BeOne Medicines Ltd. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Cautionary Note Regarding Forward-Looking Statements You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements (unaudited) and related notes included in the section of this Quarterly Report on Form 10-Q (this “Quarterly Report”), titled “Part I – Item 1 – Financial Statements.” This Quarterly Report contains forward-looking statements t hat involve substantial risks and uncertainties. These forward-looking statements are based on management’s current expectations and projections about future events and trends that may affect the business, financial condition, and operating results. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. Forward-looking statements often include words such as “aim,” “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these terms or other similar expressions. These forward-looking statements include, among other things, statements about: our ability to successfully commercialize our approved medicines and to obtain approvals in additional indications and territories for our medicines; the timing, progress and results of our research and development (“R&D”) programs, preclinical studies and clinical trials of our drug candidates, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available; our ability to successfully develop and commercialize our in-licensed medicines and drug candidates and any other medicines and drug candidates we may in-license; our ability to further develop sales and marketing capabilities and launch and commercialize new medicines, if approved; our ability to maintain and expand regulatory approvals for our medicines and drug candidates, if approved; the pricing and reimbursement of our medicines and drug candidates, if approved; our ability to advance our drug candidates into, and successfully complete, clinical trials and obtain regulatory approvals; our reliance on the success of our clinical stage drug candidates; our plans, expected milestones and the timing or likelihood of regulatory filings and approvals; the implementation of our business model, strategic plans for our business, medicines, drug candidates and technology; the scope of protection we (or our licensors) are able to establish and maintain for intellectual property rights covering our medicines, drug candidates and technology; our ability to operate our business without infringing, misappropriating or otherwise violating the intellectual property rights and proprietary technology of third parties; costs associated with enforcing or defending against intellectual property infringement, misappropriation or violation, product liability and other claims; the regulatory environment and regulatory developments in the United States (“U.S.”), China, the United Kingdom (“UK”), Switzerland, the European Union (“EU”) and other jurisdictions in which we operate; the accuracy of our estimates regarding expenses, revenues, including collaboration revenue, capital requirements and our need for additional financing; the potential benefits of strategic collaboration and licensing agreements and our ability to enter into and maintain strategic arrangements; our construction and operation of independent production facilities for small molecule medicines and large molecule biologics, as well as clinical R&D facilities, to support the global demand for both commercial and clinical supply; our reliance on third parties to conduct drug development, manufacturing and other services; our ability to manufacture and supply, or have manufactured and supplied, drug candidates for clinical development and medicines for commercial sale; the rate and degree of market access and acceptance of our medicines and drug candidates, if approved; developments relating to our competitors and our industry, including competing therapies; the size of the potential markets for our medicines and drug candidates and our ability to serve those markets; our ability to effectively manage our growth; our ability to attract and retain qualified employees and key personnel; our ability to comply with the covenants and other requirements under our facilities agreements and to borrow available amounts under such agreements; the impact of macroeconomic conditions, including uncertainties associated with geopolitical conflicts, tariff and trade policies, and inflation and capital market disruptions; statements regarding future revenue, key milestones, expenses, capital expenditures, capital requirements and share performance; the future trading price of our American Depositary Shares (“ADSs”) listed on Nasdaq, our ordinary shares listed on HKEx, and our ordinary shares issued to permitted investors in China and listed and traded on the STAR in Renminbi (“RMB Shares”), as well as the impact of securities analysts’ reports on these prices; and the effects of the redomiciliation to Switzerland, including its tax treatment and our name change in 2025. These statements involve risks and uncertainties, including those that are described in “Part II—Item 1A—Risk Factors” of this Quarterly Report, that may cause actual future events or results to differ materially from those expected. Given these uncertainties, you should not place undue reliance on these forward-looking statements. We do not assume any obligation to update any forward-looking statements whether as a result of new information or otherwise, except as required by law. This Quarterly Report includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, you are cautioned not to give undue weight to this information. 