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Item 7. Management’s Discussion and Analysis

2023-02-27 compared with 2022-02-28 · 111 added, 133 removed, 319 unchanged (43% of the section changed)

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We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this report, including those set forth under “Part I—Item 1A—Risk Factors” and under “Forward‑Looking Statements and Market Data” in this Annual Report.

We are a global, commercial-stage biotechnology company focused on discovering, developing, manufacturing, and commercializing innovative medicines to improve treatment outcomes and expand access for patients worldwide.

We are a global biotechnology company that is developing and commercializing innovative and affordable oncology medicines to improve treatment outcomes and access for patients worldwide.

We currently have three approved medicines that were discovered and developed in our own labs, including BRUKINSA ® , a small molecule inhibitor of Bruton’s Tyrosine Kinase (BTK) for the treatment of various blood cancers;

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and pamiparib, a selective small molecule inhibitor of PARP1 and PARP2.

We have obtained approvals to market BRUKINSA ® in the United States, the People's Republic of China (China or the PRC), the European Union (EU), the United Kingdom (U.K.), Canada, Australia and additional international markets, and tislelizumab and pamiparib in China.

We have obtained approvals to market BRUKINSA in the United States, China, EU, the UK, Canada, Australia and additional international markets, and tislelizumab in China.

By leveraging our China commercial capabilities, we have in-licensed the rights to distribute 13 approved medicines for the China market.

Supported by our global clinical development and commercial capabilities, we have entered into collaborations with world-leading biopharmaceutical companies such as Amgen and Novartis Pharma AG (Novartis) to develop and commercialize innovative medicines.

Supported by our global clinical development and commercial capabilities, we have entered into collaborations with world-leading biopharmaceutical companies such as Amgen Inc.

("Amgen") and Novartis Pharma AG ("Novartis") to develop and commercialize innovative medicines.

We are committed to advancing best and first-in-class clinical candidates internally or with like-minded partners to develop impactful and affordable medicines for patients across the globe.

Our internal clinical development capabilities are deep, including a more than 2,200-person global clinical development team that is running more than 90 ongoing or planned clinical trials in over 30 medicines and drug candidates.

Our internal clinical development capabilities are deep, including a more than 2,700-person global clinical development team that is running close to 80 ongoing or planned clinical trials in over 50 medicines and drug candidates.

This includes more than 30 pivotal or potentially registration-enabling trials across our portfolio, including our three internally discovered, approved medicines.

We have enrolled in our clinical trials more than 18,000 subjects, of which approximately one-half have been outside of China.

We have built, and are expanding, our internal manufacturing capabilities through our state-of-the-art biologic and small molecule manufacturing facilities in China to support current and potential future demand of our medicines, and plan to build a commercial-stage biologics manufacturing and clinical R&D center in New Jersey.

We have built, and are expanding, our internal manufacturing capabilities through our state-of-the-art biologic and small molecule manufacturing facilities in China to support current and potential future demand of our medicines, and are building a commercial-stage biologics manufacturing and clinical R&D center in New Jersey.

We also work with high quality contract manufacturing organizations (CMOs) to manufacture our internally developed clinical and commercial products.

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Recent Business Developments

On February 22, 2022, we announced that the U.S.

Food and Drug Administration (FDA) has accepted a supplemental new drug application (sNDA) for BRUKINSA® (zanubrutinib) for the treatment of adult patients with chronic lymphocytic leukemia (CLL) or small lymphocytic lymphoma (SLL).

CLL is the most common form of adult leukemia.

The Prescription Drug User Fee Act (PDUFA) target action date is October 22, 2022.

On February 22, 2022, we announced that the European Medicines Agency (EMA) has accepted for review two new indication applications for our BTK inhibitor BRUKINSA ® (zanubrutinib), for the treatment of patients with CLL and for the treatment of patients with marginal zone lymphoma (MZL).

On February 17, 2022, we announced that BRUKINSA ® (zanubrutinib) received approval from Swissmedic for the treatment of adult patients with Waldenström’s macroglobulinemia (WM) who have received at least one prior line of therapy, or for treatment-naïve patients who are not suited for standard chemo-immunotherapy.

BRUKINSA ® had previously been granted orphan drug status.

On January 28, 2022, we announced that the Center for Drug Evaluation (CDE) of the China National Medical Products Administration (NMPA) has accepted an sNDA for BRUKINSA ® (zanubrutinib) as a treatment for adult patients with CLL or SLL and granted BRUKINSA ® breakthrough therapy designation (BTD).

On January 20, 2022, we announced that the CDE of the NMPA accepted an sNDA for BRUKINSA ® as a treatment for adult patients with WM.

On January 6, 2022, we announced that the NMPA approved our anti-PD-1 antibody tislelizumab as a second- or third-line treatment for patients with locally advanced or metastatic non-small cell lung cancer (NSCLC).

On December 20, 2021, we announced an option, collaboration and license agreement with Novartis to develop, manufacture and commercialize our investigational TIGIT inhibitor ociperlimab in North America, Europe, and Japan.

We granted Novartis an exclusive time-based option under which, upon exercise by Novartis prior to late 2023, we agreed to jointly develop ociperlimab, with Novartis responsible for regulatory submissions after a transition period and for commercialization upon regulatory approvals in the licensed territory.

During the option period Novartis will conduct and fund additional global clinical trials of ociperlimab in combination with tislelizumab in selected tumor types.

In addition, following option exercise, both companies may conduct clinical trials globally to explore combinations of ociperlimab with other cancer treatments.

Following approval, we will co-detail the product in the U.S.

In addition, the companies entered into an agreement granting BeiGene rights to market, promote and detail five approved Novartis oncology products, TAFINLAR ® (dabrafenib), MEKINIST ® (trametinib), VOTRIENT ® (pazopanib), AFINITOR ® (everolimus), and ZYKADIA ® (ceritinib).

On December 20, 2021, we announced the official launch of the BeiGene Bioisland Innovation Center (BIC) in Guangzhou, China to enable scientists and entrepreneurs to accelerate development of highly differentiated, cutting-edge medical innovations.

The BIC is an innovator-centric incubator built on BeiGene’s goal of supporting exploration of new paths to meet patient needs around the world.

On December 15, 2021, we announced that the United Kingdom (UK) Medicines and Healthcare products Regulatory Agency (MHRA) has granted a marketing authorization for BRUKINSA ® in Great Britain, for the treatment of eligible adult patients with Waldenström’s macroglobulinemia (WM) who have received at least one prior therapy or for the first-line treatment of eligible patients unsuitable for chemo-immunotherapy.

On December 13, 2021, we announced that we entered into a collaboration agreement with Nanjing Leads Biolabs, Inc.

(Leads Biolabs) granting BeiGene worldwide research, development and manufacturing rights and exclusive commercialization rights outside of China to LBL-007, a novel investigational antibody targeting the LAG-3 pathway.

Leads Biolabs received an upfront cash payment and is eligible to receive additional milestone payments and royalties pending successful development, regulatory approval and commercialization of the licensed candidates.

On December 2, 2021, we announced inclusion in the NRDL of anti-PD-1 antibody tislelizumab in three new indications, including in lung and liver cancers;

BRUKINSA ® in one new indication;

and the initial listing for PARP inhibitor pamiparib.

The changes to the NRDL were effective on January 1, 2022.

On December 2, 2021, we announced the NMPA approved SYLVANT ® (siltuximab for injection), licensed from EUSA Pharma (EUSA), for the treatment of adult patients with multicentric Castleman disease (MCD) who are human immunodeficiency virus (HIV) negative and human herpes virus-8 (HHV-8) negative, also known as idiopathic MCD (iMCD).

Siltuximab is a monoclonal antibody approved in the United States, European Union, and other countries and regions around the world.

On November 23, 2021, we announced the commencement of an initial public offering (the "STAR Offering") on the Science and Technology Innovation Board (the "STAR Market") of the Shanghai Stock Exchange (the SSE).

The total number of shares offered in the STAR Offering was 115,055,260 ordinary shares, par value $0.0001 per share, which represents 8.62% of our total outstanding ordinary shares as of October 31, 2021, after giving effect to the shares being offered.

The shares offered in the STAR Offering (the RMB Shares) were issued to and subscribed for by permitted investors in the PRC and listed and traded on the STAR Market in Renminbi.

On November 30, 2021, we announced the public offering price of the RMB Shares was RMB192.60 per ordinary share, which equates to HK$234.89 per ordinary share and $391.68 per ADS, based on an assumed exchange rate of RMB0.81996 to HK$1.00 and RMB6.3924 to $1.00.

On December 14, 2021, we announced that we completed the STAR Offering and the RMB Shares began trading on the STAR Market under the stock code "688235" on December 15, 2021.

The gross proceeds from the STAR Offering, before deducting underwriting commissions and other estimated offering expenses, were approximately RMB22.2 billion, or approximately $3.5 billion.

On November 23, 2021, we announced that the European Commission (EC) approved BRUKINSA ® for the treatment of adult patients with Waldenström’s macroglobulinemia (WM) who have received at least one prior therapy or for the first-line treatment of patients unsuitable for chemo-immunotherapy.

The approval is applicable to all 27 European Union (EU) member states, plus Iceland and Norway.

On November 23, 2021, we announced that we purchased a 42-acre site at the Princeton West Innovation Park in Hopewell, N.J.

to house a new state-of-the-art manufacturing campus and clinical R&D center.

On November 14, 2021, we and NewBridge Pharmaceuticals, a specialty company in the Middle East and North Africa regions established to bridge the access gap by partnering with global pharma and biotech companies, announced that BRUKINSA ® was approved in Saudi Arabia for the treatment of adult patients with mantle cell lymphoma (MCL) who have received at least one prior therapy.

On February 24, 2023, we announced that the China National Medical Products Administration ("NMPA") granted approval for our PD-1 inhibitor, tislelizumab, in combination with fluoropyrimidine and platinum chemotherapy, for the first-line treatment of patients with locally advanced unresectable or metastatic gastric or gastroesophageal junction adenocarcinoma with high PD-L1 expression.

On January 19, 2023, we announced that the U.S.

Food and Drug Administration ("FDA") approved our Bruton’s tyrosine kinase inhibitor BRUKINSA (zanubrutinib) for the treatment of adult patients with chronic lymphocytic leukemia ("CLL") or small lymphocytic lymphoma ("SLL").

On January 19, 2023, we announced that the Medicines and Healthcare products Regulatory Agency granted marketing authorizations for BRUKINSA in Great Britain for both the treatment of adult patients with CLL and the treatment of adult patients with marginal zone lymphoma ("MZL") who have received at least one prior anti-CD20-based therapy.

On January 18, 2023, we announced that the National Reimbursement Drug List ("NRDL") released by China’s National Healthcare Security Administration ("NHSA") was updated to include four new indications for our PD-1 inhibitor tislelizumab.

KYPROLIS ® (carfilzomib), a proteosome inhibitor licensed-in from Amgen, is included for the first time and XGEVA ® (denosumab), a RANKL inhibitor and another Amgen asset, successfully renewed this year.

The updated NRDL will officially take effect on March 1, 2023.

