Weighted average number of ordinary shares - basic and diluted
981,687,390
968,767,730
976,941,030
965,060,570
Net loss per share - basic and diluted
(0.04)
(0.07)
(0.18)
(0.25)
As a result of the Company’s net loss in the three and nine months ended September 30, 2024 and 2023, 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.
September 30,
2024
2023
Share options
105,188,950
107,249,960
Non-vested restricted shares
32,875,090
32,359,260
10. Borrowings
The Company has debt arrangements with the Bank of China, SPD Bank, CMB, and Ningbo Bank to support its working capital needs in mainland China. The following table presents the Company’s short-term debt as of September 30, 2024 ($ in thousands):
Weighted average interest rate per annum
September 30, 2024
Bank of China Working Capital Loans
2.86
%
70,925
SPD Bank Working Capital Loans
3.45
%
14,271
China Merchant Bank Working Capital Loans
3.15
%
27,798
Total short-term debt
3.01
%
112,994
Bank of China Working Capital Loan Facility
On February 5, 2024, the Company entered into an uncommitted facility letter with the Bank of China (Hong Kong) Limited (the “BOC HK”) pursuant to which the BOC HK will provide standby letters of credit for loans of up to $100.0 million for a term of one year. In connection with this agreement, the Company paid a one-time, non-refundable fee of $0.7 million in the first quarter of 2024. In accordance with this agreement, the Company also maintained restricted deposits of $100.0 million, which are presented as restricted cash-current on the unaudited condensed consolidated balance sheet, to secure the standby letters of credit. On February 6, 2024 and June 20, 2024, upon the Company’s application, the BOC HK provided standby letters of credit in favor of the Bank of China Pudong Development Zone Branch (the “BOC Pudong Branch”) for $50.0 million and $23.0 million, respectively, which are or may become payable by the Company’s wholly-owned subsidiary, Zai Lab (Shanghai) Co., Ltd. (“Zai Lab Shanghai”). Zai Lab Shanghai entered into working capital loans with the BOC Pudong Branch under this facility in the first half of 2024, and the aggregate principal amount outstanding was RMB497.0 million (approximately $70.9 million) as of September 30, 2024. Each working capital loan has a one-year term and is subject to a floating interest rate, which is subject to adjustment every six months.
12
Zai Lab Limited
Notes to the unaudited condensed consolidated financial statements
SPD Bank Working Capital Loan Facility
On February 6, 2024, the Company entered into a maximum-amount guarantee contract with the Shanghai Pudong Development Bank Co., Ltd. Zhangjiang Hi-Tech Park Sub-branch (the “SPD Bank”) pursuant to which the Company will guarantee working capital loans of up to RMB300.0 million (approximately $42.0 million) from SPD Bank to Zai Lab Shanghai over a three-year period. Zai Lab Shanghai entered into working capital loan contracts with SPD Bank under this debt facility in the first quarter of 2024, and the aggregate principal amount outstanding was RMB100.0 million (approximately $14.3 million) as of September 30, 2024. Each working capital loan has a one-year term and is subject to a fixed interest rate.
Ningbo Bank Working Capital Loan Facility
On February 6, 2024, the Company’s wholly-owned subsidiary, Zai Lab (Suzhou) Co., Ltd. (“Zai Lab Suzhou”), entered into a maximum credit contract with Bank of Ningbo Co., Ltd. Suzhou Sub-branch (“Ningbo Bank”) as well as an Electronic Commercial Draft Discounting Master Agreement and Online Working Capital Loan Master Agreement (collectively, the “Ningbo Bank Agreements”). The Ningbo Bank Agreements permit Zai Lab Suzhou to utilize, including through discounting or working capital loan agreements and subject to the terms and conditions in related master agreements, up to RMB230.3 million (approximately $32.4 million), of which the Company is authorized to utilize up to RMB160.0 million (approximately $22.5 million). In connection with the arrangements described in the Ningbo Bank Agreements, Zai Lab Suzhou agreed to pledge interests in certain real property it owns in Suzhou. As of September 30, 2024, Zai Lab Suzhou has not entered into any discounting arrangements or working capital loans under this Ningbo Bank working capital loan facility.
China Merchants Bank Working Capital Loan Facility
On July 5, 2024, the Company issued a maximum-amount irrevocable letter of guarantee to China Merchants Bank Co., Ltd., Shanghai Branch (“CMB”) pursuant to which the Company will guarantee working capital loans of up to RMB250.0 million (approximately $34.4 million) from CMB to the Company’s wholly-owned subsidiary, Zai Lab Shanghai, and Zai Lab Shanghai entered into a Credit Agreement with CMB with respect to the RMB250.0 million facility. The credit facility will be available for one year. As of September 30, 2024, Zai Lab Shanghai has an aggregate principal amount outstanding of RMB194.8 million (approximately $27.8 million) under this debt facility. Each working capital loan has a one-year term and is subject to a floating interest rate, which is subject to adjustment every three months.
11. Other Current Liabilities
The following table presents the Company’s other current liabilities ($ in thousands):
September 30, 2024
December 31, 2023
Accrued payroll
24,077
33,711
Accrued professional service fee
3,986
7,520
Payables for purchase of property and equipment
2,612
2,474
Accrued rebate to distributors
8,800
16,926
Tax payables
3,756
16,988
Other (i)
2,853
5,353
Total
46,084
82,972
(i)Other primarily includes accrued travel and business-related expenses.
13
Zai Lab Limited
Notes to the unaudited condensed consolidated financial statements
12. Share-Based Compensation
During the nine months ended September 30, 2024, the Company granted share options to purchase up to 20,747,480 ordinary shares and restricted shares representing 17,293,410 ordinary shares under its equity incentive plans. The share options granted have a contractual term of ten years. Share options granted since April 2023 generally vest ratably over a four-year period, and share options granted prior to April 2023 generally vest ratably over a five-year period, with 25% or 20% of the awards vesting on each anniversary of the grant date, respectively, subject to continued employment/service with the Company on the vesting date. The restricted shares granted generally vest ratably over a specified period on the anniversary of the grant date, subject to continued employment/service with the Company on the vesting date. For a description of the Company’s equity incentive plans and more details on the terms of the share-based awards, see Note 15 of the 2023 Annual Report.