26 Table of Contents Effective May 27, 2025, we changed our jurisdiction of incorporation from the Cayman Islands to Switzerland through a transaction known as a continuation under Section 206 of the Companies Act (as amended) of the Cayman Islands and Article 161 of the Swiss Federal Act on Private International Law (the “Continuation”) and changed our legal English name from BeiGene, Ltd. to BeOne Medicines Ltd. This Quarterly Report includes the results of BeiGene, Ltd. prior to the Continuation and BeOne Medicines Ltd. following the Continuation. Unless the context requires otherwise, in this Quarterly Report, the terms “BeOne,” the “Company,” “we,” “us” and “our” refer to (i) BeOne Medicines Ltd., a Switzerland holding company with operations conducted by its subsidiaries, and its subsidiaries, on a consolidated basis, following the Continuation and (ii) BeiGene, Ltd., a Cayman Islands holding company with operations conducted by its subsidiaries, and its subsidiaries, on a consolidated basis, prior to the Continuation. Non-GAAP Financial Measures We provide certain financial measures that are not defined under accounting principles generally accepted in the United States of America (“GAAP”), commonly referred to as non-GAAP financial measures, including Adjusted Operating Expenses, Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss), Adjusted Earnings Per Share, Free Cash Flow and certain other non-GAAP measures, each of which include adjustments to GAAP figures. These non-GAAP measures are intended to provide additional information on our operating performance. Adjustments to our GAAP figures exclude, as applicable, non-cash items such as share-based compensation, depreciation and amortization. Certain other special items or substantive events may also be included in the non-GAAP adjustments periodically when their magnitude is significant within the periods incurred. Non-GAAP adjustments are tax effected to the extent there is US GAAP current tax effect. The Company currently records a valuation allowance on its net deferred tax assets, so there is no net impact recorded for deferred tax effects in our tax expense. We maintain an established non-GAAP policy that guides the determination of what items may be excluded in non-GAAP financial measures. We believe that these non-GAAP measures, when considered together with the GAAP figures, can enhance an overall understanding of our operating performance. The non-GAAP financial measures are included with the intent of providing investors with a more complete understanding of our historical and expected financial results and trends and to facilitate comparisons between periods and with respect to projected information. In addition, these non-GAAP financial measures are among the indicators BeOne’s management uses for planning and forecasting purposes and measuring our performance. These non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, GAAP financial measures. The non-GAAP financial measures used by BeOne may be calculated differently from, and therefore may not be comparable to, non-GAAP financial measures used by other companies. Overview BeOne Medicines is a global oncology company that is discovering and developing innovative treatments for cancer patients worldwide. With a portfolio spanning hematology and solid tumors, BeOne is expediting development of its diverse pipeline of novel therapeutics through its internal capabilities and collaborations. Key highlights for the first quarter of 2026 are as follows: • First quarter 2026 total global revenues increased 35% to $1.5 billion versus first quarter 2025 • Global BRUKINSA ® (zanubrutinib) revenues increased 38% to $1.1 billion versus first quarter 2025 • Diluted GAAP Earnings per American Depositary Share (“ADS”) of $1.96, non-GAAP diluted Earnings per ADS of $3.24 Recent Developments Recent Business Developments Core Marketed Products BRUKINSA (zanubrutinib) • Received Orphan Drug Designation in Japan for the treatment of adult patients with relapsed or refractory (“R/R”) marginal zone lymphoma (“MZL”). • Submitted New Drug Application in Japan for R/R MZL and tablet formulation. Sonrotoclax (BCL2 inhibitor) • Launched and commercially available in China for the treatment of adult patients with R/R mantle cell lymphoma (“MCL”) and R/R chronic lymphocytic leukemia (“CLL”)/small lymphocytic lymphoma (“SLL”). 27 Table of Contents • Included in the European Society of Medical Oncology (“ESMO”) guidelines as a recommended third-line treatment for R/R MCL patients. TEVIMBRA (tislelizumab) • Received acceptance of a Supplemental Biologics License Application (“sBLA”) by the U.S. Food and Drug Administration (“FDA”) with Priority Review for the treatment of adult patients with first-line HER2-positive gastroesophageal adenocarcinoma (“GEA”) in combination with ZIIHERA (zanidatamab) and chemotherapy, based on results of the HERIZON-GEA-01 trial which demonstrated statistically significant and clinically meaningful improvement in overall survival versus trastuzumab plus chemotherapy. • Received acceptance of sBLA by the Center for Drug Evaluation (“CDE”) in China for the treatment of adult patients with first-line HER2-positive GEA in combination with ZIIHERA and chemotherapy. ZIIHERA (zanidatamab) • Received