ZLAB

You should read the following discussion and analysis of our financial condition and results of operations together with our 2025 Annual Report and our unaudited condensed consolidated financial statements and the accompanying notes for the three and six months ended June 30, 2026 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. We currently have eight commercial programs – ZEJULA, VYVGART / VYVGART Hytrulo, NUZYRA, OPTUNE, QINLOCK, XACDURO, AUGTYRO, and KarXT – with products that have received marketing approval and that we have commercially launched in China. We also have 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 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 $105.8 million for the second quarter of 2026, a decrease of 3% compared to the prior year period, primarily driven by decreased revenue for ZEJULA, due to a shift in hospital utilization patterns following volume-based procurement for generic olaparib, and VYVGART, primarily due to a pricing adjustment related to NRDL renewal. These decreases were partially offset by increased sales for XACDURO, driven by strong patient demand and expanding hospital adoption but partially constrained by supply limitations, and increased sales for NUZYRA, supported by increased market coverage and penetration. In June 2026, we launched KarXT in mainland China for the treatment of schizophrenia in adults. KarXT is the first schizophrenia therapy with a novel mechanism of action approved in over 70 years, offering a new approach to treating schizophrenia through selective activation of M1 and M4 muscarinic receptors. We are preparing to seek inclusion of KarXT in China’s NRDL in 2027. 19 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 •Zocilurtatug Pelitecan (Zoci, DLL3-Targeting ADC) (formerly ZL-1310): In April 2026, we presented compelling clinical data at the American Association for Cancer Research (“AACR”) Annual Meeting 2026 demonstrating that zoci delivers rapid and robust intracranial responses in patients with previously treated ES-SCLC and brain metastases as measured by blinded independent assessment using mRANO-BM criteria, as well as promising data in patients with extrapulmonary NECs. ◦SCLC with Brain Metastases: Zoci showed a 53.7% confirmed intracranial objective response rate with 62.5% (10/16) at the 1.6 mg/kg dose, including complete responses. Notably, responses were observed in patients without prior brain radiotherapy (9/15, 60%), highlighting the net drug effect on the intracranial lesions. Zoci was well tolerated, with Grade ≥3 treatment-related adverse events (“TRAEs”) in 19.9% (27/136) of the overall population and in 16.4% (9/55) of patients who received 1.6 mg/kg. ◦Extrapulmonary NECs: Encouraging activity was observed with a 38.2% confirmed objective response rate across extrapulmonary NECs of different primary origins. The safety profile in extrapulmonary NECs was consistent with that previously observed in SCLC with Grade ≥3 TRAEs in 15.2% of patients in Phase 1b. We are actively engaging with health authorities on a registrational plan for extrapulmonary NECs. Combination Collaborations: In April 2026, we announced a global clinical trial collaboration with Amgen to evaluate zoci in combination with Amgen’s IMDELLTRA® (tarlatamab-dlle), a DLL3/CD3 bispecific T-cell engager, for ES-SCLC and a clinical collaboration with Boehringer Ingelheim to evaluate zoci in combination with obrixtamig, a DLL3/CD3 bispecific T-cell engager, for SCLC and other NECs. In April 2026, Amgen initiated enrollment in the global Phase 1b study (DeLLphi-313) evaluating zoci in combination with tarlatamab with or without anti-PD-L1 in patients with SCLC. Regulatory Designations: In May 2026, we received Fast Track Designation from the FDA for zoci for the treatment of patients with extrapulmonary NECs. This is the second FDA Fast Track Designation for zoci. In June 2026, we received Orphan Drug Designation (ODD) from the EMA for zoci for the treatment of patients with pulmonary NECs, and in July 2026, we received ODD from the FDA for zoci for the treatment of NECs. •TIVDAK (tisotumab vedotin): In June 2026, China’s NMPA approved the BLA for TIVDAK for the treatment of adult patients with recurrent or metastatic cervical cancer with disease progression on or after chemotherapy. TIVDAK is the first ADC approved in China for this indication. TIVDAK demonstrated a statistically significant overall survival benefit in the global Phase 3 innovaTV 301 clinical trial, including in the trial’s China subpopulation. Immunology, Neuroscience, and