On December 30, 2022, we announced that the Center for Drug Evaluation of the China National Medical Products Administration accepted a supplemental biologics license application for tislelizumab in patients with first-line unresectable or metastatic hepatocellular carcinoma.

On November 17, 2022, we announced that the European Commission approved BRUKINSA for the treatment of adult patients with treatment-naïve or relapsed/refractory ("R/R") CLL.

On November 10, 2022, we announced that BRUKINSA was approved in Brazil for the treatment of adult patients with Waldenström’s macroglobulinemia ("WM") and adult patients with R/R MZL who have received at least one anti-CD20-based regimen.

Components of Operating Results

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There were two performance obligations identified at the outset of the agreement:

(1) the exclusive license to develop, manufacture, and commercialize tislelizumab in the Novartis Territory, transfer of know-how and use of the tislelizumab trademark and (2) conducting and completing ongoing trials of tislelizumab (R&D services).

Under this agreement, we received an upfront cash payment, which was allocated between the two performance obligations identified in the agreement based on the relative standalone selling prices of the performance obligations.

The portion allocated to the license was recognized upon the delivery of the license right and transfer of know-how.

The portion of the upfront payment allocated to the R&D services was deferred and is being recognized as collaboration revenue as the R&D services are performed using a percentage of completion method.

The portion of the upfront payment allocated to the tislelizumab R&D services was deferred and is being recognized as collaboration revenue as the tislelizumab R&D services are performed using a percentage of completion method.

Estimated costs to complete are reassessed on a periodic basis and any updates to the revenue earned are recognized on a prospective basis.

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In addition, we entered into an agreement with Novartis which granted us rights to market, promote and detail five approved Novartis oncology products, TAFINLAR ® (dabrafenib), MEKINIST ® (trametinib), VOTRIENT ® (pazopanib), AFINITOR ® (everolimus), and ZYKADIA ® (ceritinib), across designated regions of China referred to as “broad markets.” There were three performance obligations identified at the outset of the arrangement:

(1) a material right for the option to the exclusive product license, (2) the right to access ociperlimab in clinical trials during the option period provided to Novartis, combined with the initial transfer of BeiGene know-how, and (3) conducting clinical trials of ociperlimab during the option period (R&D services).

The market development activities are considered immaterial in the context of the agreements.

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The portion of the transaction price allocated to Novartis' right to access ociperlimab in its own clinical trials during the option period and the initial transfer of BeiGene know-how was deferred and is being recognized over the expected option period.

The portion of the transaction price allocated to the R&D services was deferred and is being recognized as collaboration revenue as the R&D services are performed over the expected option period.

The portion of the transaction price allocated to the ociperlimab R&D services was deferred and is being recognized as collaboration revenue as the ociperlimab R&D services are performed over the expected option period.

The option exercise fee under the ociperlimab agreement is contingent upon Novartis exercising its right, and is considered fully constrained until the option is exercised.

The potential milestone payments that we are eligible to receive under both of the Novartis collaborations were excluded from the initial transaction prices, as all milestone amounts are variable consideration and were fully constrained due to uncertainty of achievement.

The potential milestone payments that we are eligible to receive under both of the

Novartis collaborations were excluded from the initial transaction prices, as all milestone amounts are variable consideration and were fully constrained due to uncertainty of achievement.

Performance-based milestones will be recognized when the milestone event is achieved or when the risk of revenue reversal is remote.

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• BGB-A445, an investigational non-ligand competing OX40 monoclonal antibody;

• BGB-16673, an investigational Chimeric Degradation Activating Compound, or CDAC, targeting BTK;

• BGB-16673, an investigational Chimeric Degradation Activating Compound ("CDAC"), targeting BTK;

• BGB-A425, an investigational humanized monoclonal antibody against TIM-3;

• BGB-10188, an investigational PI3Kδ inhibitor;

• BGB-23339, a potent, allosteric investigational tyrosine kinase 2 (TYK2) inhibitor;

• LBL-007, a novel investigational antibody targeting the LAG-3 pathway

Research and development activities also include costs associated with in-licensed drug candidates, including:

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• ZW25 (zanidatamab) and ZW49, two investigational bispecific antibody-based product candidates targeting HER2, licensed from Zymeworks Inc.

("Zymeworks");

• POBEVCY ® (BAT1706), a biosimilar to Avastin ® (bevacizumab), licensed from Bio-Thera Solutions, Ltd.

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Research and development activities are central to our business model.

We expect research and development costs to increase for the foreseeable future as our development programs progress, as we continue to support the clinical trials of our medicines and drug candidates as treatments for various cancers and as we move these medicines and drug candidates into additional clinical trials, including potential pivotal trials.

There are numerous factors associated with the successful commercialization of any of our medicines and drug candidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development.

We expect continued substantial investment in research and development for the foreseeable future as our discovery and development programs progress, as we continue to support the clinical trials of our medicines and drug candidates as treatments for various cancers and as we move these medicines and drug candidates into additional clinical trials, including potential pivotal trials.

There are numerous factors associated with the successful commercialization of any of our medicines and drug candidates, including future trial design and

various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development.

Additionally, future commercial and regulatory factors beyond our control may impact our clinical development and commercial programs and plans.

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Selling, general and administrative expenses consist primarily of product promotion costs, distribution costs, salaries and related benefit costs, including share-based compensation for selling, general and administrative personnel.

Other selling, general and administrative expenses include professional fees for legal, consulting, auditing and tax services as well as other direct and allocated expenses for rent and maintenance of facilities, travel costs, insurance and other supplies used in selling,

general and administrative activities.

We anticipate that our selling, general and administrative expenses will increase in future periods to support planned increases in commercialization activities for our approved medicines, and the preparation for potential launch and commercialization of additional in-licensed products from our collaborations and internally developed products, if approved.