acceptance of sBLA by the CDE in China for the treatment of adult patients with first-line HER2-positive GEA in combination with chemotherapy, with or without TEVIMBRA. Select Clinical-Stage Programs Hematology • BGB-16673 (BTK chimeric degradation activation compound (“CDAC”)): Initiated Phase 2 cohorts in R/R MZL and Richter’s Transformation. Breast and Gynecological Cancers • BGB-43395 (cyclin-dependent kinase 4 (“CDK4”) inhibitor): Received acceptance of Phase 1 study data as a poster presentation at ASCO. • BG-C9074 (B7-H4 ADC): Received acceptance of Phase 1 study data as a rapid oral presentation at ASCO. Gastrointestinal Cancers • BGB-B2033 (GPC3x41BB bispecific antibody): ◦ Received FDA Orphan Drug Designation for hepatocellular carcinoma (“HCC”). ◦ Initiated potentially registrational study in patients with HCC. ◦ Received acceptance of Phase 1 study data as a rapid oral presentation at ASCO. Lung Cancer • BG-C0979 (ADAM9-targeting ADC): Initiated first-in-human study. Inflammation and Immunology • BG-A3004 (KLRG1 mAb): Initiated first-in-human study. 28 Table of Contents Results of Operations The following table summarizes our results of operations for the three months ended March 31, 2026 and 2025: Three Months Ended March 31, Change 2026 2025 $ % (dollars in thousands) Revenues Product revenue, net $ 1,487,329 $ 1,108,530 $ 378,799 34.2 % Other revenue 26,109 8,749 17,360 198.4 % Total revenues 1,513,438 1,117,279 396,159 35.5 % Cost of sales - product 167,215 165,002 2,213 1.3 % Gross profit 1,346,223 952,277 393,946 41.4 % Operating expenses Research and development 541,224 481,887 59,337 12.3 % Selling, general and administrative 555,097 459,288 95,809 20.9 % Total operating expenses 1,096,321 941,175 155,146 16.5 % Income from operations 249,902 11,102 238,800 2,151.0 % Interest income 27,664 12,850 14,814 115.3 % Interest expense (32,887) (7,002) (25,885) 369.7 % Other income, net 14,536 3,950 10,586 268.0 % Income before income taxes 259,215 20,900 238,315 1,140.3 % Income tax expense 31,858 19,630 12,228 62.3 % Net income $ 227,357 $ 1,270 $ 226,087 17,802.1 % Comparison of the Three Months Ended March 31, 2026 and 2025 Revenue Total revenue increased to $1,513.4 million for the three months ended March 31, 2026, from $1,117.3 million for the three months ended March 31, 2025, due to increased sales of BRUKINSA, TEVIMBRA, as well as increased sales of in-licensed products from Amgen. Net product revenue consisted of the following: Three Months Ended March 31, Changes 2026 2025 $ % (dollars in thousands) BRUKINSA ® $ 1,094,843 $ 791,664 $ 303,179 38.3 % TEVIMBRA ® 206,241 171,164 35,077 20.5 % XGEVA ® 89,920 70,423 19,497 27.7 % BLINCYTO ® 34,035 23,906 10,129 42.4 % KYPROLIS ® 16,971 19,728 (2,757) (14.0) % POBEVCY ® 12,127 13,745 (1,618) (11.8) % Other 33,192 17,900 15,292 85.4 % Total product revenue $ 1,487,329 $ 1,108,530 $ 378,799 34.2 % Net product revenue increased 34.2% to $1,487.3 million for the three months ended March 31, 2026, compared to $1,108.5 million in the prior-year period, primarily due to increased sales of BRUKINSA globally, driven by significant growth in the U.S. and Europe. In addition, product revenues in the first quarter of 2026 were positively impacted by growth from in-licensed products from Amgen and TEVIMBRA. 29 Table of Contents Global sales of BRUKINSA totaled $1,094.8 million in the first quarter, representing a 38.3% increase compared to the prior-year period; U.S. sales of BRUKINSA totaled $761.1 million in the first quarter, compared to $563.2 million in the prior-year period, representing growth of 35.1%, driven primarily by robust demand growth as well as favorable net pricing, of which approximately $20.0 million relates to non-recurring gross to net adjustments realized in the first quarter of 2026. BRUKINSA continues to maintain its leading new patient share across the BTKi class due to its differentiated, best-in-class clinical profile. BRUKINSA sales in the EU totaled $182.4 million in the first quarter, compared to $115.9 million in the prior-year period, representing growth of 57.4%, driven by continued gains in market share across all major markets, including Germany, Italy, Spain, France and the UK. Foreign exchange contributed approximately 11% of the European growth given the Euro strengthening on a year-over-year basis. BRUKINSA sales in China totaled $94.0 million, representing growth of 15.9%. BRUKINSA rest of world revenue totaled $57.3 million in the first quarter, representing growth of 82.3% compared to the prior-year period. Sales of TEVIMBRA totaled $206.2 million in the first quarter, compared to $171.2 million in the prior-year period, representing a 20.5% increase. Revenue for Amgen products in China totaled $142.2 million in the first quarter, compared to $114.1 million in the prior-year period, representing a 24.6% increase, driven primarily by increased XGEVA ® sales volume. Other revenue totaled $26.1 million and $8.7 million for the three months ended March 31, 2026 and 2025, respectively, primarily related to royalty revenue under the Amgen collaboration and revenue generated under the Novartis broad markets marketing and promotion agreement. Gross Margin Gross margin as a percentage of product sales increased to 88.8% for the three months ended March 31, 2026, from 85.1% in the comparable period of the prior year. The gross margin percentage increased due to a proportionally