Infectious Disease •ZL-1503 (IL-13/IL-31Rα): In April 2026, we announced new data from a preclinical study of ZL-1503, demonstrating that our internally developed long-acting IL-13/IL-31Rα bispecific antibody may lead to sustained suppression of intense pruritus (itch) and inflammation caused by atopic diseases. The findings reinforce the potential of ZL-1503 to be a first-in-class treatment option for moderate-to-severe atopic dermatitis and other IL-13 and IL-31-driven diseases. A global Phase 1/1b study is ongoing, and we expect to report the first-in-human data from the global Phase 1 portion in the second half of 2026. •Efgartigimod (FcRn): In May 2026, the FDA approved the supplemental BLA submitted by our partner argenx for VYVGART and VYVGART Hytrulo, expanding the label to include all serotypes of adult patients 20 living with gMG — anti-AChR-Ab positive, anti-MuSK-Ab positive, anti-LRP4-Ab positive, and triple seronegative. The approval is based on data from the Phase 3 ADAPT SERON study. We participated in the ADAPT SERON study in Greater China. •Povetacicept (Pove, Anti-APRIL/BAFF): In June 2026, our partner Vertex announced that the FDA accepted its BLA submission for pove for accelerated approval in adults with IgAN, with a PDUFA target action date of November 30, 2026. We participated in the global Phase 3 RAINIER study in Greater China. •Elegrobart (Anti-IGF-1R, SC): Viridian Therapeutics announced positive topline data from REVEAL-2, elegrobart’s pivotal Phase 3 clinical trial for chronic TED, in May 2026. Elegrobart was generally well tolerated, and the trial met its primary endpoint with a highly statistically significant treatment effect. Both elegrobart Q4W and Q8W treatment arms achieved statistically significant and clinically meaningful 50% and 54% proptosis responder rates, respectively, versus 15% placebo at week 24. The Q4W treatment arm additionally provided meaningful diplopia benefit to patients with chronic TED. We have an exclusive license from Zenas BioPharma to develop and commercialize elegrobart in Greater China and are currently conducting a Phase 3 bridging study in the region. Organizational Updates During the second quarter, we continued to strengthen our business through key additions to our global leadership team. For example, in April 2026, we appointed Yizhe Wang, Ph.D., as Operating Partner, to strengthen our commercial capabilities and execution. Dr. Wang brings extensive experience in global oncology and immunology commercial operations, having led commercial teams across China, the U.S., and the U.K. at GSK and Eli Lilly. In May 2026, Josh Smiley, President and Chief Operating Officer, departed the Company. 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 VYVGART / VYVGART Hytrulo, OPTUNE, QINLOCK, XACDURO, AUGTYRO, and KarXT 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 capitalized post-approval milestone fees incurred under our license and collaboration agreements. We expect to 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 to launch additional commercial products, if and when we obtain required regulatory approvals. 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 CROs and CMOs, investigators, and clinical trial sites that conduct our clinical studies; and 21 •costs to produce the product candidates, including raw materials and supplies, product testing, depreciation, and facility-related expenses. 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, 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 globally. 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 June 30, 2026, we may in the future be required to pay development and regulatory milestone payments of up to an additional aggregate amount of $197.0 million for our current clinical programs and $863.0 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 June 30, 2026, we also in the future may be required to pay sales-based milestone payments of up to an additional aggregate amount of $3,078.0 million as well as certain royalties at tiered percentage rates on annual net sales. Such sales-based milestone and royalty payments are contingent on the performance of our commercial products, and we see these payments as favorable because they signify that a product is achieving higher sales levels. 