The following table presents the share-based compensation expense that has been reported in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss as follows ($ in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Selling, general and administrative
10,404
14,041
31,861
35,880
Research and development
6,391
7,951
21,552
23,284
Total
16,795
21,992
53,413
59,164
As of September 30, 2024, there was unrecognized share-based compensation expense related to unvested share options and unvested restricted shares of $80.4 million and $83.3 million, respectively, which the Company expects to recognize over a weighted-average period of 2.83 years and 2.68 years, respectively.
13. License and Collaboration Agreements
The Company has entered into various license and collaboration agreements with third parties to develop and commercialize product candidates.
Significant License and Collaboration Arrangements
For a description of the material terms of the Company’s significant license and collaboration agreements, see Note 16 of the 2023 Annual Report. During the nine months ended September 30, 2024, the Company did not enter into any new significant license or collaboration agreements. The following includes a description of milestone fees incurred in the nine months ended September 30, 2024 under the Company’s significant license and collaboration agreements.
License and Collaboration Agreement with Innoviva (SUL-DUR)
Under the terms of the Company’s license and collaboration agreement with Entasis Therapeutics Holdings Inc., a wholly owned subsidiary of Innoviva, Inc. (“Innoviva”), the Company recorded an $8.0 million regulatory milestone in the second quarter of 2024, which was capitalized as an intangible asset. As of September 30, 2024, the Company may be required to pay an additional aggregate amount of up to $80.6 million in development, regulatory, and sales-based milestones as well as certain royalties at tiered percentage rates ranging from high single digits to low-teens on annual net sales of the licensed products in the licensed territory.
License Agreement with BMS (Repotrectinib)
Under the terms of the Company’s license agreement with Turning Point Therapeutics, Inc., a company later acquired by Bristol Myers Squibb (“BMS”), the Company recorded $25.0 million for regulatory milestones in the second
14
Zai Lab Limited
Notes to the unaudited condensed consolidated financial statements
quarter of 2024, which was capitalized as an intangible asset. As of September 30, 2024, the Company may be required to pay an additional aggregate amount of up to $116.0 million in development, regulatory, and sales-based milestones as well as certain royalties at tiered percentage rates ranging from mid- to high-teens on annual net sales of the licensed products in the licensed territory.
License Agreement with BMS (Xanomeline and Trospium Chloride)
Under the terms of the Company’s license agreement with Karuna Therapeutics, Inc. (a company later acquired by BMS), the Company recorded a $10.0 million development milestone into research and development expenses in the third quarter of 2024. As of September 30, 2024, the Company may be required to pay an additional aggregate amount of up to $132.0 million in development, regulatory, and sales-based milestones as well as certain royalties at tiered percentage rates ranging from low- to high-teens on annual net sales of the licensed products in Greater China.
Other License and Collaboration Arrangements That Are Not Individually Significant
The Company recorded an upfront payment of $12.0 million into research and development expenses in the third quarter of 2024 for a license and collaboration agreement that is not individually significant.
14. Other Income, Net
The following table presents the Company’s other income, net ($ in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Government grants
3,861
671
7,186
754
Loss on equity investments with readily determinable fair value
(920)
(661)
(6,067)
(1,965)
Others miscellaneous gain
500
384
2,740
1,434
Total
3,441
394
3,859
223
15. Restricted Net Assets
The Company’s ability to pay dividends may depend on the Company receiving distributions of funds from its Chinese subsidiaries. Relevant Chinese laws and regulations permit payments of dividends by the Company’s Chinese subsidiaries only out of its retained earnings, if any, as determined in accordance with Chinese 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 Company’s Chinese subsidiaries.
In accordance with the Company Law of the People’s Republic of China, 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 Chinese statutory accounts. A domestic enterprise may provide discretionary surplus reserve, at the discretion of the Board of Directors, from the profits determined in accordance with the enterprise’s Chinese statutory accounts. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. The Company’s Chinese subsidiaries were established as domestic enterprises and therefore are subject to the above-mentioned restrictions on distributable profits.
No appropriation to statutory reserves was made in the three and nine months ended September 30, 2024 and 2023 because the Chinese subsidiaries had substantial losses during such periods.
As a result of these Chinese laws and regulations, subject to the limits discussed above that require annual appropriations of 10% of after-tax profit to be set aside, prior to payment of dividends, as a general reserve fund, the Company’s Chinese subsidiaries are restricted in their ability to transfer out a portion of their net assets.
Foreign exchange and other regulation in mainland China may further restrict the Company’s subsidiaries in mainland China from transferring out funds in the form of dividends, loans, and advances. As of September 30, 2024 and December 31, 2023, amounts restricted included the paid-in capital of the Company’s subsidiaries in mainland China and were $506.0 million.
16. Commitments and Contingencies
(a) Purchase Commitments
As of September 30, 2024, the Company’s commitments related to purchase of property and equipment and the commercial manufacturing development activities that are contracted but not yet reflected in the unaudited condensed consolidated financial statements were $8.6 million and were expected to be incurred within one year.
(b) Legal Proceedings
The Company is not currently a party to any material legal proceedings.
(c) Indemnifications
In the normal course of business, the Company enters into agreements that indemnify others for certain liabilities that may arise in connection with a transaction or certain events and activities. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations.
15
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our 2023 Annual Report and our unaudited condensed consolidated financial statements and the accompanying notes for the three and nine months ended September 30, 2024 included in Item 1. Financial Statements.
Overview
We are a patient-focused, innovative, commercial-stage, global biopharmaceutical company with a substantial presence in both Greater China and the United States. We are focused on discovering, developing, and commercializing products that address medical conditions with significant unmet needs in the areas of oncology, immunology, neuroscience, and infectious disease. We intend to leverage our competencies and resources to positively impact human health in Greater China and worldwide. We currently have five commercial products – ZEJULA®, OPTUNE, QINLOCK®, NUZYRA®, and VYVGART® – that have received marketing approval and that we have commercially launched in one or more territories in Greater China. OPTUNE refers to Tumor Treating Fields devices marketed under various brand names, including OPTUNE GIO® for glioblastoma multiforme (“GBM”). We also have three products that have received marketing approval and are moving toward commercial launch for the approved indications – VYVGART Hytrulo (the subcutaneous formulation of efgartigimod), XACDURO® (SUL-DUR), and AUGTYRO® (repotrectinib) – as well as multiple programs in late-stage product development and a number of ongoing pivotal trials across our portfolio.