higher sales mix of global BRUKINSA compared to other products in our portfolio. Gross margin also benefited from production productivity improvements resulting in lower costs for both BRUKINSA and TEVIMBRA. On an adjusted basis, which does not include depreciation and amortization, gross margin as a percentage of product sales increased to 89.2%, from 85.5% in the comparable period of the prior year. Research and Development Expense Research and development expense increased by $59.3 million, or 12.3%, to $541.2 million for the three months ended March 31, 2026 from $481.9 million for the three months ended March 31, 2025. The following table summarizes the external cost of development programs, upfront license and development milestone fees, and internal research and development expense for the three months ended March 31, 2026 and 2025, respectively: Three Months Ended March 31, Changes 2026 2025 $ % (dollars in thousands) External research and development expense: Cost of development programs $ 157,557 $ 170,046 $ (12,489) (7.3) % Upfront license and development milestone fees 544 — 544 NM Amgen co-development expense 1 29,403 20,707 8,696 42.0 % Total external research and development expenses 187,504 190,753 (3,249) (1.7) % Internal research and development expenses 353,720 291,134 62,586 21.5 % Total research and development expenses $ 541,224 $ 481,887 $ 59,337 12.3 % Adjusted research and development expenses 2 $ 465,904 $ 421,195 $ 44,709 10.6 % 1. Our co-funding obligation for the development of the pipeline assets under the Amgen collaboration for the three months ended March 31, 2026 totaled $58.0 million, of which $29.4 million was recorded as R&D expense. The remaining $28.6 million was recorded as a reduction for the R&D cost share liability. 2. Adjusted research and development expense is intended to provide investors and others with information about our performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items. Refer to Non-GAAP Financial Measures and Non-GAAP Reconciliation in this MD&A for more information about, and a detailed reconciliation of, these items. 30 Table of Contents External research and development expenses decreased slightly in the first quarter of 2026 compared to the same period in 2025. This was primarily driven by the timing of comparator drug purchases, lower spend for maturing BRUKINSA studies, and the wind-down of the ociperlimab program. These decreases were partially offset by increased investment in the continued advancement of several programs across the pipeline, including BTK CDAC, CDK4, and PRMT5, higher Amgen co-development expenses, and higher development upfront and milestone fees. Internal research and development expense increased by $62.6 million, or 21.5%, to $353.7 million for the three months ended March 31, 2026, from $291.1 million for the three months ended March 31, 2025, as we continue to invest in capabilities to support a growing portfolio. This increase was primarily attributable to the expansion of resources within the global development organization, alongside higher spending for toxicology studies, reagents, and consumables necessary to advance our clinical and preclinical candidates. Selling, General and Administrative Expense Three Months Ended March 31, Changes 2026 2025 $ % (dollars in thousands) Selling, general and administrative expenses $ 555,097 $ 459,288 $ 95,809 20.9 % Adjusted selling, general and administrative expenses 1 $ 471,993 $ 395,511 $ 76,482 19.3 % 1. Adjusted selling, general and administrative expense is intended to provide investors and others with information about our performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items. Refer to Non-GAAP Financial Measures and Non-GAAP Reconciliation in this MD&A for more information about, and a detailed reconciliation of, these items. Selling, general and administrative expense increased by $95.8 million, or 20.9%, to $555.1 million for the three months ended March 31, 2026, from $459.3 million for the three months ended March 31, 2025. The increase was primarily attributable to continued investment in global commercial expansion primarily in the U.S. and Europe. Selling, general and administrative expenses as a percentage of product sales were 37.3% in the first quarter of 2026 compared to 41.4% in the prior-year period. Interest Income Interest income increased by $14.8 million, or 115.3%, to $27.7 million for the three months ended March 31, 2026, from $12.9 million for three months ended March 31, 2025. The increase in interest income was primarily attributable to a higher cash and cash equivalents balance. Interest Expense Interest expense increased by $25.9 million, or 369.7%, to $32.9 million for the three months ended March 31, 2026, from $7.0 million for three months ended March 31, 2025. The increase in interest expense was primarily attributable to interest expense recorded under the effective interest method related to the sale of future royalty liability, higher interest rates on debt balances, and lower interest capitalized related to the completion of certain phases of our Hopewell facility. Other Income, Net Other income, net was $14.5 million for the three months ended March 31, 2026, primarily due to government subsidy income. For the three months ended March 31, 2025, other income, net was $4.0 million, primarily due to foreign exchange gains and government subsidy income, partially offset by unrealized losses on our equity investments. Income Tax Expense Income tax expense was $31.9 million for the three months ended March 31, 2026 as compared to $19.6 million for the three months ended March 31, 2025. The income tax expense for the three months ended March 31, 2026 and 2025 was primarily attributable to current U.S. tax expense determined after other special tax deductions and research and development credits, current Switzerland tax expense based on year to date earnings and current China tax expense due to certain non-deductible expenses. 