22 Results of Operations In this section, we discuss our results of operations for the three and six months ended June 30, 2026 compared to the same periods in 2025. The following table presents our results of operations ($ in thousands): Three Months Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % Revenues Product revenue, net 105,751 109,085 (3,334) (3) % 201,307 214,735 (13,428) (6) % Collaboration revenue 560 892 (332) (37) % 4,615 1,729 2,886 167 % Total revenues 106,311 109,977 (3,666) (3) % 205,922 216,464 (10,542) (5) % Expenses Cost of product revenue (48,162) (43,003) (5,159) 12 % (86,477) (81,455) (5,022) 6 % Cost of collaboration revenue — (217) 217 (100) % (20) (412) 392 (95) % Research and development (61,766) (50,614) (11,152) 22 % (127,357) (111,343) (16,014) 14 % Selling, general, and administrative (72,872) (71,038) (1,834) 3 % (137,942) (134,460) (3,482) 3 % Loss from operations (76,489) (54,895) (21,594) 39 % (145,874) (111,206) (34,668) 31 % Interest income 5,879 8,843 (2,964) (34) % 12,326 17,449 (5,123) (29) % Interest expenses (1,587) (1,262) (325) 26 % (3,224) (2,449) (775) 32 % Foreign currency gains 15,065 2,837 12,228 431 % 29,902 3,488 26,414 757 % Other income, net 5,285 3,750 1,535 41 % 5,447 3,553 1,894 53 % Loss before income tax (51,847) (40,727) (11,120) 27 % (101,423) (89,165) (12,258) 14 % Income tax benefit (expense) 1,022 — 1,022 — % (418) — (418) — % Net loss (50,825) (40,727) (10,098) 25 % (101,841) (89,165) (12,676) 14 % Revenues Product Revenue, Net The following table presents net revenue by commercial program ($ in thousands): Three Months Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % ZEJULA 32,079 41,042 (8,963) (22) % 62,046 90,571 (28,525) (31) % VYVGART / VYVGART Hytrulo 23,866 26,497 (2,631) (10) % 41,417 44,602 (3,185) (7) % NUZYRA 17,097 14,292 2,805 20 % 33,359 29,410 3,949 13 % OPTUNE 12,202 12,355 (153) (1) % 24,272 23,718 554 2 % QINLOCK 9,590 8,536 1,054 12 % 18,575 17,045 1,530 9 % XACDURO 7,957 4,622 3,335 72 % 16,529 5,739 10,790 188 % AUGTYRO 2,213 1,399 814 58 % 4,005 3,025 980 32 % KarXT 552 — 552 NM 552 — 552 NM Other (i) 195 342 (147) (43) % 552 625 (73) (12) % Total product revenue, net 105,751 109,085 (3,334) (3) % 201,307 214,735 (13,428) (6) % NM - Not Meaningful (i)Other includes product candidates sold in patient programs prior to commercialization. Our product revenue is primarily derived from the sales of our commercial products in mainland China, net of sales returns and rebates to distributors with respect to the sales of these products. 23 Our net product revenue decreased by $3.3 million and $13.4 million in the three and six months ended June 30, 2026, respectively, primarily driven by decreased revenue for ZEJULA, due to a shift in hospital utilization patterns following volume-based procurement for generic olaparib, and VYVGART, primarily due to a pricing adjustment related to NRDL renewal. These decreases were partially offset by increased sales for XACDURO, driven by strong patient demand and expanding hospital adoption but partially constrained by supply limitations, and increased sales for NUZYRA, supported by increased market coverage and penetration. Cost of Product Revenue Cost of product revenue increased by $5.2 million and $5.0 million in the three and six months ended June 30, 2026, primarily due to a shift in product mix and the inventory write-down in the second quarter in 2026. Collaboration Revenue and Cost of Collaboration Revenue In the three and six months ended June 30, 2026, collaboration revenue increased by $0.3 million and $2.9 million, respectively, mainly related to a regional license and collaboration arrangement. Cost of collaboration revenue was insignificant in the three and six months ended June 30, 2026. Research and Development Expenses The following table presents the components of our research and development expenses ($ in thousands): Three Months Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % Personnel compensation and related costs 22,713 22,447 266 1 % 41,183 46,527 (5,344) (11) % Licensing fees 15,000 — 15,000 NM 37,000 19,997 17,003 85 % CROs/CMOs/Investigators expenses 18,259 19,935 (1,676) (8) % 37,800 29,765 8,035 27 % Other costs 5,794 8,232 (2,438) (30) % 11,374 15,054 (3,680) (24) % Total 61,766 50,614 11,152 22 % 127,357 111,343 16,014 14 % NM - Not Meaningful Research and development expenses increased by $11.2 million in the three months ended June 30, 2026, primarily due to: •an increase of $15.0 million in licensing fees in connection with increased milestone fees for our license and collaboration agreements; partially offset by •a decrease of $4.1 million in CROs/CMOs/Investigators expenses and other clinical and pre-clinical costs. Research and development expenses increased by $16.0 million in the six months ended June 30, 2026, primarily due to: •an increase of $17.0 million in licensing fees in connection with increased upfront and milestone fees for our license and collaboration agreements; •an increase of $4.4 million in CROs/CMOs/Investigators expenses and other clinical and pre-clinical costs; partially offset by •a decrease of $5.3 million in personnel compensation and related costs primarily driven by our resource prioritization and efficiency efforts. 