We also expect selling, general and administrative expenses to increase in future periods to support our research and development efforts, including the continuation of the clinical trials of our treatments for various cancers and the initiation of clinical trials for potential new indications or drug candidates.

These cost increases will likely be due to increased promotional costs, increased headcount, increased share-based compensation expenses, expanded infrastructure and increased costs for insurance.

We also incur significant legal, compliance, accounting, insurance and investor and public relations expenses associated with being a public company with our ADSs, ordinary shares and RMB Shares listed for trading on The Nasdaq Global Select Market, The Hong Kong Stock Exchange and The STAR Market of the Shanghai Stock Exchange, respectively.

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Interest Income

Interest income consists primarily of interest generated from our cash and short-term investments in money market funds, time deposits, U.S.

Interest income consists primarily of interest generated from our RMB-denominated cash deposits and short-term investments in money market funds, time deposits, U.S.

Treasury securities and U.S.

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Interest expense consists primarily of interest on our bank loans and related party loan.

Other Income (Expense), Net

Other income consists primarily of gains recognized related to equity investments, government grants and subsidies received that involve no conditions or continuing performance obligations by us, realized and unrealized gains and losses related to foreign currency exchange rates, unrealized gains and losses on equity securities, and realized gains and losses on the sale of investments.

We hold significant cash in the form of RMB-denominated deposits, including the cash generated from the STAR Market offering in December 2021.

Other income (expense) includes foreign currency remeasurement gains and losses based on foreign currency exchange rates.

Other (Expense) Income, Net

Other (expense) income consists primarily of gains and losses recognized related to fluctuations in foreign currency exchange rates, gains and losses on equity investments, government grants and subsidies received that involve no conditions or continuing performance obligations by us, unrealized gains and losses on equity securities, and realized gains and losses on the sale of investments.

We hold significant cash in the form of RMB-denominated deposits at U.S.

functional currency entities, including a large portion of the cash generated from the STAR Market offering in December 2021.

Other (expense) income includes the revaluation gains and losses of these cash deposits based on foreign currency exchange rates.

Results of Operations

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Product revenue, net $ 1,254,612 $ 633,987 $ 620,625 97.9 %

Collaboration revenue 542,296 — 542,296 NM

Collaboration revenue 161,309 542,296 (380,987) (70.3) %

Total revenues 1,415,921 1,176,283 239,638 20.4 %

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Loss from operations (1,789,665) (1,438,735) (350,930) 24.4 %

Interest (expense) income, net (15,757) 1,998 (17,755) (888.6) %

Other income, net 15,904 37,490 (21,586) (57.6) %

Interest income (expense), net 52,480 (15,757) 68,237 (433.1) %

Other (expense) income, net (223,852) 15,904 (239,756) (1,507.5) %

Loss before income tax expense (1,961,037) (1,438,588) (522,449) 36.3 %

Income tax benefit (25,234) (17,671) (7,563) 42.8 %

Income tax expense 42,778 19,228 23,550 122.5 %

Net loss (2,003,815) (1,457,816) (545,999) 37.5 %

Net loss attributable to noncontrolling interest — (3,617) 3,617 (100.0) %

Net loss attributable to noncontrolling interest — — — NM

Net loss attributable to BeiGene, Ltd.

$ (2,003,815) $ (1,457,816) $ (545,999) 37.5 %

Total revenue increased by $867.4 million to $1.2 billion for the year ended December 31, 2021, from $308.9 million for the year ended December 31, 2020, primarily due to collaboration revenue from the Novartis arrangement, increased sales of our internally developed products, and increased sales from our in-licensed products.

Total revenue increased by $239.6 million to $1.4 billion for the year ended December 31, 2022, from $1.2 billion for the year ended December 31, 2021, primarily due to increases in sales of our internally developed products and in-licensed products, partially offset by a decrease in collaboration revenue, as the prior year period included the recognition of the majority of the $650 million upfront payment from Novartis as license revenue.

The following table summarizes the components of revenue for the year ended December 31, 2022 and 2021, respectively:

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Collaboration revenue:

License revenue 484,646 — 484,646 NM

Research and development service revenue 53,671 — 53,671 NM

Right to access intellectual property revenue 3,979 — 3,979 NM

Total collaboration revenue 542,296 — 542,296 NM

License revenue — 484,646 (484,646) (100.0) %

Research and development service revenue 46,822 53,671 (6,849) (12.8) %

Right to access intellectual property revenue 104,994 3,979 101,015 2,538.7 %

Other 9,493 — 9,493 NM

Total collaboration revenue 161,309 542,296 (380,987) (70.3) %

Total Revenue $ 1,415,921 $ 1,176,283 $ 239,638 20.4 %

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(dollars in thousands)

$ 564,651 $ 217,987 $ 346,664 159.0 %

Tislelizumab 422,885 255,119 167,766 65.8 %

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13,696 — 13,696 NM

Pamiparib 5,460 3,661 1,799 49.1 %

Other 16,029 7,740 8,289 107.1 %

Total product revenue $ 1,254,612 $ 633,987 $ 620,625 97.9 %

Net product revenue was $634.0 million for the year ended December 31, 2021, compared to $308.9 million in the prior year, primarily due to increased sales of BRUKINSA ® in the United States and China and tislelizumab in China and in-licensed sales of Amgen's XGEVA ® and BLINCYTO ® in China, which we began distributing in July 2020 and August 2021, respectively.

Product revenues for the year ended December 31, 2021 were negatively impacted by adjustments of $57.5 million as a result of compensating distributors for products previously sold at the pre-NRDL price, which remained in the distribution channel, due to the first inclusion of tislelizumab, BRUKINSA ® , and XGEVA ® in the updated NRDL effective March 1, 2021 and additional indications for tislelizumab, BRUKINSA ® and pamiparib effective January 1, 2022.

