What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-08 compared with 2023-11-09 · 193 added, 238 removed, 161 unchanged (73% of the section changed)

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Forward-looking statements often include words such as “aim,” “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these terms or other similar expressions.

These forward-looking statements, include, but are not limited to, statements regarding:

These forward-looking statements include, among other things, statements about:

our ability to successfully commercialize our approved medicines and to obtain approvals in additional indications and territories for our medicines;

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the regulatory environment and regulatory developments in the United States, China, the United Kingdom (“UK”), Switzerland, the European Union (“EU”) and other jurisdictions in which we operate;

the accuracy of our estimates regarding expenses, revenues, capital requirements and our need for additional financing;

the potential benefits of strategic collaboration and licensing agreements and our ability to enter into strategic arrangements;

our plans and expectations to build significant technical operations and independent production capabilities for small molecule medicines and large molecule biologics to support the global demand for both commercial and clinical supply;

the accuracy of our estimates regarding expenses, revenues, including collaboration revenue, capital requirements and our need for additional financing;

the potential benefits of strategic collaboration and licensing agreements and our ability to enter into and maintain strategic arrangements;

our construction and operation of independent production facilities for small molecule medicines and large molecule biologics, as well as clinical R&D facilities, to support the global demand for both commercial and clinical supply;

our reliance on third parties to conduct drug development, manufacturing and other services;

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our ability to attract and retain qualified employees and key personnel;

statements regarding future revenue, hiring plans, key milestones, expenses, capital expenditures, capital requirements and share performance;

statements regarding future revenue, key milestones, expenses, capital expenditures, capital requirements and share performance;

and the future trading price of our ADSs, ordinary shares and RMB Shares, and impact of securities analysts’ reports on these prices.

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Given these uncertainties, you should not place undue reliance on these forward-looking statements.

These forward-looking statements speak only as of the date hereof.

Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

We do not assume any obligation to update any forward-looking statements where as a result of new information or otherwise, except as required by law.

This Quarterly Report includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties.

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Unless the context requires otherwise, in this Quarterly Report, the terms “BeiGene,” the “Company,” “we,” “us” and “our” refer to BeiGene, Ltd., a Cayman Islands holding company with operations conducted by its subsidiaries, and its subsidiaries, on a consolidated basis.

We delivered another strong quarter across our global portfolio, driven by the ongoing successful launch of BRUKINSA ® , where we continue to see rapid uptake across all approved indications, including chronic lymphocytic leukemia (CLL).

We have regained the rights to TEVIMBRA ® worldwide, which is now approved in the EU and under regulatory review in 10 additional markets.

We are now better positioned than ever before to execute on our global growth strategy while steadily improving operating leverage with moderate expense growth.

Key highlights for the third quarter of 2023 are as follows:

• Generated global sales of BRUKINSA of $357.7 million, an increase of 130.0% compared with the prior-year period, as global launch momentum continues across multiple indications, including CLL;

• Received a positive opinion from the European Committee for Health and Medicinal Products (CHMP) of the European Medicines Agency for BRUKINSA for the treatment of adult patients with relapsed or refractory (R/R) follicular lymphoma (FL) who have received at least two prior systematic treatments;

• Received positive guidance from the National Institute for Health and Care Excellence for reimbursement of BRUKINSA on the National Health Service in England and Wales for the treatment of adult patients with R/R CLL;

• Regained global rights to the development, manufacture and commercialization of TEVIMBRA, strengthening the Company’s global portfolio in solid tumors;

• Announced European Commission (EC) approval of TEVIMBRA as monotherapy for the treatment of adult patients with unresectable, locally advanced or metastatic ESCC after prior platinum-based chemotherapy;

• Announced U.S.

Food and Drug Administration (FDA) acceptance for review of a Biologics License Application (BLA) for tislelizumab as a first-line treatment for patients with unresectable, recurrent, locally advanced, or metastatic ESCC with a target action date in July 2024, under the Prescription Drug User Fee Act (PDUFA).

Non-GAAP Financial Measures

We provide certain financial measures that are not defined under accounting principles generally accepted in the United States of America (“GAAP”), commonly referred to as non-GAAP financial measures, including Adjusted Operating Expenses and Adjusted Income (Loss) from Operations and certain other non-GAAP measures, each of which include adjustments to GAAP figures.

These non-GAAP measures are intended to provide additional information on our operating performance.

Adjustments to our GAAP figures exclude, as applicable, non-cash items such as share-based compensation, depreciation and amortization.

Certain other special items or substantive events may also be included in the non-GAAP adjustments periodically when their magnitude is significant within the periods incurred.

We maintain an established non-GAAP policy that guides the determination of what items may be excluded in non-GAAP financial measures.

We believe that these non-GAAP measures, when considered together with the GAAP figures, can enhance an overall understanding of our operating performance.

The non-GAAP financial measures are included with the intent of providing investors with a more complete understanding of our historical and expected financial results and trends and to facilitate comparisons between periods and with respect to projected information.

In addition, these non-GAAP financial measures are among the indicators BeiGene’s management uses for planning and forecasting purposes and measuring our performance.

These non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, GAAP financial measures.

The non-GAAP financial measures used by BeiGene may be calculated differently from, and therefore may not be comparable to, non-GAAP financial measures used by other companies.

BeiGene had another quarter of strong financial results.

Supported by our tremendous global growth in revenue, we have now ascended into the top 15 of global oncology innovators based on total oncology sales.

We also continue to make significant improvement in our operating leverage as we progress to sustainable profitability.

We strengthened our hematology leadership with BRUKINSA, now the BTK inhibitor with the broadest label in the class, as we advance our innovative pipeline of therapies for hematologic malignancies.

With TEVIMBRA now approved for use in the U.S.

and Europe, we look forward to rapidly advancing our deep pipeline of solid tumor therapies to match our leadership in hematology and continue to solidify our reputation as a global oncology innovator.

Key highlights for the first quarter of 2024 are as follows:

• Total revenues of $752 million in the first quarter, including product revenue of $747 million, an 82% increase from the prior-year period;

• BRUKINSA revenue of $489 million, driven by growth in the U.S.

and Europe of 153% and 243%, respectively, from the prior-year period;

with recent fifth FDA approval, BRUKINSA now has the broadest label in the BTKi class;

• Rapidly advancing late-stage hematology pipeline;

sonrotoclax in development both as a monotherapy and in combination with backbone therapy BRUKINSA;

pivotal program initiated for BTK CDAC;

• Progressing potentially differentiated solid tumor programs with ADC, degrader platforms and targeted therapies in priority cancer types;

• Significantly improved operating leverage and progress on path to sustainable profitability.

