12-month consensus analyst recommendation for Zai Lab on September 25 is a “strong buy.” The 12-month consensus target price for the company is $47.50, which is 148.04% higher than its closing price on September 25. Of the three analysts covering Zai Lab in September, two analysts recommended the company as a “strong buy,” and one analyst recommended it as a “buy.”

The chart above illustrates the total market potential across various oncology indications in China compared to the United States. The company currently has eight assets in its research pipeline, four of which are in pivotal or Phase 3 trials. 

The company is evaluating its investigational drugs in oncology indications such as first- and second-line maintenance settings for the following conditions:

  • ovarian cancer
  • breast cancer
  • small cell lung cancer
  • gastric cancer
  • hepatocellular carcinoma
  • non-small cell lung cancer
  • graft versus host disease

Zai Lab is also evaluating its clinical-stage assets in indications such as:

  • eczema
  • psoriasis
  • systemic lupus erythematosus
  • acute bacterial skin and skin structure infection
  • community-acquired bacterial pneumonia
  • acinetobacter baumannii infections
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Revenue projections

Wall Street analysts expect Zai Lab to report revenues of $0.40 million, $11.6 million, and $47.25 million, respectively, in fiscal 2018, fiscal 2019, and fiscal 2020. At the end of June, the company had cash and cash equivalents of $177.71 million on its balance sheet, lower than the $229.66 million on its balance sheet on December 31, 2017. According to Zai Lab’s corporate presentation in May, the company has sufficient cash to fund its operations until the end of 2019.

In the next article, we’ll discuss the growth prospects for Autolus Therapeutics.

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