31 Table of Contents Given the Company’s recent history of earnings, management believes that there is a reasonable possibility that, within the next twelve months, sufficient positive evidence may become available to allow management to reach a conclusion that a significant portion of the valuation allowance recorded against the deferred tax assets held will be reversed. The reversal would result in an income tax benefit for the quarterly and annual fiscal period in which the Company releases the valuation allowance. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that the Company actually achieves. Prior to reversal, income tax expense should trend with earnings per historical relationship. As of March 31, 2026, the Company had gross unrecognized tax benefits of $28.5 million. Due to the uncertain and complex application of income tax regulations by certain tax authorities outside of the U.S., it is possible that the ultimate resolution of ongoing audits may result in liabilities that could be different from current estimates. The ongoing audit resolutions, including Italy, China and Spain, for the tax years 2020 through 2024, could impact future tax expense if tax authorities in their administration of tax laws during open audits may lead us to change our assessment of whether or not it is more likely than not that certain tax benefit positions will be sustained. Accordingly, potential future settlements could be material, principally in China. The Company’s reserve for uncertain tax positions increased by $0.7 million in the three months ended March 31, 2026, primarily due to U.S. federal and state tax credits and incentives. Net Income and Earnings Per Share GAAP net income improved for the first quarter of 2026, as compared to the prior-year period, primarily attributable to revenue growth and improved operating leverage. For the first quarter of 2026, basic and diluted earnings per share was $0.16 and $0.15 per share and $2.05 and $1.96 per American Depositary Share (“ADS”), respectively, compared to $0.00 per share and $0.01 per ADS in the prior-year period. 32 Table of Contents Non-GAAP Reconciliation Three Months Ended March 31, 2026 2025 ( Amounts in thousands of U.S. dollars, except for per share and per ADS data) Reconciliation of GAAP to adjusted cost of sales - products: GAAP cost of sales - products $ 167,215 $ 165,002 Less: Depreciation 4,326 2,613 Less: Amortization of intangibles 1,742 1,173 Adjusted cost of sales - products $ 161,147 $ 161,216 Reconciliation of GAAP to adjusted research and development: GAAP research and development $ 541,224 $ 481,887 Less: Share-based compensation expenses 53,856 41,767 Less: Depreciation 21,464 18,925 Adjusted research and development $ 465,904 $ 421,195 Reconciliation of GAAP to adjusted selling, general and administrative: GAAP selling, general and administrative $ 555,097 $ 459,288 Less: Share-based compensation expenses 69,492 53,684 Less: Depreciation 13,595 10,076 Less: Amortization of intangibles 17 17 Adjusted selling, general and administrative $ 471,993 $ 395,511 Reconciliation of GAAP to adjusted operating expenses GAAP operating expenses $ 1,096,321 $ 941,175 Less: Share-based compensation expenses 123,348 95,451 Less: Depreciation 35,059 29,001 Less: Amortization of intangibles 17 17 Adjusted operating expenses $ 937,897 $ 816,706 Reconciliation of GAAP to adjusted income from operations: GAAP income from operations $ 249,902 $ 11,102 Plus: Share-based compensation expenses 123,348 95,451 Plus: Depreciation 39,385 31,614 Plus: Amortization of intangibles 1,759 1,190 Adjusted income from operations $ 414,394 $ 139,357 Reconciliation of GAAP to adjusted net income: GAAP net income $ 227,357 $ 1,270 Plus: Share-based compensation expenses 123,348 95,451 Plus: Depreciation 39,385 31,614 Plus: Amortization of intangibles 1,759 1,190 Plus: Impairment of equity investments — 12,376 Plus: Discrete tax items 3,535 5,473 Plus: Income tax effect of non-GAAP adjustments (20,342) (11,237) Adjusted net income $ 375,042 $ 136,137 33 Table of Contents Three Months Ended March 31, 2026 2025 ( Amounts in thousands of U.S. dollars, except for per share and per ADS data) Reconciliation of GAAP to adjusted EPS - basic GAAP earnings per share - basic $ 0.16 $ 0.00 Plus: Share-based compensation expenses 0.09 0.07 Plus: Depreciation 0.03 0.02 Plus: Amortization of intangibles 0.00 0.00 Plus: Impairment of equity investments 0.00 0.01 Plus: Discrete tax items 0.00 0.00 Plus: Income tax effect of non-GAAP adjustments 1 (0.01) (0.01) Adjusted earnings per share - basic $ 0.26 $ 0.10 Reconciliation of GAAP to adjusted EPS - diluted GAAP earnings per share - diluted $ 0.15 $ 0.00 Plus: Share-based compensation expenses 0.08 0.07 Plus: Depreciation 0.03 0.02 Plus: Amortization of intangibles 0.00 0.00 Plus: Impairment of equity investments 0.00 0.01 Plus: Discrete tax items 