What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-05 compared with 2026-05-06 · 220 added, 108 removed, 326 unchanged (50% of the section changed)

62 unchanged sentences

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

Key highlights for the second quarter of 2026 are as follows:

• Second quarter 2026 total global revenues increased 30% to $1.7 billion versus second quarter 2025

• Global BRUKINSA ® (zanubrutinib) revenues increased 31% to $1.2 billion versus second quarter 2025

• Diluted GAAP Earnings per American Depositary Share (“ADS”) of $2.05, non-GAAP diluted Earnings per ADS of $3.84.

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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”).

• 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

• 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.

• BG-C0979 (ADAM9-targeting ADC):

Initiated first-in-human study.

Inflammation and Immunology

• BG-A3004 (KLRG1 mAb):

Initiated first-in-human study.

On July 23, 2026, we announced a $300 million expansion of our flagship clinical and commercial-stage manufacturing and research and development center at the Princeton West Innovation Campus in Hopewell, New Jersey, to add small molecule manufacturing capabilities.

On June 30, 2026, we announced positive topline results from the Phase 3 MANGROVE study (BGB-3111-306) evaluating foundational Bruton’s tyrosine kinase (“BTK”) inhibitor BRUKINSA ® plus rituximab versus bendamustine plus rituximab in adult patients with previously untreated mantle cell lymphoma (“MCL”).

On May 13, 2026, we announced that the U.S.

Food and Drug Administration (“FDA”) granted accelerated approval to BEQALZI ™ (sonrotoclax), a foundational, next-generation BCL2 inhibitor, for the treatment of adult patients with relapsed or refractory (R/R) MCL, after at least two lines of systemic therapy, including a BTK inhibitor.

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

The following table summarizes our results of operations for the three and six months ended June 30, 2026 and 2025:

Three Months Ended Six Months Ended

June 30, Change June 30, Change

2026 2025 $ % 2026 2025 $ %

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Interest expense (39,739) (7,995) (31,744) 397.0 % (72,626) (14,997) (57,629) 384.3 %

Other income, net 14,536 3,950 10,586 268.0 %

Other (expense) income, net (749) 8,167 (8,916) (109.2) % 13,787 12,117 1,670 13.8 %

Income before income taxes 312,459 99,549 212,910 213.9 % 571,674 120,449 451,225 374.6 %

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Net income $ 237,007 $ 94,320 $ 142,687 151.3 % $ 464,364 $ 95,590 $ 368,774 385.8 %

Comparison of the Three Months Ended March 31, 2026 and 2025

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.

Comparison of the Three Months Ended June 30, 2026 and 2025

Total revenue increased to $1,705.1 million for the three months ended June 30, 2026, from $1,315.3 million for the three months ended June 30, 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

June 30, Changes

2026 2025 $ %

8 unchanged sentences

Total product revenue $ 1,679,794 $ 1,302,076 $ 377,718 29.0 %

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.

In addition, product revenues in the first quarter of 2026 were positively impacted by growth from in-licensed products from Amgen and TEVIMBRA.

Global sales of BRUKINSA totaled $1,094.8 million in the first quarter, representing a 38.3% increase compared to the prior-year period;

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.

Net product revenue increased 29.0% to $1,679.8 million for the three months ended June 30, 2026, compared to $1,302.1 million in the prior-year period, primarily due to increased sales of BRUKINSA globally, driven by significant growth in the U.S.

In addition, product revenues in the second quarter of 2026 were positively impacted by growth from in-licensed products from Amgen and TEVIMBRA.

Global sales of BRUKINSA totaled $1,247.6 million in the second quarter, representing a 31.4% increase compared to the prior-year period;

sales of BRUKINSA totaled $892.5 million in the second quarter, compared to $683.7 million in the prior-year period, representing growth of 30.5%, driven primarily by robust demand growth.

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 the EU totaled $195.6 million in the second quarter, compared to $150.5 million in the prior-year period, representing growth of 30.0%, driven by continued gains in market share across all major markets, including Germany, Italy, Spain, France and the UK.

BRUKINSA sales in China totaled $97.2 million, representing growth of 16.7%.

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 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.