Recent Developments

Recent Business Developments

On October 20, 2023, we announced that the National Institute for Health and Care Excellence of the UK issued a final draft guidance recommending BRUKINSA (zanubrutinib) for the treatment of eligible adult patients with:

untreated CLL if there is a 17p deletion or TP53 mutation (high risk) or untreated CLL without a 17p deletion or TP53 mutation, and fludarabine-cyclophosphamide-rituximab or bendamustine plus rituximab is unsuitable and relapsed or refractory CLL.

On October 17, 2023, we announced results from the final analysis of the Phase 3 RATIONALE 305 trial showing tislelizumab plus chemotherapy significantly improved overall survival in the intent-to-treat population as a first-line treatment for patients with advanced gastric or gastroesophageal junction adenocarcinoma.

On October 17, 2023, we announced that the Phase 3 RATIONALE 315 trial met primary endpoints of major pathological response rate and event-free survival for tislelizumab plus chemotherapy in patients with resectable non-small cell lung cancer (“NSCLC”).

On October 13, 2023, we announced that the Committee for Medicinal Products for Human Use of the European Medicines Agency issued a positive opinion recommending approval of BRUKINSA (zanubrutinib), in combination with obinutuzumab for the treatment of adult patients with relapsed or refractory follicular lymphoma who have received at least two prior lines of systemic therapy.

On September 19, 2023, we announced that the European Commission approved TEVIMBRA (tislelizumab) as monotherapy for the treatment of adult patients with unresectable, locally advanced or metastatic ESCC after prior platinum-based chemotherapy.

Additionally, the U.S.

Food and Drug Administration accepted for review a Biologics License Application for tislelizumab as a first-line treatment for patients with unresectable, recurrent, locally advanced, or metastatic ESCC.

On September 19, 2023, we announced that we entered into a Mutual Termination and Release Agreement with Novartis to regain worldwide rights to develop, manufacture, and commercialize TEVIMBRA.

On April 23, 2024, we announced that the European Commission approved tislelizumab as a treatment for non-small cell lung cancer (“NSCLC”) across three indications, including first- and second-line use.

On March 14, 2024, we announced that the U.S.

Food and Drug Administration (“FDA”) approved TEVIMBRA (tislelizumab-jsgr) as monotherapy for the treatment of adult patients with unresectable or metastatic esophageal squamous cell carcinoma (“ESCC”) after prior systemic chemotherapy that did not include a PD-(L)1 inhibitor.

TEVIMBRA will be available in the U.S.

in the second half of 2024.

On March 13, 2024, together with The Max Foundation and the BeiGene Foundation, we announced that the first doses of BRUKINSA was administered for the treatment of adult patients with chronic lymphocytic leukemia (“CLL”) to patients in Armenia and Nepal, as part of a three-year collaboration to provide access to the medicine in 29 low- and middle-income countries.

On March 7, 2024, we announced that the FDA granted accelerated approval to BRUKINSA (zanubrutinib) for the treatment of adult patients with relapsed or refractory (“R/R”) follicular lymphoma (“FL”), in combination with the anti-CD20 monoclonal antibody obinutuzumab, after two or more lines of systemic therapy.

The indication was approved under accelerated approval based on response rate and durability of response, marking BRUKINSA’s fifth indication in B-cell malignancies in the U.S.

On February 29, 2024, we announced a new matching adjusted indirect comparison of the efficacy of BRUKINSA versus acalabrutinib in R/R CLL based on data from the Phase 3 ALPINE and Phase 3 ASCEND trials.

The analysis suggests a progression-free survival and complete response advantage for BRUKINSA versus acalabrutinib, as well as potentially improved overall survival.

On February 27, 2024, we announced that the FDA accepted a Biologics License Application (“BLA”) for TEVIMBRA (tislelizumab), in combination with fluoropyrimidine- and platinum-containing chemotherapy, for the treatment of patients with locally advanced unresectable or metastatic gastric or gastroesophageal junction (“G/GEJ”) adenocarcinoma.

The FDA’s action date on the BLA is expected in December 2024.

Results of Operations

The following table summarizes our results of operations for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended Nine Months Ended

September 30, Change September 30, Change

The following table summarizes our results of operations for the three months ended March 31, 2024 and 2023:

Three Months Ended

March 31, Change

2024 2023 $ %

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Cost of sales - product 124,935 81,789 43,146 52.8 %

Gross profit 626,717 366,012 260,705 71.2 %

Operating expenses

Research and development 460,638 408,584 52,054 12.7 %

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Amortization of intangible assets — 187 (187) (100.0) %

Total expenses 915,276 825,985 89,291 10.8 % 2,648,311 2,356,869 291,442 12.4 %

Total operating expenses 888,065 737,270 150,795 20.5 %

Loss from operations (261,348) (371,258) 109,910 (29.6) %

Interest income, net 16,160 16,016 144 0.9 %

Other income (expense), net 336,657 (125,640) 462,297 (368.0) % 291,142 (243,290) 534,432 (219.7) %

Income (loss) before income taxes 229,338 (551,238) 780,576 (141.6) % (475,064) (1,530,072) 1,055,008 (69.0) %

Other income, net 1,762 18,303 (16,541) (90.4) %

Loss before income taxes (243,426) (336,939) 93,513 (27.8) %

Income tax expense 7,724 11,492 (3,768) (32.8) %

Net income (loss) $ 215,413 $ (557,556) $ 772,969 (138.6) % $ (514,155) $ (1,558,480) $ 1,044,325 (67.0) %

Comparison of the Three Months Ended September 30, 2023 and 2022

Total revenue increased to $781.3 million for the three months ended September 30, 2023, from $387.6 million for the three months ended September 30, 2022, due to an increase in sales of BRUKINSA and tislelizumab, as well as increased sales of our in-licensed products from Amgen.

Additionally, collaboration revenue increased due to the recognition of the remaining deferred revenue associated with the Novartis collaborations upon termination of the agreements.

The following table summarizes the components of revenue for the three months ended September 30, 2023 and 2022, respectively:

Net loss $ (251,150) $ (348,431) $ 97,281 (27.9) %

Comparison of the Three Months Ended March 31, 2024 and 2023

Total revenue increased to $751.7 million for the three months ended March 31, 2024, from $447.8 million for the three months ended March 31, 2023, due to an increase in sales of BRUKINSA, tislelizumab, as well as our in-licensed products from Amgen, partially offset by a decrease in collaboration revenue.

Collaboration revenue decreased due to termination of the Novartis collaborations in the prior year.

