Item 5. Market for Registrant’s Common Equity
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our American Depositary Shares ("ADSs") have been publicly traded on the NASDAQ Global Select Market under the symbol “BGNE” since February 3, 2016. Our ordinary shares have been publicly traded on the Stock Exchange of Hong Kong Limited ("HKEx") under the stock code “06160” since August 8, 2018.
Shareholders
As of January 31, 2021, we had approximately 160 holders of record of our ordinary shares and 10 holders of record of our ADSs. This number does not include beneficial owners whose ordinary shares or ADSs are held by nominees in street name. Because many ordinary shares and ADSs are held by broker nominees, we are unable to estimate the total number of beneficial holders represented by these record holders.
Dividend Policy
Our board of directors has adopted a dividend policy which provides that we currently intend to retain all available funds and earnings, if any, to fund the development and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future. Subject to applicable law and our amended and restated articles of association, any future determination to pay dividends will be made at the discretion of our board of directors and may be based on a number of factors, including our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that our board of directors may deem relevant. This dividend policy reflects our board of directors’ current views on our financial and cash flow position. We intend to continue to review our dividend policy from time to time, and there can be no assurance that dividends will be paid in any particular amount, if at all, for any given period.
We have never declared or paid any dividends on our ordinary shares or any other securities. If we pay dividends in the future, in order for us to distribute dividends to our shareholders and holders of ADSs, we may rely to some extent on dividends distributed by our PRC subsidiaries. PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to us, and such distributions will be subject to PRC withholding tax. In addition, PRC regulations currently permit payment of dividends of a PRC company only out of accumulated distributable after-tax profits, as determined in accordance with our articles of association and the accounting standards and regulations in the PRC.
Investors should not purchase our ordinary shares or ADSs with the expectation of receiving cash dividends.
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Performance Comparison Graph
This graph is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
The following graph shows the total shareholder return of an investment of $100 in cash at market close on February 3, 2016 (the first day of trading of our ADSs) through December 31, 2020 for our ADSs, the NASDAQ Composite Index (U.S.), and the NASDAQ Biotechnology Index.
Pursuant to applicable SEC rules, all values assume reinvestment of the full amount of any dividends, although no dividends have been declared or paid to date. The shareholder return shown on the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future shareholder returns.
2/3/16 3/31/16 6/30/16 9/30/16 12/31/16 3/31/17 6/30/17 9/30/17 12/31/17 3/31/18 6/30/18
BeiGene, Ltd. 100.00 103.50 105.23 108.79 107.20 129.27 158.90 365.32 345.06 593.22 542.83
NASDAQ Composite 100.00 105.84 105.60 116.17 118.10 130.06 135.47 143.69 153.10 157.06 167.44
NASDAQ Biotechnology 100.00 97.63 96.54 108.60 99.57 110.37 116.84 125.89 121.12 121.19 124.92
9/30/18 12/31/18 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 6/30/20 9/30/20 12/31/20
BeiGene, Ltd. 608.12 495.27 466.10 437.68 432.42 585.31 434.71 665.25 1,011.44 912.39
NASDAQ Composite 179.86 148.75 173.75 180.47 180.80 203.33 174.96 229.10 254.85 294.67
NASDAQ Biotechnology 138.91 110.38 127.54 124.67 113.92 138.10 123.91 157.25 155.95 174.59
Equity Compensation Plan Information
Our equity compensation plan information required by this item is incorporated by reference to the information in “Part III—Item 12—Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report.
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Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
None.
Taxation
Cayman Islands Taxation
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation, and there is no taxation in the nature of inheritance tax or estate duty or withholding tax applicable to us or to any holder of the ADSs and ordinary shares. There are no other taxes likely to be material to us levied by the Government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within, the jurisdiction of the Cayman Islands. No stamp duty is payable in the Cayman Islands on the issue of shares by, or any transfers of shares of, Cayman Islands companies (except those which hold interests in land in the Cayman Islands). The Cayman Islands is not party to any double tax treaties that are applicable to any payments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.
Payments of dividends and capital in respect of the ADSs and ordinary shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of the ADSs or ordinary shares, as the case may be, nor will gains derived from the disposal of the ADSs or ordinary shares be subject to Cayman Islands income or corporation tax.
PRC Taxation
Under the Enterprise Income Tax Law ("EIT Law"), an enterprise established outside the PRC with a “de facto management body” within the PRC is considered a “resident enterprise,” which means that it is treated in a manner similar to a Chinese enterprise for PRC enterprise income tax purposes. The implementation rules of the EIT Law define “de facto management body” as a managing body that exercises substantial and overall management and control over the production and operations, personnel, accounting and properties of an enterprise. In addition, the Notice Regarding the Determination of Chinese‑Controlled Offshore Incorporated Enterprise as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies, or Circular 82, issued by the State Administration of Taxation, which provides guidance on the determination of the tax residence status of a Chinese‑controlled offshore incorporated enterprise, defines Chinese-controlled offshore incorporated enterprise as an enterprise that is incorporated under the laws of a foreign country or territory and that has a PRC enterprise or enterprise group as its primary controlling shareholder. Although BeiGene, Ltd. does not have a PRC enterprise or enterprise group as our primary controlling shareholder and is therefore not a Chinese‑controlled offshore incorporated enterprise within the meaning of Circular 82, in the absence of guidance specifically applicable to us, we have applied the guidance set forth in Circular 82 to evaluate the tax residence status of BeiGene, Ltd. and its subsidiaries organized outside the PRC.