Foreign exchange contributed approximately 7% of the China growth given the Renminbi strengthening on a year-over-year basis.

BRUKINSA rest of world revenue totaled $62.4 million in the second quarter, representing growth of 92.1% compared to the prior-year period.

Sales of TEVIMBRA totaled $228.5 million in the second quarter, compared to $193.5 million in the prior-year period, representing an 18.1% increase.

Revenue for Amgen products in China totaled $157.3 million in the second quarter, compared to $126.3 million in the prior-year period, representing a 24.5% increase, driven primarily by increased XGEVA ® sales volume.

Other revenue totaled $25.3 million and $13.2 million for the three months ended June 30, 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 as a percentage of product sales increased to 89.6% for the three months ended June 30, 2026, from 87.4% 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.

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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:

Research and development expense increased by $87.4 million, or 16.6%, to $612.3 million for the three months ended June 30, 2026 from $524.9 million for the three months ended June 30, 2025.

Three Months Ended

March 31, Changes

June 30, Changes

2026 2025 $ %

2 unchanged sentences

Cost of development programs $ 194,035 $ 182,567 $ 11,468 6.3 %

Upfront license and development milestone fees 544 — 544 NM

Upfront license and development milestone fees 23,287 500 22,787 4,557.4 %

Amgen co-development expense 1

5 unchanged sentences

$ 533,950 $ 444,057 $ 89,893 20.2 %

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.

Our co-funding obligation for the development of the pipeline assets under the Amgen collaboration for the three months ended June 30, 2026 totaled $59.8 million, of which $30.3 million was recorded as R&D expense.

The remaining $29.5 million was recorded as a reduction for the R&D cost share liability.

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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.

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.

External research and development expenses increased in the second quarter of 2026 compared to the same period in 2025.

This was primarily driven by increased investment in the continued advancement of several programs across the pipeline, including BTK CDAC, CDK4, PRMT5 and GPC3x4-1BB bsAb, higher Amgen co-development expenses, and higher development upfront and milestone fees.

Internal research and development expense increased by $49.3 million, or 15.6%, to $364.7 million for the three months ended June 30, 2026, from $315.4 million for the three months ended June 30, 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.

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Three Months Ended

March 31, Changes

June 30, Changes

2026 2025 $ %

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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.

Selling, general and administrative expense increased by $55.3 million, or 10.3%, to $593.2 million for the three months ended June 30, 2026, from $537.9 million for the three months ended June 30, 2025.

The increase was primarily attributable to continued investment in global commercial expansion primarily in the U.S.

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.

Selling, general and administrative expenses as a percentage of product sales were 35.3% in the second quarter of 2026 compared to 41.3% 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.

Interest income increased by $16.4 million, or 142.8%, to $27.9 million for the three months ended June 30, 2026, from $11.5 million for three months ended June 30, 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.

Interest expense increased by $31.7 million, or 397.0%, to $39.7 million for the three months ended June 30, 2026, from $8.0 million for three months ended June 30, 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.

Other Expense (Income), Net

Other expense, net was $0.7 million for the three months ended June 30, 2026, primarily due to foreign exchange losses.

For the three months ended June 30, 2025, other income, net was $8.2 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.

Three Months Ended

June 30, Changes

2026 2025 $ %

(dollars in thousands)

GAAP income tax expense $ 75,452 $ 5,229 $ 70,223 1,343.0 %

Discrete tax items* (49,839) 14,210 (64,049) (450.7) %

Income tax effect of non-GAAP adjustments 20,331 17,466 2,865 16.4 %

Adjusted income tax expense $ 45,944 $ 36,905 $ 9,039 24.5 %

GAAP effective income tax rate 24.1 % 5.3 %

Adjusted effective income tax rate 9.4 % 12.7 %

*Certain US GAAP discrete tax items are not adjusted for purposes of non-GAAP adjusted results above.

Income tax expense was $75.5 million for the three months ended June 30, 2026 as compared to $5.2 million for the three months ended June 30, 2025.

The income tax expense for the three months ended June 30, 2026 and 2025 was primarily attributable to the application of our expected current worldwide effective tax rate for the full year to year-to-date actual pre-tax income, reflecting the mix of taxable income across jurisdictions as well as the impact of certain discrete items.

