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Zai Lab Stock Down, Atopic Dermatitis Candidate Trial Fails

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Shares of Zai Lab Limited (ZLAB - Free Report) declined on Friday Aug 24 following disappointing results from a phase IIA study on its pipeline candidate ZL-3101. However, the stock has increased 8.3% against the industry’s 5.5% decline so far this year.

The company announced that it will discontinue the development of its pipeline candidate, ZL-3101 (Fugan), for atopic dermatitis (AD) — a type of eczema. The decision was taken post the release of top-line results from a phase IIA study of ZL-3101 on patients with mild to moderate subacute eczema.

The double-blinded placebo-controlled phase IIA study enrolled (n=295) Chinese patients with AD. The primary objective was to evaluate efficacy of ZL-3101 ointment schedule /dose. 

The primary endpoint is to measure the EASI (Eczema Area and Severity Index) score changes from baseline to day 21 of treatment. The secondary aim is to assess the safety and tolerability of ZL-3101 ointment in subjects with mild to moderate subacute eczema.

Zai Lab initiated the phase II study of ZL-3101 during the second quarter of 2017.

Notably, the company licensed the exclusive worldwide rights to ZL-3101 in 2016 from Glaxo (GSK - Free Report) . ZL-3101 is a novel steroid-sparing topical product, currently being evaluated for the treatment of eczema and psoriasis.

Apart from ZL-3101, Zai Lab has a pipeline candidate called ZL-2302. It is a multi-targeted tyrosine kinase inhibitor with activity against both Anaplastic lymphoma kinase (ALK) mutation and crizotinib-resistant ALK mutations. Presently, the candidate is being developed for treating patients with non-small cell lung cancer having ALK mutations and developed a crizotinib resistance and/or brain metastasis. The company acquired the exclusive worldwide rights to ZL-2302 from Sanofi (SNY - Free Report) in 2015.

Zai Lab’s marketed product is Zejula (ZL-2306), an oral, once-daily small molecule PARP 1/2 inhibitor. It is being developed and commercialized along with its partner Tesaro. Last March, ZL-2306 received an FDA marketing approval and in November 2017, gained the European Union marketing nod as a maintenance treatment for recurrent platinum-sensitive epithelial ovarian cancer. This April, the product was commercially launched in the United States under the commercial name, Zejula.

ZL-2306 is the first PARP inhibitor, approved by the FDA for ovarian cancer that requires no BRCA mutation or other biomarker testing. ZL-2306 is uniquely suited for the China marketplace where BRCA biomarker diagnostic tests are not widely available. The company plans to develop ZL-2306 for Chinese patients across multiple tumor types.

Zai Lab initiated the first of two-phase III studies on ZL-2306 related to patients with ovarian cancer in September 2017 and plans to initiate the second trial by the first half of 2018. The company also intends to pursue the evaluation of ZL-2306 for other indications.

Zacks Rank & Stocks to Consider

Zai Lab currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the pharma sector is Illumina, Inc. (ILMN - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Illumina’s earnings estimates have been raised 12.1% for 2018 and 10% for 2019 over the past 60 days. The stock has soared 55.9% so far this year.

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