24 The following table presents our research and development expenses by program ($ in thousands): Three Months Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % Clinical programs 14,792 16,967 (2,175) (13) % 45,881 45,059 822 2 % Pre-Clinical programs 19,609 5,069 14,540 287 % 31,325 8,383 22,942 274 % Unallocated research and development expenses 27,365 28,578 (1,213) (4) % 50,151 57,901 (7,750) (13) % Total 61,766 50,614 11,152 22 % 127,357 111,343 16,014 14 % In the three months ended June 30, 2026, research and development expenses attributable to clinical programs decreased by $2.2 million, primarily driven by a decrease in trial costs based on the progress of our studies. Research and development expenses attributable to pre-clinical programs increased by $14.5 million, primarily driven by an increase in licensing fees for our license and collaboration agreements. In the six months ended June 30, 2026, research and development expenses attributable to pre-clinical programs increased by $22.9 million, primarily driven by an increase in licensing fees for our license and collaboration agreements. Although we manage our external research and development expenses by program, we do not allocate our internal research and development expenses by program because our employees and internal resources may be engaged in projects for multiple programs at any given time. Selling, General, and Administrative Expenses The following table presents our selling, general, and administrative expenses by category ($ in thousands): Three Months Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % Personnel compensation and related costs 44,707 42,679 2,028 5 % 85,767 83,322 2,445 3 % Other costs 28,165 28,359 (194) (1) % 52,175 51,138 1,037 2 % Total 72,872 71,038 1,834 3 % 137,942 134,460 3,482 3 % Selling, general, and administrative expenses remained relatively flat in the three and six months ended June 30, 2026, compared to the prior year periods, reflecting continued efforts to streamline the organization, optimize resource allocation, and enhance operating efficiency as the company advances its next phase of growth. Interest Income Interest income decreased by $3.0 million and $5.1 million in the three and six months ended June 30, 2026, respectively, primarily due to decreased interest rates. Interest Expense Interest expense increased by $0.3 million and $0.8 million in the three and six months ended June 30, 2026, respectively, primarily due to higher levels of short-term debt. Foreign Currency Gains Foreign currency gains increased by $12.2 million and $26.4 million in the three and six months ended June 30, 2026, respectively, primarily due to appreciation of the RMB against the U.S. dollar. 25 Other Income, Net Other income, net increased by $1.5 million and $1.9 million in the three and six months ended June 30, 2026, respectively, primarily due to higher government grants. Income Tax Expense Income tax benefit was $1.0 million in the three months ended June 30, 2026 primarily due to the deferred tax assets recognized related to the inventory provision as of June 30, 2026. Income tax expense was $0.4 million in the six months ended June 30, 2026 attributable to taxable income in certain Chinese entities. Income tax expense was nil in both the three and six months ended June 30, 2025 as the Company’s subsidiaries were in cumulative loss positions. Net Loss Net loss was $50.8 million in the three months ended June 30, 2026, or a loss per ordinary share attributable to shareholders of $0.05 (or loss per ADS of $0.46), compared to a net loss of $40.7 million in the three months ended June 30, 2025, or a loss per ordinary share of $0.04 (or loss per ADS of $0.37). Net loss was $101.8 million in the six months ended June 30, 2026, or a loss per ordinary share attributable to shareholders of $0.09 (or loss per ADS of $0.92), compared to a net loss of $89.2 million in the six months ended June 30, 2025, or a loss per ordinary share of $0.08 (or loss per ADS of $0.82). 