Specifically, the provision for income taxes for the three months ended June 30, 2026 included a discrete net tax expense of approximately $49.3 million.

This figure primarily relates to the settlement of the audit of one of our China subsidiaries amounting to $59.0 million, partially offset by certain discrete items mainly related to U.S.

share-based compensation.

The income taxes expense for the three months ended June 30, 2025 included a discrete net tax benefit of $14.2 million, primarily related to updated provision estimates for U.S.

R&D credits for prior periods.

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.

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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.

Prior to reversal, excluding any significant discrete items, income tax expense should trend with earnings per historical relationship.

As of June 30, 2026, the Company had gross unrecognized tax benefits of $26.0 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.

The ongoing tax audits in various jurisdictions 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.

The Company’s reserve for uncertain tax positions decreased by $2.4 million in the three months ended June 30, 2026, primarily due to the settlement of the China audit, partially offset by an increase in 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.

Net income for the second quarter of 2026 improved over the prior-year period on both a GAAP and adjusted basis, primarily attributable to revenue growth and improved operating leverage.

For the second quarter of 2026, basic and diluted earnings per share were both $0.16 per share and $2.12 and $2.05 per American Depositary Share (“ADS”), respectively, compared to $0.07 and $0.06 per share and $0.87 and $0.84 per ADS in the prior-year period.

On an adjusted basis, basic and diluted earnings per share was $0.31 and $0.30 per share and $3.98 and $3.84 per ADS, respectively, compared to $0.18 and $0.17 per share and $2.33 and $2.25 per ADS in the prior-year period.

Comparison of the Six Months Ended June 30, 2026 and 2025

Total revenue increased to $3,218.5 million, or 32.3%, for the six months ended June 30, 2026, from $2,432.6 million for the six months ended June 30, 2025, primarily due to increased sales of our internally developed products, BRUKINSA and TEVIMBRA, as well as increased sales of in-licensed Amgen products.

Net product revenues consisted of the following:

Six Months Ended

June 30, Changes

2026 2025 $ %

(dollars in thousands)

$ 2,342,483 $ 1,741,504 $ 600,979 34.5 %

434,756 364,688 70,068 19.2 %

194,419 151,741 42,678 28.1 %

70,572 49,493 21,079 42.6 %

32,118 39,144 (7,026) (17.9) %

21,760 24,987 (3,227) (12.9) %

Other 71,015 39,049 31,966 81.9 %

Total product revenue $ 3,167,123 $ 2,410,606 $ 756,517 31.4 %

Net product revenue increased 31.4% to $3,167.1 million for the six months ended June 30, 2026, compared to $2,410.6 million in the prior-year period, primarily due to increased sales of BRUKINSA globally, driven by continued growth in the U.S.

In addition, product revenues in the six months ended June 30, 2026 were positively impacted by sales of TEVIMBRA and in-licensed products from Amgen, primarily XGEVA ® .

Global sales of BRUKINSA totaled $2,342.5 million in the six months ended June 30, 2026, representing a 34.5% increase compared to the prior-year period.

sales of BRUKINSA totaled $1,653.6 million in the six months ended June 30, 2026, compared to $1,246.9 million in the prior-year period, representing growth of 32.6%, driven primarily by robust demand growth across all indications 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 sales in Europe totaled $378.0 million in the six months ended June 30, 2026, representing growth of 41.9% driven by increased market share across all major European markets.

BRUKINSA revenue in China totaled $191.2 million, representing growth of 16.3%.

BRUKINSA rest of world revenue totaled $119.6 million in the six months ended June 30, 2026, representing growth of 87.3% compared to the prior-year period.

Revenue for TEVIMBRA totaled $434.8 million in the six months ended June 30, 2026, compared to $364.7 million in the prior-year period, representing a 19.2% increase.

Revenue for Amgen products in China totaled $299.5 million in the six months ended June 30, 2026, compared to $240.4 million in the prior-year period, driven primarily by increased XGEVA ® sales volume.

