Global commercial-stage biotechnology company Zai Lab (NASDAQ: ZLAB) the stock cratered (-82%) from a 52-week high of $178.91. The biotech generates revenue through the licensing of established drugs in the Chinese market, in addition to its own pipeline of drugs for the treatment of cancer. The model of licensing drugs to fund own research has led to increased prepayment of royalties amid falling health care reimbursement rates. This explains why revenues have increased but losses have increased even faster. However, the company has 11 products in development, ranging from psoriasis treatments to lung cancer drugs. Zai Lab expects it will have 15 products on the market by 2025 and a series of pivotal studies and clinical results published in 2022. The company has nearly $1.3 billion in cash and cash equivalents. Cautious investors looking for exposure in a potential cancer therapy multi-bagger can watch for opportunistic pullbacks in Zai Lab’s stock.
Publication of results for the first quarter of fiscal year 2022
On May 10, 2022, Zai Lab released its fiscal first quarter 2022 results for the quarter ending March 2022. The company reported an adjusted earnings per share (EPS) loss of (-$0.86) excluding non-core items. recurring against consensus analyst estimates for a loss of ($1.23), beating estimates of $0.37. Revenue grew to $46.7 million year over year (YOY) from $45.72 million. Zai Lad CEO Samantha Du said, “Our first quarter results reflect Zai’s strong foundation and track record of consistent execution, and were marked by progress across the portfolio,” the CEO said. Dr. Samantha Du, Founder, President and CEO of Zai. Laboratory. “Today, Zai’s extensive proprietary portfolio consists of 11 assets with global rights. Building on last year’s proof-of-concept achievement for ZL-1102, our Humabody® anti-IL-17A for chronic plaque psoriasis, Zai recently unveiled preclinical data from four key oncology programs at the 2022 AACR Annual Meeting. With these assets just beginning to enter first-in-man clinical studies and proof of concept, we are in the exciting early days of demonstrating the commitment of Zai towards its in-house discovery and translational research And of course, this proprietary pipeline complements the advances of our later-stage partnered pipeline, which is expected to yield many crucial study reads throughout 2022.”
Takeaways from the conference call
CEO Du provided updates on five of the 11 products developed in-house with global rights. She updated the 2022 strategic priorities that aim to position Zai as a leader in the clean wave of biopharmaceutical innovation. The Company will file the NDA for efgartigimod in China by mid-2022. The registration study of bemarituzumab for front-line gastric cancer in Greater China is expected to start in mid-2022. The company also expects breakthrough data for KarXT from its EMERGENT-2 Phase 3 trial by Q3 2022. Continued R&D to advance its proprietary pipeline with global rights, moving the ZL -1102 to full development and driving significant growth for the four products currently marketed in China.
Breakthrough Therapy Tags
On June 10, 2022, China’s National Medical Products Administration granted two breakthrough designations for Zai Lab’s repotrectinib treatment for patients with non-small cell lung cancer (NSCLC). The designations were back by the phase 1 and 2 trials of TRIDENT-1. The designation is to treat patients with metastatic ROS1-positive NSCLC who have previously received a prior line of ROS1 tyrosine kinase inhibitor and prior treatment with EXP-2. It is also intended for patients whose NSCLC has spread to other parts that test positive for fusions in the ROS1 gene who received a previous line of ROS1 TKI without EXP-4, chemotherapy or immunotherapy.
ZLAB Opportunistic Withdrawal Levels
Using rifle charts on the weekly and daily time frames provides an accurate view of the landscape for the ZLAB stock. The weekly Rifles chart hit an initial low near $22.38 Fibonacci level (fib) before organizing a rally. The weekly downtrend has a 5-period moving average (MA) down at $30.28, followed by the 15-period MA at $36.05. The lower weekly Bollinger Bands (BB) lie at $15.41. The weekly stochastic fell and stalled on the 20 band. The weekly weak market structure (MSL) buy triggers on the breakout of $33.86. The daily downtrend in the Rifles chart attempts a reversal from the stochastic bounce towards the 20 band. The daily 5-period MA rises to $24.91 and the 15-period MA flattens to $27.32. The daily 50-period MA stands at $34.58 and the 200-period MA at $64.46 with daily higher BBs at $38.73. Cautious investors can watch for opportunistic pullback levels at the $24.29, $22.38, $20.47, $17.75, $16.13, $14.29 and $12.49 level. The upward trajectories range from the $34.84 fib to the $48.14 fib level.