| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| Pudong |
||
(Address of principal executive offices) |
(Zip Code) | |
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
The Stock Exchange of Hong Kong Limited |
| * | Included in connection with the registration of the American Depositary Shares with the Securities and Exchange Commission. The ordinary shares are not registered or listed for trading in the United States but are listed for trading on The Stock Exchange of Hong Kong Limited. |
| ☒ | Accelerated filer | ☐ | ||||
Non-accelerated filer |
☐ | Smaller reporting company | ||||
| Emerging growth company | ||||||
Page |
||||||
| PART I. |
4 | |||||
| Item 1. |
Financial Statements (Unaudited) | 5 | ||||
| 5 | ||||||
| 6 | ||||||
| 7 | ||||||
| 8 | ||||||
| 9 | ||||||
| 10 | ||||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 26 | ||||
| Item 3. |
Quantitative and Qualitative Disclosures about Market Risk | 41 | ||||
| Item 4. |
Controls and Procedures | 42 | ||||
| PART II. |
42 | |||||
| Item 1. |
Legal Proceedings | 42 | ||||
| Item 1A. |
Risk Factors | 42 | ||||
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds | 53 | ||||
| Item 3. |
Defaults upon Senior Securities | 53 | ||||
| Item 4. |
Mine Safety Disclosures | 53 | ||||
| Item 5. |
Other Information | 53 | ||||
| Item 6. |
Exhibits | 54 | ||||
| 55 | ||||||
As of |
||||||||||||
Notes |
September 30, 2021 |
December 31, 2020 |
||||||||||
$ |
$ |
|||||||||||
| Assets |
||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
3 | |||||||||||
| Short-term investments |
5 | |||||||||||
| Accounts receivable (net of allowance for credit loss of $ |
||||||||||||
| Inventories |
6 | |||||||||||
| Prepayments and other current assets |
||||||||||||
| |
|
|
|
|||||||||
| Total current assets |
||||||||||||
| Restricted cash, non-current |
4 | |||||||||||
| Long - term investments |
7 | |||||||||||
| Prepayments for equipment |
||||||||||||
| Property and equipment, net |
8 | |||||||||||
| Operating lease right-of-use assets |
||||||||||||
| Land use rights, net |
||||||||||||
| Intangible assets, net |
||||||||||||
| Long-term deposits |
||||||||||||
| Value added tax recoverable |
||||||||||||
| |
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|
|
|||||||||
| Total assets |
||||||||||||
| |
|
|
|
|||||||||
| Liabilities and shareholders’ equity |
||||||||||||
| Current liabilities: |
||||||||||||
| Accounts payable |
||||||||||||
| Current operating lease liabilities |
||||||||||||
| Other current liabilities |
11 | |||||||||||
| |
|
|
|
|||||||||
| Total current liabilities |
||||||||||||
| Deferred income |
||||||||||||
| Non-current operating lease liabilities |
||||||||||||
| |
|
|
|
|||||||||
| Total liabilities |
||||||||||||
| |
|
|
|
|||||||||
| Commitments and contingencies (Note 17) |
||||||||||||
| Shareholders’ equity |
||||||||||||
| Ordinary shares (par value of $ |
||||||||||||
| Additional paid-in capital |
||||||||||||
| Accumulated deficit |
( |
) | ( |
) | ||||||||
| Accumulated other comprehensive loss |
( |
) | ( |
) | ||||||||
| Treasury Stock (at cost, |
( |
) | — | |||||||||
| |
|
|
|
|||||||||
| Total shareholders’ equity |
||||||||||||
| |
|
|
|
|||||||||
| Total liabilities and shareholders’ equity |
||||||||||||
| |
|
|
|
|||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||
Notes |
2021 |
2020 |
2021 |
2020 |
||||||||||||||||
$ |
$ |
$ |
$ |
|||||||||||||||||
| Revenue |
9 | |||||||||||||||||||
| Expenses: |
||||||||||||||||||||
| Cost of sales |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Research and development |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Selling, general and administrative |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||||||
| Loss from operations |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Interest income |
||||||||||||||||||||
| Interest expenses |
— | ( |
) | — | ( |
) | ||||||||||||||
| Other (expense s ) income, net |
( |
) | ( |
) | ||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||||||
| Loss before income tax and share of loss from equity method investment |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Income tax expense |
10 | — | — | |||||||||||||||||
| Share of loss from equity method investment |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||||||
| Net loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||||||
| Net loss attributable to ordinary shareholders |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||||||
| Loss per share - basic and diluted |
12 | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||
| Weighted-average shares used in calculating net loss per ordinary share - basic and diluted |
||||||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
$ |
$ |
$ |
$ |
|||||||||||||
| Net loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other comprehensive income (loss), net of tax of |
||||||||||||||||
| Foreign currency translation adjustments |
( |
) | ( |
) | ( |
) | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Comprehensive loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
Ordinary Shares |
Additional paid in capital |
Accumulated deficit |
Accumulated other comprehensive (loss) income |
Treasury Stock |
Total |
|||||||||||||||||||||||||||
Number of Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
Balance at December 31, 2020 |
( |
) | ( |
) | — | — | ||||||||||||||||||||||||||
Issuance of ordinary shares upon vesting of restricted shares |
— | — | — | — | — | |||||||||||||||||||||||||||
Exercise of shares option |
— | — | — | — | ||||||||||||||||||||||||||||
Issuance of ordinary shares in connection with collaboration and license arrangement (Note 15) |
— | — | — | — | ||||||||||||||||||||||||||||
Issuance cost adjustment for secondary listing |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Net loss |
— | — | — | ( |
) | — | — | — | ( |
) | ||||||||||||||||||||||
Foreign currency translatio n |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Balance at March 31, 2021 |
( |
) | ( |
) | — | — | ||||||||||||||||||||||||||
Issuance of ordinary shares upon vesting of restricted shares |
— | — | — | — | ||||||||||||||||||||||||||||
Exercise of shares option |
— | — | — | — | ||||||||||||||||||||||||||||
Issuance of ordinary shares upon follow-on public offering, net of issuance cost of $ |
— | — | — | — | ||||||||||||||||||||||||||||
Receipt of employees’ shares to satisfy tax withholding obligations related to share-based compensation |
— | — | — | — | — | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Net loss |
— | — | — | ( |
) | — | — | — | ( |
) | ||||||||||||||||||||||
Foreign currency translation |
— | — | — | — | ( |
) | — | — | ( |
) | ||||||||||||||||||||||
Balance at June 30, 2021 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||
Issuance of ordinary shares upon vesting of restricted shares |
— | — | — | — | ||||||||||||||||||||||||||||
Exercise of shares option |
— | — | — | — | ||||||||||||||||||||||||||||
Issuance cost adjustment for follow-on public offering |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Receipt of employees’ shares to satisfy tax withholding obligations related to share-based compensation |
— | — | — | — | — | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Net loss |
— | — | — | ( |
) | — | — | — | ( |
) | ||||||||||||||||||||||
Foreign currency translation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Balance at September 30, 2021 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||
Balance at December 31, 2019 |
( |
) | — | — | ||||||||||||||||||||||||||||
Issuance of ordinary shares upon vesting of restricted shares |
— | — | — | — | — | |||||||||||||||||||||||||||
Exercise of shares option |
— | — | — | — | ||||||||||||||||||||||||||||
Issuance of ordinary shares upon follow-on public offering, net of issuance cost of $ |
— | — | — | — | ||||||||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Net loss |
— | — | — | ( |
) | — | — | — | ( |
) | ||||||||||||||||||||||
Foreign currency translation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Balance at March 31, 2020 |
( |
) | — | — | ||||||||||||||||||||||||||||
Issuance of ordinary shares upon vesting of restricted shares |
— | — | — | — | ||||||||||||||||||||||||||||
Exercise of shares option |
— | — | — | — | ||||||||||||||||||||||||||||
Issuance cost adjustment for follow-on public offering |
— | — | ( |
) | — | — | — | — | ( |
) | ||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Net loss |
— | — | — | ( |
) | — | — | — | ( |
) | ||||||||||||||||||||||
Foreign currency translation |
— | — | — | — | ( |
) | — | — | ( |
) | ||||||||||||||||||||||
Balance at June 30, 2020 |
( |
) | — | — | ||||||||||||||||||||||||||||
Issuance of ordinary shares upon vesting of restricted shares |
— | — | — | — | ||||||||||||||||||||||||||||
Exercise of shares option |
— | — | — | — | ||||||||||||||||||||||||||||
Issuance of ordinary shares upon secondary listing, net of issuance cost of $ |
— | — | — | — | ||||||||||||||||||||||||||||
Issuance cost adjustment for follow-on public offering |
— | — | ( |
) | — | — | — | — | ( |
) | ||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Net loss |
— | — | — | ( |
) | — | — | — | ( |
) | ||||||||||||||||||||||
Foreign currency translation |
— | — | — | — | ( |
) | — | — | ( |
) | ||||||||||||||||||||||
Balance at September |
( |
) | ( |
) | — | — | ||||||||||||||||||||||||||
Nine Months Ended September 30, |
||||||||
2021 |
2020 |
|||||||
$ |
$ |
|||||||
Operating activities |
||||||||
Net loss |
( |
) | ( |
) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Allowance for doubtful accounts |
||||||||
Inventory write-down |
— | |||||||
Depreciation and amortization expenses |
||||||||
Amortization of deferred income |
( |
) | ( |
) | ||||
Share-based compensation |
||||||||
Noncash research and development expenses (Note 15) |
— | |||||||
Share of loss from equity method investment |
||||||||
Loss from fair value changes of equity investment with readily determinable fair value |
||||||||
Loss on disposal of property and equipment |
||||||||
Noncash lease expenses |
||||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
( |
) | ( |
) | ||||
Inventories |
( |
) | ||||||
Prepayments and other current assets |
( |
) | ( |
) | ||||
Long - term deposits |
( |
) | ( |
) | ||||
Value added tax recoverable |
( |
) | ( |
) | ||||
Accounts payable |
( |
) | ||||||
Other current liabilities |
( |
) | ||||||
Operating lease liabilities |
( |
) | ( |
) | ||||
Deferred income |
||||||||
Net cash used in operating activities |
( |
) | ( |
) | ||||
Cash flows from investing activities: |
||||||||
Purchases of short-term investments |
( |
) | ( |
) | ||||
Proceeds from maturity of short-term investment |
— | |||||||
Payment for investment in equity investee |
( |
) | — | |||||
Disposal of property and equipment |
— | |||||||
Purchase of property and equipment |
( |
) | ( |
) | ||||
Purchase of intangible assets |
( |
) | ( |
) | ||||
Net cash provided by (used in) investing activities |
( |
) | ||||||
Cash flows from financing activities: |
||||||||
Repayment of short-term borrowings |
— | ( |
) | |||||
Proceeds from exercises of stock options |
||||||||
Proceeds from issuance of ordinary shares upon public offerings |
||||||||
Payment of public offering costs |
( |
) | ( |
) | ||||
Employee taxes paid related to net share settlement of equity awards |
( |
) | — | |||||
Net cash provided by financing activities |
||||||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash |
||||||||
Net increase in cash, cash equivalents and restricted cash |
||||||||
Cash, cash equivalents and restricted cash - beginning of period |
||||||||
Cash, cash equivalents and restricted cash - end of period |
||||||||
Supplemental disclosure on non-cash investing and financing activities: |
||||||||
Payables for purchase of property and equipment |
||||||||
Payables for intangible assets |
||||||||
Payables for public offering costs |
— | |||||||
Supplemental disclosure of cash flow information: |
||||||||
Cash and cash equivalents |
||||||||
Restricted cash, non-current |
||||||||
Total cash and cash equivalents and restricted cash |
||||||||
Interest paid |
— | |||||||
Description |
Fair Value as of September 30, 2021 US$ |
Fair Value Measurement at Reporting Date Using Quoted Prices in Active Markets for Identical Assets (Level 1) US$ |
||||||
| Equity Investments with Readily Determinable Fair Value |
||||||||
As of |
||||||||
September 30, 2021 |
December 31, 2020 |
|||||||
$ |
$ |
|||||||
| Cash at bank and in hand |
||||||||
| Cash equivalents (note (i)) |
||||||||
| |
|
|
|
|||||
| |
|
|
|
|||||
| Denominated in: |
||||||||
| US$ |
||||||||
| RMB (note (ii)) |
||||||||
| Hong Kong dollar (“HK$”) |
||||||||
| Australian dollar (“A$”) |
||||||||
| Taiwan dollar (“TW$”) |
— | |||||||
| |
|
|
|
|||||
| |
|
|
|
|||||
| (i) | Cash equivalents represent short-term and highly liquid investments in a money market fund. |
| (ii) | Certain cash and bank balances denominated in RMB were deposited with banks in China. The conversion of these RMB denominated balances into foreign currencies is subject to the rules and regulations of foreign exchange control promulgated by the government of the People’s Republic of China (“PRC”). |
As of |
||||||||
September 30, 2021 |
December 31, 2020 |
|||||||
$ |
$ |
|||||||