0.00 0.00 Plus: Income tax effect of non-GAAP adjustments 1 (0.01) (0.01) Adjusted earnings per share - diluted $ 0.25 $ 0.09 Reconciliation of GAAP to adjusted earnings per ADS - basic GAAP earnings per ADS - basic $ 2.05 $ 0.01 Plus: Share-based compensation expenses 1.11 0.89 Plus: Depreciation 0.35 0.30 Plus: Amortization of intangibles 0.02 0.01 Plus: Impairment of equity investments 0.00 0.12 Plus: Discrete tax items 0.03 0.05 Plus: Income tax effect of non-GAAP adjustments 1 (0.18) (0.11) Adjusted earnings per ADS - basic $ 3.38 $ 1.27 Reconciliation of GAAP to adjusted earnings per ADS - diluted GAAP earnings per ADS - diluted $ 1.96 $ 0.01 Plus: Share-based compensation expenses 1.07 0.86 Plus: Depreciation 0.34 0.28 Plus: Amortization of intangibles 0.02 0.01 Plus: Impairment of equity investments 0.00 0.11 Plus: Discrete tax items 0.03 0.05 Plus: Income tax effect of non-GAAP adjustments 1 (0.18) (0.10) Adjusted earnings per ADS - diluted $ 3.24 $ 1.22 1 Tax effect of non-GAAP adjustments is based on the statutory tax rate in the relevant tax jurisdiction. Please note that the Company currently records a valuation allowance on its net deferred tax assets, so there is no net impact recorded for deferred tax effects. 34 Table of Contents Three Months Ended March 31, 2026 2025 Free Cash Flow (Non-GAAP): Net cash provided by operating activities (GAAP) $ 201,336 $ 44,082 Less: Purchases of property, plant and equipment (40,789) (56,407) Free Cash Flow (Non-GAAP) $ 160,547 $ (12,325) Liquidity and Capital Resources The following table represents our cash and debt balances as of March 31, 2026 and December 31, 2025: As of March 31, December 31, 2026 2025 (in thousands) Cash, cash equivalents and restricted cash $ 4,853,425 $ 4,609,647 Total debt $ 1,078,655 $ 1,019,206 We have generated positive cash flow from operations since the third quarter of 2024. Based on our current operating plan, we expect that our operating cash flows and existing cash and cash equivalents as of March 31, 2026 will enable us to fund our operating expenses and planned long-term investments for at least the next 12 months after the date that the financial statements included in this report are issued. In 2025, we generated proceeds from long-term debt of $855.0 million which was used to pay off all existing short-term working capital loans, and is associated with certain restrictive covenants as laid our further below with respect to certain coverage ratios and maximum investment amounts. We believe we will have sufficient cash and cash equivalents and other sources of capital to be able to repay and/or refinance those debt obligations on a consolidated basis as they become due principally in 2027 and 2028. Facilities Agreement In November 2025, we entered into a Facilities Agreement (the “Facilities Agreement”) with a syndicate of banks. The Facilities Agreement provides for a $140 million U.S. dollar-denominated, 2-year B1 revolving credit facility (the “B1 Revolving Loan Facility”), a $560 million U.S. dollar-denominated, 2-year , B2 term loan facility (the “B2 Term Loan Facility” and, together with the B1 Revolving Loan Facility, the “B Loan Facilities”), and a RMB $2.15 billion Renminbi-denominated, or approximately $300 million, 3-year, A term loan facility (the “A Loan Facility”) (collectively, the “Loan Facilities”). Subsequently, we consummated the refinancing of our short-term (1 year tenor) working capital loans of approximately $768 million in aggregate through the proceeds from the B2 Term Loan Facility and A Loan Facility. We paid $23 million in debt issuance costs for the Facilities Agreement from available cash and cash equivalents. The refinancing extended the maturity of our working capital loans. The A Loan Facility requires repayment of 4% of the aggregate amount outstanding every six months beginning on November 24, 2026, with all remaining principal outstanding due on November 24, 2028. The B2 Term Loan Facility requires repayment of 10% of the aggregate amount outstanding every three months beginning on June 15, 2027, with all remaining principal outstanding due on December 15, 2027, unless the final repayment date is extended. As of March 31, 2026, we had $312 million A Loan Facility and $560 million B2 Term Loan Facility outstanding under our Facilities Agreement. The A Loan Facility is subject to an interest rate equal to the Reference Rate (RMB) (as defined in the Facilities Agreement) plus a margin of 0.65% per annum. The B Loan Facilities are subject to an interest rate equal to the Reference Rate (USD) (as defined in the Facilities Agreement) plus a margin of 2.40% per annum. In addition to paying interest on the outstanding principal, we are also required to pay a commitment fee of 0.85% on the undrawn and uncancelled amounts under the Loan Facilities. 