Since our inception, we have incurred net losses and negative cash flows from our operations. Substantially all of our losses have resulted from funding our research and development programs and selling, general and administrative costs associated with our operations. Developing high quality product candidates requires significant investment in our research and development activities over a prolonged period of time, and a core part of our strategy is to continue making sustained investments in this area. Our ability to generate profits and positive cash flow from operations over the next several years depends upon our ability to successfully market our commercial products and to successfully expand the indications for these products and develop and commercialize our other product candidates. As discussed further below, we expect to continue to incur substantial costs related to our research and development and commercialization activities.
As we pursue our corporate strategic goals, we anticipate that our financial results will fluctuate from quarter to quarter and year to year depending in part on the balance between the success of our commercial products and the level of our research and development expenses. We cannot predict whether or when our product candidates will receive regulatory approval. Further, if we receive such regulatory approval, we cannot predict whether or when we may be able to successfully commercialize such products or whether or when such products may become profitable.
Recent Developments
Commercial Products
Net product revenue was $101.8 million for the third quarter of 2024, an increase of 47% compared to the prior year period, primarily driven by increased sales for VYVGART since its launch in September 2023 and listing on China’s National Reimbursement Drug List (“NRDL”) in January 2024 for the treatment of adult patients with generalized myasthenia gravis (“gMG”) who are anti-acetylcholine receptor (“AChR”) antibody positive and increased sales for ZEJULA and NUZYRA. The NRDL listing for ZEJULA as a maintenance treatment was renewed in the first quarter of 2024, and ZEJULA continues to be the leading PARP inhibitor in hospital sales for ovarian cancer in mainland China. Increased sales for NUZYRA were supported by the inclusion in the NRDL for its intravenous (“IV”) formulation for the treatment of adult patients with community-acquired bacterial pneumonia (“CABP”) and acute bacterial skin and skin structure infections (“ABSSSI”) in the first quarter of 2023 and for its oral formulation for these indications in the first quarter of 2024.
16
Product Candidates
We continued to advance our product candidates through our research and development activities, including the following developments with respect to our clinical trials and regulatory approvals:
Oncology
•Niraparib: In July 2024, data from a Zai-supported study was published in Cell that provides new insights with potential to improve treatment of HRD-positive ovarian cancers, including through neoadjuvant monotherapy with niraparib and a combination of niraparib and ZL-1218, our investigational CCR8 antibody.
•Early-Stage Global Pipeline: In October 2024, we presented data from a Phase I study of ZL-1310, an investigational DLL3-antibody-drug conjugate, in second-line+ extensive stage small cell lung cancer. The data, from the ongoing Part Ia monotherapy dose-escalation portion of the study, included results from 25 patients across four dose cohorts (0.8 mg/kg, 1.6 mg/kg, 2.0 mg/kg, 2.4 mg/kg). Findings from this study suggest that ZL-1310 delivers anti-tumor activity across multiple dose levels with an overall response rate of 74%. It was well tolerated across all dose levels with the majority of treatment emergent adverse events being Grade 1 or 2.
Immunology, Neuroscience, and Infectious Disease
•Efgartigimod: In July 2024, the NMPA approved the Biologics License Application for efgartigimod alfa injection (subcutaneous injection), under the brand name VYVGART Hytrulo, as an add on to standard therapy for the treatment of adult patients with gMG who are AChR antibody positive. In November 2024, the NMPA approved the supplemental Biologics License Application for VYVGART Hytrulo for the treatment of adult patients with chronic inflammatory demyelinating polyneuropathy.
•Xanomeline and Trospium Chloride (KarXT):
◦Schizophrenia: In October 2024, we announced positive topline results from the Phase III bridging study evaluating the safety and efficacy of KarXT in schizophrenia in China. The study met its primary endpoint, with KarXT demonstrating a statistically significant and clinically meaningful 9.2-point reduction in the Positive and Negative Syndrome Scale (“PANSS”) total score compared to placebo at Week 5 (-16.9 KarXT vs. -7.7 placebo, p=0.0014). The study also met all secondary efficacy endpoints. We expect to submit a New Drug Application to the NMPA for KarXT for the treatment of patients with schizophrenia in early 2025.
In September 2024, our partner BMS announced that the FDA had approved KarXT, under the brand name COBENFY™, for the treatment of adult patients with schizophrenia. In October 2024, BMS announced new topline results from the Phase III EMERGENT-4 and EMERGENT-5 open-label trials evaluating the long-term efficacy, safety, and tolerability of KarXT in adults with schizophrenia over 52 weeks of treatment. In the analysis, KarXT was associated with continued improvements in symptoms of schizophrenia across all efficacy measures. KarXT continued to see a lack of weight gain, and it was not associated with movement disorders or metabolic changes.
◦ADP: In July 2024, we joined the global Phase III ADEPT-2 study evaluating the safety and efficacy of KarXT for the treatment of psychosis associated with Alzheimer’s disease (“ADP”) in Greater China.
•Early-Stage Global Pipeline: In September 2024, Zai Lab presented pre-clinical data of ZL-1503, an IL-13/IL-31 bi-specific antibody, at the European Academy of Dermatology and Venerology Congress 2024. The presentation discussed the potential of ZL-1503 as a novel treatment for moderate-to-severe atopic dermatitis, as well as other diseases involving the IL-13 and IL-31 pathways.
17
Corporate Updates
We continue to enhance our portfolio through strategic partnerships and to strengthen our organizational structure to support the evolving needs of our business:
•Business Development: In July 2024, we entered into a strategic partnership and global license agreement with MabCare Therapeutics Co., Ltd. Through this collaboration, we expanded our global oncology pipeline with a next generation antibody-drug conjugate targeting ROR1, ZL-6301. ZL-6301 has the potential to be used in the treatment of solid tumors where ROR1 is commonly expressed and in hematological malignancies where ROR1 is a validated target. ZL-6301 has demonstrated an encouraging pre-clinical profile, and it is currently in the IND-enabling stage. We plan to focus on advancing its global development.