Other revenue totaled $51.4 million and $22.0 million for the six months ended June 30, 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 on product sales increased to $2,825.4 million for the six months ended June 30, 2026, compared to $2,081.0 million in the prior-year period, primarily due to increased product revenue in the current year period.

Gross margin as a percentage of product sales increased to 89.2% for the six months ended June 30, 2026, from 86.3% 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 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 89.6%, from 86.9% in the comparable period of the prior year.

Research and Development Expense

Research and development expense increased by $146.7 million, or 14.6%, to $1,153.5 million for the six months ended June 30, 2026 from $1,006.8 million for the six months ended June 30, 2025.

The following table summarizes external clinical, external non-clinical and internal research and development expense for the six months ended June 30, 2026 and 2025, respectively:

Six Months Ended

June 30, Changes

2026 2025 $ %

(dollars in thousands)

External research and development expense:

Cost of development programs $ 351,592 $ 352,613 $ (1,021) (0.3) %

Upfront license and development milestone fees 23,831 500 23,331 4666.2 %

Amgen co-development expense 1

59,703 47,146 12,557 26.6 %

Total external research and development expenses 435,126 400,259 34,867 8.7 %

Internal research and development expenses 718,378 606,524 111,854 18.4 %

Total research and development expenses $ 1,153,504 $ 1,006,783 $ 146,721 14.6 %

Adjusted research and development expenses 2

$ 999,854 $ 865,252 $ 134,602 15.6 %

Our co-funding obligation for the development of the pipeline assets under the Amgen collaboration for the six months ended June 30, 2026 totaled $117.9 million, of which $59.7 million was recorded as R&D expense.

The remaining $58.2 million was recorded as a reduction of the R&D cost share liability.

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.

The increase in external research and development expenses in the six months ended June 30, 2026 was primarily attributable to an increase in development upfront and milestone fees and Amgen co-development expenses.

Internal research and development expense increased $111.9 million, or 18.4%, to $718.4 million and was primarily attributable to the expansion of our global development organization and our clinical and preclinical drug candidates, as well as our continued efforts to internalize research and clinical trial activities and control spend.

Selling, General and Administrative Expense

Six Months Ended

June 30, Changes

2026 2025 $ %

(dollars in thousands)

Selling, general and administrative expenses $ 1,148,311 $ 997,201 $ 151,110 15.2 %

Adjusted selling, general and administrative expenses 1

$ 972,667 $ 837,166 $ 135,501 16.2 %

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 $151.1 million, or 15.2%, to $1,148.3 million, for the six months ended June 30, 2026, from $997.2 million for the six months ended June 30, 2025.

The increase was primarily attributable to continued investment in global commercial expansion primarily in the U.S.

Selling, general and administrative expenses as a percentage of product sales were 36.3% for the six months ended June 30, 2026 compared to 41.4% in the prior-year period.

Interest Income

Interest income increased by $31.2 million, or 128.3%, to $55.6 million for the six months ended June 30, 2026, from $24.3 million for the six months ended June 30, 2025.

The increase in interest income was primarily attributable to higher cash and cash equivalents balance.

Interest Expense

Interest expense increased by $57.6 million, or 384.3%, to $72.6 million for the six months ended June 30, 2026, from $15.0 million for the six months ended June 30, 2025.

Interest expense increased resulting from 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 completion of certain phases of our Hopewell facility.

Other Income, Net

Other income, net was $13.8 million for the six months ended June 30, 2026, primarily due to government subsidy income.

For the six months ended June 30, 2025, other income, net was $12.1 million, primarily due to foreign exchange gains and government subsidy income, partially offset by unrealized losses on our equity investments.

Income Tax Expense

Six Months Ended

June 30, Changes

2026 2025 $ %

(dollars in thousands)

GAAP income tax expense $ 107,310 $ 24,859 $ 82,451 331.7 %

Discrete tax items* (53,374) 8,737 (62,111) (710.9) %

Income tax effect of non-GAAP adjustments 40,673 28,703 11,970 41.7 %

Adjusted income tax expense $ 94,609 $ 62,299 $ 32,310 51.9 %

GAAP effective income tax rate 18.8 % 20.6 %

Adjusted effective income tax rate 10.3 % 13.8 %

*Certain US GAAP discrete tax items are not adjusted for purposes of non-GAAP adjusted results above.