Finished goods |
||||||||
Raw materials |
||||||||
Inventories |
||||||||
As of |
||||||||
September 30, 2021 |
December 31, 2020 |
|||||||
$ |
$ |
|||||||
Office equipment |
||||||||
Electronic equipment |
||||||||
Vehicle |
||||||||
Laboratory equipment |
||||||||
Manufacturing equipment |
||||||||
Leasehold improvements |
||||||||
Construction in progress |
||||||||
Less: accumulated depreciation |
( |
) | ( |
) | ||||
Property and equipment, net |
||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
$ |
$ |
$ |
$ |
|||||||||||||
Product revenue - gross |
||||||||||||||||
Less: Rebate and sales return |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Product revenue - net |
||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
$ |
$ |
$ |
$ |
|||||||||||||
ZEJULA |
||||||||||||||||
Optune |
||||||||||||||||
QINLOCK |
||||||||||||||||
Product revenue - net |
||||||||||||||||
As of |
||||||||
September 30, 2021 |
December 31, 2020 |
|||||||
$ |
$ |
|||||||
| Payroll |
||||||||
| Accrued professional service fee |
||||||||
| Payables for purchase of property and equipment |
||||||||
| Accrued rebate to distributors |
||||||||
| Tax payable |
||||||||
| Others (note (i)) |
||||||||
| |
|
|
|
|||||
| Total |
||||||||
| |
|
|
|
|||||
(i) |
Others are mainly payables to employees for exercising the share-based compensations, payables related to travel and business entertainment expenses. |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
$ |
$ |
$ |
$ |
|||||||||||||
| Numerator: |
||||||||||||||||
| Net loss attributable to ordinary shareholders |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Denominator: |
||||||||||||||||
| Weighted average number of ordinary shares- basic and diluted |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net loss per share - basic and diluted |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
As of |
||||||||
September 30, 2021 |
September 30, 2020 |
|||||||
| Share options |
||||||||
| Non-vested restricted shares |
||||||||
| Company Name |
Relationship with the Group | |
| MEDx (Suzhou) Translational Medicine Co., Ltd. |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
$ |
$ |
$ |
$ |
|||||||||||||
| Selling, general and administrative |
||||||||||||||||
| Research and development |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
$ |
$ |
$ |
$ |
|||||||||||||
| Selling, general and administrative |
||||||||||||||||
| Research and development |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| • | expenses incurred for payments to contract research organizations (CROs), contract manufacture organizations (CMOs), investigators and clinical trial sites that conduct our clinical studies; |
| • | employee compensation related expenses, including salaries, benefits and equity compensation expenses; |
| • | expenses for licensors; |
| • | the cost of acquiring, developing and manufacturing clinical study materials; |
| • | facilities and other expenses, which include office leases and other overhead expenses; |
| • | costs associated with pre-clinical activities and regulatory operations; |
| • | expenses associated with the construction and maintenance of our manufacturing facilities; and |
| • | costs associated with operating as a public company. |
Three months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
| (in thousands, except share and per share data) |
||||||||||||||||
| Comprehensive Loss Data: |
||||||||||||||||
| Revenue |
$ | 43,103 | $ | 14,651 | $ | 100,141 | $ | 33,864 | ||||||||
| Expenses: |
||||||||||||||||
| Cost of sales |
(12,162 | ) | (4,934 | ) | (30,535 | ) | (9,914 | ) | ||||||||
| Research and development |
(55,144 | ) | (58,100 | ) | (401,220 | ) | (160,149 | ) | ||||||||
| Selling, general and administrative |
(59,002 | ) | (27,874 | ) | (149,254 | ) | (70,346 | ) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Loss from operations |
$ | (83,205 | ) | $ | (76,257 | ) | $ | (480,868 | ) | $ | (206,545 | ) | ||||
| Interest income |
713 | 866 | 1,171 | 3,748 | ||||||||||||
| Interest expenses |
— | (43 | ) | — | (157 | ) | ||||||||||
| Other (expenses) income, net |
(13,580 | ) | 11,958 | (12,401 | ) | 11,267 | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Loss before income tax and share of loss from equity method investment |
$ | (96,072 | ) | $ | (63,476 | ) | $ | (492,098 | ) | $ | (191,687 | ) | ||||
| Income tax expense |
— | — | — | — | ||||||||||||
| Share of loss from equity method investment |
(340 | ) | (265 | ) | (548 | ) | (671 | ) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net loss attributable to ordinary shareholders |
$ | (96,412 | ) | $ | (63,741 | ) | $ | (492,646 | ) | $ | (192,358 | ) | ||||
| Weighted-average shares used in calculating net loss per ordinary share, basic and diluted |
95,035,432 | 75,436,646 | 92,174,838 | 74,381,115 | ||||||||||||
| Net loss per share, basic and diluted |
$ | (1.01 | ) | $ | (0.84 | ) | $ | (5.34 | ) | $ | (2.59 | ) | ||||
Three Months Ended September 30, |
||||||||||||||||
(in thousands) |
2021 |
% |
2020 |
% |
||||||||||||
| ZEJULA |
$ | 28,162 | 65.3 | % | $ | 8,503 | 58.0 | % | ||||||||
| Optune |
10,653 | 24.7 | % | 5,950 | 40.6 | % | ||||||||||
| QINLOCK |
4,288 | 10.0 | % | 198 | 1.4 | % | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total product revenue—Net |
$ | 43,103 | 100.0 | % | $ | 14,651 | 100.0 | % | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
Three Months Ended September 30, |
||||||||||||||||
(in thousands) |
2021 |
% |
2020 |
% |
||||||||||||
| Research and Development Expenses: |
||||||||||||||||
| Personnel compensation and related costs |
$ | 20,564 | 37.3 | % | $ | 12,204 | 21.0 | % | ||||||||
| Licensing fees |
5,051 | 9.2 | % | 25,911 | 44.6 | % | ||||||||||
| Payment to CROs/CMOs/Investigators |
17,102 | 31.0 | % | 14,414 | 24.8 | % | ||||||||||
| Other costs |
12,427 | 22.5 | % | 5,571 | 9.6 | % | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 55,144 | 100.0 | % | $ | 58,100 | 100.0 | % | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| • | $20.9 million for decreased licensing fees in connection with the upfront payments for new licensing agreements as well as certain milestone fees; and partially offset by, |
| • | $8.4 million for increased personnel compensation and related costs which was primarily attributable to increased employee compensation costs, due to hiring of more personnel during the three months ended September 30, 2021 and the grants of new share options and vesting of restricted shares to certain employees; |
| • | $2.7 million for increased payment to CROs, CMOs and investigators in the three months ended September 30, 2021 as we advanced our drug candidate pipeline; and |
| • | $6.8 million for increased lab consumables and other costs in the three months ended September 30, 2021. |
Three Months Ended September 30, |
||||||||||||||||
(in thousands) |
2021 |
% |
2020 |
% |
||||||||||||
| Research and Development Expenses: |
||||||||||||||||
| Clinical programs |
$ | 20,248 | 36.7 | % | $ | 39,736 | 68.4 | % | ||||||||
| Pre-clinical programs |
9,988 | 18.1 | % | 2,728 | 4.7 | % | ||||||||||
| Unallocated research and development expenses |
24,908 | 45.2 | % | 15,636 | 26.9 | % | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 55,144 | 100.0 | % | $ | 58,100 | 100.0 | % | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
Three Months Ended September 30, |
||||||||||||||||
(in thousands) |
2021 |
% |
2020 |
% |
||||||||||||
| Selling, General and Administrative Expenses: |
||||||||||||||||
| Personnel compensation and related costs |
$ | 34,088 | 57.8 | % | $ | 15,869 | 56.9 | % | ||||||||
| Professional service fees |
6,194 | 10.5 | % | 2,258 | 8.1 | % | ||||||||||
| Other costs |
18,720 | 31.7 | % | 9,747 | 35.0 | % | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 59,002 | 100.0 | % | $ | 27,874 | 100.0 | % | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| • | $18.2 million for increased personnel compensation and related costs which was primarily attributable to increased commercial and administrative personnel costs, due to hiring of more personnel during the three months ended September 30, 2021 and the grants of new share options and vesting of restricted shares to certain employees; |
| • | $3.9 million for increased professional service fees, mainly attributable to our increased legal, compliance, accounting and investor and public relations expenses associated with being a public company; and |
| • | $9.0 million for increased other costs, mainly including selling, rental, and administrative expenses primary attributable to commercial operations in Hong Kong and China. |
Nine Months Ended September 30, |
||||||||||||||||
(in thousands) |
2021 |
% |
2020 |
% |
||||||||||||
| ZEJULA |
$ | 64,134 | 64.0 | % | $ | 22,294 | 65.8 | % | ||||||||
| Optune |
27,318 | 27.3 | % | 11,372 | 33.6 | % | ||||||||||
| QINLOCK |
8,689 | 8.7 | % | 198 | 0.6 | % | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total product revenue—Net |
$ | 100,141 | 100.0 | % | $ | 33,864 | 100.0 | % | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
Nine Months Ended September 30, |
||||||||||||||||
(in thousands) |
2021 |
% |
2020 |
% |
||||||||||||
| Research and Development Expenses: |
||||||||||||||||
| Personnel compensation and related costs |
$ | 50,543 | 12.6 | % | $ | 33,804 | 21.1 | % | ||||||||
| Licensing fees |
274,299 | 68.4 | % | 77,631 | 48.5 | % | ||||||||||
| Payment to CROs/CMOs/Investigators |
52,246 | 13.0 | % | 34,226 | 21.4 | % | ||||||||||
| Other costs |
24,132 | 6.0 | % | 14,488 | 9.0 | % | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 401,220 | 100.0 | % | $ | 160,149 | 100.0 | % | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| • | $16.7 million for increased personnel compensation and related costs which was primarily attributable to increased employee compensation costs, due to hiring of more personnel during the nine months ended September 30, 2021 and the grants of new share options and vesting of restricted shares to certain employees; |
| • | $196.7 million for increased licensing fees in connection with the upfront payments for new licensing agreements as well as certain milestone fees; |
| • | $18.0 million for increased payment to CROs, CMOs and investigators in the nine months ended September 30, 2021 as we advanced our drug candidate pipeline; and |
| • | $9.7 million for increased lab consumables and other costs in the nine months ended September 30, 2021. |
Nine Months Ended September 30, |
||||||||||||||||
(in thousands) |
2021 |
% |
2020 |
% |
||||||||||||
| Research and Development Expenses: |
||||||||||||||||
| Clinical programs |
$ | 299,937 | 74.8 | % | $ | 112,071 | 70.0 | % | ||||||||
| Pre-clinical programs |
41,033 | 10.2 | % | 5,643 | 3.5 | % | ||||||||||
| Unallocated research and development expenses |
60,250 | 15.0 | % | 42,435 | 26.5 | % | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 401,220 | 100.0 | % | $ | 160,149 | 100.0 | % | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
Nine Months Ended September 30, |
||||||||||||||||
(in thousands) |
2021 |
% |
2020 |
% |
||||||||||||
| Selling, General and Administrative Expenses: |
||||||||||||||||
| Personnel compensation and related costs |
$ | 87,560 | 58.7 | % | $ | 42,951 | 61.1 | % | ||||||||
| Professional service fees |
14,583 | 9.8 | % | 6,828 | 9.7 | % | ||||||||||
| Other costs |
47,111 | 31.5 | % | 20,567 | 29.2 | % | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 149,254 | 100.0 | % | $ | 70,346 | 100.0 | % | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| • | $44.6 million for increased personnel compensation and related costs which was primarily attributable to increased commercial and administrative personnel costs, due to hiring of more personnel during the nine months ended September 30, 2021 and the grants of new share options and vesting of restricted shares to certain employees; |
| • | $7.8 million for increased professional service fee, mainly attributable to our increased legal, compliance, accounting and investor and public relations expenses associated with being a public company; and |
| • | $26.5 million for increased other costs, mainly including selling, rental, and administrative expenses primary attributable to the commercial operation in Hong Kong and China. |
Description |
Fair Value as of September 30, 2021 |
Fair Value Measurement at Reporting Date Using Quoted Prices in Active Markets for Identical Assets (Level 1) |
||||||
(in thousands) | ||||||||
| Equity Investments with Readily Determinable Fair Value |
$ | 20,070 | $ | 20,070 | ||||
Nine months ended September 30, |
||||||||
(in thousands) |
2021 |
2020 |
||||||
| Net cash used in operating activities |
$ | (396,237 | ) | $ | (171,720 | ) | ||
| Net cash provided by (used in) investing activities |
531,446 | (754,881 | ) | |||||
| Net cash provided by financing activities |
820,478 | 1,024,486 | ||||||
| Effect of foreign exchange rate changes |
695 | 2,062 | ||||||
| |
|
|
|
|||||
| Net increases in cash, cash equivalents and restricted cash |
$ | 956,382 | $ | 99,947 | ||||
| |
|
|
|
|||||
(in thousands) |
Total |
Less than 1 year |
1 to 3 years |
3 to 5 years |
More than 5 years |
|||||||||||||||
| Purchase Obligations |
$ | 24,191 | $ | 24,191 | $ | — | $ | — | $ | — | ||||||||||
| Operating Lease Obligations |
17,497 | 6,573 | 5,349 | 4,160 | 1,415 | |||||||||||||||
| • | our ability to successfully commercialize ZEJULA, Optune, QINLOCK and any other products and product candidates that we may obtain regulatory approval for; |
| • | the anticipated amount, timing and accounting of revenues; contingent, milestone, royalty and other payments under licensing, collaboration, and acquisition agreements; tax positions and contingencies; collectability of receivables; pre-approval inventory; cost of sales; research and development costs; |
| compensation and other selling, general and administrative expenses; amortization of intangible assets; foreign currency exchange risk; estimated fair value of assets and liabilities; and impairment assessments; |
| • | expectations, plans and prospects relating to sales, pricing, growth and launch of our marketed and pipeline products; |
| • | the potential impact of increased product competition in the markets in which we compete, including increased competition from new originator therapies, generics, prodrugs and biosimilars of existing products and products approved under abbreviated regulatory pathways, including generic or biosimilar versions of our products; |
| • | patent terms, patent term extensions, patent office actions and expected availability and any period of regulatory exclusivity; |
| • | the timing, outcome and impact of administrative, regulatory, legal or other proceedings related to our patents and other proprietary and intellectual property rights, tax audits, assessments and settlements, pricing matters, sales and promotional practices, product liability and other matters; |
| • | the drivers for growing our business, including our plans and intention to commit resources relating to discovery, research and development programs and business development opportunities as well as the potential benefits and results of certain business development transactions; |
| • | our ability to finance our operations and business initiatives and obtain funding for such activities; |
| • | the expectations, development plans and anticipated timelines, including costs and timing of potential clinical trials, filings and approvals of our products, product candidates and pipeline programs, including collaborations with third-parties, as well as the potential therapeutic scope of the development and commercialization of our and our collaborators’ pipeline products; |
| • | reputational or financial harm to our business arising from adverse safety events, including product liability claims or lawsuits affecting our or any of our licensors’ marketed products, generic or biosimilar versions of our or any of our licensors’ marketed products or any other products from the same class as one of our or any of our licensors’ products; |
| • | unexpected impacts on our business operations including sales, expenses, supply chain, manufacturing, cyber-attacks or other privacy or data security incidents, research and development costs, clinical trials and employees; |
| • | the potential impact of measures being taken worldwide designed to reduce healthcare costs and limit the overall level of government expenditures, including the impact of pricing actions and reduced reimbursement for our products; |
| • | our manufacturing capacity, use of third-party contract manufacturing organizations, plans and timing relating to changes in our manufacturing capabilities or activities in new or existing manufacturing facilities; |
| • | lease commitments, purchase obligations and the timing and satisfaction of other contractual obligations; |
| • | the impact of new laws, regulatory requirements, judicial decisions and accounting standards; |
| • | the disruption of our business relationships with our licensors; |
| • | the direct and indirect impact of the COVID-19 pandemic on our business and operations, our and our partners’ ability to effectively travel, as needed, during the COVID-19 pandemic, and the duration and impact of COVID-19 or any of its variants that may affect, precipitate or exacerbate one or more of any of the risks and uncertainties mentioned in this section; |
| • | our ability to effectively manage our growth; |
| • | the disruption in the capital or credit markets which may adversely impact our ability to obtain necessary capital or credit market financing; |
| • | the geopolitical tensions that exist between China and the United States may adversely affect our business, our ability to grow, and our access to necessary capital or credit markets; |
| • | our ability to retain key executives and to attract, retain and motivate personnel; |
| • | changes in United States and China relations, as well as relations with other countries, and/or regulations may adversely impact our business, our operating results, our ability to raise capital and the market price of our ordinary shares and/or our ADSs; |
| • | compliance with China’s new Data Security Law, Cybersecurity Review Measures (Revised Draft for Comment), Personal Information Protection Law regulations and guidelines relating to the multi-level protection scheme and any other future laws and regulations may entail significant expenses and could materially affect our business; |
| • | the audit report included in our annual reports are prepared by an auditor who is not inspected by the U.S. Public Company Accounting Oversight Board, or the PCAOB, and as such, you are deprived of the benefits of such inspection, we may be subject to additional Nasdaq listing criteria or other penalties and our ADSs may be delisted from the U.S. stock market; |
| • | our failure to comply with data protection laws and regulations could lead to government enforcement actions and significant penalties against us, and adversely impact our operating results; |
| • | China’s economic, political and social conditions, as well as governmental policies or regulatory actions, could affect the business environment and financial markets in China, our ability to operate our business, our liquidity and our access to capital; |
| • | the uncertainties in the China legal system could materially and adversely affect us; |
| • | if the Chinese government determines that our corporate structure does not comply with Chinese regulations, or if Chinese regulations change or are interpreted differently in the future, the value of our ADSs and our ordinary shares may decline in value or become worthless; |
| • | we are not currently required to obtain approval or prior permission from the China Securities Regulatory Commission or any other Chinese regulatory authority under the Chinese laws and regulations currently in effect to issue securities to foreign investors. However, as there are uncertainties with respect to the Chinese legal system and changes in laws, regulations and policies, including how those laws and regulations will be interpreted or implemented, there can be no assurance that we will not be subject to such requirements, approvals or permissions in the future. We are required to obtain approvals and permissions from Chinese authorities in connection with our general business activities currently conducted in China; |
| • | the Chinese government may intervene in or influence our operations at any time, which could result in a material change in our operations and significantly and adversely impact the value of our ADSs; |
| • | both recent and future economic, political and social conditions, as well as governmental policies and regulatory actions implemented in China, could affect our ability to operate our business. The Chinese government has provided new guidance on China-based companies raising capital outside of China. Due to our extensive operations in China, any future Chinese, U.S. or other rules and regulations that place restrictions on capital raising or other activities by companies with extensive operations in China could adversely affect our business, results of operations and the market price of our ADSs; |
| • | changes in the legal, political and economic policies of the Chinese government, the relations between China and the United States, or Chinese or United States regulations may materially and adversely affect our business, financial condition, results of operations and the market price of our ADSs, which could cause the value of our ADSs to significantly decline or to become worthless. Any such changes may take place quickly and with very little notice. Recent statements made and regulatory actions undertaken by China’s government, including the recent enactment of China’s new Data Security Law, as well as our obligations to comply with China’s Cybersecurity Review Measures (Revised Draft for Comment), regulations and guidelines relating to the multi-level protection scheme, Personal Information Protection Law and any other future laws and regulations may require us to incur significant expenses and could materially affect our ability to conduct our business, accept foreign investments or list on a U.S. or foreign stock exchange; and |
| • | other risks and uncertainties, including those listed under “Part I-Item 1A-Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020. |
| * | Filed herewith |
| ** | Furnished herewith |
| # | Management contract or compensatory plan or arrangement |
| ^ | Certain confidential information contained in this exhibit has been omitted because it (i) is not material and (ii) would be competitively harmful if publicly disclosed. |
| ZAI LAB LIMITED | ||||
| Dated: November 9, 2021 | By: | /s/ Samantha Du | ||
| Name: | Samantha Du | |||
| Title: | Chief Executive Officer | |||
Exhibit 10.1
ZAI LAB LIMITED
NON-EMPLOYEE DIRECTOR COMPENSATION POLICY
As of October 17, 2021, each individual who provides services to Zai Lab Limited (the “Company”) as a director, other than a director who is employed by the Company or an affiliate, (a “Non-Employee Director”) shall be entitled to receive the following amounts of compensation:
| Type of Compensation |
Amount and Form of Payment | |
| Annual cash retainer | $50,000 (payable in cash on a quarterly basis) | |
| Equity retainer | Commencing in calendar year 2022, each Non-Employee Director is eligible to receive, effective as of a date designated by the Board of Directors (the “Date of Grant”), an annual grant of a number of shares of Restricted Stock (as defined in the 2017 Equity Incentive Plan) equal to US$500,000 divided by the closing price of the Company’s ADS on NASDAQ on the Date of Grant (or on the next succeeding business day if the NASDAQ stock market is not open for trading on the Date of Grant), rounded down to the nearest whole share. Such shares of Restricted Stock shall vest in full on the first anniversary of the Date of Grant, subject to continued service as a member of our board of directors through such date. | |
| New Member Grant | Commencing in calendar year 2021, each Non-Employee Director newly elected to the Board of Directors is eligible to receive, effective as of the date of his or her election to the Board of Directors (the “Date of Election”), an initial grant of a number of shares of Restricted Stock (as defined in the 2017 Equity Incentive Plan) equal to US$750,000 divided by the closing price of the Company’s ADS on NASDAQ on the Date of Election (or on the next succeeding business day if the NASDAQ stock market is not open for trading on the Date of Election), rounded down to the nearest whole share. Such shares of Restricted Stock shall vest with respect to one-third of the initial grant on each of the next three anniversaries of the Date of Election, subject to continued service as a member of our board of directors through such date. In the event that a newly elected Non-Employee Director’s Date of Election is less than 180 days prior to the Date of Grant of the next annual grant to Non-Employee Director, such newly elected Non-Employee Director shall not be eligible to participate in that particular annual grant, but shall participate in all subsequent annual grants. | |
| Additional annual cash retainer for Audit Committee chair | $20,000 (payable in cash on a quarterly basis) | |
| Additional annual cash retainer for Audit Committee member | $10,000 (payable in cash on a quarterly basis) | |
| Additional annual cash retainer for Compensation Committee chair | $15,000 (payable in cash on a quarterly basis) | |
| Additional annual cash retainer for Compensation Committee member | $7,500 (payable in cash on a quarterly basis) | |
| Additional annual cash retainer for Nominating Committee chair | $10,000 (payable in cash on a quarterly basis) | |
| Additional annual cash retainer for Nominating Committee member | $5,000 (payable in cash on a quarterly basis) | |
| Annual Limit on Non-Employee Director Compensation | The total compensation of each individual Non-Employee Director (including cash retainers and equity grants) shall not exceed US$750,000 in any calendar year or US$1,000,000 in the initial calendar year of such Non-Employee Director’s service, as the case may be. | |
Cash retainers shall be pro-rated for service for periods of less than a full calendar quarter. In addition, Non-Employee Directors will be reimbursed by the Company for reasonable and customary expenses incurred in connection with attendance at board of director and committee meetings, in accordance with the Company’s policies as in effect from time to time.