The following table summarizes the components of revenue for the three months ended March 31, 2024 and 2023, respectively:

Three Months Ended

September 30, Changes

March 31, Changes

2024 2023 $ %

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Collaboration revenue:

Material rights revenue 71,980 — 71,980 NM

Research and development service revenue — 6,817 (6,817) (100.0) %

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Three Months Ended

September 30, Changes

March 31, Changes

2024 2023 $ %

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12,233 23,158 (10,925) (47.2) %

4,320 3,314 1,006 30.4 %

Pamiparib 1,887 1,266 621 49.1 %

Other 12,402 10,489 1,913 18.2 %

Total product revenue $ 746,918 $ 410,291 $ 336,627 82.0 %

Net product revenue increased 70.3% to $595.3 million for the three months ended September 30, 2023, compared to $349.5 million in the prior-year period, primarily due to continued increases in sales of BRUKINSA globally and tislelizumab in China.

In addition, product revenues in the third quarter of 2023 were positively impacted by sales of in-licensed products from Amgen in China.

During the quarter ended September 30, 2023, we continued to see increased patient demand in China for tislelizumab and BRUKINSA due to broader reimbursement and increase in market share, and this demand more than offset the effect of the related price reductions.

Global sales of BRUKINSA totaled $357.7 million in the third quarter, representing a 130.0% increase compared to the prior-year period;

sales of BRUKINSA totaled $270.1 million in the third quarter, compared to $108.1 million in the prior-year period, representing growth of 149.8%.

sales continued to accelerate after the approval and launch of BRUKINSA in the first quarter of 2023 for adult patients with CLL and small lymphocytic lymphoma (SLL).

BRUKINSA sales in China totaled $47.4 million, representing growth of 20.8% over the prior-year period, driven by increases in all approved indications.

BRUKINSA rest of world sales totaled $40.2 million in the third quarter, representing growth of 410.2% compared to the prior-year period, primarily driven by an increase in all approved indications, including CLL and SLL in Europe.

Sales of tislelizumab in China totaled $144.4 million in the third quarter, compared to $128.2 million in the prior-year period, representing a 12.6% increase.

In the third quarter, new patient demand from broader reimbursement and hospital listings continued to drive increased market penetration and market share for tislelizumab.

We believe that our strategy of expanding our salesforce and hospital listings and continuing to seek expanded labels in broad indications will allow us to continue to increase our market share.

Collaboration revenue totaled $186.0 million for the three months ended September 30, 2023, of which $183.0 million related to the recognition of the remaining deferred revenue associated with the Novartis collaborations upon termination of the agreements, consisting of $59.1 million recognized from deferred R&D service revenue under both the tislelizumab and ociperlimab collaborations, $52.0 million recognized from deferred revenue for Novartis' right to access ociperlimab over the option period prior to termination and $72.0 million recognized from deferred material right revenue associated with the ociperlimab collaboration upon termination.

Additionally, $3.0 million was recognized primarily related to the sale of tislelizumab and ociperlimab clinical supply to Novartis and revenue generated under the broad markets marketing and promotion agreement.

Collaboration revenue totaled $38.1 million for the three months ended September 30, 2022, of which $9.8 million was recognized from deferred revenue for R&D services performed during the three months ended September 30, 2022 under both the tislelizumab and ociperlimab collaborations and $26.2 million was recognized from deferred revenue for Novartis' right to access ociperlimab over the option period (see Note 3 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q).

Net product revenue increased 82.0% to $746.9 million for the three months ended March 31, 2024, compared to $410.3 million in the prior-year period, primarily due to continued increases in sales of BRUKINSA globally, driven by significant growth in the U.S.

In addition, product revenues in the first quarter of 2024 were positively impacted by sales of tislelizumab and in-licensed products from Amgen in China.

Global sales of BRUKINSA totaled $488.5 million in the first quarter, representing a 131.1% increase compared to the prior-year period;

sales of BRUKINSA totaled $351.5 million in the first quarter, compared to $138.8 million in the prior-year period, representing growth of 153.3%, as BRUKINSA gained share in treatment-naïve (TN) chronic lymphocytic leukemia (CLL), and emerged as the BTKi class leader in new-patient share in relapsed or refractory (R/R) CLL.

BRUKINSA sales in Europe totaled $66.8 million in the first quarter, compared to $19.5 million in the prior-year period, representing growth of 242.8%, driven by continued gains in market share and additional reimbursements including France, which implemented reimbursement for BRUKINSA within CLL, Waldenström’s macroglobulinemia (WM) and marginal zone lymphoma for the first time.

BRUKINSA sales in China totaled $57.4 million, representing growth of 19.4%.

BRUKINSA rest of world sales totaled $12.8 million in the first quarter, representing growth of 153.7% compared to the prior-year period.

Sales of tislelizumab in China totaled $145.2 million in the first quarter, compared to $114.9 million in the prior-year period, representing a 26.4% increase.

In the first quarter, new patient demand from broader reimbursement and hospital listings continued to drive increased market penetration and market share for tislelizumab.

Collaboration revenue totaled $4.7 million for the three months ended March 31, 2024, primarily related to revenue generated under the Novartis broad markets marketing and promotion agreement.

Collaboration revenue totaled $37.5 million for the three months ended March 31, 2023, of which $6.8 million was recognized from deferred revenue for R&D services performed during the three months ended March 31, 2023 under both the tislelizumab and ociperlimab collaborations, $26.2 million was recognized from deferred revenue for Novartis’ right to access ociperlimab over the option period and $4.4 million was recognized related to the sale of tislelizumab and ociperlimab clinical supply to Novartis (see Note 3 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q).

Cost of Sales

Cost of sales increased to $96.3 million for the three months ended September 30, 2023 from $76.5 million for the three months ended September 30, 2022, primarily due to increased product sales of BRUKINSA and tislelizumab, as well as sales of in-licensed products from Amgen in China.

Gross margin on global product sales increased to $499.0 million for the three months ended September 30, 2023, compared to $273.0 million in the prior-year period, primarily due to increased product sales in the current year period.

Gross margin as a percentage of product sales increased to 83.8% for the three months ended September 30, 2023, from 78.1% in the comparable period of the prior year.

The increase is primarily due to proportionally higher sales mix of global BRUKINSA compared to lower margin sales of in-licensed products, as well as lower costs per unit for tislelizumab in China.

Cost of sales increased to $124.9 million for the three months ended March 31, 2024 from $81.8 million for the three months ended March 31, 2023, primarily due to increased product sales of BRUKINSA and tislelizumab, as well as sales of in-licensed products from Amgen in China.

Gross margin on global product sales increased to $622.0 million for the three months ended March 31, 2024, compared to $328.5 million in the prior-year period, primarily due to increased product sales in the current year period.

Gross margin as a percentage of product sales increased to 83.3% for the three months ended March 31, 2024, from 80.1% in the comparable period of the prior year.

The increase is primarily due to proportionally higher sales mix of global BRUKINSA compared to other products in the portfolio.