Income tax expense increased to $107.3 million for the six months ended June 30, 2026, from $24.9 million for the six months ended June 30, 2025.

The income tax expense for the six months ended June 30, 2026 and 2025 was primarily attributable to the application of our expected current worldwide effective tax rate for the fully year to year-to-date actual pre-tax income, reflecting the mix of taxable income across jurisdictions as well as the impact of certain discrete items.

Specifically, the provision for income taxes for the six months ended June 30, 2026 included a discrete net tax expense of approximately $52.8 million.

This figure primarily relates to the settlement of the audit of one of our China subsidiaries amounting to $59.6 million, partially offset by certain discrete items mainly related to U.S.

share-based compensation.

The income tax expense for the six months ended June 30, 2025 included a discrete net tax benefit of $8.7 million, primarily related to updated provision estimates for U.S.

R&D tax credits.

On July 4, 2025, the reconciliation bill (H.R.

1), commonly referred to as the One Big Beautiful Bill Act (“OBBBA”), was signed into law and includes a broad range of tax reform provisions that may affect our financial results.

The OBBBA allows an elective deduction for domestic research and development expenses, a reinstatement of elective 100% first-year bonus depreciation, and a more favorable tax rate on foreign-derived deduction eligible income.

While we have estimated the impact of certain elective provisions of the OBBBA, we do not expect the legislation to have a material impact on our consolidated financial statements.

Net Income and Earnings Per Share

Net income for the six months ended June 30, 2026 improved over the prior-year period on both a GAAP and adjusted basis, primarily attributable to revenue growth and improved operating leverage.

For the six months ended June 30, 2026, basic and diluted earnings per share was $0.32 and $0.31 per share and $4.17 and $4.01 per ADS, respectively, compared to basic and diluted earnings per share of $0.07 and $0.07 per share and $0.89 and $0.85 per ADS in the prior-year period.

On an adjusted basis, basic and diluted earnings per share was $0.57 and $0.54 per share and $7.37 and $7.08 per ADS, respectively, compared to $0.28 and $0.27 per share and $3.61 and $3.48 per ADS in the prior-year period.

Non-GAAP Reconciliation

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2026 2025 2026 2025

( Amounts in thousands of U.S.

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Amortization of intangibles 1,592 5,749 3,334 6,922

Other — 893 — 893

Adjusted cost of sales - products $ 167,418 $ 154,643 $ 328,565 $ 315,859

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Amortization of intangibles 1,609 5,760 3,368 6,950

Other — 893 — 893

Adjusted income from operations $ 503,029 $ 274,945 $ 917,423 $ 414,302

Reconciliation of GAAP to adjusted income tax expense:

GAAP income tax expense $ 75,452 $ 5,229 $ 107,310 $ 24,859

Discrete tax items (49,839) 14,210 (53,374) 8,737

Income tax effect of non-GAAP adjustments 20,331 17,466 40,673 28,703

Adjusted income tax expense $ 45,944 $ 36,905 $ 94,609 $ 62,299

Three Months Ended Six Months Ended

June 30, June 30,

2026 2025 2026 2025

( Amounts in thousands of U.S.

dollars, except for per share and per ADS data)

Reconciliation of GAAP to adjusted net income:

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Amortization of intangibles 1,609 5,760 3,368 6,950

Other — 893 — 893

Impairment of equity investments — 3,118 — 15,494

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Adjusted net income $ 444,497 $ 252,822 $ 819,539 $ 388,959

Three Months Ended

( Amounts in thousands of U.S.

dollars, except for per share and per ADS data)

Reconciliation of GAAP to adjusted EPS - basic

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Amortization of intangibles 0.00 0.00 0.00 0.00

Other 0.00 0.00 0.00 0.00

Impairment of equity investments 0.00 0.00 0.00 0.01

8 unchanged sentences

Amortization of intangibles 0.00 0.00 0.00 0.00

Other 0.00 0.00 0.00 0.00

Impairment of equity investments 0.00 0.00 0.00 0.01

8 unchanged sentences

Amortization of intangibles 0.01 0.05 0.03 0.06

Other 0.00 0.01 0.00 0.01

Impairment of equity investments 0.00 0.03 0.00 0.14

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Adjusted earnings per ADS - basic $ 3.98 $ 2.33 $ 7.37 $ 3.61

