China’s Zai Lab files for $115M Nasdaq IPO to take Tesaro, Bristol-Myers cancer drugs through late-p

Zai Lab has filed to raise up to $115 million in a Nasdaq IPO. The biotech plans to use the money to hustle cancer drugs licensed from Bristol-Myers Squibb and Tesaro through late-phase trials in its home country of China.

Since setting up shop in 2014, Zai Lab has quickly established a clinical-phase pipeline by striking deals for assets with GlaxoSmithKline, Sanofi, UCB, Bristol-Myers, Paratek Pharmaceuticals and Tesaro. The drugs Zai Lab picked up from the latter three companies are among the most advanced in its pipeline—and are the focus of the planned post-IPO spending spree.

Phase 3 trials of niraparib, the Tesaro PARP inhibitor the FDA approved earlier this year, in cancer of the ovaries, breasts and lung will account for a sizable, as-yet-undisclosed slice of the IPO haul. The plan is to start a phase 3 ovarian cancer trial as a second-line maintenance therapy later this year, before moving into a first-line study in the first half of next year. Zai Lab is also aiming to kick off a phase 3 trial in gBRCA-positive breast cancer patients by the midpoint of next year. 

Shanghai, China-based Zai Lab thinks the trials could tee it up to become the first company to win approval for a PARP inhibitor in their home country and is already planning ahead to that day. A tranche of the IPO money is earmarked for commercialization of the drug in China, Hong Kong, S.A.R., China and Macau, S.A.R., China.   

Zai Lab picked up the right to develop niraparib in China from Tesaro. The F-1 reveals Zai Lab paid $10.9 million upfront for the rights in a deal that gave Tesaro the option to help commercialize the PARP inhibitor in China.

Zai Lab also singled out phase 3 trials of omadacycline and phase 2/3 trials of ZL-2301 as uses for the IPO funds. Paratek granted Zai Lab the rights to the antibiotic omadacycline in return for $7.5 million upfront earlier this year. Zai Lab has phase 3 trials in acute bacterial skin/skin structure infections and community-acquired bacterial pneumonia in its sights but is yet to set a start date as it is still transferring the technology from Paratek and gearing up for talks with regulators.    

ZL-2301 is further back still and represents a more speculative punt for Zai Lab. Whereas niraparib and omadacycline had generated positive phase 3 data by the time Zai Lab got involved, ZL-2301 came to the Chinese biotech after failing in two late-stage trials. 

In 2011 and 2012, Bristol-Myers reported the dual target tyrosine-kinase inhibitor—then known as brivanib or BMS-582664—could neither match Amgen and Bayer’s Nexavar in hepatocellular carcinoma (HCC) nor help patients who progressed following treatment with the latter drug.   

Those data curtailed Bristol-Myers’ plans to file for approval. But Zai Lab spotted potential in the drug after digging into the data, considering the standard of care in China and factoring in its belief the role of hepatitis B and different biology in local cases of HCC renders Nexavar less effective than in the West.

The decision to snag rights to the drug was made when Nexavar was a $7,500-a-month drug not covered by national insurance, as The Wall Street Journal reported last year. The competitive landscape has changed since then, though. Bayer halved the price of Nexavar as part of a clutch of deals the Chinese government struck with drugmakers earlier this year. Yet, with most patients in China still TKI-naive when starting second-line treatment, Zai Lab still thinks ZL-2301 can find a market.

Work to test this theory, starting with a recently initiated phase 2 trial, is being overseen by Samantha Du, Zai Lab’s CEO. Du worked for Pfizer, founded and helmed Hutchison MediPharma and held a post at Sequoia Capital China before setting up Zai Lab. As CEO, Du has used her connections to set up the string of deals that built Zai Lab’s pipeline and raise $164.5 million in VC money from funds including Sequoia. Du owns about 20% of Zai Lab.