•Organizational Update: In September 2024, the Company appointed Prista Charuworn, M.D., as our Vice President, Immunology, Global R&D. Dr. Charuworn is an accomplished gastroenterologist with extensive experience and leadership in clinical development in hepatology and immunology. She reports to Rafael Amado, M.D., our President, Head of Global R&D, and is responsible for leading and advancing the R&D strategy for our immunology therapeutic area as well as our neuroscience and infectious disease assets. She previously held key leadership roles in clinical development at Amgen, AstraZeneca, and Gilead.
Factors Affecting Our Results of Operations
Our Commercial Products
We generate product revenue through the sale of our commercial products in Greater China, net of any related sales returns and rebates to distributors. Our cost of product revenue mainly consists of the costs of manufacturing ZEJULA and NUZYRA, costs of purchasing OPTUNE, QINLOCK, and VYVGART from our collaboration partners, any royalty fees incurred as a result of sales of our commercial products under our license and collaboration agreements, and amortization of any sales-based milestone fees incurred under our license and collaboration agreements. We expect our product revenue to increase in coming years as we continue to focus on increasing patient access to our existing commercial products, such as through NRDL listing or increased supplemental insurance coverage in the private-pay market, and as we launch additional commercial products, if and when we obtain required regulatory approvals. We expect our cost of product revenue to increase as the volume of products sold increases.
Research and Development Expenses
We believe our ability to successfully develop product candidates will be the primary factor affecting our long-term competitiveness, as well as our future growth and development. Developing high quality product candidates requires a significant investment of resources over a prolonged period of time. We are committed to advancing and expanding our pipeline of potential best-in-class and first-in-class products, such as through clinical and pre-clinical trials and business development activities. As a result, we expect to continue making significant investments in research and development, including internal discovery activities.
Elements of research and development expenditures primarily include:
•payroll and other related costs of personnel engaged in research and development activities;
•fees for exclusive development rights of products granted to the Company;
•costs related to pre-clinical testing of the Company’s technologies and clinical trials, such as payments to contract research organizations (“CROs”) and contract manufacturing organizations (“CMOs”), investigators, and clinical trial sites that conduct our clinical studies; and
•costs to produce the product candidates, including raw materials and supplies, product testing, depreciation, and facility-related expenses.
18
Selling, General, and Administrative Expenses
Our selling, general, and administrative expenses consist primarily of personnel compensation and related costs, including share-based compensation for commercial and administrative personnel. Other selling, general, and administrative expenses include product distribution and promotion costs, and professional service fees for legal, intellectual property, consulting, auditing, and tax services as well as other direct and allocated expenses for rent and maintenance of facilities, insurance, and other supplies used in selling, general, and administrative activities. We expect these costs to continue to be significant to support sales of our commercial products and preparation to launch and subsequent sales of additional product candidates if and when approved.
Our Ability to Commercialize Our Product Candidates
We have multiple product candidates in late-stage clinical development and various others in clinical and pre-clinical development in Greater China and the United States. Our ability to generate revenue from our product candidates is dependent on our receipt of regulatory approvals for and successful commercialization of such product candidates, which may not occur. Certain of our product candidates may require additional pre-clinical and/or clinical development, regulatory approvals in multiple jurisdictions, manufacturing supply, and significant marketing efforts before we generate any revenue from product sales.
License and Collaboration Arrangements
Our results of operations have been, and will continue to be, affected by our license and collaboration agreements. In accordance with these agreements, we may be required to make upfront payments and milestone payments upon the achievement of certain development, regulatory, and sales-based milestones for the relevant products as well as certain royalties at tiered percentage rates based on annual net sales of the licensed products in the licensed territories. As of September 30, 2024, we may be required to pay development and regulatory milestone payments of up to an additional aggregate amount of $284.5 million for our current clinical programs and $613.0 million for other programs. Such development and regulatory milestone payments are contingent on the progress of our product candidates prior to commercialization, and we see these payments as favorable because they indicate that product candidates are advancing. As of September 30, 2024, we also may be required to pay sales-based milestone payments of up to an additional aggregate amount of $2,295.0 million as well as certain royalties at tiered percentage rates on annual net sales. Such sales-based milestone and royalty payments are contingent on the performance of our commercial products, and we see these payments as favorable because they signify that a product is achieving higher sales levels.
19
Results of Operations
In this section, we discuss our results of operations for the three and nine months ended September 30, 2024 compared to the same periods in 2023.
The following table presents our results of operations ($ in thousands):
Three Months Ended September 30,
Change
Nine Months Ended September 30,
Change
2024
2023
$
%
2024
2023
$
%
Revenues
Product revenue, net
101,847
69,228
32,619
47
%
289,102
200,889
88,213
44
%
Collaboration revenue
418
—
418
NM
816
—
816
NM
Total revenues
102,265
69,228
33,037
48
%
289,918
200,889
89,029
44
%
Expenses
Cost of product revenue
(36,569)
(25,479)
(11,090)
44
%
(105,336)
(70,579)
(34,757)
49
%
Cost of collaboration revenue
(348)
—
(348)
NM
(433)
—
(433)
NM
Research and development
(65,982)
(58,767)
(7,215)
12
%
(182,252)
(183,920)
1,668
(1)
%
Selling, general, and administrative
(67,219)
(68,552)
1,333
(2)
%
(216,123)
(198,982)
(17,141)
9
%
Gain on sale of intellectual property
—
—
—
NM
—
10,000
(10,000)
(100)
%
Loss from operations
(67,853)
(83,570)
15,717
(19)
%
(214,226)
(242,592)
28,366
(12)
%
Interest income
9,029
9,172
(143)
(2)
%
28,017
29,493
(1,476)
(5)
%
Interest expense
(745)
—
(745)
NM
(1,350)
—
(1,350)
NM
Foreign currency gains (losses)
14,457
4,852
9,605
198
%
8,281
(26,315)
34,596
(131)
%
Other income, net
3,441
394
3,047
773
%
3,859
223
3,636
1630
%
Loss before income tax
(41,671)
(69,152)
27,481
(40)
%
(175,419)
(239,191)
63,772
(27)
%
Income tax expense
—
—
—
—
%
—
—
—
—
%
Net loss
(41,671)
(69,152)
27,481
(40)
%
(175,419)
(239,191)
63,772
(27)
%
NM - Not Meaningful
Revenues
Product Revenue, Net
The following table presents the components of the Company’s product revenue ($ in thousands):
Three Months Ended September 30,
Change
Nine Months Ended September 30,
Change
2024
2023
$
%
2024
2023
$
%
Product revenue - gross
107,678
74,018
33,660
45
%
307,401
220,240
87,161
40
%
Less: Rebates and sales returns
(5,831)
(4,790)
(1,041)
22
%
(18,299)
(19,351)
1,052
(5)
%
Product revenue - net
101,847
69,228
32,619
47
%
289,102
200,889
88,213
44
%
Our product revenue is derived from the sales of our commercial products primarily in mainland China, net of sales returns and rebates to distributors with respect to the sales of these products.