Three Months Ended Six Months Ended

June 30, June 30,

2026 2025 2026 2025

( Amounts in thousands of U.S.

dollars, except for per share and per ADS data)

Reconciliation of GAAP to adjusted earnings per ADS - diluted

3 unchanged sentences

Amortization of intangibles 0.01 0.05 0.03 0.06

Other 0.00 0.01 0.00 0.01

Impairment of equity investments 0.00 0.03 0.00 0.14

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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.

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2026 2025 2026 2025

Free Cash Flow (Non-GAAP):

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Liquidity and Capital Resources

The following table represents our cash and debt balances as of March 31, 2026 and December 31, 2025:

March 31, December 31,

The following table represents our cash and debt balances as of June 30, 2026 and December 31, 2025:

June 30, December 31,

(in thousands)

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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.

Based on our current operating plan, we expect that our operating cash flows and existing cash and cash equivalents as of June 30, 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.

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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.

As of June 30, 2026, we had $317 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.

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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.

We were compliant with the required covenants as of June 30, 2026.

Sale of Future Royalties

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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.

Pursuant to the Royalty Agreement, in the six months ended June 30, 2026, we paid to Royalty Pharma an aggregate of $33 million, of which $30 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 $25 million of interest expense was accrued as of June 30, 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

There was no such restricted cash as of June 30, 2026.

The following table provides information regarding our cash and cash equivalents, cash flows and unused borrowing capacity available for the six months ended June 30, 2026 and 2025:

Six Months Ended

(dollars in thousands)

2 unchanged sentences

Net cash used in investing activities (94,863) (188,546)

Net cash provided by (used in) financing activities 68,632 (33,777)

Net cash provided by financing activities 62,578 1,248

Net effect of foreign exchange rate changes 39,156 26,957

Net increase (decrease) in cash, cash equivalents, and restricted cash 243,778 (108,156)

Net increase in cash, cash equivalents, and restricted cash 671,027 147,339

Cash, cash equivalents and restricted cash at end of period $ 5,280,674 $ 2,786,086

1 unchanged sentence

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.

Cash provided by operating activities improved $356.5 million in the six months ended June 30, 2026, versus the prior year period due to our significantly improved gross margins in the current year period, primarily 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.

Investing activities used $94.9 million of cash in the six months ended June 30, 2026, compared to $188.5 million in the prior year period due primarily to a decrease in capital expenditures, principally related to our manufacturing and clinical R&D facility in Hopewell, New Jersey, 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.

Financing activities provided $62.6 million of cash in the six months ended June 30, 2026, compared to $1.2 million 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.

We expect to repay approximately $201.1 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.

In the six months ended June 30, 2026, we incurred realized losses on cash of $6.8 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.

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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:

The following table summarizes our significant contractual obligations as of the payment due date by period as of June 30, 2026:

Payments Due by Period

17 unchanged sentences

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.

As of June 30, 2026, non-cancellable purchase commitments amounted to $262.8 million, of which $22.6 million related to non-utilization fees and minimum purchase requirements for supply purchased from contract manufacturers and $240.2 million related to binding purchase order obligations of inventory from Amgen.

We do not have any minimum purchase requirements for inventory from Amgen.

4 unchanged sentences

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.

As of June 30, 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.

8 unchanged sentences

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.

As of June 30, 2026, our remaining co-development funding commitment was $12.5 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.

As of June 30, 2026, our remaining capital commitment was $2.2 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.

We had capital commitments amounting to $22.2 million for the acquisition of property, plant and equipment as of June 30, 2026, related to various facilities across the globe.

Critical Accounting Policies and Significant Judgments and Estimates

6 unchanged sentences

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.

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.

There have been no material changes to our critical accounting policies as of and for the three and six months ended June 30, 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.

For new accounting policies adopted during the three and six months ended June 30, 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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis