Samantha Du's Zai Lab sets its ambitions sky high, looking to raise $750M to fuel its licensing business model
Looking to capitalize on a bustling Chinese drug market, upstart biotechs like Samantha Du’s Zai Lab have made a killing in-licensing foreign molecules as well as developing their own homegrown assets. Now, with even more growth in mind, Zai Lab has offered up a healthy chunk of shares on the US market to fuel its ambitions.
Zai Lab will offer $750 million in US depository shares as part of a major cash raise to keep driving its in-licensing business engine as well as advance its suite of clinical programs, the Chinese biotech said this week.
According to its 424(b)(f) prospectus, Zai Lab will use roughly 30% of those proceeds toward “corporate development and licensing opportunities,” the biotech said, looking to build on its business model in-licensing molecules for use in China.
So far, that business plan has proved lucrative, and Zai Lab has inked bigger and bigger licensing pacts along the way. Back in January, Du’s company inked a deal with argenx worth a cool $175 million for regional rights to autoimmune drug efgartigimod in China, Taiwan, Hong Kong and Macau. In exchange, argenx CEO Tim Van Hauwermeiren got $75 million upfront in Zai Lab stock, another $75 million as a guarantee from Zai Lab for their cost-sharing arrangement, and another $25 million milestone tied to US approval of the late-stage drug.
Zai Lab is also the exclusive Chinese license holder for Amgen’s bemarituzumab, which just earned the FDA’s breakthrough designation in gastric cancer. The molecule came over as part of Amgen’s acquisition of Five Prime in March.
In addition to adding to its cash pile for potential licenses, Zai Lab also plans to use a big chunk of its proceeds to advance a suite of drugs through clinical trials — allocating about 30% of the $750 million to that effort. One of those projects is a collaboration with Novocure working on using electrical fields to treat non-small cell lung cancer. The partners recently scaled back a Phase III trial after an independent data monitoring committee saw enough to go on to slow enrollment.
As for the rest of the planned cash raise? Zai Lab will dedicate 20% to expand their commercial efforts, 15% to “enhance our global pipeline” and about 5% for “working capital and other general corporate purposes,” the biotech said.
Of course, all those levels are not set in stone, and Zai Lab is reserving the right to switch those percentages around as needs arise — particularly based on progress in the clinic.
“Due to the many variables inherent to the development of our drug candidates at this time, such as the timing of patient enrollment and evolving regulatory requirements, we cannot currently predict the stage of development we expect to achieve for our pre-clinical and clinical trial and drug candidates with the net proceeds of this offering,” Zai Lab said.