10-QPeriod: Q3 FY2018

BeOne Medicines Ltd. Quarterly Report for Q3 Ended Sep 30, 2018

Filed November 8, 2018For Securities:ONCBEIGF

Summary

Beigene, Ltd. reported a significant increase in cash and cash equivalents, reaching $643.5 million as of September 30, 2018, up from $239.6 million at the end of 2017. This liquidity boost was largely driven by successful public offerings, including a dual listing on the Hong Kong Stock Exchange. Despite this strong cash position, the company experienced a substantial net loss of $144.0 million for the third quarter and $405.5 million for the first nine months of 2018, primarily due to continued high research and development expenses. Revenue streams shifted significantly, with collaboration revenue decreasing by 93% in Q3 and 78% year-to-date, while product revenue from the distribution of Celgene's oncology drugs in China saw a significant increase of 336% in Q3 and 956% year-to-date. The company continues to invest heavily in its pipeline, with R&D expenses climbing 68% in Q3 and 137% year-to-date, driven by the advancement of key drug candidates like zanubrutinib and tislelizumab. The company also advanced its commercialization efforts in China for in-licensed Celgene products. While the company has a robust cash balance, the substantial ongoing investment in R&D and increasing SG&A expenses, coupled with the lack of internally developed product revenues to date, indicate a continued need for capital to fund operations and development.

Financial Highlights

55 data points
Beta

Revenue

$54.20M

83.9% Gross Margin

Net Income

-$144.49M

-266.6% Net Margin

EPS (Diluted)

$-0.19

Total Assets

$2.41B

Cash & Equivalents

$643.49M

Free Cash Flow

-$158.91M

Financial Statements
Beta
Revenue$54.20M
Cost of Revenue$8.71M
Gross Profit$45.50M
R&D Expenses$147.59M
SG&A Expenses$48.82M
Operating Expenses$205.30M
Operating Income-$151.10M
Interest Expense$830K
Net Income-$144.49M
EPS (Basic)$-0.19
EPS (Diluted)$-0.19
Shares Outstanding (Basic)739.79M
Shares Outstanding (Diluted)739.79M

Key Highlights

  • 1Strong liquidity position with $643.5 million in cash and cash equivalents as of September 30, 2018.
  • 2Significant increase in product revenue (336% Q3, 956% YTD) from sales of in-licensed drugs in China.
  • 3Collaboration revenue declined significantly (-93% Q3, -78% YTD) due to the upfront payment recognition in the prior year.
  • 4Research and development expenses increased substantially (68% Q3, 137% YTD) to support clinical trials of key drug candidates.
  • 5Net loss for the nine months ended September 30, 2018, was $405.5 million, compared to a net profit of $6.2 million in the prior year period, largely due to increased R&D spending and the absence of large upfront collaboration payments.
  • 6Successful dual listing on the Hong Kong Stock Exchange in August 2018, bolstering the company's cash position.
  • 7Continued investment in expanding commercial operations in China and advancing a pipeline of oncology drug candidates.

Frequently Asked Questions

Beigene, Ltd. ended the third quarter of 2018 with a strong liquidity position, holding $643.5 million in cash and cash equivalents and $1.39 billion in short-term investments, totaling over $2 billion. This was significantly boosted by successful public offerings, including a dual listing on the Hong Kong Stock Exchange. While the company continues to invest heavily in research and development, leading to substantial net losses, its robust cash position provides runway for ongoing operations and development.

Revenue performance showed a significant shift. Collaboration revenue decreased by 93% year-over-year for the third quarter, as the large upfront payments from the Celgene collaboration recognized in the prior year were not repeated. Conversely, product revenue from the sale of in-licensed Celgene drugs in China surged by 336% year-over-year, indicating successful commercialization efforts in that market.

The primary expense driver is research and development, which increased by 68% in the third quarter and 137% year-to-date. This reflects Beigene's commitment to advancing its pipeline of oncology drug candidates through clinical trials. Selling, general, and administrative expenses also saw a significant increase (212% in Q3, 249% YTD), driven by the expansion of its commercial operations in China and increased headcount to support R&D and business growth.

Beigene is advancing several key oncology drug candidates, including zanubrutinib, tislelizumab, and pamiparib, into late-stage clinical trials globally and in China. The company has filed New Drug Applications (NDAs) in China for zanubrutinib and tislelizumab. Recent business highlights include progress in Phase 3 trials and acceptance of NDAs by China's NMPA, indicating positive movement towards potential commercialization. However, the company has revised its guidance for the first U.S. NDA filing for zanubrutinib to 2019 or early 2020.