For the avoidance of doubt, directors who are (i) employees of the Company, (ii) employees of one of its affiliates or (iii) (a) are affiliated with a shareholder holding more than one percent (1%) of the ordinary shares or ordinary share equivalents of the Company or (b) individually (or through any trust or estate planning entity) hold more than one percent (1%) of the ordinary shares or ordinary share equivalents) of the Company will not receive compensation for their service as a director, other than reimbursement for reasonable and customary expenses incurred in connection with attendance at board of director and committee meetings, in accordance with the Company’s policies as in effect from time to time.
Exhibit 31.1
CERTIFICATIONS
I, Samantha (Ying) Du, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Zai Lab Limited; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 9, 2021 | /s/ Samantha (Ying) Du | |
| Samantha (Ying) Du | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATIONS
I, Billy Cho, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Zai Lab Limited; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 9, 2021 | /s/ Billy Cho | |
| Billy Cho | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report on Form 10-Q of Zai Lab Limited (the “Company”), for the three months ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Samantha (Ying) Du, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: November 9, 2021 | /s/ Samantha (Ying) Du | |
| Samantha (Ying) Du | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) |
This certification accompanies the quarterly report on Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Zai Lab Limited under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of this quarterly report on Form 10-Q), irrespective of any general incorporation language contained in such filing.
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report on Form 10-Q of Zai Lab Limited (the “Company”), for the three months ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Billy Cho, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: November 9, 2021 |
/s/ Billy Cho | |
| Billy Cho | ||
| Chief Financial Officer | ||
| (Principal Executive Officer) |
This certification accompanies the quarterly report on Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Zai Lab Limited under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of this quarterly report on Form 10-Q), irrespective of any general incorporation language contained in such filing.
Consolidated balance sheets (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Accounts receivable, allowance | $ 6 | $ 1 |
| Ordinary shares, par value | $ 0.00006 | $ 0.00006 |
| Ordinary shares, shares authorized | 500,000,000 | 500,000,000 |
| Ordinary shares, shares issued | 95,273,589 | 87,811,026 |
| Ordinary shares, shares outstanding | 95,273,589 | 87,811,026 |
| Treasury Stock, Shares | 27,722 | |
| Investments, fair value disclosure | $ 20,070 | $ 0 |
Consolidated statements of operations - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Income Statement [Abstract] | ||||
| Revenue | $ 43,103 | $ 14,651 | $ 100,141 | $ 33,864 |
| Expenses: | ||||
| Cost of sales | (12,162) | (4,934) | (30,535) | (9,914) |
| Research and development | (55,144) | (58,100) | (401,220) | (160,149) |
| Selling, general and administrative | (59,002) | (27,874) | (149,254) | (70,346) |
| Loss from operations | (83,205) | (76,257) | (480,868) | (206,545) |
| Interest income | 713 | 866 | 1,171 | 3,748 |
| Interest expenses | (43) | (157) | ||
| Other (expenses) income, net | (13,580) | 11,958 | (12,401) | 11,267 |
| Loss before income tax and share of loss from equity method investment | (96,072) | (63,476) | (492,098) | (191,687) |
| Income tax expense | ||||
| Share of loss from equity method investment | (340) | (265) | (548) | (671) |
| Net loss | (96,412) | (63,741) | (492,646) | (192,358) |
| Net loss attributable to ordinary shareholders | $ (96,412) | $ (63,741) | $ (492,646) | $ (192,358) |
| Loss per share - basic and diluted | $ (1.01) | $ (0.84) | $ (5.34) | $ (2.59) |
| Weighted-average shares used in calculating net loss per ordinary share - basic and diluted | 95,035,432 | 75,436,646 | 92,174,838 | 74,381,115 |
Consolidated statements of comprehensive loss - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Statement of Comprehensive Income [Abstract] | ||||
| Net loss | $ (96,412) | $ (63,741) | $ (492,646) | $ (192,358) |
| Other comprehensive income (loss), net of tax of nil: | ||||
| Foreign currency translation adjustments | 1,741 | (9,901) | (600) | (7,535) |
| Comprehensive loss | $ (94,671) | $ (73,642) | $ (493,246) | $ (199,893) |
Consolidated statements of comprehensive loss (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Statement of Comprehensive Income [Abstract] | ||||
| Other comprehensive income, tax | $ 0 | $ 0 | $ 0 | $ 0 |
Consolidated statements of shareholders' equity (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | ||
|---|---|---|---|
Jun. 30, 2021 |
Sep. 30, 2020 |
Mar. 31, 2020 |
|
| Share issuance cost upon follow-on public offering | $ 879 | $ 740 | |
| Issuance cost adjustment for secondary listing | $ 5,634 | ||
Organization and principal activities |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Organization and principal activities | |
| Organization and Principal Activities | 1. Organization and principal activities Zai Lab Limited (the “Company”) was incorporated on March 28, 2013 in the Cayman Islands as an exempted company with limited liability under the Companies Law of the Cayman Islands. The Company and its subsidiaries (collectively referred to as the “Group”) are focused on developing and commercializing therapies that address medical conditions with unmet medical needs including, in particular, oncology, autoimmune disorders and infectious diseases. The Group’s principal operations and geographic markets are in mainland China (hereinafter referred to as “China”), Hong Kong, Macau and Taiwan (hereinafter collectively referred to as “Greater China”). The Group has a substantial presence in Greater China and the United States. |
Basis of presentation and consolidation and significant accounting policies |
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Sep. 30, 2021 | ||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||
| Basis of presentation and consolidation and significant accounting policies | 2. Basis of presentation and consolidation and significant accounting policies (a) Basis of presentation The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and disclosures necessary for a presentation of the Company’s financial position, results of operations, shareholders’ equity and cash flows in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). In the opinion of management, these financial statements reflect all normal recurring adjustments and accruals necessary for a fair statement of the Company’s unaudited condensed consolidated financial statements for such periods. The results of operations for any interim period are not necessarily indicative of the results for the full year. The December 31, 2020 condensed consolidated balance sheets data were derived from audited financial statements, but do not include all disclosures required by U.S. GAAP. These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Interim results are not necessarily indicative of full year results and the unaudited condensed consolidated financial statements may not be indicative of the Group’s (b) Principles of consolidation The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All intercompany transactions and balances among the Company and its subsidiaries are eliminated upon consolidation. (c) Use of estimates The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the period. Areas where management uses subjective judgment include, but are not limited to, estimating the useful lives of long-lived assets, estimating the current expected credit losses for financial assets, assessing the impairment of long-lived assets, discount rate of operating lease liabilities, accrual of rebate, allocation of the research and development service expenses to the appropriate financial reporting period based on the progress of the research and development projects, share-based compensation expenses, recoverability of deferred tax assets and a lack of marketability discount of the ordinary shares issued in connection with collaboration and license arrangement (Note 15). Management bases the estimates on historical experience and various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from these estimates. (d) Long-term investments Long-term investments represent equity-method investments and equity investments with readily determinable fair values. The Group accounts for equity investment in entities with significant influence under equity-method accounting. Under this method, the Group’s pro rata share of income (loss) from investment is recognized in the consolidated statements of comprehensive income. Dividends received reduce the carrying amount of the investment. When the Group’s share of loss in an equity-method investee equals or exceeds its carrying value of the investment in that entity, the Group continues to report its share of equity method losses in the statements of comprehensive income to the extent and as an adjustment to the carrying amount of its other investments in the investee. Equity-method investment is reviewed for impairment by assessing if the decline in market value of the investment below the carrying value is other-than-temporary. In making this determination, factors are evaluated in determining whether a loss in value should be recognized. These include consideration of the intent and ability of the Group to hold investment and the ability of the investee to sustain an earnings capacity, justifying the carrying amount of the investment. Impairment losses are recognized in other expense when a decline in value is deemed to be other-than-temporary. Investments in equity securities that have readily determinable fair values (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) are measured at fair value, with unrealized gains and losses from fair value changes recognized in other (expenses) income, net in the unaudited condensed consolidated statements of operations. (e) Fair value measurements The Group applies ASC topic 820 (“ASC 820”), Fair Value Measurements and Disclosures, in measuring fair value. ASC 820 defines fair value, establishes a framework for measuring fair value and requires disclosures to be provided on fair value measurement. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - Include other inputs that are directly or indirectly observable in the marketplace. Level 3 - Unobservable inputs which are supported by little or no market activity. ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. The Group did not have any assets or liabilities that were measured at fair value on a recurring basis prior to 2021. As of September 30, 2021, information about inputs into the fair value measurement of the Group’s assets that are measured at a fair value on a recurring basis in periods subsequent to their initial recognition is as follows:
Financial instruments of the Group primarily include cash, cash equivalents and restricted cash, short-term investments, accounts receivable, prepayments and other current assets, long-term investments, accounts payable and other current liabilities .As of September 30, 2021 and December 31, 2020, the carrying values of cash and cash equivalents, short-term investments, accounts receivable, prepayments and other current assets, accounts payable and other payable approximated their fair values due to the short-term maturity of these instruments, and the carrying value of restricted cash approximates its fair value based on the nature of the assessment of the ability to recover these amounts. (f) Recent accounting pronouncements Adopted Accounting Standards In December 2019, the Financial Accounting Standard Board (“FASB”) issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes Income taxes (g) Significant accounting policies For a more complete discussion of the Company’s significant accounting policies and other information, the unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form
10-K for the year ended December 31, 2020. |
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Cash and cash equivalents |
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| Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | 3. Cash and cash equivalents
Note s :
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Restricted cash, non-current |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Restricted Cash [Abstract] | |
| Restricted cash, non-current | 4. Restricted cash, non-current The Group’s restricted cash balance of $743 and $743 as of September 30, 2021 and December 31, 2020, respectively, was long-term bank deposits held as collateral for issuance of letters of credit. These deposits will be released when the related letters of credit are settled by the Group. |
Short-term investments |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Short-term investments | |
| Short-term investments | 5. Short-term investments Short-term investments are primarily comprised of time deposits with original maturities between three months and one year. The Group’s short-term investments consisted entirely of short-term held to maturity debt instruments with high credit ratings, which were determined to have remote risk of expected credit loss. Accordingly, no allowance for credit loss was recorded as of September 30, 2021 and December 31, 2020, respectively. |
Inventories |
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| Inventories | 6. Inventories The Group’s inventory balance of $12,494 and $13,144 as of September 30, 2021 and December 31, 2020, respectively, mainly consisted of finished goods purchased from Tesaro Inc., now GlaxoSmithKline (GSK), for distribution in Hong Kong, and from NovoCure Limited (“NovoCure”) and Deciphera Pharmaceuticals, LLC (“Deciphera”) for distribution in Hong Kong and China, as well as finished goods and certain raw materials for ZEJULA commercialization in China.