Our net product revenue increased by $32.6 million and $88.2 million in the three and nine months ended September 30, 2024, respectively, primarily driven by increased sales for VYVGART since its launch in September 2023 and NRDL listing in January 2024 for the treatment of gMG. Net product revenue growth was also supported by increased sales volumes for ZEJULA and NUZYRA in the three and nine months ended September 30, 2024. ZEJULA sales remained strong as it continued to be the leading PARP inhibitor in hospital sales for ovarian cancer in mainland China. The growth in NUZYRA sales was supported by the inclusion in the NRDL for its IV formulation for the treatment of CABP and ABSSSI in the first quarter of 2023 and for its oral formulation for these indications in the first quarter of 2024.
20
The following table presents net revenue by product ($ in thousands):
Three Months Ended September 30,
Change
Nine Months Ended September 30,
Change
2024
2023
$
%
2024
2023
$
%
ZEJULA
48,227
41,593
6,634
16
%
138,727
127,230
11,497
9
%
OPTUNE
7,715
11,562
(3,847)
(33)
%
32,779
38,596
(5,817)
(15)
%
QINLOCK
8,643
5,702
2,941
52
%
21,774
14,535
7,239
50
%
NUZYRA
9,997
5,483
4,514
82
%
32,205
15,588
16,617
107
%
VYVGART
27,265
4,888
22,377
458
%
63,617
4,940
58,677
1188
%
Total product revenue, net
101,847
69,228
32,619
47
%
289,102
200,889
88,213
44
%
Cost of Product Revenue
Cost of product revenue increased by $11.1 million and $34.8 million in the three and nine months ended September 30, 2024, respectively, primarily due to increasing sales volumes and shifts in product sales mix.
Collaboration Revenue and Cost of Collaboration Revenue
In the three and nine months ended September 30, 2024, collaboration revenue related to promotional activities in mainland China was $0.4 million and $0.8 million, respectively, and cost of collaboration revenue was $0.3 million and $0.4 million, respectively. We had no such collaboration revenue in the prior year periods.
Research and Development Expenses
The following table presents the components of our research and development expenses ($ in thousands):
Three Months Ended September 30,
Change
Nine Months Ended September 30,
Change
2024
2023
$
%
2024
2023
$
%
Personnel compensation and related costs
23,405
27,933
(4,528)
(16)
%
82,622
85,967
(3,345)
(4)
%
Licensing fees
22,634
9
22,625
NM
22,634
19,291
3,343
17
%
CROs/CMOs/Investigators expenses
13,004
23,136
(10,132)
(44)
%
57,213
59,201
(1,988)
(3)
%
Other costs
6,939
7,689
(750)
(10)
%
19,783
19,461
322
2
%
Total
65,982
58,767
7,215
12
%
182,252
183,920
(1,668)
(1)
%
NM - Not Meaningful
Research and development expenses increased by $7.2 million in the three months ended September 30, 2024, primarily due to:
•an increase of $22.6 million in licensing fees in connection with increased upfront and milestone payments for our license and collaboration agreements; partially offset by
•a decrease of $10.9 million in CROs/CMOs/Investigators expenses and other costs related to ongoing clinical trials; and
•a decrease of $4.5 million in personnel compensation and related costs primarily driven by the Company’s ongoing resource prioritization and efficiency efforts.
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Research and development expenses decreased by $1.7 million in the nine months ended September 30, 2024, primarily due to:
•a decrease of $3.3 million in personnel compensation and related costs primarily driven by the Company’s ongoing resource prioritization and efficiency efforts; and
•a decrease of $1.7 million in CROs/CMOs/Investigators expenses and other costs related to ongoing clinical trials; partially offset by
•an increase of $3.3 million in licensing fees in connection with increased upfront and milestone payments for our license and collaboration agreements.
The following table presents our research and development expenses by program ($ in thousands):
Three Months Ended September 30,
Change
Nine Months Ended September 30,
Change
2024
2023
$
%
2024
2023
$
%
Clinical programs
23,060
23,243
(183)
(1)
%
63,196
68,232
(5,036)
(7)
%
Pre-clinical programs
14,461
2,013
12,448
618
%
19,649
15,252
4,397
29
%
Unallocated research and development expenses
28,461
33,511
(5,050)
(15)
%
99,407
100,436
(1,029)
(1)
%
Total
65,982
58,767
7,215
12
%
182,252
183,920
(1,668)
(1)
%
Research and development expenses attributable to pre-clinical programs increased by $12.4 million in the three months ended September 30, 2024 primarily due to an increase in licensing fees.
Research and development expenses attributable to clinical programs decreased by $5.0 million in the nine months ended September 30, 2024 primarily driven by a decrease of $7.3 million in CROs/CMOs/Investigators expenses related to the progress of existing studies, offset by an increase of $2.3 million in licensing fees. Research and development expenses attributable to pre-clinical programs increased by $4.4 million in the nine months ended September 30, 2024 primarily due to an increase of $3.4 million in CROs/CMOs/Investigators expenses related to newly initiated studies and progress of existing studies and an increase of $1.0 million in licensing fees.