According to Circular 82, a Chinese‑controlled offshore incorporated enterprise will be regarded as a PRC tax resident by virtue of having a “de facto management body” in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the following criteria are met:
• the primary location of the enterprise’s senior executives of the day‑to‑day operational management and senior management departments performing their duties is in the PRC;
• decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC;
• the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder meeting minutes are located or maintained in the PRC; and
• 50% or more of voting board members or senior executives habitually reside in the PRC.
Currently, some of the members of our management team are located in China. However, we do not believe that we meet all of the conditions outlined in the immediately preceding paragraph. BeiGene, Ltd. and its offshore subsidiaries are incorporated outside the PRC. As a holding company, our key assets and records, including the resolutions and meeting minutes of our board of directors and the resolutions and meeting minutes of our shareholders, are located and maintained outside the PRC. We are not aware of any offshore holding companies with a corporate structure similar to ours that has been deemed a
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PRC “resident enterprise” by the PRC tax authorities. Accordingly, we believe that BeiGene, Ltd. and its offshore subsidiaries should not be treated as a “resident enterprise” for PRC tax purposes if the criteria for “de facto management body” as set forth in Circular 82 were deemed applicable to us. However, as the tax residency status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body” as applicable to our offshore entities, we will continue to monitor our tax status.
The implementation rules of the EIT Law provide that, (1) if the enterprise that distributes dividends is domiciled in the PRC or (2) if gains are realized from transferring equity interests of enterprises domiciled in the PRC, then such dividends or capital gains are treated as China‑sourced income. It is not clear how “domicile” may be interpreted under the EIT Law, and it may be interpreted as the jurisdiction where the enterprise is a tax resident. Therefore, if we are considered as a PRC tax resident enterprise for PRC tax purposes, any dividends we pay to our overseas shareholders or ADS holders as well as gains realized by such shareholders or ADS holders from the transfer of our shares or ADSs may be regarded as China‑sourced income. As a result, dividends paid to non‑PRC resident enterprise ADS holders or shareholders may be subject to PRC withholding tax at a rate of up to 10% (or 20% in the case of non‑PRC individual ADS holders or shareholders) and gains realized by non‑PRC resident enterprise ADS holders or shareholders from the transfer of our ordinary shares or ADSs may be subject to PRC tax at a rate of 10% (or 20% in the case of non‑PRC individual ADS holders or shareholders). It is also unclear whether, if we are considered a PRC resident enterprise, holders of our shares or ADSs would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or areas.
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Item 6. Selected Consolidated Financial Data
The selected financial data set forth below is derived from our audited consolidated financial statements and may not be indicative of future operating results. The following selected consolidated financial data should be read in conjunction with “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the notes thereto included elsewhere in this Annual Report. The selected financial data in this section are not intended to replace our consolidated financial statements and the related notes. Our historical results are not necessarily indicative of our future results.
Year Ended December 31,
2020 2019 2018 2017 2016
(in thousands, except share and per share data)
Statements of Operations:
Revenues
Product revenue, net $ 308,874 $ 222,596 $ 130,885 $ 24,428 $ —
Collaboration revenue — 205,616 67,335 213,959 1,070
Total revenues 308,874 428,212 198,220 238,387 1,070
Expenses
Cost of sales - product 70,657 71,190 28,705 4,974 —
Research and development (1)
1,294,877 927,338 679,005 269,018 98,033
Selling, general and administrative 600,176 388,249 195,385 62,602 20,097
Amortization of intangible assets 846 1,326 894 250 —
Total expenses 1,966,556 1,388,103 903,989 336,844 118,130
Loss from operations (1,657,682) (959,891) (705,769) (98,457) (117,060)
Interest income (expense), net 1,998 9,131 13,947 (4,108) 383
Changes in fair value of financial instruments — — — — (1,514)
Other income (expense), net 37,490 7,174 1,993 11,501 (972)
Loss before income tax expense (1,618,194) (943,586) (689,829) (91,064) (119,163)
Income tax (benefit) expense (17,671) 6,992 (15,796) 2,235 54
Net loss (1,600,523) (950,578) (674,033) (93,299) (119,217)
Less: net loss attributable to noncontrolling interest (3,617) (1,950) (264) (194) —
Net loss attributable to BeiGene, Ltd. $ (1,596,906) $ (948,628) $ (673,769) $ (93,105) $ (119,217)
Loss per share attributable to BeiGene, Ltd, basic and diluted (2)
$ (1.47) $ (1.22) $ (0.93) $ (0.17) $ (0.30)
Weighted-average shares outstanding, basic and diluted 1,085,131,783 780,701,283 720,753,819 543,185,460 403,619,446
(1) Included in research and development expense is $109.5 million, $50.0 million and $89.0 million of upfront payments for in-process research and development related to collaboration agreements entered into in 2020, 2019 and 2018, respectively (see Note 3).
(2) See Note 16 to our audited consolidated financial statements appearing elsewhere in this Annual Report for a description of the method used to calculate basic and diluted loss per share of ordinary shares.
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As of December 31,
2020 2019 2018 2017 2016
(in thousands)
Balance Sheet Data:
Cash, cash equivalents, and restricted cash $ 1,390,005 $ 620,775 $ 740,713 $ 239,602 $ 87,514
Short-term investments 3,268,725 364,728 1,068,509 597,914 280,660
Working capital 3,885,491 862,384 1,697,390 763,509 339,341
Total assets 5,600,757 1,612,289 2,249,684 1,046,479 405,813
Total liabilities 1,731,514 633,934 496,037 362,248 52,906
Noncontrolling interest — 16,150 14,445 14,422 —
Total equity 3,869,243 978,355 1,753,647 684,231 352,907
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