The Group writes down inventory for any excess or obsolete inventories or when the Group believes that the net realizable value of inventories is less than the carrying value. During the three and nine months ended September 30, 2021, the Group recorded write-downs of $112 and $402, in cost of revenues, respectively. During the three and nine months ended September 30, 2020, the Group recorded reverses and write-downs of $7 and nil, in cost of revenues, respectively. |
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Long-term investments |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Equity Method Investments and Joint Ventures [Abstract] | |
| Long-term investments | 7. Long-term investments In June 2017, the Group entered into an agreement with three third-parties to launch JING Medicine Technology (Shanghai) Ltd. (“JING”), an entity which provides services for product discovery and development, consultation and transfer of pharmaceutical technology. The capital contribution by the Group was RMB26,250 in cash, which was paid by the Group in 2017 and 2018, representing 20% and 18% of the equity interest of JING as of December 31, 2020 and September 30, 2021 respectively. The Group accounts for this investment using the equity method of accounting due to the fact that the Group can exercise significant influence on the investee. The Group recorded its gain on deemed disposal in this investee of nil and $463 for the three months and nine months ended September 30, 2021, and recorded loss of $340 and $1,011 for its portion of JING’s net loss for the three months and nine months ended September 30, 2021, respectively. The Group recorded share of loss in this investee of $265 and $671 for the three and nine months ended September 30, 2020, respectively. In July 2021, the Group made an equity investment in MacroGenics Inc. (“MacroGenics”), a biopharmaceutical company focused on developing and commercializing innovative monoclonal antibody-based therapeutics for the treatment of cancer, in a private placement with total contributions of $30,000 and obtained 958,467 newly issued common shares of MacroGenics at $31.30 per share (see Note 15). The Group recorded this investment at acquisition cost and subsequently measured at fair value, with the changes in fair value recognized in the statement of operations. The Group recognized its fair value loss of $9,930 and $9,930 for the three and nine months ended September 30, 2021. |
Property and Equipment, net |
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| Property and equipment, net | 8. Property and equipment, net Property and equipment consist of the following:
Depreciation expenses for the three and nine months ended September 30, 2021 were $1,510 and $4,257, respectively. Depreciation expenses for the three and nine months ended September 30, 2020 were $1,061 and $3,035, respectively. |
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Revenue |
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| Revenue | 9. Revenue The Group’s revenue is primarily derived from the sale of ZEJULA, Optune and QINLOCK in China and Hong Kong. The table below presents the Group’s net product sales for the three and nine months ended September 30, 2021 and 2020.
Sales rebates are offered to distributors in China and the amounts are recorded as a reduction of revenue. Estimated rebates are determined based on contracted rates, sales volumes and level of distributor inventories. The sales rebates included nil and $22,009 compensation to distributors for those products previously sold at the price prior to the National Reimbursement Drug List (“NRDL”) implementation, due to the first-time inclusion of ZEJULA in the NRDL, for the three and nine months ended September 30, 2021. There was no such compensation for the three and nine months ended September 30, 2020. The following table disaggregates net revenue by product for the three and nine months ended September 30, 2021 and 2020:
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Income Tax |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Income tax | |
| Income tax | 10. Income Tax No provision for income taxes has been required to be accrued because the Company and all of its subsidiaries are in cumulative loss positions for all the periods presented. The Company recorded a full valuation allowance against deferred tax assets of all its consolidated entities because all entities were in a cumulative loss position as of September 30, 2021 and December 31, 2020. No unrecognized tax benefits and related interest and penalties were recorded in any of the periods presented. |
Other current liabilities |
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| Other current liabilities | 11. Other current liabilities Other current liabilities consist of the following:
Note:
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Loss per share |
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| Loss per share | 12. Loss per share Basic and diluted net loss per share for each of the period presented are calculated as follows:
As a result of the Group’s net loss for the nine months ended September 30, 2021 and 2020, share options and non-vested restricted shares outstanding in the respective periods were excluded from the calculation of diluted loss per share as their inclusion would have been anti-dilutive.
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Related Party Transactions |
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Sep. 30, 2021 | ||||||||||
| Related party transactions | ||||||||||
| Related party transactions | 13. Related party transactions The table below sets forth the major related party and the relationship with the Group as of September 30, 2021:
For the three and nine months ended September 30, 2021, the Group incurred $96 and $303 in research and development expense with MEDx (Suzhou) Translational Medicine Co., Ltd. for product research and development services, respectively. The Group incurred $233 and $417 in research and development expense for the three and nine months ended September 30, 2020, respectively. All of the transactions are carried out with normal business terms and are on arms’ length basis. |
Share-based compensation |
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| Share-based compensation | 14. Share-based compensation Share options On March 5, 2015, the Board of Directors of the Company approved an Equity Incentive Plan (the “2015 Plan”) which is administered by the Board of Directors. Under the 2015 Plan, the Board of Directors may grant options to purchase ordinary shares to management including officers, directors, employees and individual advisors who render services to the Group to purchase an aggregate of no more than 4,140,945 ordinary shares of the Group (“Option Pool”). Subsequently, the Board of Directors approved the increase in the Option Pool to 7,369,767 ordinary shares. In connection with the completion of the initial public offering (the “IPO”), the Board of Directors approved the 2017 Equity Incentive Plan (the “2017 Plan”) and all equity-based awards subsequent to the IPO would be granted under the 2017 Plan. For the nine months ended September 30, 2020, the Group granted 1,059,431 share options to certain management, employees and individual advisors of the Group at the exercise price ranging from $44.94 to $82.50 per share under the 2017 Plan. These options granted have a contractual term of ten years and generally vest over a - or three-year period, with 20% or 33.3% of the awards vesting beginning on the anniversary date one year after the grant date. For the nine months ended September 30, 2021, the Group granted 553,198 share options to certain management and employees of the Group at the exercise price ranging from $130.96 to $180.00 per share under the 2017 Plan. These options granted have a contractual term of ten years and generally vest over a five-year period, with 20% of the awards vesting beginning on the anniversary date one year after the grant date. The weighted-average grant-date fair value of the options granted in the nine months ended September 30, 2021 and 2020 were $82.21and $34.91 per share, respectively. The Group recorded compensation expense related to the options of $ 19,951 and $ 15,718 for the nine months ended September 30, 2021 and 2020, respectively, which were classified in the accompanying unaudited condensed consolidated statements of operations as follows:
As of September 30, 2021, there was $ 93,248 of total unrecognized compensation expense related to unvested share options granted. That cost is expected to be recognized over a weighted-average period of 1.39 years which is determined based on the number of shares and unrecognized years. Non-vested restricted shares For the nine months ended September 30, 2020, 50,000 ordinary shares were authorized for grant to the independent directors. The restricted shares will vest and be released from the restrictions in full on the first anniversary from the date of the agreement. Upon termination of the independent directors’ service with the Group for any reason, any shares that are outstanding and not yet vested will be immediately forfeited. For the nine months ended September 30, 2020, 71,250 ordinary shares were authorized for grant to certain management. of the restricted shares will vest and be released from the restrictions on each yearly anniversary from the date of the agreement. Upon termination of the certain management’s service with the Group for any reason, any shares that are outstanding and not yet vested will be immediately forfeited. For the nine months ended September 30, 2021, 19,260 ordinary shares were authorized for grant to the independent directors. The restricted shares will vest and be released from the restrictions in full on the first anniversary from the date of the agreement. Upon termination of the independent directors’ service with the Group for any reason, any shares that are outstanding and not yet vested will be immediately forfeited. For the nine months ended September 30, 2021, 271,509 ordinary shares were authorized for grant to certain management. of the restricted shares will vest and be released from the restrictions on each yearly anniversary from the date of the agreement. Upon termination of the certain management’s service with the Group for any reason, any shares that are outstanding and not yet vested will be immediately forfeited. The Group measured the fair value of the non-vested restricted shares as of respective grant dates and recognized the amount as compensation expense over the deemed service period using a graded vesting attribution model on a straight-line basis. As of September 30, 2021, there was $46,885 of total unrecognized compensation expense related to non-vested restricted shares. The Group recorded compensation expense related to the restricted shares of $8,155 and $4,687 for the nine months ended September 30, 2021 and 2020, respectively, which were classified in the accompanying unaudited condensed consolidated statements of operations as follows:
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Licenses and collaborative arrangement |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Licenses And Collaborative Arrangement [Abstract] | |
| Licenses and collaborative arrangement | 15. Licenses and collaborative arrangement The following is a description of the Group’s significant ongoing collaboration agreements for the three and nine months ended September 30, 2021. License and collaboration agreement with GSK In September 2016, the Group entered into a collaboration, development and license agreement with Tesaro, Inc, a company later acquired by GSK, pursuant to which it obtained an exclusive sublicense under certain patents and know-how of GSK (including such patents and know-how licensed from Merck, Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc., and AstraZeneca UK Limited) to develop, manufacture and commercialize GSK’s proprietary PARP inhibitor, niraparib, in China, Hong Kong and Macau for the diagnosis and prevention of any human diseases or conditions (other than prostate cancer). The Group also obtained the right of first negotiation to obtain a license to develop and commercialize certain follow-on compounds of niraparib being developed by GSK in the licensed territory. Under the agreement, the Group agreed not to research, develop or commercialize certain competing products, and the Group also granted GSK the right of first refusal to license certain immuno-oncology assets developed by us. In February 2018, the Group entered into an amendment with GSK that eliminated GSK’s option to co-market niraparib in the licensed territory. Under the terms of the agreement, the Group made an upfront payment of $15,000 and one milestone payment of $1,000, and accrued one development milestone payment of $3,500 to GSK. On top of those, if the Group achieves other specified regulatory, development and commercialization milestones, the Group may be additionally required to pay further milestone payments up to $36,000 to GSK. In addition, if the Group successfully develops and commercializes the licensed products, the Group will pay GSK tiered royalties on the net sales of the licensed products, until the later of the expiration of the last-to-expire product-by-product region-by-region The Group has the right to terminate this agreement at any time by providing written notice of termination. License and collaboration agreements with MacroGenics In November 2018, the Group entered into a collaboration agreement with MacroGenics, pursuant to which it obtained an exclusive license under certain patents and know-how of MacroGenics to develop and commercialize margetuximab, tebotelimab (MGD-013) and an undisclosed multi-specific TRIDENT molecule in pre-clinical development, each as an active ingredient in all human fields of use, except to the extent limited by any applicable third party agreement of MacroGenics in Greater China. Under the terms of the agreement, the Group paid an upfront license fee of $25,000 and two milestone payments in total of $4,000 to MacroGenics. The Group also agreed to pay certain development and regulatory-based milestone payments up to an aggregate of $136,000, and tiered royalties at percentage rates for net sales of Margetuximab, tebotelimab and TRIDENT molecule in the territory. The Group has the right to terminate this agreement at any time by providing written notice of termination to MacroGenics. In June 2021, the Group entered into a collaboration and license agreement with MacroGenics, pursuant to which the Group and MacroGenics made four collaboration programs involving up to four immuno-oncology molecules. The first collaboration program covers a lead research molecule that incorporates MacroGenics’ DART platform and binds CD3 and an undisclosed target that is expressed in multiple solid tumors. The second collaboration program will cover a target to be designated by MacroGenics. For both molecules, the Group received commercial rights in Greater China, Japan, and Korea and MacroGenics received commercial rights in all other territories. For the lead molecule, the Group receives an option upon reaching a predefined clinical milestone to convert the regional arrangement into a global 50/50 profit share. The Group also obtained exclusive, global licenses from MacroGenics to develop, manufacture and commercialize two additional molecules. For these four programs, each company will contribute intellectual property to generate either CD3- or CD47-based bispecific antibodies. Under the terms of the agreement, the Group paid an upfront payment of $25,000 to MacroGenics. In addition, MacroGenics is also eligible to receive up to $1,386,000 in potential development, regulatory and commercial milestone payments for the four programs. If products from the collaboration are commercialized, MacroGenics would also receive royalties on annual net sales in the Group’s territories. Pursuant to the collaboration and license agreement, the Group also made an equity investment of $30,000 in MacroGenics’ common stock at $31.30 per share in (see Note 7). J uly 2021The Group has the right to terminate this agreement at any time by providing written notice of termination to MacroGenics. License and collaboration agreement with Deciphera In June 2019, the Group entered into a license agreement with Deciphera, pursuant to which it obtained an exclusive license under certain patents and know-how of Deciphera to develop and commercialize products containing ripretinib in the field of the prevention, prophylaxis, treatment, cure or amelioration of any disease or medical condition in humans in Greater China. Under the terms of the agreement, the Group paid Deciphera an upfront license fee of $20,000 and three milestone payments of $12,000. The Group also agreed to pay certain additional development, regulatory and commercial milestone payments up to an aggregate of $173,000, and certain tiered royalties (from low-to-high The Group has the right to terminate this agreement at any time by providing written notice of termination to Deciphera. License agreements with Turning Point Therapeutics Inc (“Turning Point”) In July 2020, the Group entered into an exclusive license agreement with Turning Point pursuant to which Turning Point exclusively licensed to the Group the rights to develop and commercialize products containing repotrectinib as an active ingredient in all human therapeutic indications, in Greater China. Under the terms of the agreements, the Group paid an upfront payment of $25,000 and one milestone payment of $2,000, and accrued two milestone payments totaling $3,000 to Turning Point. Turning Point is also eligible to receive up to $146,000 in development, regulatory and sales milestones. Turning Point will also be eligible to receive certain tiered royalties (from mid-to-high The Group has the right to terminate this agreement at any time by providing written notice of termination to Turning Point. In January 2021, the Group entered into a license agreement with Turning Point, which expanded their collaboration. Under the terms of the new agreement, the Group obtained exclusive rights to develop and commercialize TPX-0022, Turning Point’s MET, SRC and CSF1R inhibitor, in Greater China. The Group paid an upfront license fee in the amount of $25,000 to Turning Point. The Group also agreed to pay certain development, regulatory and commercial milestone payments up to an aggregate of $336,000. Turning Point will also be eligible to receive certain tiered royalties (from mid-teens to low-twenties on a percentage basis and subject to certain reductions) based on annual net sales of TPX-0022 in Greater China. In addition, Turning Point will have the right of first negotiation to develop and commercialize an oncology product candidate discovered by the Group. License and collaboration agreement with Five Prime Therapeutics, Inc. (“Five Prime”) In December 2017, the Group entered into a license and collaboration agreement with Five Prime (a company later acquired by Amgen Inc.), pursuant to which it obtained an exclusive license under certain patents and know-how of Five Prime to develop and commercialize products containing Five Prime’s proprietary afucosylated FGFR2b antibody known as bemarituzumab (FPA144) as an active ingredient in the treatment or prevention of any disease or condition in humans in Greater China. Under the terms of the agreement, the Group made an upfront payment of $5,000 and payment of $2,000 to Five Prime. Additionally, the Group also agreed to pay further development and regulatory milestone payments of up to an aggregate of $37,000 to Five Prime and certain tiered royalties (from high-teens to low-twenties on a percentage basis and subject to certain reductions) based on the number of patients the Group enrolls in the bemarituzumab study. The Group has the right to terminate this agreement at any time by providing written notice of termination to Five Prime. License agreement with Cullinan Pearl Corp. (“Cullinan”) In December 2020, the Group entered into a license agreement with Cullinan, a subsidiary of Cullinan Management, Inc., formerly Cullinan Oncology, LLC, pursuant to which it obtained an exclusive license under certain patents and know-how of Cullinan to develop, manufacture and commercialize products containing CLN-081 as an active ingredient in all uses in humans and animals in Greater China. Under the terms of the agreement, the Group paid an upfront payment of $20,000 to Cullinan. Cullinan is also eligible to receive up to $211,000 in development, regulatory and sales-based milestone payments. Cullinan is also eligible to receive certain tiered royalties (from high-single-digit to low-teen tiered royalties on a percentage basis and subject to certain reductions) based on annual net sales of CLN-081 in Greater China. The Group has the right to terminate this agreement at any time by providing written notice of termination to Cullinan. License agreement with Takeda Pharmaceutical Company Limited (“Takeda”) In December 2020, the Group entered into an exclusive license agreement with Takeda. Under the terms of the license agreement, Takeda exclusively licensed to the Group the right to exploit products in the licensed field during the term. Under the terms of the agreement, the Group paid an upfront payment of $6,000 to Takeda. Takeda is also eligible to receive up to $481,500 in development, regulatory and sales-based milestone payments. Takeda is also eligible to receive certain tiered royalties (from high-single-digit to low-teen tiered royalties on a percentage basis and subject to certain reductions) based on net sales of each product sold by selling party during each year of the applicable royalty term. The Group has the right to terminate this agreement at any time by providing written notice of termination to Takeda. Collaboration and license agreement with argenx BV (“argenx”) In January 2021, the Group entered into a collaboration and license agreement with argenx. The Group received an exclusive license to develop and commercialize products containing argenx’s proprietary antibody fragment, known as efgartigimod, in Greater China. The Group is responsible for the development of the licensed compound and licensed product and will have the right to commercialize such licensed product in the territory. Pursuant to the collaboration and license agreement, a share issuance agreement was entered into between the Group and argenx. As the upfront payment to argenx, the Group issued 568,182 ordinary shares of the Company to argenx with par value $0.00006 per share on the closing date of January 13, 2021. In determining the fair value of the ordinary shares at closing, the Company considered the closing price of the ordinary shares on the closing date and included a lack of marketability discount because the shares are subject to certain restrictions. The fair value of the shares on the closing date was determined to be $62,250 in the aggregate. The Group recorded this upfront payment in research and development expenses. In addition, the Group made a non-creditable, non-refundable development cost-sharing payment of $75,000 to argenx. Argenx is also eligible to receive a cash payment of $25,000 upon the first regulatory approval of a licensed product by the U.S. Food and Drug Administration for myasthenia gravis and tiered royalties (from mid-teen to low-twenties on a percentage basis and subject to certain reductions) based on annual net sales of all licensed product in the territory. Collaboration and license agreement with Mirati Therapeutics, Inc. (“Mirati”) In May 2021, the Group entered into a collaboration and license agreement with Mirati. The Group obtained the right to research, develop, manufacture and exclusively commercialize adagrasib in Greater China. The Group will support accelerated enrollment in key global, registration-enabling clinical trials of adagrasib in patients with cancer who have a KRASG12C mutation. Mirati has an option to co-commercialize in Greater China and retains full and exclusive rights to adagrasib in all countries outside of Greater China. Under the terms of the agreement, the Group paid an upfront payment of $65,000 to Mirati. Mirati is also eligible to receive up to $273,000 in development, regulatory and sales-based milestone payments. Mirati is also eligible to receive - to -percent tiered royalties based on annual net sales of adagrasib in Greater China. The Group has the right to terminate this agreement at any time by providing written notice of termination to Mirati. Collaboration and license agreement with Schrödinger, Inc. (“Schrödinger”) In July 2021, the Group entered into a global discovery, development and commercialization collaboration with Schrödinger, pursuant to which the parties will jointly conduct a research program focused on a novel DNA damage repair program in the area of oncology. Following the selection of a development candidate, the Group will assume primary responsibility for global development, manufacturing and commercialization of the program. Full details of the licenses and collaborative arrangements are included in our Annual Report on Form
10-K for the year ended December 31, 2020 as filed with the SEC on March 1, 2021 and this Quarterly Report on Form 10-Q. As noted above, the Group has entered into various license and collaboration agreements with third party licensors to develop and commercialize product candidates. Based on the terms of these agreements, the Group is contingently obligated to make additional material payments upon the achievement of certain contractually defined milestones. Based on management’s evaluation of the progress of each project noted above, the licensors will be eligible to receive from the Group up to an aggregate of approximately $4,878,738 in future contingent milestone payments dependent upon the achievement of contractually specified development milestones, such as regulatory approval for the product candidates, which may be before the Group has commercialized the product or received any revenue from sales of such product candidate. These milestone payments are subject to uncertainties and contingencies and may n ot occur. |
Restricted Net Assets |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Restricted net assets | |
| Restricted net assets | 16. Restricted net assets The Group’s ability to pay dividends may depend on the Group receiving distributions of funds from its Chinese subsidiar ies . Relevant PRC statutory laws and regulations permit payments of dividends by the Group’s PRC subsidiaries only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the unaudited condensed consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Group’s PRC subsidiaries . In accordance with the Company Law of the PRC, a domestic enterprise is required to provide statutory reserves of at least 10% of its annual after-tax profit until such reserve has reached 50% of its respective registered capital based on the enterprise’s PRC statutory accounts. A domestic enterprise is also required to provide discretionary surplus reserve, at the discretion of the Board of Directors, from the profits determined in accordance with the enterprise’s PRC statutory accounts. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. The Group’s Chinese subsidiaries were established as domestic invested enterprise and therefore are subject to the above-mentioned restrictions on distributable profits. During the three and nine months ended September 30, 2021 and 2020, no appropriation to statutory reserves was made because the Chinese subsidiar ies had substantial losses during such periods. As a result of these PRC laws and regulations subject to the limit discussed above that require annual appropriations of 10% of after-tax income to be set aside, prior to payment of dividends, as general reserve fund, the Group’s Chinese subsidiaries are restricted in their ability to transfer a portion of their net assets to the Group. Foreign exchange and other regulation in China may further restrict the Group’s Chinese subsidiar
ies paid-in capital of the Group’s Chinese subsidiaries, which amounted to $306,010 and $255,858, respectively. |
Commitments and Contingencies |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | 17. Commitments and Contingencies (a) Purchase commitments As of September 30, 2021, the Group’s commitments related to purchase of property and equipment contracted but not yet reflected in the unaudited condensed consolidated financial statement were $24,191 which is expected to be incurred within one year. (b) Contingencies The Group is a party to or assignee of license and collaboration agreements that may require it to make future payments relating to milestone fees and royalties on future sales of licensed products (Note 15). |
Subsequent Event |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Subsequent Events [Abstract] | |
| Subsequent Event | 18. Subsequent Event In November 2021, the Group and Blueprint Medicines Corporation (“Blueprint”) entered into a license and collaboration agreement, pursuant to which the Group obtained from Blueprint an exclusive license to develop, perform medical affairs for, manufacture and commercialize BLU-701 and BLU-945 in Greater China. Pursuant to the terms of the agreement, the Group will pay to Blueprint an upfront fee of $25,000 plus milestone payments of up to an aggregate of $590,000 upon the achievement of specified clinical, regulatory and sales milestones. Blueprint will also be eligible to receive certain royalties at tiered percentage rates ranging from the low to mid teens percent on annual net sales of licensed products in Greater China, subject to reduction under specified circumstances. In November 2021, the Group and Karuna Therapeutics, Inc (“Karuna”) ente r ed into a license agreement, pursuant to which the Group obtained from Karuna an exclusive license to develop, manufacture and commercialize KarXT in Greater China. Pursuant to the terms of the agreement, the Group will pay to Karuna an upfront fee of $35,000 plus milestone payments of up to an aggregate of $152,000 upon the achievement of specified clinical, regulatory and sales milestones. Karuna will also be eligible to receive certain royalties at tiered percentage rates ranging from the low to high teens percent on annual net sales of licensed products in Greater China, subject to reduction under specified circumstances. In October and November 2021, the Group granted 60,066 share options to certain management and employees of the Group at the exercise price from $102.75 to $104.42 per share under the 2017 Plan. These options granted have a contractual term of ten years and generally vest over a five-year period, with 20% of the awards vesting beginning on the anniversary date one year after the grant date. In November 2021, the Group granted 92,700 share options to certain management and employees of the Group at the exercise price of $104.42 per share under the 2017 Plan. These options granted have a contractual term of ten years and generally vest over a four-year period, with 25% of the awards vesting beginning on the anniversary date one year after the grant date. In October and November 2021, 41,415 ordinary shares were authorized for grant to certain management and employees of the Group. -fifth of the restricted shares will vest and be released from the restrictions on each yearly anniversary from the date of the agreement. Upon termination of the certain management’s service with the Group for any reason, any shares that are outstanding and not yet vested will be immediately forfeited. In November 2021, 36,640 ordinary shares were authorized for grant to certain management and employees of the Group. of the restricted shares will vest and be released from the restrictions on each yearly anniversary from the date of the agreement. Upon termination of the certain management’s service with the Group for any reason, any shares that are outstanding and not yet vested will be immediately forfeited. In October 2021, 7,345 ordinary shares were authorized for grant to independent directors of the Group. O ne-third of the restricted shares will vest and be released from the restrictions on each yearly anniversary from the date of the agreement. Upon termination of the certain directors’ service with the Group for any reason, any shares that are outstanding and not yet vested will be immediately forfeited. |
Basis of presentation and consolidation and significant accounting policies (Policies) |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||
| Basis of presentation | (a) Basis of presentation The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and disclosures necessary for a presentation of the Company’s financial position, results of operations, shareholders’ equity and cash flows in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). In the opinion of management, these financial statements reflect all normal recurring adjustments and accruals necessary for a fair statement of the Company’s unaudited condensed consolidated financial statements for such periods. The results of operations for any interim period are not necessarily indicative of the results for the full year. The December 31, 2020 condensed consolidated balance sheets data were derived from audited financial statements, but do not include all disclosures required by U.S. GAAP. These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Interim results are not necessarily indicative of full year results and the unaudited condensed consolidated financial statements may not be indicative of the Group’s |
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| Principles of consolidation | (b) Principles of consolidation The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All intercompany transactions and balances among the Company and its subsidiaries are eliminated upon consolidation. |
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| Use of estimates | (c) Use of estimates The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the period. Areas where management uses subjective judgment include, but are not limited to, estimating the useful lives of long-lived assets, estimating the current expected credit losses for financial assets, assessing the impairment of long-lived assets, discount rate of operating lease liabilities, accrual of rebate, allocation of the research and development service expenses to the appropriate financial reporting period based on the progress of the research and development projects, share-based compensation expenses, recoverability of deferred tax assets and a lack of marketability discount of the ordinary shares issued in connection with collaboration and license arrangement (Note 15). Management bases the estimates on historical experience and various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from these estimates. |
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| Long-term investments | (d) Long-term investments Long-term investments represent equity-method investments and equity investments with readily determinable fair values. The Group accounts for equity investment in entities with significant influence under equity-method accounting. Under this method, the Group’s pro rata share of income (loss) from investment is recognized in the consolidated statements of comprehensive income. Dividends received reduce the carrying amount of the investment. When the Group’s share of loss in an equity-method investee equals or exceeds its carrying value of the investment in that entity, the Group continues to report its share of equity method losses in the statements of comprehensive income to the extent and as an adjustment to the carrying amount of its other investments in the investee. Equity-method investment is reviewed for impairment by assessing if the decline in market value of the investment below the carrying value is other-than-temporary. In making this determination, factors are evaluated in determining whether a loss in value should be recognized. These include consideration of the intent and ability of the Group to hold investment and the ability of the investee to sustain an earnings capacity, justifying the carrying amount of the investment. Impairment losses are recognized in other expense when a decline in value is deemed to be other-than-temporary. Investments in equity securities that have readily determinable fair values (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) are measured at fair value, with unrealized gains and losses from fair value changes recognized in other (expenses) income, net in the unaudited condensed consolidated statements of operations. |
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| Fair value measurements | (e) Fair value measurements The Group applies ASC topic 820 (“ASC 820”), Fair Value Measurements and Disclosures, in measuring fair value. ASC 820 defines fair value, establishes a framework for measuring fair value and requires disclosures to be provided on fair value measurement. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - Include other inputs that are directly or indirectly observable in the marketplace. Level 3 - Unobservable inputs which are supported by little or no market activity. ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. The Group did not have any assets or liabilities that were measured at fair value on a recurring basis prior to 2021. As of September 30, 2021, information about inputs into the fair value measurement of the Group’s assets that are measured at a fair value on a recurring basis in periods subsequent to their initial recognition is as follows:
Financial instruments of the Group primarily include cash, cash equivalents and restricted cash, short-term investments, accounts receivable, prepayments and other current assets, long-term investments, accounts payable and other current liabilities .As of September 30, 2021 and December 31, 2020, the carrying values of cash and cash equivalents, short-term investments, accounts receivable, prepayments and other current assets, accounts payable and other payable approximated their fair values due to the short-term maturity of these instruments, and the carrying value of restricted cash approximates its fair value based on the nature of the assessment of the ability to recover these amounts. |
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| Recent accounting pronouncements | (f) Recent accounting pronouncements Adopted Accounting Standards In December 2019, the Financial Accounting Standard Board (“FASB”) issued ASU
2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes Income taxes |
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| Significant accounting policies | (g) Significant accounting policies For a more complete discussion of the Company’s significant accounting policies and other information, the unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form
10-K for the year ended December 31, 2020. |
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Basis of presentation and consolidation and significant accounting policies (Tables) |
9 Months Ended | |||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||
| Summary of assets and liabilities that are measured at fair value on a recurring basis | As of September 30, 2021, information about inputs into the fair value measurement of the Group’s assets that are measured at a fair value on a recurring basis in periods subsequent to their initial recognition is as follows:
|
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Cash and cash equivalents (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of cash and cash equivalents |
Note s :
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Inventories (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventories | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of inventory |
|
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Property and Equipment, net (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and equipment, net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of property and equipment | Property and equipment consist of the following:
|
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Revenue (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of net product sales |
|
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| Schedule of disaggregation of net revenue | The following table disaggregates net revenue by product for the three and nine months ended September 30, 2021 and 2020:
|
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Other current liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other current liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of other current liabilities | Other current liabilities consist of the following:
Note:
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Loss per share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loss per share | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of basic and diluted net loss per share | Basic and diluted net loss per share for each of the period presented are calculated as follows:
|
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| Summary of anti-dilutive excluded from the calculation of diluted loss per share | As a result of the Group’s net loss for the nine months ended September 30, 2021 and 2020, share options and non-vested restricted shares outstanding in the respective periods were excluded from the calculation of diluted loss per share as their inclusion would have been anti-dilutive.
