Zai Lab Plunges 13% on $750 Million Share Offering

The biopharmaceutical firm has been advancing its products at a fast pace; now it seeks more capital.
Anthony RussoApr 20,2021,14:38

Shares in Zai Lab (Nasdaq: ZLAB) slipped 13% in early trading Tuesday on news of a follow-on share sale worth $750 million.

The biopharmaceutical firm has yet to disclose the pricing and the number of shares it’s offering to raise to the funds. Based on Monday’s close of $164.33 per share, Zai Lab would offer around 4.6 million shares.

Zai Lab is planning on allowing the underwriters a 30-day option to buy an unspecified amount of additional shares. Goldman Sachs & Co. LLC, Jefferies LLC, Morgan Securities LLC, Citigroup Global Markets Inc., SVB Leerink LLC, and Guggenheim Securities, LLC are the joint book-running managers on the deal.

Meanwhile, at the close of trading in Hong Kong today, Zai Lab was trading at HK$1,294 per share, 3% above Monday’s close. Since raising $825 million in a secondary listing, the company's Hong Kong shares have more than doubled from the issue price of HK$562.

Zai Lab, which has headquarters in both Shanghai and San Francisco, had 21 product candidates in its pipeline, including 11 in late-stage development, as of early March. According to Zai Lab, it has three commercialized products in China. That includes the recent approval of QINLOCK® (ripretinib), which treats adult individuals who have advanced gastrointestinal stromal tumors.

“We see the [Qinlock] approval as a further validation to Zai Lab’s robust clinical development and regulatory communication capability (approval 8.4 months from NDA acceptance and 22 months from in-licensing), confirming one of our thesis points from our initiation,” Goldman Sachs analyst Ziyi Chen wrote, as cited by TipRanks earlier this month.

Chen also said, “In addition, we believe Qinlock will be eligible for this year’s NRDL price negotiation (last year’s cutoff Aug 17, 2020) although no official guidance has been given by the company.”

Currently, Chen has a $211.23 per share price target on Zai Lab, representing 48% upside from its current levels.

Topics:Zai Lab, China