01—Abstract
Summary
Summary of the 10-K filed February 28, 2019. Cited figures are marked; the original filing is the authoritative source.
BeiGene, Ltd. (now known as BeiGene, Ltd. and operating under the ticker ONC for this filing) is a commercial-stage biotechnology company focused on developing and commercializing innovative oncology drugs.
As of their February 28, 2019 10-K filing, the company had advanced three lead internally-developed drug candidates—zanubrutinib (BTK inhibitor), tislelizumab (anti-PD-1 antibody), and pamiparib (PARP inhibitor)—into late-stage clinical trials across multiple cancer indications globally and in China. Additionally, BeiGene was marketing three in-licensed cancer drugs in China, generating product revenue since September 2017. The company highlighted its strong global clinical development team and its strategic positioning to capitalize on China's evolving regulatory environment and growing pharmaceutical market.
Significant investment in research and development was evident, with a substantial increase in R&D expenses year-over-year, reflecting the progression of their pipeline. Financially, BeiGene reported substantial increases in product revenue, driven by sales of its in-licensed drugs in China, but also significant operating losses and research and development expenses.
The company secured significant financing during 2018, raising over $1.6 billiona in net proceeds from equity offerings to support its extensive development programs. Looking ahead, BeiGene anticipated continued growth in R&D and SG&A expenses to advance its pipeline and prepare for potential launches of its internally developed drug candidates.
02—Key points
Key Highlights
- BeiGene has a robust pipeline with three lead drug candidates (zanubrutinib, tislelizumab, pamiparib) in late-stage clinical development for various cancer indications.
- The company filed three New Drug Applications (NDAs) in China for its internally developed drug candidates and planned additional submissions in China and the US in 2019-2020.
- BeiGene generated product revenue from three in-licensed cancer drugs marketed in China since September 2017.
- Significant investment in R&D drove a substantial increase in research and development expenses to $679.0 million in 2018.
- Total revenues were $198.2 million in 2018, a decrease from $238.4 million in 2017, primarily due to lower collaboration revenue.
- The company raised approximately $1.6 billion in net proceeds from follow-on public offerings in 2018 to fund operations and development.
- Zanubrutinib received Breakthrough Therapy designation from the FDA in January 2019 for mantle cell lymphoma.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 28, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $198.22M$238.39M | −16.8% |
| Cost of Revenue | $28.70M$4.97M | +477.1% |
| Gross Profit | $169.51M$233.41M | −27.4% |
| R&D Expenses | $679.00M$269.02M | +152.4% |
| SG&A Expenses | $195.38M$62.60M | +212.1% |
| Operating Expenses | $903.99M$336.84M | +168.4% |
| Operating Income | -$705.77M-$98.46M | −616.8% |
| Interest Expense | $13.15M— | — |
| Net Income | -$674.03M-$93.11M | −623.9% |
| EPS (Basic) | $-0.93$-0.17 | −447.1% |
| Shares Outstanding (Basic) | 720.75M543.19M | +32.7% |
05—Questions
Frequently Asked Questions
What are BeiGene's key drug candidates and their development status?
BeiGene's three lead internally-developed drug candidates are zanubrutinib (BTK inhibitor), tislelizumab (anti-PD-1 antibody), and pamiparib (PARP inhibitor). As of the filing date, all three were in late-stage clinical trials (Phase 2 or 3) globally and/or in China for various cancer indications. Zanubrutinib had NDAs filed in China for mantle cell lymphoma (MCL) and chronic lymphocytic leukemia (CLL)/small lymphocytic lymphoma (SLL), and tislelizumab had an NDA filed in China for classical Hodgkin’s lymphoma (cHL).
How is BeiGene generating revenue, and what is its financial outlook?
BeiGene's revenue is derived from product sales of in-licensed drugs in China (ABRAXANE®, REVLIMID®, VIDAZA®) and collaboration revenue from licensing and research agreements, notably with Celgene. In 2018, product revenue was $130.9 million, while collaboration revenue was $67.3 million. The company incurred significant net losses ($674.0 million in 2018) due to substantial R&D investments. BeiGene raised substantial capital in 2018 and anticipated continued increases in R&D and SG&A expenses, requiring ongoing funding for pipeline development and potential commercialization.
What are the major risks facing BeiGene, according to this filing?
Key risks include the substantial uncertainty and expense of clinical development and regulatory approval for its drug candidates, dependence on the success of these candidates, potential delays in clinical trials, competition from other companies, reliance on third-party manufacturers, and the complex and evolving regulatory landscape in China and globally. The company also faces financial risks related to its significant net losses and the need for future financing, as well as risks associated with its intellectual property protection and its operations in China.
What is the significance of the Celgene collaboration and the potential BMS acquisition?
BeiGene entered a significant collaboration with Celgene in 2017, granting Celgene rights for tislelizumab in solid tumors outside Asia and licensing Celgene's approved cancer therapies (ABRAXANE®, REVLIMID®, VIDAZA®) for China. The filing notes the proposed acquisition of Celgene by Bristol-Myers Squibb (BMS) and the potential termination of the tislelizumab agreement, which could result in BeiGene regaining full rights to tislelizumab, contingent on a termination fee. BeiGene stated it was operationally and financially capable of advancing tislelizumab independently if the agreement terminates.
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