Research and Development Expense

Research and development expense increased by $26.9 million, or 6.3%, to $453.3 million for the three months ended September 30, 2023 from $426.4 million for the three months ended September 30, 2022.

The following table summarizes external clinical, external non-clinical and internal research and development expense for the three months ended September 30, 2023 and 2022, respectively:

Research and development expense increased by $52.1 million, or 12.7%, to $460.6 million for the three months ended March 31, 2024 from $408.6 million for the three months ended March 31, 2023.

The following table summarizes external clinical, external non-clinical and internal research and development expense for the three months ended March 31, 2024 and 2023, respectively:

Three Months Ended

September 30, Changes

March 31, Changes

2024 2023 $ %

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Cost of development programs $ 122,871 $ 128,596 $ (5,725) (4.5) %

Upfront license fees 15,000 20,000 (5,000) (25.0) %

Upfront license and development milestone fees 35,028 — 35,028 NM

Amgen co-development expense 1

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Total research and development expenses $ 460,638 $ 408,584 $ 52,054 12.7 %

1 Our co-funding obligation for the development of the pipeline assets under the Amgen collaboration for the three months ended September 30, 2023 totaled $31.7 million, of which $15.8 million was recorded as R&D expense.

Adjusted research and development expenses 2

$ 405,440 $ 361,696 $ 43,744 12.1 %

1 Our co-funding obligation for the development of the pipeline assets under the Amgen collaboration for the three months ended March 31, 2024 totaled $26.6 million, of which $13.5 million was recorded as R&D expense.

The remaining $13.1 million was recorded as a reduction of the R&D cost share liability.

The decrease in external research and development expenses in the third quarter was primarily attributable to a decrease in Amgen co-development expense, external clinical trial costs for TEVIMBRA (tislelizumab) and ZW25 (zanidatamab) and preclinical trial costs for certain assets in our portfolio, partially offset by higher external clinical trial costs for BRUKINSA.

Internal research and development expense increased $43.9 million, or 17.4%, to $296.1 million, and was primarily attributable to the expansion of our global discovery and development organization, as well as our continued efforts to internalize research and clinical trial activities, and included the following:

• $22.8 million increase of employee salary and benefits, primarily attributable to hiring more research and development personnel to support our expanding research and development activities;

• $7.7 million increase of share-based compensation expense, primarily attributable to our increased headcount of research and development employees, resulting in more awards being expensed;

• $6.4 million net increase in depreciation, market access, and other expenses;

• $6.0 million increase of consulting fees, which was mainly attributable to activities in the United States and Europe;

• $1.0 million increase of travel and meeting expenses, which was mainly due to travel normalizing and key conferences in connection with the advancement of our drug candidates.

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 first quarter was primarily attributable to higher development milestone fees, partially offset by a decrease in Amgen co-development expense and external clinical trial costs as we continue to internalize clinical trials.

Internal research and development expense increased $27.1 million, or 10.3%, to $289.3 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.

Selling, General and Administrative Expense

Selling, general and administrative expense increased by $41.5 million, or 12.9%, to $364.4 million for the three months ended September 30, 2023, from $322.9 million for the three months ended September 30, 2022.

The increase was primarily attributable to the following:

• $39.2 million increase of external commercial-related expenses, including grants and sponsorships, meetings, conferences and seminars, travel expenses, marketing and promotional activities, and market access studies and analytics, related to commercial expansion in the United States and Europe driven by the launch of BRUKINSA in CLL;

• $20.0 million decrease in consulting expenses due primarily to lower external commercial expenses in China;

• $11.5 million increase of employee salary and benefits, primarily attributable to hiring more commercial and medical affairs personnel to support our commercial expansion activities;

• $10.1 million increase of share-based compensation expense, primarily attributable to our increased headcount of sales and administrative employees, resulting in more awards being expensed;

• $0.7 million increase of professional fees and other administrative expenses.

Interest Income, Net

Interest income, net increased by $13.9 million, or 108.9%, to $26.6 million of net interest income for the three months ended September 30, 2023, from $12.8 million of net interest income for three months ended September 30, 2022.

The increase in interest income, net, was primarily attributable to increased interest income resulting from higher interest rates on our cash and short-term investment balances and a decrease in interest expense as a result of higher interest capitalized related to Hopewell construction in process.

Other Income (Expense), Net

Other income, net was $336.7 million for the three months ended September 30, 2023, primarily due to the noncash gain recorded for the receipt of ordinary shares resulting from the BMS settlement and government subsidy income, partially offset by foreign exchange losses resulting from the strengthening of the U.S.

dollar compared to the RMB in the period and the revaluation impact of foreign currencies held in U.S.

functional currency subsidiaries and unrealized losses on our equity investments.

For the three months ended September 30, 2022, other expense, net, was $125.6 million, which was primarily due to foreign exchange losses resulting from the strengthening of the U.S.

dollar compared to the RMB in the period and the revaluation impact of foreign currencies held in U.S.

functional currency subsidiaries and unrealized losses on our equity investments.

Income Tax Expense

Income tax expense was $13.9 million for the three months ended September 30, 2023 as compared to $6.3 million for the three months ended September 30, 2022.

The income tax expense for the three months ended September 30, 2023 and 2022 was primarily attributable to current China tax expense due to certain non-deductible expenses and current U.S.

tax expense determined after other special tax deductions and research and development tax credits.

Comparison of the Nine Months Ended September 30, 2023 and 2022

Total revenue increased to $1.8 billion, or 76.1%, for the nine months ended September 30, 2023, from $1.0 billion for the nine months ended September 30, 2022, primarily due to increased sales of our internally developed products, BRUKINSA and tislelizumab, as well as increased sales of in-licensed products, most notably from the Amgen products.

Additionally, collaboration revenue increased due to the recognition of the remaining deferred revenue associated with the Novartis collaborations upon termination of the agreements.

The following table summarizes the components of revenue for the nine months ended September 30, 2023 and 2022, respectively:

Nine Months Ended

September 30, Changes

2023 2022 $ %

(dollars in thousands)

Product revenue $ 1,559,326 $ 915,590 $ 643,736 70.3 %

Collaboration revenue:

Material rights revenue 71,980 — 71,980 NM

Research and development service revenue 79,432 34,074 45,358 133.1 %

Right to access intellectual property revenue 104,475 78,746 25,729 32.7 %

Other 9,157 7,416 1,741 23.5 %

Total collaboration revenue 265,044 120,236 144,808 120.4 %

Total Revenue $ 1,824,370 $ 1,035,826 $ 788,544 76.1 %

Net product revenues consisted of the following:

Nine Months Ended

September 30, Changes

2023 2022 $ %

(dollars in thousands)

877,353 388,567 $ 488,786 125.8 %

408,666 320,728 87,938 27.4 %

59,965 60,622 (657) (1.1) %

68,621 47,156 21,465 45.5 %

41,894 29,671 12,223 41.2 %

40,394 27,610 12,784 46.3 %

27,096 11,225 15,871 141.4 %

11,439 12,260 (821) (6.7) %

Pamiparib 5,612 5,843 (231) (4.0) %

Other 18,286 11,908 6,378 53.6 %

Total product revenue $ 1,559,326 $ 915,590 $ 643,736 70.3 %

Net product revenue increased 70.3% to $1,559.3 million for the nine months ended September 30, 2023, compared to $915.6 million in the prior year period, primarily due to increased sales of BRUKINSA in the United States and China and increased sales of tislelizumab in China.