|
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Related Party Transactions (Tables) |
9 Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||
| Related party transactions | ||||||||||
| Schedule of Major Related Party and Relationship | The table below sets forth the major related party and the relationship with the Group as of September 30, 2021:
|
Share-based compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Allocation of compensation expense related to options | The weighted-average grant-date fair value of the options granted in the nine months ended September 30, 2021 and 2020 were $82.21and $34.91 per share, respectively. The Group recorded compensation expense related to the options of $ 19,951 and $ 15,718 for the nine months ended September 30, 2021 and 2020, respectively, which were classified in the accompanying unaudited condensed consolidated statements of operations as follows:
|
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| Allocation of compensation expense related to restricted shares | As of September 30, 2021, there was $46,885 of total unrecognized compensation expense related to non-vested restricted shares. The Group recorded compensation expense related to the restricted shares of $8,155 and $4,687 for the nine months ended September 30, 2021 and 2020, respectively, which were classified in the accompanying unaudited condensed consolidated statements of operations as follows:
|
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Basis of presentation and consolidation and significant accounting policies - Summary of Assets and Liabilities that are Measured at Fair Value on a Recurring Basis (Detail) $ in Thousands |
Sep. 30, 2021
USD ($)
|
|---|---|
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
| Equity Investments with Readily Determinable Fair Value | $ 20,070 |
| Fair value input level 1 [Member] | |
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
| Equity Investments with Readily Determinable Fair Value | $ 20,070 |
Cash and cash equivalents - Summary of Cash and Cash Equivalents (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
Sep. 30, 2020 |
|---|---|---|---|
| Cash And Cash Equivalents [Line Items] | |||
| Cash at bank and in hand | $ 1,097,430 | $ 441,283 | |
| Cash equivalents | 301,068 | 833 | |
| Cash and cash equivalents | 1,398,498 | 442,116 | $ 175,879 |
| Denominated in US$ | |||
| Cash And Cash Equivalents [Line Items] | |||
| Cash and cash equivalents | 762,209 | 297,813 | |
| Denominated in RMB | |||
| Cash And Cash Equivalents [Line Items] | |||
| Cash and cash equivalents | 28,802 | 23,898 | |
| Denominated in Hong Kong dollar | |||
| Cash And Cash Equivalents [Line Items] | |||
| Cash and cash equivalents | 607,323 | 119,695 | |
| Denominated in Australia dollar | |||
| Cash And Cash Equivalents [Line Items] | |||
| Cash and cash equivalents | 134 | $ 710 | |
| Denominated in Taiwan dollar | |||
| Cash And Cash Equivalents [Line Items] | |||
| Cash and cash equivalents | $ 30 |
Restricted cash, non-current - Additional Information (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
Sep. 30, 2020 |
|---|---|---|---|
| Restricted Cash [Abstract] | |||
| Restricted cash, non-current | $ 743 | $ 743 | $ 510 |
Short-term investments (Details) - USD ($) $ in Thousands |
9 Months Ended | |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Schedule Of Available For Sale Securities [Line Items] | ||
| Investments, allowance for credit losses | $ 0 | $ 0 |
| Maturities of Time Deposits, Description | time deposits with original maturities between three months and one year | |
| Minimum | ||
| Schedule Of Available For Sale Securities [Line Items] | ||
| Time deposits, Maturity period | 3 months | |
| Maximum | ||
| Schedule Of Available For Sale Securities [Line Items] | ||
| Time deposits, Maturity period | 1 year |
Inventories - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
|
| Inventory [Line Items] | |||||
| Inventory write-down | $ 112 | $ 7 | $ 402 | $ 0 | |
| Inventory balance | $ 12,494 | $ 12,494 | $ 13,144 | ||
| Inventory reverses value | $ 7 | $ 0 | |||
Inventories - Schedule of inventory (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Inventories | ||
| Finished goods | $ 5,298 | $ 3,041 |
| Raw materials | 7,196 | 10,103 |
| Inventories | $ 12,494 | $ 13,144 |
Long-term investments - Additional Information (Details) $ / shares in Units, ¥ in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | |||||
|---|---|---|---|---|---|---|---|
|
Jul. 31, 2021
USD ($)
$ / shares
shares
|
Sep. 30, 2021
USD ($)
|
Sep. 30, 2020
USD ($)
|
Sep. 30, 2021
USD ($)
|
Sep. 30, 2020
USD ($)
|
Dec. 31, 2020 |
Jun. 30, 2017
CNY (¥)
item
|
|
| Equity And Cost Method Investments | |||||||
| Share of gain (loss) from equity method investment | $ (340) | $ (265) | $ (548) | $ (671) | |||
| JING | |||||||
| Equity And Cost Method Investments | |||||||
| Share of gain (loss) from equity method investment | 340 | $ 265 | 1,011 | $ 671 | |||
| Equity method investment, gain on disposal | $ 0 | $ 463 | |||||
| Number of third-parties | item | 3 | ||||||
| Capital contribution commitment | ¥ | ¥ 26,250 | ||||||
| Percentage of equity interest | 18.00% | 18.00% | 20.00% | ||||
| MacroGenics | |||||||
| Equity And Cost Method Investments | |||||||
| Share of gain (loss) from equity method investment | $ 9,930 | $ 9,930 | |||||
| Capital contribution commitment | $ 30,000 | ||||||
| Stock Issued During Period, Shares, Acquisitions | shares | 958,467 | ||||||
| Issue price per share | $ / shares | $ 31.30 | ||||||
Property and Equipment, net - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Property Plant And Equipment | ||
| Property and equipment, gross | $ 51,592 | $ 39,414 |
| Less: accumulated depreciation | (14,505) | (10,252) |
| Property and equipment, net | 37,087 | 29,162 |
| Office Equipment | ||
| Property Plant And Equipment | ||
| Property and equipment, gross | 802 | 430 |
| Electronic Equipment | ||
| Property Plant And Equipment | ||
| Property and equipment, gross | 3,771 | 2,646 |
| Vehicle | ||
| Property Plant And Equipment | ||
| Property and equipment, gross | 217 | 143 |
| Laboratory Equipment | ||
| Property Plant And Equipment | ||
| Property and equipment, gross | 15,274 | 11,933 |
| Manufacturing Equipment | ||
| Property Plant And Equipment | ||
| Property and equipment, gross | 13,313 | 12,198 |
| Leasehold Improvements | ||
| Property Plant And Equipment | ||
| Property and equipment, gross | 9,909 | 9,641 |
| Construction in Progress | ||
| Property Plant And Equipment | ||
| Property and equipment, gross | $ 8,306 | $ 2,423 |
Property and Equipment, net - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Property and equipment, net | ||||
| Depreciation expenses | $ 1,510 | $ 1,061 | $ 4,257 | $ 3,035 |
Revenue - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Revenue | ||||
| Amount of compensation to distributors included in sales rebates | $ 0 | $ 0 | $ 22,009 | $ 0 |
Revenue - (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Revenue | ||||
| Product revenue - gross | $ 47,555 | $ 17,152 | $ 135,490 | $ 37,567 |
| Less: Rebate and sales return | (4,452) | (2,501) | (35,349) | (3,703) |
| Product revenue - net | $ 43,103 | $ 14,651 | $ 100,141 | $ 33,864 |
Revenue - Disaggregation of net revenue by product (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Disaggregation of Revenue | ||||
| Product revenue - net | $ 43,103 | $ 14,651 | $ 100,141 | $ 33,864 |
| ZEJULA | ||||
| Disaggregation of Revenue | ||||
| Product revenue - net | 28,162 | 8,503 | 64,134 | 22,294 |
| Optune | ||||
| Disaggregation of Revenue | ||||
| Product revenue - net | 10,653 | 5,950 | 27,318 | 11,372 |
| QINLOCK | ||||
| Disaggregation of Revenue | ||||
| Product revenue - net | $ 4,288 | $ 198 | $ 8,689 | $ 198 |
Income Tax - Additional Information (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Income Tax Disclosure [Line Items] | ||
| Unrecognized tax benefits | $ 0 | $ 0 |
| Unrecognized tax benefits, interest and penalties | $ 0 | $ 0 |
Other current liabilities - Schedule of Other Current Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Other current liabilities | ||
| Payroll | $ 18,926 | $ 13,694 |
| Accrued professional service fee | 3,607 | 3,128 |
| Payables for purchase of property and equipment | 1,797 | 788 |
| Accrued rebate to distributors | 10,803 | 7,067 |
| Tax payable | 10,989 | 952 |
| Others | 8,170 | 4,567 |
| Total | $ 54,292 | $ 30,196 |
Loss per share - Summary of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Numerator: | ||||
| Net loss attributable to ordinary shareholders | $ (96,412) | $ (63,741) | $ (492,646) | $ (192,358) |
| Denominator: | ||||
| Weighted average number of ordinary shares- basic and diluted | 95,035,432 | 75,436,646 | 92,174,838 | 74,381,115 |
| Loss per share - basic and diluted | $ (1.01) | $ (0.84) | $ (5.34) | $ (2.59) |
Loss per share - Summary of Anti-Dilutive Shares Excluded from Calculation of Diluted Loss Per Share (Details) - shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Stock Options | ||
| Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
| Antidilutive shares excluded from calculation of diluted loss per share | 8,180,157 | 9,093,582 |
| Non-Vested Restricted Shares | ||
| Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
| Antidilutive shares excluded from calculation of diluted loss per share | 636,619 | 597,850 |
Related party transactions - Schedule of Major Related Party and Relationship (Details) |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| MEDx (Suzhou) Translational Medicine Co., Ltd. | |
| Related Party Transaction [Line Items] | |
| Relationship with the Group | Significant influence held by Samantha Du’s (Director, Chairwoman and Chief Executive Officer of the Company) immediate family |
Related party transactions - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Research and development | MEDx (Suzhou) Translational Medicine Co., Ltd. | ||||
| Related Party Transaction [Line Items] | ||||
| Transactions between its related party | $ 96 | $ 233 | $ 303 | $ 417 |
Share-based compensation - Allocation of Compensation Expense Related to Option (Details) - Stock Options - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
| Compensation expense | $ 7,175 | $ 5,363 | $ 19,951 | $ 15,718 |
| Selling, General and Administrative | ||||
| Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
| Compensation expense | 4,119 | 2,952 | 11,501 | 8,500 |
| Research and Development | ||||
| Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
| Compensation expense | $ 3,056 | $ 2,411 | $ 8,450 | $ 7,218 |
Share-based compensation - Non-vested Restricted Shares - Additional Information (Details) - Non-Vested Restricted Shares - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
| Unrecognized share-based compensation | $ 46,885 | $ 46,885 | ||
| Compensation expense | $ 3,381 | $ 1,615 | $ 8,155 | $ 4,687 |
| Independent Directors | ||||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
| Shares granted | 19,260 | 50,000 | ||
| Management | ||||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
| Shares granted | 271,509 | 71,250 | ||
| Management | Each yearly anniversary from the date of the agreement | ||||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
| Option vesting percentage | 20.00% | 20.00% | ||
Share-based compensation - Allocation of Compensation Expense Related to Restricted Shares (Details) - Non-Vested Restricted Shares - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
| Compensation expense | $ 3,381 | $ 1,615 | $ 8,155 | $ 4,687 |
| Selling, General and Administrative | ||||
| Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
| Compensation expense | 2,028 | 1,065 | 5,078 | 3,179 |
| Research and Development | ||||
| Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
| Compensation expense | $ 1,353 | $ 550 | $ 3,077 | $ 1,508 |
Restricted Net Assets (Details) - PRC - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |
|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Restricted net assets | |||
| Minimum required percentage of statutory reserves | 10.00% | 10.00% | |
| Percentage of statutory reserves to respective registered capital | 50.00% | 50.00% | |
| Statutory reserves | $ 0 | $ 0 | |
| Restricted amount by subsidiaries | $ 306,010 | $ 306,010 | $ 255,858 |
Commitments and Contingencies (Details) $ in Thousands |
Sep. 30, 2022
USD ($)
|
|---|---|
| Property and Equipment | |
| Loss Contingencies [Line Items] | |
| Purchase obligation | $ 24,191 |