During the year ended December 31, 2021, the inclusion of tislelizumab, BRUKINSA ® , XGEVA ® , and pamiparib in the NRDL significantly increased patient demand that more than offset the net effect of price reductions as a result of NRDL inclusion.

Net product revenue was $1.3 billion for the year ended December 31, 2022, compared to $634.0 million in the prior year, primarily due to increased sales of BRUKINSA in the United States and China and tislelizumab in China, in-licensed sales of Amgen's BLINCYTO ® , which we began distributing in August 2021, and XGEVA, as well as Bio-Thera's POBEVCY.

During 2022, we continued to see increased patient demand in China for tislelizumab and BRUKINSA due to the inclusion on the National Reimbursement Drug List ("NRDL"), and this demand more than offset the effect of the related price reductions.

Global sales of BRUKINSA totaled $564.7 million for the year ended December 31, 2022, representing a 159.0% increase compared to the prior year;

sales of BRUKINSA ® totaled $115.7 million for the year ended December 31, 2021 compared to $18.2 million in the prior year.

sales accelerated in the period, driven by continued uptake in MCL and FDA approvals in WM and MZL.

sales of BRUKINSA totaled $389.7 million for the year ended December 31, 2022 compared to $115.7 million in the prior year, representing growth of 237.0%.

sales accelerated in the period, driven by increased uptake in MCL, WM and MZL.

BRUKINSA sales in China totaled $150.3 million for the year ended December 31, 2022, representing growth of 48.6% compared to the prior year, driven by a significant increase in all approved indications, including CLL/SLL.

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Full year 2021 sales of tislelizumab included two negative adjustments totaling $45.6 million for distributor channel inventory compensation as a result of inclusion in the March 2021 and January 2022 NRDL lists.

Collaboration revenue totaled $542.3 million for the year ended December 31, 2021.

$484.6 million was recognized upon delivery of the tislelizumab license right and transfer of know-how to Novartis under our collaboration and license agreement with Novartis, $53.7 million was recognized from deferred revenue for R&D services performed during the year ended December 31, 2021 under both the tislelizumab and ociperlimab collaborations, and $4.0 million was recognized from deferred revenue for Novartis' right to access ociperlimab over the option period (see Footnote 3).

We did not have any collaboration revenue during the year ended December 31, 2020.

Product revenues for the year ended December 31, 2021 were negatively impacted by adjustments of $57.5 million as a result of compensating distributors for products previously sold at the pre-NRDL price, which remained in the distribution channel, due to the first inclusion of tislelizumab, BRUKINSA, and XGEVA in the updated NRDL effective March 1, 2021 and additional indications for tislelizumab, BRUKINSA and pamiparib effective January 1, 2022.

During the year ended December 31, 2021, the inclusion of tislelizumab, BRUKINSA, XGEVA, and pamiparib in the NRDL significantly increased patient demand that more than offset the net effect of price reductions as a result of NRDL inclusion.

Collaboration revenue totaled $161.3 million for the year ended December 31, 2022, of which $46.8 million was recognized from deferred revenue for R&D services performed during the year ended December 31, 2022 under both the tislelizumab and ociperlimab collaborations, $105.0 million was recognized from deferred revenue for Novartis' right to access ociperlimab over the option period, and $9.5 million was recognized related to the sale of tislelizumab clinical supply to Novartis.

Collaboration revenue totaled $542.3 million for the year ended December 31, 2021, of which $484.6 million was recognized upon delivery of the tislelizumab license right and transfer of know-how to Novartis, $53.7 million was recognized from deferred revenue for R&D services performed during the year ended December 31, 2021 under both the tislelizumab and ociperlimab collaborations, and $4.0 million was recognized from deferred revenue for Novartis' right to access ociperlimab over the option period (see Note 4 to our consolidated financial statements included in this Annual Report on Form 10-K).

Cost of Sales

Cost of sales increased to $164.9 million for the year ended December 31, 2021 from $70.7 million for the year ended December 31, 2020, primarily due to increased product sales of BRUKINSA ® , tislelizumab, and Amgen products.

Cost of sales increased to $286.5 million for the year ended December 31, 2022 from $164.9 million for the year ended December 31, 2021, primarily due to increased product sales of tislelizumab, BRUKINSA and XGEVA, as well as initial sales of BLINCYTO ® , which we began selling in August 2021, and initial sales of KYPROLIS and POBEVCY.

Gross margin on global product sales increased to $968.1 million for the year ended December 31, 2022, compared to $469.1 million for the year ended December 31, 2021, primarily due to increased product revenue in the current year period.

Gross margin as a percentage of product sales decreased to 74.0% for the year ended December 31, 2021, from 77.1% in the prior year.

The decrease is primarily due to the impact of the accrued compensation in the first and fourth quarters of 2021 to

customers for sales of tislelizumab, BRUKINSA ® , and XGEVA ® that remained in the channel and were sold at the pre-NRDL price, as well as the ongoing lower prices resulting from the listing on the NRDL.

These negative impacts to our gross margin were partially offset by a proportionally higher sales mix of global BRUKINSA ® sales and sales of tislelizumab in China compared to lower margin sales of in-licensed products.

Pre-launch inventory carried at zero or low cost consumed during the year ended December 31, 2021 and December 31, 2020 was immaterial and did not have a significant impact on our gross margin.

Gross margin as a percentage of product sales increased to 77.2% for the year ended December 31, 2022, from 74.0% in the prior year.

The increase is primarily due to proportionally higher sales mix of global BRUKINSA sales and sales of tislelizumab in China compared to lower margin sales of in-licensed products and lower costs per unit for both BRUKINSA and tislelizumab, partially offset by a lower average selling price for both BRUKINSA and tislelizumab.

Research and Development Expense

Research and development expense increased by $164.4 million, or 12.7%, to $1.5 billion for the year ended December 31, 2021, from $1,294.9 million for the year ended December 31, 2020.

Research and development expense increased by $181.3 million, or 12.4%, to $1.6 billion for the year ended December 31, 2022, from $1.5 billion for the year ended December 31, 2021.

The following table summarizes the external cost of development programs, upfront license fees, and internal research and development expense for the years ended December 31, 2022 and 2021:

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The remaining $96.4 million was recorded as a reduction for the R&D cost share liability.

The decrease in external research and development expenses for the year ended December 31, 2021 was primarily attributable to lower upfront license fees under collaboration agreements, lower external spending related to fees paid to external CROs as we internalize previously outsourced activities, and a decrease in the expense recognized on co-development fees to Amgen.

Internal research and development expense increased $216.5 million, primarily attributable to the expansion of our global development organization including the internalization of previously outsourced activities and the continued development of our clinical and preclinical drug candidates, and included the following:

The decrease in external research and development expenses for the year ended December 31, 2022 was primarily attributable to lower upfront license fees under collaboration agreements, lower external spending related to fees paid to CROs as we internalize previously outsourced activities, and a decrease in the expense recognized on co-development fees to Amgen.

Internal research and development expense increased $220.9 million, or 28.2%, to $1.0 billion 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 included the following:

• $114.7 million increase of employee salary and benefits, primarily attributable to hiring more research and development personnel to support our expanding research and development activities;

• $52.4 million increase of facilities, depreciation, office expense, rental fees, and other expenses to support the growth of our organization;

• $21.4 million increase of share-based compensation expense, primarily attributable to our increased headcount, resulting in more awards being expensed related to the growing employee population;

• $57.6 million increase of materials and reagent expenses, primarily in connection with the in-house manufacturing of drug candidates used for clinical purposes;

• $16.1 million increase of consulting fees, which was mainly attributable to increased travel and meeting expense related to scientific, regulatory and development consulting activities, in connection with the advancement of our drug candidates.

• $47.6 million increase of facilities, depreciation, office expense, rental fees, and other expenses to support the growth of our organization;

• $25.0 million increase of share-based compensation expense, primarily attributable to our increased headcount of research and development employees, resulting in more awards being expensed;

• $24.0 million decrease of consulting fees, including decreased meeting expense related to scientific, regulatory and development consulting activities, in connection with the advancement of our drug candidates.

Selling, General and Administrative Expense

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The increase was primarily attributable to the following:

• $175.7 million increase of employee salary and benefits, which was primarily attributable to the expansion of our commercial organizations in China, the United States, Canada, Europe and emerging markets, and the hiring of more personnel to support our growing business;

• $119.1 million increase in external commercial-related expenses, including market research, sales and marketing, consulting and conference related expenses, related to the growth of our global commercial organization, as we continue to build our worldwide footprint and capabilities;

• $59.3 million increase of professional fees, consulting, recruiting, information technology, tax, accounting and audit services, and facility expenses, rental fees, office expenses, and other administrative expenses, primarily attributable to the global expansion of our business, including the expansion of our commercial operations in China, the United States and Europe;

• $35.9 million increase in share-based compensation expense, primarily attributable to our increased headcount of sales and administrative employees, resulting in more awards being expensed related to the growing sales and administrative employee population.

Interest (Expense) Income, Net

Interest (expense) income, net decreased by $17.8 million, or 888.6%, to $15.8 million of net interest expense for the year ended December 31, 2021, from $2.0 million of net interest income for the year ended December 31, 2020.

The decrease in interest income, net, was primarily attributable to decreased interest income, as a result of lower interest rates, as well as increased interest expense, resulting from higher debt balances.

Other Income, Net

Other income, net decreased by $21.6 million to $15.9 million for the year ended December 31, 2021, from $37.5 million for the year ended December 31, 2020.

The income for the year ended December 31, 2021 was primarily due to the unrealized gain on our investment in Leap Therapeutics, as well as a realized foreign exchange loss on the proceeds received from the STAR Market offering.

The income for the year ended December 31, 2020 resulted from unrealized gains on equity investments, as well as a gain recognized in conjunction with the deconsolidation of MapKure LLC.

Income Tax Benefit

Income tax benefit was $25.2 million for the year ended December 31, 2021 compared with income tax benefit of $17.7 million for the year ended December 31, 2020.

The income tax benefit for the year ended December 31, 2021 was primarily attributable to the deferred tax benefit of U.S.

stock-based compensation deductions in excess of tax expense on income reported in certain China subsidiaries as adjusted for certain non-deductible expenses.

• $176.4 million increase of employee salary and benefits, which was primarily attributable to the hiring of personnel to support our growing business, including the expansion of our commercial organizations in China, the United States, Canada, Europe and emerging markets;

• $46.0 million increase in external commercial-related expenses, including market research, market access studies and promotional activities, related to the growth of our global commercial organization, as we continue to build our worldwide footprint and capabilities;

• $37.5 million increase of share-based compensation expense, primarily attributable to our increased headcount of sales and administrative employees, resulting in more awards being expensed;

• $27.8 increase of professional fees, consulting, recruiting, information technology, tax, accounting and audit services, and facility expenses, rental fees, office expenses, and other administrative expenses, primarily attributable to the global expansion of our business, including the expansion of our commercial operations in China, the United States and Europe.