In addition, there were increased sales of our in-licensed products from Amgen.

Global sales of BRUKINSA totaled $877.4 million in the nine months ended September 30, 2023, representing a 125.8% increase compared to the prior year period;

sales of BRUKINSA totaled $632.4 million in the nine months ended September 30, 2023, compared to $264.4 million in the prior year period, representing growth of 139.2%.

sales continued to accelerate in the period, driven by the approval and launch of BRUKINSA for adult patients with CLL and SLL.

BRUKINSA sales in China totaled $144.0 million in the nine months ended September 30, 2023, representing growth of 31.6% compared to the prior year period, driven by an increase in all approved indications.

BRUKINSA rest of world sales totaled $101.0 million in the nine months ended September 30, 2023, representing growth of 602.5% compared to the prior-year period, driven by a significant increase in all approved indications, including CLL and SLL in Europe.

Sales of tislelizumab in China totaled $408.7 million in the nine months ended September 30, 2023, representing a 27.4% increase compared to $320.7 million in the prior year period.

In the nine months ended September 30, 2023, new patient demand from broader reimbursement and further expansion of our salesforce and hospital listings continued to drive increased market penetration and market share for tislelizumab.

Collaboration revenue totaled $265.0 million for the nine months ended September 30, 2023, primarily related to the recognition of the remaining deferred revenue associated with the Novartis collaborations upon termination of the agreements

during the third quarter of 2023.

Collaboration revenue for the nine months ended September 30, 2023 consisted of $79.4 million recognized from deferred revenue for R&D services performed during the nine months ended September 30, 2023 under both the tislelizumab and ociperlimab collaborations, $104.5 million recognized from deferred revenue for Novartis' right to access ociperlimab over the option period, $72.0 million recognized from deferred material right revenue associated with the ociperlimab collaboration upon termination and $9.2 million recognized primarily related to the sale of tislelizumab clinical supply to Novartis and revenue generated under the broad markets marketing and promotion agreement.

Collaboration revenue totaled $120.2 million for the nine months ended September 30, 2022, of which $34.1 million was recognized from deferred revenue for R&D services performed during the nine months ended September 30, 2022, $78.7 million was recognized from deferred revenue for Novartis' right to access ociperlimab over the option period, and $7.4 million was recognized related to the sale of tislelizumab clinical supply to Novartis (see Note 3 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q).

Cost of Sales

Cost of sales increased to $274.1 million for the nine months ended September 30, 2023 from $213.0 million for the nine months ended September 30, 2022, primarily due to increased product sales of BRUKINSA and tislelizumab as well as sales of in-licensed products from Amgen in China.

Gross margin on product sales increased to $1.3 billion for the nine months ended September 30, 2023, compared to $702.6 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 82.4% for the nine months ended September 30, 2023, from 76.7% in the comparable period of the prior year.

The increase is primarily due to a proportionally higher sales mix of global BRUKINSA compared to lower margin sales of in-licensed products and lower per unit costs for BRUKINSA and tislelizumab, partially offset by the impact of lower selling prices in China from the listing of tislelizumab and BRUKINSA on the updated NRDL.

Research and Development Expense

Research and development expense increased by $90.1 million, or 7.5%, to $1.3 billion for the nine months ended September 30, 2023 from $1.2 billion for the nine months ended September 30, 2022.

The following table summarizes external clinical, external non-clinical and internal research and development expense for the nine months ended September 30, 2023 and 2022, respectively:

Nine Months Ended

September 30, Changes

Three Months Ended

March 31, Changes

2024 2023 $ %

(dollars in thousands)

External research and development expense:

Cost of development programs $ 384,520 $ 360,644 $ 23,876 6.6 %

Upfront license fees 15,000 20,000 (5,000) (25.0) %

Amgen co-development expense 1

Selling, general and administrative expenses $ 427,427 $ 328,499 $ 98,928 30.1 %

Adjusted selling, general and administrative expenses 1

$ 372,146 $ 283,154 $ 88,992 31.4 %

Total external research and development expenses 438,626 452,896 (14,270) (3.2) %

Internal research and development expenses 845,981 741,589 104,392 14.1 %

Total research and development expenses $ 1,284,607 $ 1,194,485 $ 90,122 7.5 %

1 Our co-funding obligation for the development of the pipeline assets under the Amgen collaboration for the nine months ended September 30, 2023 totaled $77.7 million, of which $39.1 million was recorded as R&D expense.

The remaining $38.6 million was recorded as a reduction of the R&D cost share liability .

The decrease in external research and development expenses in the nine months ended September 30, 2023 was primarily attributable to decrease in Amgen co-development expense and lower external clinical trial costs for TEVIMBRA (tislelizumab) and ZW25 (zanidatamab), partially offset by increases in external clinical trial costs for BRUKINSA and sonrotoclax (BGB-11417) and preclinical trial costs for certain assets in our portfolio.

Internal research and development expense increased $104.4 million, or 14.1%, to $846.0 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 included the following:

• $62.3 million increase of employee salary and benefits, primarily attributable to hiring more research and development personnel to support our expanding research and development activities;

• $19.7 million increase of share-based compensation expense, primarily attributable to our increased headcount of research and development employees, resulting in more awards being expensed related to the growing research and development employee population;

• $21.8 million increase of facilities, depreciation, consulting, regulatory, office expense, rental fees, lab consumables and other expenses to support the growth of our organization, partially offset by a $6.3 million decrease in clinical inventory;

• $6.9 million increase in meetings, seminars and travel expenses mainly attributable to increased meetings and conferences travel normalizing.

Selling, General and Administrative Expense

Selling, general and administrative expense increased by $139.1 million, or 14.7%, to $1.1 billion, for the nine months ended September 30, 2023, from $948.9 million for the nine months ended September 30, 2022.