35 Table of Contents The Facilities Agreement contains certain affirmative and negative covenants customary for financings of this type. In addition, the Facilities Agreement contains financial covenants applicable to the Loan Facilities, including covenants requiring the maintenance of: (i) a minimum cash interest coverage ratio of not less than 5.00 to 1.00; (ii) a net leverage ratio of not greater than 2.50 to 1.00; (iii) a minimum total consolidated shareholders’ equity of the Group of not less than $2.7 billion; (iv) a minimum cash balance held outside the PRC by the Company and the Guarantors of $500.0 million; (v) a maximum financial indebtedness of the Company and its subsidiaries not to exceed $2.0 billion; and (vi) a maximum financial indebtedness of the Company’s subsidiaries that are incorporated or registered in the PRC not to exceed $500.0 million. We were compliant with the required covenants as of March 31, 2026. Sale of Future Royalties The proceeds from sale of future royalties of $911 million in 2025 increased our cash and cash equivalents through financing cash inflows. However, the repayment of this obligation to Royalty Pharma will be made upon the receipt of royalties from Amgen throughout the royalty period; therefore, it has not been included in the total debt balance above, as there is no claim on unrestricted cash. Our classification of the liability between current and non-current is based on our expectations of royalty revenue from Amgen over the next 12 months, which will be paid to Royalty Pharma in accordance with the terms of the Royalty Agreement. Cash inflows from Amgen are classified as operating cash inflows, while the corresponding payments to Royalty Pharma are allocated between interest cash outflows within operating cash flows and a portion to reduce the liability, classified as a financing cash outflow. Pursuant to the Royalty Agreement, in the three months ended March 31, 2026, we paid to Royalty Pharma an aggregate of $17 million, of which $14 million was allocated as interest expense and recognized within operating cash flows, and $3 million was recorded as reduction to the liability and recognized within financing activities. An additional $18 million of interest expense was accrued as of March 31, 2026. Any cash received from Amgen but not yet remitted to Royalty Pharma as of the balance sheet date will be reflected as restricted cash in the Consolidated Balance Sheet. There was no such restricted cash as of March 31, 2026. The following table provides information regarding our cash and cash equivalents, cash flows and unused borrowing capacity available for the three months ended March 31, 2026 and 2025: Three Months Ended March 31, 2026 2025 (dollars in thousands) Cash, cash equivalents and restricted cash at beginning of period $ 4,609,647 $ 2,638,747 Net cash provided by operating activities 201,336 44,082 Net cash used in investing activities (45,510) (121,941) Net cash provided by (used in) financing activities 68,632 (33,777) Net effect of foreign exchange rate changes 19,320 3,480 Net increase (decrease) in cash, cash equivalents, and restricted cash 243,778 (108,156) Cash, cash equivalents and restricted cash at end of period $ 4,853,425 $ 2,530,591 Unused borrowing capacity available, at end of period $ 219,734 $ — Operating Activities Cash provided by operating activities improved $157.3 million in the three months ended March 31, 2026, versus the prior year period due to our significantly improved gross margins in the current year period, offset by continued funding of our development pipeline and commercial operations, increasing working capital to support our global expansion and the timing of compensation-related payments. Investing Activities Investing activities used $45.5 million of cash in the three months ended March 31, 2026, compared to $121.9 million in the prior year period due primarily to a decrease in capital expenditures and acquired in-process research and development and regulatory milestone payments. Financing Activities Financing activities provided $68.6 million of cash in the three months ended March 31, 2026, compared to $33.8 million used in the prior year period due primarily to a net increase in debt borrowings in the current year period, offset by lower proceeds from option exercises and the employee share purchase plan. 36 Table of Contents We expect to repay approximately $119.4 million of outstanding bank loans in the next 12 months. Effects of Exchange Rates on Cash In the three months ended March 31, 2026, we incurred realized losses on cash of $3.4 million, which is included in the reconciling items between net income and net cash provided by operating activities on the consolidated statements of cash flows, primarily related to the remeasurement of monetary assets and liabilities denominated in currencies other than the USD to USD. We also have substantial operations in China and Europe, where the functional currency is the RMB and Euro, respectively, and as such the net cash flows are translated to the U.S. dollar for financial reporting. This process generates translation gains and losses on non-USD cash held in those currency markets that are included in the effects of foreign exchange rate changes on the consolidated statements of cash flows, as such translation gains and losses are excluded from cash flows from operating, investing and financing activities. Future Liquidity and Material Cash Requirements Our material cash requirements in the short- and long-term consist of the following operational, capital, and manufacturing expenditures, a portion of which contain contractual or other obligations. We plan to fund our material cash requirements with cash on hand. Contractual and Other Obligations The following table summarizes our significant contractual obligations as of the payment due date by period as of March 31, 2026: Payments Due by Period Total Short Term Long Term (dollars in thousands) Contractual obligations Operating lease commitments $ 76,646 $ 17,678 $ 58,968 