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ZLAB, Zai Lab Limited

Pharmaceuticals consumer brand Unprofitable

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.

To that end, our experienced team has secured partnerships with leading global biopharmaceutical companies to generate a broad pipeline, including multiple commercial products and multiple programs in late-stage clinical development.

Latest annual: FY2025 10-K

ZLAB · Zai Lab Limited

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$457M

+15.0% YoY · 56% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $447M 5-yr avg $296M

Gross margin 57% 5-yr avg 63%

Operating margin −54.2% 5-yr avg −186.9%

ROIC −1796% 5-yr avg −1282%

Owner-earnings margin −24% 5-yr avg −146%

Free cash flow margin −24% 5-yr avg −149%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

What it is: Revenue is led by ZEJULA (42%) and Vyvgart/Vyvgart Hytrulo (21%), with 5 more lines behind.
Situation: Unprofitable. No sustained operating profit across the record; an earnings multiple has nothing to rest on. What the record does show is revenue, the gross-margin trajectory, and the burn against the cash on hand.
What moves the needle: Operating margin has run around −486% through the cycle on a 64% gross margin, the operating line in the red even at its best — so the lever is whether the spending below the gross line can come down enough to clear a profit: revenue growth against the cost curve, and the cash runway until it does. The cash cycle has run negative through the cycle (a median of −179 days): the operation is paid before it pays, so working capital releases cash as the business grows rather than tying it up. Read this kind of business on the pipeline against the patent cliff, and pricing. On its own account, the filing leans hardest on customer concentration, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has rarely cleared the cost of capital (median −103%, above 15% in 0 of 8 years). Owner earnings, the cash-based check, have been thin too. This is price-taker territory, where the balance sheet and the cycle matter more than any multiple; the rest is in the 10-K.

Every line is arithmetic on the company's filings, shown in full in the sections below.

Where the money comes from

read the 10-K →

Revenue spreads across 7 lines, the largest ZEJULA at 42%.

Revenue by product line, FY2025

ZEJULA42%$189M
Vyvgart/Vyvgart Hytrulo21%$94M
NUZYRA14%$61M
OPTUNE11%$48M
QINLOCK8%$36M
XACDURO5%$23M
Other1%$6M

From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.

The record

Ten years of arithmetic, read across the cycle.

The record, 2018–2025

realized figures from each filing · older years to the left

2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMMar 2026
									Income statement
$129K	$13M	$49M	$144M	$213M	$267M	$398M	$457M	$447M	RevenueRevenue
67%	71%	66%	64%	65%	64%	63%	58%	57%	Gross marginGross mgn
n/m	541%	227%	152%	122%	106%	75%	61%	62%	SG&A / revenueSG&A/rev
n/m	n/m	455%	398%	135%	100%	59%	48%	50%	R&D / revenueR&D/rev
($142M)	($203M)	($302M)	($700M)	($404M)	($367M)	($282M)	($229M)	($243M)	Operating incomeOp. inc.
n/m	n/m	−616.4%	−485.8%	−190.1%	−137.4%	−71.0%	−50.2%	−54.2%	Operating marginOp. mgn
($139M)	($195M)	($269M)	($704M)	($443M)	($335M)	($257M)	($176M)	($178M)	Net incomeNet inc.
									Cash flow & returns
($98M)	($191M)	($216M)	($549M)	($368M)	($198M)	($215M)	($151M)	($101M)	Operating cash flowOp. cash
$2M	$4M	$5M	$6M	$8M	$9M	$12M	$15M	$15M	DepreciationDeprec.
$28M	($20M)	$23M	$108M	$6M	$48M	($40M)	($56M)	($2M)	Working capital & otherWC & other
$10M	$6M	$10M	$18M	$25M	$7M	$6M	$8M	$8M	CapexCapex
n/m	46.5%	20.7%	12.7%	11.6%	2.7%	1.4%	1.8%	1.7%	Capex / revenueCapex/rev
($99M)	($195M)	($221M)	($556M)	($376M)	($205M)	($221M)	($159M)	($109M)	Owner earningsOwner earn.
n/m	n/m	−450.8%	−385.6%	−176.7%	−77.0%	−55.5%	−34.8%	−24.3%	Owner earnings marginOE mgn
($108M)	($197M)	($226M)	($568M)	($392M)	($205M)	($221M)	($159M)	($109M)	Free cash flowFCF
n/m	n/m	−462.0%	−393.8%	−184.4%	−77.0%	−55.5%	−34.8%	−24.3%	Free cash flow marginFCF mgn
-60%	-73%	-33%	-133%	-860%	-4853%	-57%	-505%	-1796%	ROICROIC
-55%	-66%	-23%	-51%	-42%	-42%	-31%	-25%	-27%	Return on equityROE
−55%	−66%	−23%	−51%	−42%	−42%	−31%	−25%	−27%	Retained to equityRetained/eq
									Balance sheet
$63M	$276M	$1.2B	$1.4B	$1.0B	$806M	$780M	$690M	$661M	Cash & investmentsCash+inv
—	$4M	$5M	$47M	$40M	$59M	$85M	$106M	$54M	ReceivablesReceiv.
—	$6M	$13M	$19M	$32M	$45M	$40M	$75M	$86M	InventoryInvent.
—	$23M	$63M	$126M	$66M	$113M	$101M	$142M	$126M	Accounts payablePayables
—	($13M)	($44M)	($60M)	$6M	($9M)	$24M	$39M	$14M	Operating working capitalOper. WC
—	$292M	$1.2B	$1.5B	$1.1B	$940M	$1.1B	$1.0B	$945M	Current assetsCur. assets
—	$47M	$98M	$193M	$140M	$203M	$299M	$416M	$393M	Current liabilitiesCur. liab.
—	6.3×	12.4×	7.8×	8.0×	4.6×	3.5×	2.4×	2.4×	Current ratioCurr. ratio
—	$355M	$1.3B	$1.6B	$1.2B	$1.0B	$1.2B	$1.2B	$1.1B	Total assetsAssets
($63M)	($276M)	($1.2B)	($1.4B)	($1.0B)	($806M)	($780M)	($690M)	($661M)	Net debt / (cash)Net debt
-3544.2×	-693.5×	-1667.4×	—	—	—	-125.2×	-44.0×	-42.9×	Interest coverageInt. cov.
$251M	$295M	$1.2B	$1.4B	$1.0B	$796M	$841M	$716M	$662M	Shareholders’ equityEquity
n/m	156.3%	50.7%	28.3%	28.8%	29.9%	17.8%	14.3%	14.2%	Stock comp / revenueSBC/rev
									Per share
52.6M	64.4M	777M	930M	958M	966M	989M	1.10B	1.11B	Shares out (diluted)Shares
$0.00	$0.20	$0.06	$0.15	$0.22	$0.28	$0.40	$0.42	$0.40	Revenue / shareRev/sh
$-2.64	$-3.03	$-0.35	$-0.76	$-0.46	$-0.35	$-0.26	$-0.16	$-0.16	EPS (diluted)EPS
$-1.89	$-3.03	$-0.28	$-0.60	$-0.39	$-0.21	$-0.22	$-0.15	$-0.10	Owner earnings / shareOE/sh
$-2.04	$-3.06	$-0.29	$-0.61	$-0.41	$-0.21	$-0.22	$-0.15	$-0.10	Free cash flow / shareFCF/sh
$0.19	$0.09	$0.01	$0.02	$0.03	$0.01	$0.01	$0.01	$0.01	Cap. spending / shareCapex/sh
$4.77	$4.58	$1.51	$1.48	$1.09	$0.82	$0.85	$0.65	$0.60	Book value / shareBVPS

The diluted share count moved ×12.07 into 2020 — shares issued, not a split the totals corroborate — and the per-share figures carry the counts as filed.

Per-share growththe realized rate an owner's share compounded

	7-yr	5-yr
Revenue / share	+108.3%/yr	+45.9%/yr
Capital spending / share	−37.1%/yr	−10.7%/yr
Book value / share	−24.7%/yr	−15.4%/yr

The record, charted

FY2018–2025

Each measure over its full record; the current point and the worst year marked.

Share count

1.1Bpeak FY2025

ROIC

−505%low FY2023

Gross margin

58%low FY2025

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

($159M)owner earningsvs.($176M)net incomelow FY2021

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business turned a $176M loss into ($159M) of owner earnings: more cash than the profit line showed, after the non-cash charges and the capital it put back in.

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	($176M)	($257M)	($335M)	($443M)	($704M)
Depreciation & amortizationnon-cash charge added back	+$15M	+$12M	+$9M	+$8M	+$6M
Stock-based compensationreal costnon-cash, but a real cost	+$66M	+$71M	+$80M	+$61M	+$41M
Working capital & othertiming of cash in and out, other non-cash items	−$56M	−$40M	+$48M	+$6M	+$108M
Cash from operations	($151M)	($215M)	($198M)	($368M)	($549M)
Maintenance capital expenditurethe spending needed just to hold position and volume	−$8M	−$6M	−$7M	−$8M	−$6M
Owner earnings	($159M)	($221M)	($205M)	($376M)	($556M)
Growth capital expenditurediscretionary; spent to get bigger, not to stand still	—	—	—	−$16M	−$12M
Free cash flow	($159M)	($221M)	($205M)	($392M)	($568M)
Owner-earnings marginowner earnings ÷ revenue	-35%	-55%	-77%	-177%	-386%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $66M), owner earnings is nearer ($224M).

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? -44.0×

Does not cover its interest

Operating income ($229M) ÷ interest expense $5M

What this means
A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.
How heavy is the debt, net of cash? +$690M

Net cash, debt-free

Cash $680M + ST investments $10M − debt $0

What this means
Cash and short-term investments exceed every dollar of debt by $690M, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? -43d

Negative, funded by others

DSO 85 + DIO 143 − DPO 271 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. A negative cycle is a quiet moat: suppliers and customers fund the operation (Buffett's “float”), the company grows on other people's money.

Is it a good business?

Return on invested capital —

Not enough data

Industry peers: median -35%

What this means
The filing data didn't include the inputs for this check.
Owner-earnings margin -386%

Consumes cash through the cycle

8-yr median margin, range -76890%–-35%; latest ($159M) = operating cash ($151M) − maintenance capex $8M

Industry peers: median -38%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's -35% of revenue this year, a -386% median across 8 years. Treating stock comp as the real expense it is (less $66M of SBC) leaves ($224M).
Are earnings backed by cash? ($151M)

Loss, and burning cash

Net income ($176M) · cash from operations ($151M)

What this means
The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did not.

How is the cash used?

Where do the earnings go? —

Not enough data

What this means
The filing data didn't include the inputs for this check.
Investing or harvesting? 0.54×

Harvesting

Capex $8M ÷ depreciation $15M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 1 of 4 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Miss

Revenue ≥ $2B · $457M

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Pass

Current ratio ≥ 2× · 2.45×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Earnings stability Miss

A profit every year (8-yr record) · 8 loss years

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Miss

Uninterrupted dividends · none paid

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth —

Earnings +33% over the record · —

What this means
Earnings were negative early in the record, a growth rate isn't meaningful.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $-0.23/share (latest year $-0.16), the averaged base the calculator's gate runs on, and book value is $0.64/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2018–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 0 of 8

What this means
Lost money in 8 year(s), look at what happened there before trusting the average.
Operating margin −37360% → −86% (3-yr avg ends)

What this means
Through the cycle the operating margin widened — about −37360% early to −86% lately, median −486% — pricing power intact or improving.
Worst year 2018 · −109897.7% op. margin

What this means
Operations went underwater in 2018, understand why before trusting the good years.
How management talks about it Promotional

What this means
The record is compounding, but the filing leans on a promoter’s vocabulary rather than the per-share, return-on-capital terms an owner uses. The results back the talk here; the register is still worth noting.

Does AI threaten the moat?

Low contestability

The moat is physical, regulated or balance-sheet-funded, the kind AI cuts costs within but does not contest.

In its own filing A competitive risk, new this year

Its FY2025 10-K names artificial intelligence as a competitive threat, in language that was not in the prior year's filing.

“We may experience operational, regulatory, and competitive risks due to our use of artificial intelligence.”