The increase was primarily attributable to the following:

• $73.0 million increase in external commercial-related expenses, including market research, sales and marketing, conference, meeting and seminar and travel related expenses related to the growth of our global commercial organization, including commercial expansion of BRUKINSA in CLL in the United States and Europe, as we continue to build our worldwide footprint and capabilities;

• $35.4 million increase in grants and donations;

• $30.4 million increase of employee salary and benefits, which was primarily attributable to the expansion of our commercial organizations in the United States, Europe, Canada, China and emerging markets, and the hiring of personnel to support our growing business;

• $30.0 million increase of 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;

• $21.5 million decrease in consulting expenses due primarily to lower external commercial expenses in China;

• $8.2 million decrease in general and administrative and other expenses primarily attributable to increased legal fees related to increased arbitration activities for the prior nine months period ended September 30, 2022.

Interest Income (Expense), Net

Interest income (expense), net increased by $23.5 million, or 68.5%, to $57.7 million of net interest income for the nine months ended September 30, 2023, from $34.3 million of net interest income for nine months ended September 30, 2022.

The increase in interest income was primarily attributable to higher interest rates earned on our cash, cash equivalents and short-term investments and lower interest expense due to an increase in interest capitalization related to Hopewell construction.

Other Income (Expense), Net

Other income, net was $291.1 million for the nine months ended September 30, 2023, primarily due to the noncash gain recorded for the receipt of ordinary shares as a result of the BMS settlement and government subsidy income, partially offset by foreign exchange losses resulting from the strengthening of the U.S.

dollar compared to the RMB and the revaluation impact of RMB-denominated deposits held in U.S.

functional currency subsidiaries and unrealized losses on equity investments.

For the nine months ended September 30, 2022, other expense, net was $243.3 million, which was primarily due to foreign exchanges losses resulting from the strengthening of the U.S.

dollar compared to the RMB and the revaluation impact of RMB-denominated deposits held in U.S.

functional currency subsidiaries being greater in the prior-year period.

Also contributing to the decrease in expense was decrease in the unrealized loss on our equity investment in Leap Therapeutics.

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 $98.9 million, or 30.1%, to $427.4 million for the three months ended March 31, 2024, from $328.5 million for the three months ended March 31, 2023.

The increase was primarily attributable to investing in the expansion of our commercial activities to support our product launches, primarily BRUKINSA in the U.S.

and Europe to drive continued revenue and margin expansion.

Selling, general and administrative expenses as a percentage of product sales were 57.2% in the first quarter of 2024 compared to 80.1% in the prior year period.

We expect selling and marketing expenses to increase in 2024 as product sales increase and we expect selling, general and administrative expenses as a percentage of revenue to improve gradually throughout 2024.

Interest Income, Net

Interest income, net increased by $0.1 million, or 0.9%, to $16.2 million of net interest income for the three months ended March 31, 2024, from $16.0 million of net interest income for three months ended March 31, 2023.

The increase in interest income, net, was primarily attributable to increased interest income resulting from higher interest rates on our cash balance and a decrease in interest expense as a result of higher interest capitalized related to Hopewell construction in process.

Other Income, Net

Other income, net was $1.8 million for the three months ended March 31, 2024, primarily due to the gain recognized on the divestiture of Pi Health, Inc.

and government subsidy income in China, slightly offset by foreign exchange losses.

For the three months ended March 31, 2023, other income, net was $18.3 million, primarily due to government subsidy income in China.

Income Tax Expense

Income tax expense increased to $39.1 million for the nine months ended September 30, 2023, from $28.4 million for the nine months ended September 30, 2022.

The income tax expense for the nine months ended September 30, 2023 and September

30, 2022 was primarily attributable to current China tax expense due to certain non-deductible expenses and current U.S.

tax expense determined after other special deductions and research and development tax credits.

Income tax expense was $7.7 million for the three months ended March 31, 2024 as compared to $11.5 million for the three months ended March 31, 2023.

We are anticipating a lower annual effective tax rate in 2024 due to the forecasted jurisdictional mix of consolidated pre-tax earnings, which is expected to increase in jurisdictions where we have tax attributes to offset current tax expense.

The income tax expense for the three months ended March 31, 2024 and 2023 was primarily attributable to current U.S.

tax expense determined after other special tax deductions and research and development tax credits and current China tax expense due to certain non-deductible expenses.

Non-GAAP Reconciliation

Three Months Ended

( in thousands)

Reconciliation of GAAP to adjusted cost of sales - products:

GAAP cost of sales - products $ 124,935 $ 81,789

Depreciation 2,345 2,180

Amortization of intangibles 1,183 799

Adjusted cost of sales - products $ 121,407 $ 78,810

Reconciliation of GAAP to adjusted research and development:

GAAP research and development $ 460,638 $ 408,584

Share-based compensation expenses 38,045 34,028

Depreciation 17,153 12,860

Adjusted research and development $ 405,440 $ 361,696

Reconciliation of GAAP to adjusted selling, general and administrative:

GAAP selling, general and administrative $ 427,427 $ 328,499

Share-based compensation expenses 50,669 41,360

Depreciation 4,612 3,985

Adjusted selling, general and administrative $ 372,146 $ 283,154

Reconciliation of GAAP to adjusted operating expenses

GAAP operating expenses $ 888,065 $ 737,270

Share-based compensation expenses 88,714 75,388

Depreciation 21,765 16,845

Amortization of intangibles — 187

Adjusted operating expenses $ 777,586 $ 644,850

Reconciliation of GAAP to adjusted loss from operations:

GAAP loss from operations $ (261,348) $ (371,258)

Share-based compensation expenses 88,714 75,388

Depreciation 24,110 19,025

Amortization of intangibles 1,183 986

Adjusted loss from operations $ (147,341) $ (275,859)

Liquidity and Capital Resources

The following table represents our cash, short-term investments, and debt balances as of September 30, 2023 and December 31, 2022:

September 30, December 31,

The following table represents our cash, short-term investments, and debt balances as of March 31, 2024 and December 31, 2023:

March 31, December 31,

(dollars in thousands)

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Total debt $ 1,025,992 $ 885,984

With the exception of the periods in which we received upfront payments from out-licensing rights to tislelizumab to Novartis, and prior to that BMS, and the current quarter where we recorded a large noncash gain from the BMS settlement and accelerated deferred revenue recognition from the Novartis terminations, we have incurred net losses and negative cash flows from operations since inception, resulting from the funding of our research and development programs and selling, general and administrative expenses to support the commercialization of our products and our global operations.

We recognized net income of $215.4 million and net loss of $514.2 million for the three and nine months ended September 30, 2023, respectively, and net losses of $557.6 million and $1.6 billion for the three and nine months ended September 30, 2022, respectively.

As of September 30, 2023, we had an accumulated deficit of $7.6 billion.

To date, we have financed our operations principally through proceeds from public and private offerings of our securities and proceeds from our collaborations.

Based on our current operating plan, we expect that our existing cash, cash equivalents and short-term investments as of September 30, 2023 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.

