What happened

Shares of Chinese biotech company Zai Lab Limited (ZLAB 0.87%) were up more than 59.2% for the week as of Thursday afternoon, according to data provided by S&P Global Market Intelligence. The stock closed at $30.70 on Friday and rose to as high as $49.81 on Thursday. Zai Lab has a 52-week low of $20.98 and a 52-week high of $61.29. The stock is down more than 43% over the past year.

So what

Zai Lab focuses on therapies to treat cancer, autoimmune disorders, infectious diseases, and neurological disorders. The driving force for the huge run was the announcement before the markets opened on Thursday that Zai and Swiss pharmaceutical company  Novocure (NVCR 1.90%)'s therapy, Tumor Treating Fields (TTFields), had met its primary endpoint in a phase-3 clinical trial to treat stage-4 non-small cell lung cancer (NSCLC) patients who have had or are on chemotherapy. The treatment, combined with immune checkpoint inhibitors, showed clinically significant tumor reduction compared to just using checkpoint inhibitors alone.

Based on the results, Novocure said it planned to file a premarket approval application with the Food and Drug Administration (FDA) in the second half of the year. Zai Lab would market the drug in China, where it said lung cancer is the most commonly diagnosed form of cancer and the leading cause of cancer deaths.

Non-small cell lung cancer is the most common form of lung cancer. It was estimated by the American Cancer Society that in 2022, there would be 236,740 new cases of lung cancer in the United States, and 82% of those would be diagnosed with NSCLC. 

According to Zai Lab, TTFields are electric fields that kill cancer cells without affecting healthy cells as they have different properties than the cancer cells.

The company has another NSCLC therapy, Krazati (adagrasib), which it developed with Japanese pharmaceutical company Mirati Therapeutics. On Dec. 12, the FDA granted accelerated approval to the drug to be used for adults with KRAS G12C-mutated locally advanced or metastatic non–small cell lung cancer (NSCLC).

Now what

Zai Lab is already seeing growing sales from its lead drug, Zejula, a pill used as a monotherapy to treat advanced ovarian cancer. In the third quarter, the company reported revenue of $57.5 million, up 33% year over year and 19% sequentially, thanks mostly to increased Zejula sales, it said. The company also listed $1.12 billion in cash. It also lost $161.2 million in the quarter, or $0.17 in earnings per share (EPS), compared to a loss of $96.4 million or an EPS loss of $0.10 in the same quarter a year ago.

Chinese stocks are a little trickier for investors in recent years, because of politics in China affecting some stocks and because of delisting concerns. However, with a second promising, new drug collaboration, things are looking up for Zai Lab.