10-QPeriod: Q3 FY2019

BeOne Medicines Ltd. Quarterly Report for Q3 Ended Sep 30, 2019

Filed November 12, 2019For Securities:ONCBEIGF

Summary

BeiGene, Ltd.'s (ONC) Q3 2019 report shows a significant increase in product revenue, up 30% year-over-year for the quarter and 78% year-over-year for the nine-month period, driven by sales of ABRAXANE®, REVLIMID®, and VIDAZA® in China. However, this growth was somewhat offset by a complete absence of collaboration revenue compared to the previous year, primarily due to the termination of the Celgene collaboration agreement for tislelizumab. The company continues to invest heavily in research and development, with R&D expenses increasing significantly by 61% for the quarter and 53% for the nine months, reflecting progress in its clinical pipeline, particularly for zanubrutinib and tislelizumab. Consequently, the net loss widened considerably, driven by these R&D investments and increased selling, general, and administrative expenses. Financially, BeiGene ended the period with a robust cash position of approximately $1.3 billion in cash, cash equivalents, and short-term investments, providing ample runway. However, the company's operating activities consumed substantial cash, highlighting the capital-intensive nature of drug development. Investors should note the strategic importance of the announced collaboration with Amgen, which includes a significant equity investment, as well as the continued heavy investment in pipeline development, which is driving losses but also positions the company for potential future growth.

Financial Statements
Beta

Key Highlights

  • 1Product revenue increased by 30% year-over-year to $50.1 million for the three months ended September 30, 2019, and by 78% to $165.7 million for the nine months ended September 30, 2019.
  • 2Research and development expenses increased significantly, up 61% to $237.0 million for the quarter and up 53% to $644.1 million for the nine months, reflecting advancement of key drug candidates.
  • 3Net loss attributable to BeiGene, Ltd. increased to $307.4 million for the quarter and $560.6 million for the nine months, compared to $144.0 million and $405.5 million, respectively, in the prior year periods.
  • 4Cash, cash equivalents, and short-term investments stood at $1.3 billion as of September 30, 2019, providing a strong liquidity position.
  • 5Collaboration revenue decreased to zero for the quarter from $15.8 million in the prior year, primarily due to the termination of the Celgene collaboration.
  • 6Selling, general, and administrative expenses more than doubled, increasing by 115% for the quarter and 99% for the nine months, reflecting organizational expansion and commercial readiness efforts.
  • 7The company announced a significant strategic oncology collaboration with Amgen in October 2019, including a $2.7 billion equity investment by Amgen.

Frequently Asked Questions

BeiGene reported total revenues of $50.1 million for the three months ended September 30, 2019, a decrease of 7% from $54.2 million in the same period of 2018. This was primarily due to a decrease in collaboration revenue to zero, while net product revenue increased by 30% to $50.1 million.

BeiGene continues to significantly invest in research and development. R&D expenses increased by 61% to $237.0 million for the three months ended September 30, 2019, and by 53% to $644.1 million for the nine months ended September 30, 2019. This increase is driven by the advancement of clinical drug candidates, notably zanubrutinib and tislelizumab, and expansion of their pivotal trials.

As of September 30, 2019, BeiGene had cash, cash equivalents, and short-term investments totaling approximately $1.3 billion. While operating activities consumed a significant amount of cash ($483.1 million for the nine months), this cash balance provides substantial liquidity to fund operations and development activities for at least the next 12 months, though further financing will likely be needed for future growth.

The termination of the tislelizumab collaboration with Celgene in June 2019 resulted in BeiGene regaining full global rights to tislelizumab and receiving a $150 million payment. This termination eliminated collaboration revenue from the Q3 2019 results compared to the prior year, but the company received a significant one-time payment and retained important rights.