The following table provides information regarding our cash flows for the nine months ended September 30, 2023 and 2022:

Nine Months Ended

September 30,

With the exception of the periods in which we received upfront payments from out-licensing rights to tislelizumab to Novartis, and prior to that BMS, and the third quarter of 2023 where we recorded a large noncash gain from the BMS settlement and accelerated deferred revenue recognition from the Novartis terminations, we have incurred net losses and negative cash flows from operations since inception, resulting from the funding of our research and development programs and selling, general and administrative expenses to support the commercialization of our products and our global operations.

We recognized a net loss of $251.2 million and $348.4 million for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, we had an accumulated deficit of $8.2 billion.

To date, we have financed our operations principally through proceeds from public and private offerings of our securities, proceeds from debt, sales of marketable securities and proceeds from our collaborations, together with product sales since September 2017.

Based on our current operating plan, we expect that our existing cash and cash equivalents as of March 31, 2024 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.

We have also financed our operations and investments with proceeds from debt incurred primarily from various banks both through our subsidiaries and BeiGene, Ltd.

of $1.0 billion at March 31, 2024.

The majority of those debt obligations, or approximately $827.0 million, owed by BeiGene, Ltd., have due dates within the next 12 months.

We believe we will have sufficient cash and cash equivalents and other sources of capital to be able to repay and/or refinance those debt obligations.

On December 15, 2021, we completed our initial public offering on the STAR Market of the Shanghai Stock Exchange (the “STAR Offering”).

The shares offered in the STAR Offering were issued to and subscribed for by permitted investors in the People’s Republic of China (“PRC”) in Renminbi (“RMB Shares”).

The public offering price of the RMB Shares was RMB192.60 per ordinary share, or $391.68 per ADS.

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

Net proceeds after deducting underwriting commissions and offering expenses were $3.4 billion (RMB 21.7 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.

As of March 31, 2024, the Company had cash remaining related to the STAR Offering proceeds of $1.0 billion.

The following table provides information regarding our cash flows for the three months ended March 31, 2024 and 2023:

Three Months Ended

(dollars in thousands)

1 unchanged sentence

Net cash used in operating activities (308,572) (563,777)

Net cash provided by investing activities 122,588 1,038,587

Net cash provided by financing activities 69,430 91,395

Net cash (used in) provided by investing activities (209,831) 241,063

Net cash provided by (used in) financing activities 162,293 (19,868)

Net effect of foreign exchange rate changes (22,438) 11,311

3 unchanged sentences

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

Operating activities used $935.8 million of cash in the nine months ended September 30, 2023, principally from our net loss of $514.2 million, an increase in our net operating assets and liabilities of $387.6 million, and non-cash charges of $34.1 million.

The increase in net operating assets and liabilities was primarily driven by increased working capital associated with our growth in product sales.

The non-cash charges were primarily the result of the BMS termination settlement and amortization of the research and development cost share liability, offset by share-based compensation expense, depreciation and amortization expense.

Operating activities used $1.2 billion of cash in the nine months ended September 30, 2022, which resulted principally from our net loss of $1.6 billion, partially offset by a decrease in our net operating assets and liabilities of $132.6 million and by non-cash charges of $247.5 million.

Net loss for the three months ended September 30, 2022 includes $125.6 million of other losses due primarily to the strengthening of the U.S.

dollar and the related revaluation of RMB-denominated deposits held by U.S.

functional currency subsidiaries.

The decrease in working capital was driven largely by decreases in accounts receivable (due to the receipt of the upfront from Novartis related to the ociperlimab collaboration), decreases in prepaid assets and other non-current assets, and an increase in taxes payable, partially offset by increases in inventories and decreases in accounts payable, accrued expenses, deferred revenue and other long-term liabilities.

The non-cash charges were primarily driven by share-based compensation expense, depreciation and amortization expense, and unrealized loss on our Leap investment, offset by amortization of the research and development cost share liability and deferred income tax benefits.

Operating activities used $308.6 million of cash in the three months ended March 31, 2024, principally from our net loss of $251.2 million and an increase in our net operating assets and liabilities of $155.4 million, partially offset by non-cash charges of $97.9 million.

The increase in net operating assets and liabilities was primarily driven by increased working capital associated with our growth in product sales and compensation-related payments.

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

Operating activities used $563.8 million of cash in the three months ended March 31, 2023, principally from our net loss of $348.4 million and an increase in our net operating assets and liabilities of $294.1 million, partially offset by non-cash charges of $78.7 million.

The increase in working capital was driven largely by the seasonality of receivables and compensation-related payments.

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

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 $122.6 million of cash in the nine months ended September 30, 2023, consisting of sales and maturities of investment securities of $567.5 million, partially offset by capital expenditures of $404.9 million, purchase of IPR&D assets of $15.0 million, purchase of intangible assets of $9.4 million and $15.6 million in purchases of investment securities.

Investing activities provided $1.0 billion of cash in the nine months ended September 30, 2022, consisting of sales and maturities of investment securities of $1.4 billion, offset by $14.7 million in purchases of investment securities, capital expenditures of $204.1 million, and $95.0 million of acquired in-process research and development.

Investing activities used $209.8 million of cash in the three months ended March 31, 2024, consisting of capital expenditures of $156.6 million, purchase of IPR&D assets of $31.8 million, purchase of intangible assets of $4.7 million, $19.4 million in purchases of long-term investments and other investing activities, partially offset by sales and maturities of investment securities of $2.7 million.

Investing activities provided $241.1 million of cash in the three months ended March 31, 2023, consisting of sales and maturities of investment securities of $377.0 million, partially offset by capital expenditures of $125.6 million, $10.3 million in purchases of long-term investments and other investing activities.

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 ordinary shares and ADSs through employee equity compensation plans.

Financing activities provided $69.4 million of cash in the nine months ended September 30, 2023, consisting primarily of $22.5 million of net proceeds from long-term bank loans, $162.6 million of proceeds from short-term bank loans and $52.4 million from the exercise of employee share options and proceeds from the issuance of shares through our employee share purchase plan, which were partially offset by $159.6 million in repayments of short-term bank loans and $8.5 million in repayments of long-term bank loans.

Financing activities provided $91.4 million of cash in the nine months ended September 30, 2022, consisting primarily of $163.8 million of proceeds from short-term bank loans, $37.4 million of proceeds from a long-term bank loan and $35.7 million from the exercise of employee share options and proceeds from the issuance of shares through our employee share purchase plan, which were partially offset by $145.4 million in repayment of short-term bank loans.

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

Financing activities provided $162.3 million of cash in the three months ended March 31, 2024, consisting primarily of $9.1 million of net proceeds from long-term loans, $142.0 million of proceeds from short-term loans and $14.8 million from the exercise of employee share options and proceeds from the issuance of shares through our employee share purchase plan, which were partially offset by $3.6 million in repayments of long-term loans.