Interest Income (Expense), Net

Interest income (expense), net increased by $68.2 million, or 433.1%, to $52.5 million of net interest income for the year ended December 31, 2022, from $15.8 million of net interest expense for the year ended December 31, 2021.

The increase in interest income (expense), net, was primarily attributable to increased interest income resulting from the increase in cash balances resulting from the STAR Offering proceeds in the fourth quarter of 2021, as well as higher interest rates earned on our cash, cash equivalents and short-term investments.

Other (Expense) Income, Net

Other (expense) income, net decreased by $239.8 million to $223.9 million of expense for the year ended December 31, 2022, from $15.9 million of income for the year ended December 31, 2021.

The increase in expense for the year ended December 31, 2022 was primarily related to foreign exchange losses resulting from the strengthening of the U.S.

dollar and the revaluation impact of foreign currencies held in U.S.

functional currency subsidiaries.

Also contributing to the increase in expense was an increase in the unrealized loss on our equity investments.

These losses were partially offset by increased income from government subsidies.

Income Tax Expense

Income tax expense was $42.8 million for the year ended December 31, 2022 compared with $19.2 million for the year ended December 31, 2021.

The income tax expense for the year ended December 31, 2022 was primarily attributable to current China tax expense for certain subsidiaries determined after certain non-deductible expenses and current U.S.

tax expense, as a result of amendments to Internal Revenue Code (IRC) Section 174 pursuant to the 2017 Tax Cuts and Jobs Act, which took effect January 1, 2022, and eliminates the ability to fully deduct research and development expenditures in the year incurred, and requires capitalization and amortization.

Other current tax expense was primarily attributable to foreign non-creditable withholding taxes.

Liquidity and Capital Resources

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Based on our current operating plan, we expect that our existing cash, cash equivalents and short-term investments as of December 31, 2022 will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months after the date that the financial statements included in this report are issued.

On June 28, 2021, the Listing Committee of the Science and Technology Innovation Board (the “STAR Market") of the Shanghai Stock Exchange (the SSE) approved the listing application which we submitted in January 2021 to the SSE for a proposed public offering of our ordinary shares and listing of such shares on the STAR Market of the SSE (the “STAR Offering”).

On December 15, 2021, we completed the initial public offering on the SSE.

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In this offering, we sold 115,055,260 ordinary shares.

Net proceeds after deducting underwriting discounts and commissions and offering expenses were $3.4 billion.

Net proceeds after deducting underwriting commissions and offering expenses were $3.4 billion.

As required by the PRC securities laws, the net proceeds from the STAR Offering must be used in compliance with the planned uses as disclosed in the PRC prospectus as well as our proceeds management policy for the STAR Offering approved by our board of directors.

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In addition, we and Novartis entered into an agreement granting us rights to market, promote and detail five approved Novartis oncology products.

Under the terms of the agreement, we received an upfront cash payment of $300 million in January 2022, which is not included in our cash balance at December 31, 2021.

Under the terms of the agreement, we received an upfront cash payment of $300 million in January 2022.

The following table provides information regarding our cash flows for the years ended December 31, 2022 and 2021:

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Net cash used in operating activities (1,496,619) (1,298,723)

Net cash provided by (used in) investing activities 640,659 (3,168,366)

Net cash provided by financing activities 3,636,911 5,202,826

Net cash provided by investing activities 1,077,123 640,659

Net cash (used in) provided by financing activities (18,971) 3,636,911

Net effect of foreign exchange rate changes (69,383) 14,035

Net increase in cash, cash equivalents and restricted cash 2,992,882 769,230

Net (decrease) increase in cash, cash equivalents and restricted cash (507,850) 2,992,882

Cash, cash equivalents and restricted cash at end of period $ 3,875,037 $ 4,382,887

Operating Activities

Cash flows from operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities.

Cash flows from operating activities is net loss adjusted for certain non-cash items and changes in assets and liabilities.

Operating activities used $1.5 billion of cash for the year ended December 31, 2022, which resulted principally from our net loss of $2.0 billion, inclusive of $223.9 million of other losses due primarily to the strengthening of the U.S.

dollar and the related revaluation of foreign currencies held by U.S.

functional currency subsidiaries, partially offset by non-cash charges and adjustments of $374.8 million, and by a decrease in our net operating assets and liabilities of $132.4 million.

The non-cash charges and adjustments were primarily driven by share-based compensation expense, charges for acquired in-process research and development costs, and depreciation and amortization expense, offset by amortization of the research and development cost share liability.

The decrease in working capital was driven largely by decreases in accounts receivable and prepaid expenses and an increase in taxes payable, partially offset by a decrease in deferred revenue and an increase in inventories.

Operating activities used $1.3 billion of cash for the year ended December 31, 2021, which resulted principally from our net loss of $1.5 billion and an increase in our net operating assets and liabilities of $118.3 million, partially offset by non-cash charges and adjustments of $277.4 million.

The increase in working capital was driven largely by increases in accounts receivable, inventory and prepaid expenses, offset by increases in accounts payable, accrued expenses and other liabilities and deferred revenue resulting from the upfront option payment from Novartis.

Operating activities used $1.3 billion of cash for the year ended December 31, 2020, which resulted principally from our net loss of $1.6 billion, partially offset by non-cash charges and adjustments of $166.5 million and a decrease in our net operating assets and liabilities of $150.6 million.

The non-cash charges and adjustments were primarily driven by share-based compensation expense, offset by amortization of the research and development cost share liability.

The decrease in working capital was driven largely by increases in accounts payable, accrued expenses and other liabilities, offset by increases in inventory and prepaid expenses.

The increase in working capital was driven

largely by increases in accounts receivable, inventory and prepaid expenses, offset by increases in accounts payable, accrued expenses and other liabilities and deferred revenue resulting from the upfront option payment from Novartis.