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 26 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 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 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 historical information to develop reasonable expectations 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 and public offerings, including 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. We have raised approximately $164.6 million in private equity financing and approximately $2,677.8 million in net proceeds from public offerings after deducting underwriting commissions and the offering expenses payable by us. Our operations have consumed substantial amounts of cash since inception. The net cash used in our operating activities was $75.3 million and $92.7 million in the six months 27 ended June 30, 2026 and 2025, 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 June 30, 2026, we had commitments of $1.8 million related to commercial manufacturing development activities and capital expenditures. We have also identified opportunities to access capital through debt arrangements on favorable commercial terms. As of June 30, 2026, we had such debt arrangements with Chinese financial institutions that allow certain of our subsidiaries to borrow up to approximately $320.0 million (or RMB2,271.7 million) to support our working capital needs in mainland China. As of June 30, 2026, we had short-term debt outstanding of $238.1 million (or RMB1,479.5 million) pursuant to these debt arrangements. These debt arrangements provide us with additional capital capacity that will give us enhanced flexibility to execute our corporate strategic goals. For more information, see Note 10. As of June 30, 2026, we had cash and cash equivalents, current restricted cash, and short-term investments of $717.5 million, which we expect will enable us to meet our cash requirements including the funding of operating expenses, capital expenditures, and debt obligations for at least the next 12 months. Although we believe that we have sufficient capital to fund our operations for at least the next twelve months, we may, from time to time, utilize debt arrangements on favorable commercial terms, subject to lenders’ assessment of our financial position including our cash balances, or consider additional funding sources to bring to fruition our strategic objectives. There can be no assurances that such funding will be made available to us on acceptable terms or at all. The following table presents information regarding our cash flows ($ in thousands): Six Months Ended June 30, Change 2026 2025 $ Net cash used in operating activities (75,318) (92,723) 17,405 Net cash (used in) provided by investing activities (23,705) 323,211 (346,916) Net cash provided by financing activities 24,278 51,990 (27,712) Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash 2,696 125 2,571 Net (decrease) increase in cash, cash equivalents and restricted cash (72,049) 282,603 (354,652) Net Cash Used in Operating Activities Net cash used in operating activities decreased by $17.4 million in the six months ended June 30, 2026, primarily due to an increase of $61.4 million in net changes in operating assets and liabilities, partially offset by a decrease of $31.3 million in other adjustments to reconcile net loss to net cash used in operating activities and an increase of $12.7 million in net loss. Net Cash (Used in) Provided by Investing Activities Net cash used in investing activities was $23.7 million in the six months ended June 30, 2026, compared to net cash provided by investing activities of $323.2 million in the six months ended June 30, 2025, primarily due to a decrease of $330.0 million in proceeds from the maturity of short-term investments, an increase of $17.6 million from acquisitions of intangible assets, and a decrease of $1.2 million in proceeds from the sale of an equity investment, partially offset by a decrease of $1.9 million in purchases of property and equipment. Net Cash Provided by Financing Activities Net cash provided by financing activities decreased by $27.7 million in the six months ended June 30, 2026, primarily due to an increase of $47.1 million in repayment of short-term bank borrowings, a decrease of $9.7 million in proceeds from exercises of stock options, and an increase of $4.4 million in employee taxes paid related to net share settlement of equity awards, partially offset by an increase of $32.6 million in short-term debt proceeds. 28 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 2025 Annual Report. The Company has not adopted any new accounting standards in the three and six months ended June 30, 2026.