Our borrowing and repayment cycle is dictated by the short-term maturities of our debt and the ability to increase our borrowings is dependent on interest rates, credit spreads, bank lending capacity and other factors.

We expect to repay approximately $827.0 million of loans in the next 12 months and expect to be able to re-finance those on a consistent basis with our historical experience, with the cost of those borrowings depending on prevailing interest rates and credit spreads.

Financing activities used $19.9 million of cash in the three months ended March 31, 2023, consisting primarily of $1.5 million in repayment of long-term bank loans and $50.0 million in repayment of short-term bank loans, which were partially offset by $31.6 million from the exercise of employee share options and proceeds from the issuance of shares through our employee share purchase plan.

Effects of Exchange Rates on Cash

4 unchanged sentences

The impact of foreign currency deposits being translated into the U.S.

dollar negatively impacted ending cash by $50.3 million in the nine months ended September 30, 2023, compared to a negative impact of $133.9 million in the prior-year period.

dollar negatively impacted ending cash by $22.4 million in the three months ended March 31, 2024, compared to a positive impact of $11.3 million in the prior-year period.

Future Liquidity and Material Cash Requirements

Until such time, if ever, as we can generate substantial product revenue sufficient to cover our costs and capital investments, we may be required to finance our cash needs through a combination of equity offerings, debt financings, collaboration agreements, strategic alliances, licensing arrangements, government grants, and other available sources.

Under the rules of the SEC, we currently qualify as a “well-known seasoned issuer,” which allows us to file shelf registration statements to register an unspecified amount of securities that are effective upon filing.

In May 2023, we filed such a shelf registration statement with the SEC for the issuance of an unspecified amount of ordinary shares (including in the form of ADSs), preferred shares, various series of debt securities and/or warrants to purchase any of such securities, either individually or in units, from

time to time at prices and on terms to be determined at the time of any such offering.

Under the rules of the U.S.

Securities and Exchange Commissions (“SEC”), we currently qualify as a “well-known seasoned issuer,” which allows us to file shelf registration statements to register an unspecified amount of securities that are effective upon filing.

This registration statement was effective upon filing and will remain in effect for up to three years from filing, prior to which time we may file another shelf registration statement that will be effective for up to three years from filing.

7 unchanged sentences

Our material cash requirements in the short- and long-term consist of the following operational, capital, and manufacturing expenditures, a portion of which contain contractual or other obligations.

We plan to fund our material cash requirements with our current financial resources together with our anticipated receipts of accounts receivable, product sales and royalty revenues.

We plan to fund our material cash requirements with our current financial resources together with our anticipated receipts of accounts receivable and product sales.

Contractual and Other Obligations

The following table summarizes our significant contractual obligations as of the payment due date by period as of September 30, 2023:

The following table summarizes our significant contractual obligations as of the payment due date by period as of March 31, 2024:

Payments Due by Period

8 unchanged sentences

Funding commitment 8,905 2,213 6,692

Research and development commitment 16,498 6,004 10,494

Capital commitments 61,577 61,577 —

1 unchanged sentence

Operating Lease Commitments

We lease office or manufacturing facilities in Beijing, Shanghai, Suzhou and Guangzhou in China;

office facilities in California, Massachusetts, Maryland, and New Jersey in the United States;

and office facilities in Basel, Switzerland under non-cancelable operating leases expiring on various dates.

We lease office facilities in the U.S.

and Switzerland, and office and manufacturing facilities in China under non-cancelable operating leases expiring on various dates.

Payments under operating leases are expensed on a straight-line basis over the respective lease terms.

1 unchanged sentence

Purchase Commitments

As of September 30, 2023, non-cancellable purchase commitments amounted to $131.7 million, of which $41.2 million related to minimum purchase requirements for supply purchased from contract manufacturers and $90.5 million related to

binding purchase obligations of inventory from BMS and Amgen.

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

As of March 31, 2024, non-cancellable purchase commitments amounted to $93.5 million, of which $35.4 million related to minimum purchase requirements for supply purchased from contract manufacturers and $58.1 million related to binding purchase obligations of inventory from Amgen.

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

Debt Obligations and Interest

2 unchanged sentences

See Note 10 in the Notes to the Financial Statements for further detail of our debt obligations.

We have numerous financial and non-financial covenants on our debt obligations with various banks and other lenders.

Some of these covenants include cross-default provisions that could require acceleration of repayment of loans in the event of default.

However, our debt is primarily short-term in nature.

Any acceleration would be a matter of months but may impact our ability to refinance debt obligations if an event of default occurs.

As of March 31, 2024, we were in compliance with all covenants of our material debt agreements.

Interest on bank loans is paid quarterly until the respective loans are fully settled.

3 unchanged sentences

We are funding our portion of the co-development costs by contributing cash and development services.

As of September 30, 2023, our remaining co-development funding commitment was $517.5 million.

As of March 31, 2024, our remaining co-development funding commitment was $457.0 million.

Funding Commitment

Funding commitment represents our committed capital related to two equity method investments.

As of September 30, 2023, our remaining capital commitment was $10.6 million and is expected to be paid from time to time over the investment period.

Research and Development Commitment

We entered into a long-term research and development agreement in June 2021, which includes obligations to make fixed quarterly payments over the next three years.

As of September 30, 2023, the total research and development commitment amounted to $16.5 million.

As of March 31, 2024, our remaining capital commitment was $8.9 million and is expected to be paid from time to time over the investment period.

Capital Commitments

We had capital commitments amounting to $442.6 million for the acquisition of property, plant and equipment as of September 30, 2023, which were mainly for our Hopewell facility, and additional capacity at the Guangzhou and Suzhou manufacturing facilities.

We are making a significant investment in our future manufacturing and clinical R&D center in the United States, a 42-acre site that is being constructed in Hopewell, NJ.

We purchased this site for $75.2 million, announced its groundbreaking on April 29, 2022 and have $419.5 million of construction in process related to the project.

We expect continued significant capital expenditures as we build out the Hopewell facility over the next several years.

We had capital commitments amounting to $61.6 million for the acquisition of property, plant and equipment as of March 31, 2024, which were mainly for our manufacturing and clinical R&D campus in Hopewell, New Jersey, additional capacity at the Guangzhou and Suzhou manufacturing facilities, and a new building for Beijing Innerway Bio-tech Co., Ltd.

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 and nine months ended September 30, 2023, 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, 2022.

For new accounting policies adopted during the three and nine months ended September 30, 2023 , 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 months ended March 31, 2024, as compared to those described in the section titled “Part I—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, 2023.

For new accounting policies adopted during the three months ended March 31, 2024, 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