Investing Activities

Cash flows from investing activities consist primarily of capital expenditures, investment purchases, sales, maturities, and disposals, and upfront payments related to our collaboration agreements.

Investing activities provided $1.1 billion of cash for the year ended December 31, 2022, consisting of $1.6 billion in sales and maturities of investment securities, partially offset by $325.4 million of capital expenditures, $143.7 million upfront collaboration payments, $15.9 million in purchases of long-term investments and $1.5 million in purchases of short-term investment securities.

Investing activities provided $640.7 million of cash for the year ended December 31, 2021, consisting of $2.1 billion in purchases of short-term investment securities, $262.9 million of capital expenditures, $43.4 million in purchases of intangible assets, $43.5 million in purchases of long-term investments and $8.5 million upfront collaboration payments, all of which were offset by sales and maturities of investment securities of $3.1 billion.

Investing activities used $3.2 billion of cash for the year ended December 31, 2020, consisting of $5.7 billion in purchases of investment securities, $117.5 million of capital expenditures, and $109.5 million upfront collaboration payments, all of which were offset by sales and maturities of investment securities of $2.8 billion.

Financing Activities

Cash flows from financing activities consist primarily of sale of ordinary shares, RMB Shares, and ADSs through equity offerings, issuance and repayment of short-term and long-term debt, and proceeds from the sale of ADSs through employee equity compensation plans.

Financing activities used $19.0 million of cash for the year ended December 31, 2022, consisting primarily of $417.1 million of repayment of short-term loans, partially offset by $313.8 million from proceeds of short-term loans, $47.0 million from the exercise of employee share options and proceeds from the issuance of shares through our employee share purchase plan and $37.4 million from proceeds of long-term bank loans.

Financing activities provided $3.6 billion of cash for the year ended December 31, 2021, consisting primarily of $3.4 billion of net proceeds from our STAR Offering in December 2021, $406.4 million from proceeds of short-term loans, $92.8 million from the exercise of employee share options and proceeds from the issuance of shares through our employee share purchase plan, $50.0 million from the sale of our shares to Amgen, and $16.8 million from proceeds of long-term bank loans.

These inflows were partially offset by $321.8 million of repayment of short-term loans.

Financing activities provided $5.2 billion of cash for the year ended December 31, 2020.

This consisted primarily of $2.8 billion received from our collaboration with Amgen and $2.1 billion from a registered direct offering of ordinary shares to certain existing investors.

Other inflows included $93.1 million from the exercise of employee share options and proceeds from the issuance of shares through our employee share purchase plan, and $433.9 million from loan proceeds.

These inflows were partially offset by $144.3 million of repayment of principal under the loan between Guangzhou High-tech Zone Technology Holding Group Co., Ltd.

(GET) BeiGene Biologics (the Shareholder Loan) and $28.7 million of cash consideration paid for the acquisition of the remaining 5% minority interest in our subsidiary BeiGene Biologics Co., Ltd.(BeiGene Biologics).

Effects of Exchange Rates on Cash

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Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends, and may require the issuance of warrants, which could potentially dilute your ownership interest.

If we raise additional funds through collaboration agreements, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our medicines or drug candidates, future revenue streams or research programs, or to grant licenses on terms that may not be favorable to us.

If we are unable to raise additional funds

through equity or debt financings, collaborations or other sources when needed, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts or grant rights to develop and market products or drug candidates that we would otherwise prefer to develop and market ourselves.

research programs, or to grant licenses on terms that may not be favorable to us.

If we are unable to raise additional funds through equity or debt financings, collaborations or other sources when needed, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts or grant rights to develop and market products or drug candidates that we would otherwise prefer to develop and market ourselves.

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.

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See Note 14 in the Notes to the Financial Statements for further detail of our debt obligations.

Interest on bank loans and the Related Party Loan is paid quarterly until the respective loans are fully settled.

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.

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Funding Commitment

Funding commitment represents our committed capital related to one of our equity method investments in the amount of $15.0 million.

Funding commitment represents our committed capital related to two of our equity method investments in the amount of $19.0 million.

As of December 31, 2022, our remaining capital commitment was $16.0 million and is expected to be paid from time to time over the investment period.

Research and Development Commitment

We entered into long-term research and development agreements, which includes obligations to make upfront payments and fixed quarterly payments over the next five years.

We entered into long-term research and development agreements, which includes obligations to make upfront payments and fixed quarterly payments over the next four years.

As of December 31, 2022, the total research and development commitment amounted to $22.3 million.

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Capital Commitments

We had capital commitments amounting to $42.4 million for the acquisition of property, plant and equipment as of December 31, 2021, which were mainly for our biologics manufacturing facility in Guangzhou, China, small molecule manufacturing facility in Suzhou, China, and research and development operations at the Changping facility in Beijing, China.

We had capital commitments amounting to $404.9 million for the acquisition of property, plant and equipment as of December 31, 2022, which were mainly for our manufacturing and clinical R&D campus in Hopewell, NJ, additional capacity at the Guangzhou and Suzhou manufacturing facilities, and new building for Beijing Innerway Bio-tech Co., Ltd.

Other Obligations

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When the achievement of these milestones or sales have occurred, the corresponding amounts are recognized in our financial statements.

Future milestone payments potentially owed related to in-licensed technology totaled $5.7 billion as of December 31, 2021.

Critical Accounting Estimates

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however, some require advanced payments.

We make estimates of our expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time.

We make estimates of our expenses as of each balance sheet date in our financial statements based on facts and circumstances known to

us at that time.

Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting expenses that are too high or too low in any particular period.

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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-K

Item 7. Management’s Discussion and Analysis