Purchase commitments 186,437 186,437 — Debt obligations 1,098,164 119,351 978,813 Interest on debt 99,702 51,885 47,817 Co-development funding commitment 72,346 72,346 — Funding commitment 4,406 4,350 56 Capital commitments 22,925 22,925 — Total $ 1,560,626 $ 474,972 $ 1,085,654 Operating Lease Commitments We lease office facilities in California and Massachusetts in the U.S.; Basel, Switzerland; and office or manufacturing facilities in Beijing, Shanghai, Suzhou and Guangzhou in China under non-cancelable operating leases expiring on various dates. Payments under operating leases are expensed on a straight-line basis over the respective lease terms. The aggregate future minimum payments under these non-cancelable operating leases are summarized in the table above. Purchase Commitments As of March 31, 2026, non-cancellable purchase commitments amounted to $186.4 million, of which $22.5 million related to non-utilization fees and minimum purchase requirements for supply purchased from contract manufacturers and $163.9 million related to binding purchase order obligations of inventory from Amgen. We do not have any minimum purchase requirements for inventory from Amgen. 37 Table of Contents Debt Obligations and Interest Total debt obligations coming due in the next twelve months are $119.4 million. Total long-term debt obligations are $978.8 million. We have numerous financial and non-financial covenants on our debt obligations with various banks and other lenders. Some of these covenants include default and/or cross-default provisions that could require acceleration of repayment of loans in the event of default. As of March 31, 2026, we were in compliance with all covenants of our material debt agreements. See above regarding Liquidity and Capital Resources and Note 10 in the Notes to the Condensed Consolidated Financial Statements for further detail of our debt obligations. Interest on bank loans is paid quarterly until the respective loans are fully settled. For the purpose of contractual obligations calculation, current interest rates on floating rate obligations were used for the remainder contractual life of the outstanding borrowings. Royalty Sale Liability As described above, we have a contractual commitment to pay Royalty Pharma amounts received from Amgen related to Amgen’s sales of IMDELLTRA ® in certain markets outside of China. While we have classified the upfront payment and the option exercise payment received from Royalty Pharma as a liability, the repayment of this obligation to Royalty Pharma will be made upon the receipt of royalties from Amgen throughout the royalty period, which is anticipated to extend at least through 2041. We have not included this liability in the table above because it does not constitute a fixed contractual obligation or a cancellable commitment from which the upfront payment and the option exercise payment could be demanded for refund. Co-Development Funding Commitment Under our collaboration with Amgen, we are responsible for co-funding global clinical development costs for the licensed oncology pipeline assets up to a total cap of $1.25 billion. We are funding our portion of the co-development costs by contributing cash and/or development services. As of March 31, 2026, our remaining co-development funding commitment was $72.3 million. Funding Commitments Funding commitments represent our committed capital related to equity investments. As of March 31, 2026, our remaining capital commitment was $4.4 million and is expected to be paid from time to time over the investment period. Capital Commitments We had capital commitments amounting to $22.9 million for the acquisition of property, plant and equipment as of March 31, 2026, related to various facilities across the globe. Critical Accounting Policies and Significant Judgments and Estimates Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses. We evaluate our estimates and judgments on an ongoing basis, and our actual results may differ from these estimates. These include, but are not limited to, estimating the useful lives of long-lived assets, estimating variable consideration in product sales and collaboration revenue arrangements, estimating the incremental borrowing rate for operating lease liabilities, identifying separate accounting units and the standalone selling price of each performance obligation in the Company’s revenue arrangements, assessing the impairment of long-lived assets, valuation and recognition of share-based compensation expenses, realizability of deferred tax assets, estimates related to the sale of future royalty liability and the fair value of financial instruments. We base our estimates on historical experience, known trends and events, contractual milestones and other various factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions. There have been no material changes to our critical accounting policies as of and for the three months ended March 31, 2026, as compared to those described in the section titled “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2025. 38 Table of Contents For new accounting policies adopted during the three months ended March 31, 2026, see “Part I—Item 1—Financial Statements—Notes to the Condensed Consolidated Financial Statements—1. Description of Business, Basis of Presentation and Consolidation and Significant Accounting Policies—Significant accounting policies” in this Quarterly Report on Form 10-Q.