01—Abstract
Summary
Summary of the 10-K filed February 27, 2023. Cited figures are marked; the original filing is the authoritative source.
BeOne Medicines Ltd. (formerly BeiGene, ticker ONC on NASDAQ, shown as BGNE in this filing) reported a fiscal 2022 net loss of $2.0 billiona on total revenue of $1.42 billion, up 20.4% year over year, in this 10-K filed February 27, 2023.
Growth came mainly from product sales, which rose 97.9% to $1.25 billionb, led by BRUKINSA (up 159% to $565 million) and tislelizumab (up 66% to $423 million, almost entirely in China). Collaboration revenue fell 70% to $161 million because 2021 included roughly $485 million of license revenue recognized from the Novartis tislelizumab deal. Operating expenses rose 23% to $3.2 billion, with R&D at $1.64 billion and SG&A at $1.28 billion, so the company remains far from profitability and its accumulated deficit reached $7.1 billion.
Liquidity is still substantial but declining. Cash, equivalents and restricted cash were $3.9 billionc and short-term investments were $0.67 billion at year-end, against total debt of $538 million, and management says existing resources cover at least the next 12 months. Operating cash burn was $1.5 billion in 2022.
The company has commitments including $595.7 milliond of remaining Amgen co-development funding, $405 million of capital commitments mainly for the New Jersey and Suzhou campuses, and $329 million of debt due within a year. The main investor issues are concentration and regulatory exposure.
BRUKINSA and tislelizumab carry most of the revenue, China pricing and NRDL reimbursement cuts shape margins, and the company faces PRC regulatory, data and listing risks, including the HFCAA auditor issue, which the filing says was addressed by moving to Ernst & Young LLP (US). Amgen's AMG 510 (sotorasib) was dropped from the cost-share program, and an arbitration with BMS over ABRAXANE is pending.
02—Key points
Key Highlights
- Total revenue of $1.42 billion, up 20.4%, with product revenue up 97.9% to $1.25 billion driven by BRUKINSA (+159%) and tislelizumab (+66%)
- Net loss widened to $2.00 billion (from $1.46 billion), with operating loss of $1.79 billion and R&D expense of $1.64 billion
- Gross margin on product sales improved to 77.2% from 74.0%, reflecting a richer BRUKINSA and tislelizumab mix
- Collaboration revenue fell 70% to $161 million after 2021's one-time $485 million Novartis license recognition
- Cash, equivalents and restricted cash of $3.9 billion plus $0.67 billion in short-term investments against $538 million of total debt; operating cash used was $1.5 billion
- Accumulated deficit of $7.1 billion; management expects losses to narrow as product sales growth outpaces expense growth, though profitability is not guaranteed
- BRUKINSA received FDA approval for CLL/SLL in January 2023 and the NRDL was expanded to include tislelizumab and KYPROLIS effective March 1, 2023
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2022, BeOne Medicines Ltd. lost $1.42.
- Revenue$1.42B100.0%
- Cost of revenue−$286.5M20.2%
- Gross profit$1.13B79.8%
- Operating costs−$2.92B206.2%
- Operating income−$1.79B126.4%
- Interest, other & tax−$214.2M15.1%
- Net income−$2.00B141.5%
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 27, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $1.42B$1.18B | +20.4% |
| Cost of Revenue | $286.48M$164.91M | +73.7% |
| Gross Profit | $1.13B$1.01B | +11.7% |
| R&D Expenses | $1.64B$1.46B | +12.4% |
| SG&A Expenses | $1.28B$990.12M | +29.1% |
| Operating Expenses | $2.92B$2.45B | +19.1% |
| Operating Income | -$1.79B-$1.44B | −24.4% |
| Interest Expense | $21.70M$29.26M | −25.8% |
| Net Income | -$2.00B-$1.46B | −37.5% |
| EPS (Basic) | $-1.49$-1.21 | −23.1% |
| EPS (Diluted) | $-1.49$-1.21 | −23.1% |
| Shares Outstanding (Basic) | 1.34B1.21B | +11.2% |
| Shares Outstanding (Diluted) | 1.34B1.21B | +11.2% |
05—Questions
Frequently Asked Questions
What drove the revenue growth, and why did collaboration revenue decline?
Product revenue more than doubled to $1.25 billion, driven by BRUKINSA U.S. and China sales and tislelizumab sales in China, which benefited from NRDL inclusion that boosted patient demand despite price cuts. Collaboration revenue dropped to $161 million from $542 million because 2021 included about $485 million recognized upfront from the Novartis tislelizumab license, a one-time item.
How much cash does the company have, and is it enough to fund operations?
The company had $3.9 billion in cash, cash equivalents and restricted cash and $665 million in short-term investments at December 31, 2022, against $538 million of debt. Management believes these resources will fund operations for at least 12 months, but the filing warns that further funding through equity, debt or partnerships may be needed to complete all trials and launches, and that dilution is possible.
What are the biggest risks to the investment case?
Key risks include continued losses and no assured path to profitability, dependence on BRUKINSA and tislelizumab, China price reductions from volume-based procurement and NRDL negotiations, and reliance on partners such as Amgen, Novartis and BMS. The company also faces PRC government oversight of overseas listings and data, U.S. HFCAA audit-related delisting risk, a pending BMS arbitration over ABRAXANE, and currency exposure to the RMB.
What is the status of the company's key drugs and pipeline?
BRUKINSA is approved in more than 65 markets, including new FDA approval in CLL/SLL (January 2023) and EU approval in CLL (November 2022). Tislelizumab is approved in China for ten indications, with U.S. and EU filings pending through partner Novartis. The pipeline includes BCL-2 inhibitor BGB-11417, HPK1 inhibitor BGB-15025, the BTK degrader BGB-16673, and ociperlimab, a TIGIT antibody in Phase 3 trials.
Did the company change its auditor, and does that affect the HFCAA risk?
Yes. Ernst & Young Hua Ming LLP, which was based in China, resigned in March 2022, and Ernst & Young LLP (Boston) was engaged to audit the FY2022 consolidated financial statements. The company says this should satisfy PCAOB inspection requirements and avoid a trading prohibition under the HFCAA, though the Chinese statutory auditor for local filings remains Ernst & Young Hua Ming.
06—Continue