Although we manage our external research and development expenses by program, we do not allocate our internal research and development expenses by program because our employees and internal resources may be engaged in projects for multiple programs at any given time.
Selling, General, and Administrative Expenses
The following table presents our selling, general and administrative expenses by program ($ in thousands):
Three Months Ended September 30,
Change
Nine Months Ended September 30,
Change
2024
2023
$
%
2024
2023
$
%
Personnel compensation and related costs
39,984
45,410
(5,426)
(12)
%
134,157
129,198
4,959
4
%
Professional service fees
5,863
4,404
1,459
33
%
14,917
18,752
(3,835)
(20)
%
Other costs
21,372
18,738
2,634
14
%
67,049
51,032
16,017
31
%
Total
67,219
68,552
(1,333)
(2)
%
216,123
198,982
17,141
9
%
Selling, general, and administrative expenses decreased by $1.3 million the three months ended September 30, 2024, primarily due to:
•a decrease of $5.4 million in personnel compensation and related costs primarily driven by the Company’s ongoing resource prioritization and efficiency efforts; partially offset by
22
•an increase of $2.6 million in other costs primarily related to higher general selling expenses for VYVGART which was launched in September 2023.
Selling, general, and administrative expenses increased by $17.1 million in the nine months ended September 30, 2024, primarily due to:
•an increase of $16.0 million in other costs primarily related to higher general selling expenses for VYVGART which was launched in September 2023; and
•an increase of $5.0 million in personnel compensation and related costs primarily driven by headcount growth related to support VYVGART; partially offset by
•a decrease of $3.8 million in professional service fees primarily related to decreased finance and human resources administrative expenses.
Gain on Sale of Intellectual Property
We had a gain on sale of intellectual property of $10.0 million in the second quarter of 2023 in connection with our sale of certain patent rights and related know-how to a third party. We had no such gain or loss in the current year periods.
Interest Income
Interest income decreased by $0.1 million and $1.5 million in the three and nine months ended September 30, 2024, respectively, primarily due to decreased cash and cash equivalents.
Interest Expense
Interest expense increased by $0.7 million and $1.4 million in the three and nine months ended September 30, 2024, respectively, primarily due to interest expense on short-term debt we entered into in 2024. We had no such interest expense in the prior year periods.
Foreign Currency Gains (Losses)
Foreign currency gain increased by $9.6 million in the three months ended September 30, 2024, primarily driven by increased remeasurement gain due to appreciation of the RMB against the U.S. dollar.
Foreign currency gain was $8.3 million in the nine months ended September 30, 2024, primarily driven by remeasurement gain due to appreciation of the RMB against the U.S. dollar, compared to foreign currency loss of $26.3 million in the nine months ended September 30, 2023, driven by remeasurement loss due to depreciation of the RMB against the U.S. dollar.
Other Income, Net
Other income, net increased by $3.0 million and $3.6 million in the three and nine months ended September 30, 2024, respectively, primarily due to an increase of $3.2 million and $6.4 million in government grants, respectively, and an increase of $0.1 million and $1.3 million in other miscellaneous gain primarily driven by an increase in sublease rental income, respectively, partially offset by an increase of $0.3 million and $4.1 million in loss of our equity investment in MacroGenics, Inc. as a result of changes in its stock price, respectively.
Income Tax Expense
Income tax expense was nil in both the three and nine months ended September 30, 2024 and 2023.
Net Loss
Net loss was $41.7 million in the three months ended September 30, 2024, or a loss per ordinary share attributable to common stockholders of $0.04 (or loss per ADS of $0.42), compared to a net loss of $69.2 million in the three months ended September 30, 2023, or a loss per ordinary share of $0.07 (or loss per ADS of $0.71).
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Net loss was $175.4 million in the nine months ended September 30, 2024, or a loss per ordinary share attributable to common stockholders of $0.18 (or loss per ADS of $1.80), compared to a net loss of $239.2 million in the nine months ended September 30, 2023, or a loss per ordinary share of $0.25 (or loss per ADS of $2.48).
Critical Accounting Policies and Significant Judgments and Estimates
We prepare our financial statements in conformity with U.S. GAAP, which requires management to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. Some of those judgments can be subjective and complex. Actual results could differ from our estimates.
Our most critical accounting policies and estimates, including those that require the most difficult, subjective, or complex judgments and are the most inherently uncertain, are described below.
Revenue Recognition
We sell our products to distributors (our customers), who ultimately sell the products to healthcare providers, primarily in mainland China. We recognize revenue when the performance obligations are satisfied upon the product’s delivery to distributors.
We offer rebates to our distributors to compensate the distributors consistent with pharmaceutical industry practices. We are required to establish a provision for rebates in the same period the related product sales are recognized. The estimated amount of rebates, if any, is recorded as a reduction of revenue.
Significant judgments are required in making these estimates. In determining the appropriate accrual amount, we consider our contracted rates, sales volumes, levels of distributor inventories, and historical experiences and trends. If actual results vary from our estimates or our expectations change, we will adjust these estimates accordingly, which would affect net product revenue and earnings in the period such variances become expected or known.
Research and Development Expenses
We have a significant amount of research and development expenses, including with respect to pre-clinical and clinical trials for our product candidates. Such costs are expensed as incurred when they have no alternative future uses.
We contract with third parties to perform various pre-clinical and clinical trial activities on our behalf in the ongoing development of our product candidates. Expenses related to pre-clinical and clinical trial activities are accrued based on the Company’s estimates of the actual services performed by the third parties, such as CROs and CMOs.
Significant judgments are required in estimating the actual services performed by the third parties for the respective period and the related expense accruals. In determining the appropriate accrual, we consider a variety of factors, including contractual requirements with respect to services to be provided, related rates, and our assessment of services performed during the period and progress with respect to any contractual milestones when we have not yet been invoiced or otherwise notified by third parties of actual costs. If the actual status and timing of services performed vary from our estimates, our reported expenses and earnings for the corresponding period may be affected.