AI is unlikely to contest a moat that is physical, regulated or balance-sheet-funded; here it reads more as a cost tool than a threat.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Mar 31, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$945M

Cash & short-term investments$661M
Receivables$54M
Inventory$86M
Other current assets$143M

Current liabilities$393M

Accounts payable$126M
Other current liabilities$267M

Current ratio2.40×all current assets ÷ what's due · Graham looked for 2×

Quick ratio2.19×stricter: inventory excluded

Cash ratio1.68×strictest: cash alone against what's due

Working capital$552Mthe cushion left after near-term bills

Cash runway6.1 yrsthe business is consuming cash; this is how long the cash on hand lasts at that rate

Revenue, latest quarter vs. a year ago−6.5%the freshest read on whether the business is still growing

Current ratio, recent quarters3.5× → 2.4×

Deeper floors

Tangible book value$586Mequity stripped of goodwill & intangibles

Net current asset value$511MGraham's net-net: current assets less all liabilities

Debt incl. operating leases$18M$18M of it operating leases

From the company's latest filing.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Chief executive	Pay, as filed	“Actually paid”	Owner earnings
2021	Samantha (Ying) Du	$15.3M	−$30.5M	($556M)
2022	Samantha (Ying) Du	$20.2M	$740k	($376M)
2023	Samantha (Ying) Du	$12.0M	$7.5M	($205M)
2024	Samantha (Ying) Du	$9.1M	$12.1M	($221M)
2025	Samantha (Ying) Du	$10.7M	$1.9M	($159M)

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

Stock-based compensation$66M
The slice of the business handed to employees in shares this year, 14% of revenue. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

What an owner would ask, FY2025

read the 10-K →

How much of the revenue rides on one buyer?
≈$148M · 33% of revenue on the largest customers (TTM)
“Our five largest customers accounted for approximately 33.1% and 32.4% of our total product revenue in 2025 and 2024, respectively.”verify →
Which reported numbers are a judgment call?
Management names Revenue recognition, Income taxes, Stock compensation as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, Pharmaceuticals

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
MIRMMirum Pharmaceuticals Inc.	$521M	—	-58.6%	-61%	-38%
BBIOBridgeBio Pharma Inc.	$502M	96%	-659.6%	—	-627%
TVTXTravere Therapeutics	$491M	97%	-83.6%	-35%	-20%
NATRNature's Sunshine Products Inc.	$480M	73%	4.3%	12%	4%
ZLABZai Lab Limited	$457M	65%	-338.0%	-103%	-281%
INVAInnoviva Inc.	$411M	—	85.6%	44%	63%
ARDXArdelyx Inc.	$407M	87%	-138.7%	-82%	-232%
ESPREsperion Therapeutics Inc.	$403M	—	-62.8%	—	-48%
Group median	—	87%	-73.2%	-48%	-43%

The price

What a price has to assume.

What the price implies

reverse-DCF

Zai Lab Limited is profitable, but owner earnings are negative this year because capital spending currently outruns operating cash, a build-out, so the owner-earnings reverse-DCF has no positive base to grow. We read the price from both ends instead: type a price to see the steady-state profitability it demands, then set the mature margin you would believe and weigh the two against each other. Nothing leaves your browser unless you enter it in your notebook.

Today’s price $

The assumptions Required return 9% Years to get there 10 Revenue growth 0%

Revenue, delivered51%/yr’20→’25

Mature owner-earnings margin 15%

Enter a price to run it.

Owner earnings it must reach—

Margin the price demands—

Owner-earnings margin today−24%

Two reads of one future. From your price: the owner earnings the company must reach, valued at a mature multiple and discounted back at your rate, expressed as the margin it implies on revenue grown at your rate. From your belief: the mature margin you would credit, set on the dial above. When the margin the price demands runs above the one you would believe, you are paying for a future taken on faith. For a deep cyclical at a trough, normalized through-cycle earnings are the better lens; this mode is for the genuinely unprofitable, and for the profitable business whose capital spending currently outruns its cash.

Weigh ZLAB against another business →

The owners of ZLAB: the meeting and the votes →

Cite: Owner Scorecard, "Zai Lab Limited (ZLAB), the owner's record," https://ownerscorecard.com/c/ZLAB, data as of 2026-07-09.

Manual order: ← ZIP its page in the Manual ZM →

Industry order: ← ZBIO the Pharmaceuticals chapter ZTS →