Share-Based Compensation
We grant share-based awards, including share options and restricted shares, to eligible employees, non-employees, and directors. Such share-based awards are measured at grant date fair value.
Significant assumptions are required in determining the fair value of share options, which we estimate using the Black-Scholes option valuation model. These assumptions include: (i) the expected volatility of our ADS price, (ii) the periods of time over which grantees are expected to hold their options prior to exercise (expected term), (iii) the expected dividend yield on our ADSs, and (iv) risk-free interest rates. Since we do not have sufficient trading history since our September 2017 initial public offering on Nasdaq to cover the expected term of our share options, we estimate expected volatility based on movements in the share price of certain companies we consider comparable over the most recent equivalent historical period. Since we do not have sufficient historical information to develop reasonable expectations
24
about future exercise patterns and post-vesting employment termination behavior, the expected term is derived from the average midpoint between the weighted average vesting and the contractual term, also known as the simplified method. The expected dividend yield is zero as we have never paid dividends and do not currently anticipate paying any in the foreseeable future, and risk-free interest rates are based on quoted U.S. Treasury rates for securities with maturities approximating the expected term. If actual results vary from our estimates or our expectations change, our reported expenses and earnings for the corresponding period may be affected.
Income Taxes
We recognize deferred tax assets and liabilities for temporary differences between the financial statement and income tax bases of assets and liabilities, which are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some or all of a deferred tax asset will not be realized. Significant judgements are required when evaluating tax positions in accordance with ASC 740, Income Taxes.
We recognize in our financial statements the benefit of a tax position if the tax position is “more likely than not” to prevail based on the facts and technical merits of the position. Tax positions that meet the “more likely than not” recognition threshold are measured at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement. We estimate our liability for unrecognized tax benefits which are periodically assessed and may be affected by changing interpretations of laws, rulings by tax authorities, changes and/or developments with respect to tax audits, and the expiration of the applicable statute of limitations. The ultimate outcome for a particular tax position may not be determined with certainty prior to the conclusion of a tax audit and, in some cases, appeal or litigation process.
We consider positive and negative evidence when determining whether some or all of our deferred tax assets will not be realized. This assessment considers various factors, including the nature, frequency, and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carry-forward periods, our historical results of operations, and our tax planning strategies. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Our estimates may be affected by changing interpretations of laws, rulings by tax authorities, changes and/or developments with respect to tax audits, and expiration of the statute of limitations. If actual benefits vary from our estimates or our expectations change, we will adjust the recognition and measurement estimates accordingly, which would affect reported expenses and earnings in the corresponding period.
Liquidity and Capital Resources
To date, we have financed our activities primarily through private placements, our September 2017 initial public offering and various follow-on offerings on Nasdaq, and our September 2020 secondary listing and initial public offering on the Hong Kong Stock Exchange. In addition, we have raised approximately $164.6 million in private equity financing and approximately $2,462.7 million in net proceeds after deducting underwriting commissions and the offering expenses payable by us in our initial public offering and subsequent follow-on offerings on Nasdaq and our initial public offering on the Hong Kong Stock Exchange. Our operations have consumed substantial amounts of cash since inception. The net cash used in our operating activities was $159.1 million and $183.3 million in the nine months ended 2024 and 2023, respectively. For information on our research and development activities and related expenditures see the Research and Development Expenses, Selling, General, and Administrative Expenses, License and Collaboration Arrangements, and Results of Operations sections above. In addition, as of September 30, 2024, we had commitments for capital expenditures of $8.6 million mainly for the purpose of commercial manufacturing development, plant construction, and installation.
As of September 30, 2024, we had cash and cash equivalents, current restricted cash, and short-term investments of $716.1 million, which we expect will enable us to meet our cash requirements including the funding of operating expenses, capital expenditures, and debt obligations for at least the next 12 months.
Although we believe that we have sufficient capital to fund our operations for at least the next twelve months, we may, from time to time, identify opportunities to access capital through debt arrangements on favorable commercial terms. In the nine months ended September 30, 2024, we entered into four such debt arrangements with Chinese financial
25
institutions that allow certain of our subsidiaries to borrow up to approximately $198.9 million (or RMB1,421.7 million) to support our working capital needs in mainland China. As of September 30, 2024, we had short-term debt of approximately $113.0 million (or RMB791.8 million) pursuant to these debt arrangements. These debt arrangements will provide us with additional capital capacity that gives us enhanced flexibility to execute on our corporate strategic goals. For more information, see Note 10.
We may consider, or we may ultimately need, additional funding sources to bring to fruition our strategic objectives, and there can be no assurances that such funding will be made available to us on acceptable terms or at all.
The following table presents information regarding our cash flows ($ in thousands):
Nine Months Ended September 30,
Change
2024
2023
$
Net cash used in operating activities
(159,100)
(183,261)
24,161
Net cash used in investing activities
(27,439)
(25,233)
(2,206)
Net cash provided by (used in) financing activities
112,077
(6,826)
118,903
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
402
(3,355)
3,757
Net decrease in cash, cash equivalents and restricted cash
(74,060)
(218,675)
144,615
Net Cash Used in Operating Activities
Net cash used in operating activities decreased by $24.2 million in the nine months ended September 30, 2024, primarily due to a decrease of $63.8 million in net loss, partially offset by a decrease of $23.0 million in adjustments to reconcile net loss to net cash used in operating activities and a decrease of $16.6 million in net changes in operating assets and liabilities.
Net Cash Used in Investing Activities
Net cash used in investing activities increased by $2.2 million in the nine months ended September 30, 2024, primarily due to a decrease of $86.1 million in proceeds from the maturity of short-term investments, an increase of $40.1 million from acquisition of intangible assets due to payments for milestone fees, a decrease of $10.0 million in proceeds from sale of intellectual property, and a decrease of $3.9 million in proceeds from land use right, partially offset by a decrease of $134.0 million in purchases of short-term investments, and a decrease of $3.9 million in purchases of property and equipment.
Net Cash Provided by (Used in) Financing Activities
Net cash provided by financing activities was $112.1 million in the nine months ended September 30, 2024, compared to net cash used in financing activities of $6.8 million in the nine months ended September 30, 2023. This shift was primarily due to $111.0 million in short-term debt proceeds net of related issuance costs as we entered into certain debt arrangements in the nine months ended September 30, 2024, and a decrease of $8.7 million in taxes paid related to settlement of equity awards, partially offset by a decrease of $0.6 million in proceeds from exercises of stock options and an increase of $0.3 million in repayment of short-term debt.
Recently Issued Accounting Standards
For more information regarding recently issued accounting standards, see Part II – Item 8. Financial Statements and Supplementary Data – Recent Accounting Pronouncements in our 2023 Annual Report. The Company has not adopted any new accounting standards in the nine months ended September 30, 2024.
26
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk including foreign exchange risk and credit risk.
Foreign Exchange Risk
Renminbi, or RMB, is not a freely convertible currency. The State Administration of Foreign Exchange, under the authority of the People’s Bank of China (“PBOC”), controls the conversion of RMB into foreign currencies. The value of RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. The cash and cash equivalents of the Company included aggregated amounts of $40.1 million and $25.1 million, which were denominated in RMB, representing 7% and 3% of the cash and cash equivalents as of September 30, 2024 and December 31, 2023, respectively.
While our financial statements are presented in U.S. dollars, our business mainly operates in mainland China with a significant portion of our transactions settled in RMB, and as such, we do not believe that we currently have significant direct foreign exchange risk and have not used derivative financial instruments to hedge our exposure to such risk. Although, in general, our exposure to foreign exchange risk should be limited, the value of your investment in our ADSs and ordinary shares will be affected by the exchange rate between the U.S. dollar and the RMB and between the HK dollar and the RMB, respectively, because the value of our business is effectively denominated in RMB, while ADSs and ordinary shares are traded in U.S. dollars and HK dollars, respectively.
The value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in Greater China’s political and economic conditions. The conversion of RMB into foreign currencies, including U.S. dollars, has been based on rates set by the PBOC.
The value of our ADSs and our ordinary shares will be affected by the foreign exchange rates between U.S. dollars, HK dollars, and the RMB. For example, to the extent that we need to convert U.S. dollars or HK dollars into RMB for our operations or if any of our arrangements with other parties are denominated in U.S. dollars or HK dollars and need to be converted into RMB, appreciation of the RMB against the U.S. dollar or the HK dollar would have an adverse effect on the RMB amount we receive from the conversion. Conversely, if we decide to convert RMB into U.S. dollars or HK dollars for the purpose of making payments for dividends on ordinary shares or ADSs or for other business purposes, appreciation of the U.S. dollar or the HK dollar against the RMB would have a negative effect on the conversion amounts available to us.
Since 1983, the Hong Kong Monetary Authority (“HKMA”) has pegged the HK dollar to the U.S. dollar at the rate of approximately HK$7.80 to US$1.00. However, there is no assurance that the HK dollar will continue to be pegged to the U.S. dollar or that the HK dollar conversion rate will remain at HK$7.80 to US$1.00. If the HK dollar conversion rate against the U.S. dollar changes and the value of the HK dollar depreciates against the U.S. dollar, our assets denominated in HK dollars will be adversely affected. Additionally, if the HKMA were to repeg the HK dollar to, for example, the RMB rather than the U.S. dollar, or otherwise restrict the conversion of HK dollars into other currencies, then our assets denominated in HK dollars will be adversely affected.
Credit Risk
Financial instruments that are potentially subject to significant concentration of credit risk consist of cash and cash equivalents, short-term investments, accounts receivable, and notes receivable.
The carrying amounts of cash and cash equivalents and short-term investments represent the maximum amount of losses due to credit risk. As of September 30, 2024 and December 31, 2023, we had cash and cash equivalents of $616.1 million and $790.2 million, respectively, and short-term investments of nil and $16.3 million, respectively. As of September 30, 2024 and December 31, 2023, all of our cash and cash equivalents and short-term investments were held by major financial institutions located in mainland China and international financial institutions outside of mainland China which we believe are of high credit quality and for which we monitor continued credit worthiness.
Accounts receivable are typically unsecured and are derived from product revenue and collaborative arrangements. We manage credit risk related to our accounts receivable through ongoing monitoring of outstanding balances and limiting
27
the amount of credit extended based upon payment history and credit worthiness. Historically, we have collected receivables from customers within the credit terms with no significant credit losses incurred. As of September 30, 2024, our two largest customers accounted for approximately 22% of our total accounts receivable collectively.
Certain accounts receivable balances are settled in the form of notes receivable. As of September 30, 2024, such notes receivable included bank acceptance promissory notes that are non-interest bearing and due within six months. These notes receivable were used to collect the receivables based on an administrative convenience, given these notes are readily convertible to known amounts of cash. In accordance with the sales agreements, whether to use cash or bank acceptance promissory notes to settle the receivables is at our discretion, and this selection does not impact the agreed contractual purchase prices.
Item 4. Controls and Procedures
Management’s Evaluation of Our Disclosure Controls and Procedures
Our management, including our Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Our disclosure controls and procedures are designed to ensure that the information required to be disclosed in the reports that we file or furnish under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective. Based upon that evaluation, our management has concluded that, as of September 30, 2024, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such item is defined in Rules 13a-15(f)) during the fiscal quarter ended September 30, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
We may be, from time to time, subject to claims and suits arising in the ordinary course of business. We are not currently a party to any material legal or administrative proceedings.
Item 1A. Risk Factors.
We are subject to risks and uncertainties that could, directly or indirectly, adversely affect our business, results of operations, financial condition, liquidity, cash flows, strategies, and/or prospects. There have been no material changes in our risk factors from those disclosed in the “Risk Factors” section of our 2023 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
During the period covered by this report, none of the Company’s directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (each as defined in Item 408 of Regulation S-K).
On November 11, 2024, Professor Kai-Xian Chen informed the Company that he has decided to retire and plans to resign from the Board of Directors, effective December 31, 2024. There are no disagreements between Professor Chen and the Company relating to the Company’s operations, policies, or practices that resulted in his decision to retire.
Inline XBRL Instance Document-the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
+ Portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
