What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-07 compared with 2024-05-08 · 195 added, 105 removed, 249 unchanged (55% of the section changed)

19 unchanged sentences

costs associated with enforcing or defending against intellectual property infringement, misappropriation or violation, product liability and other claims;

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

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

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

28 unchanged sentences

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.

BeiGene reduced GAAP operating loss and achieved positive adjusted operating income during the quarter with rapidly increasing global revenues and continued financial discipline.

Having now reached this milestone, we will further build on our differentiated, strategic capabilities as a leading, global oncology innovator.

BRUKINSA is emerging as the BTKi class leader in the U.S.

in new patient starts across all approved indications, demonstrating the strength of its clinical efficacy and safety data, and is the only BTKi to demonstrate superior efficacy versus ibrutinib in a head-to-head trial.

With our leadership in hematology, we are working to expand into other highly prevalent cancer types, backed by one of the largest oncology research teams in the industry.

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

• Generated total revenues of $929 million in the second quarter, an increase of 56% from the prior-year period;

• Reduced GAAP operating loss and achieved non-GAAP operating income;

• Strengthened hematology leadership with global BRUKINSA revenues of $637 million, an increase of 107% from the prior-year period;

• Advanced pivotal programs for BCL2 inhibitor sonrotoclax and BTK-targeted degrader BGB-16673;

• Advanced innovative solid tumor pipeline of more than 15 investigational molecules, including ADCs, multispecific antibodies, and targeted therapies for lung, breast, and gastrointestinal cancers.

Recent Developments

Recent Business Developments

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.

On July 23, 2024, we announced the opening of our flagship U.S.

facility in Hopewell, New Jersey, at the Princeton West Innovation Campus, which houses state-of-the-art biologics manufacturing capabilities and a clinical research and development center that further bolster our differentiated model as an oncology innovator.

Results of Operations

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

Three Months Ended

March 31, Change

The following table summarizes our results of operations for the three and six months ended June 30, 2024 and 2023:

Three Months Ended Six Months Ended

June 30, Change June 30, Change

2024 2023 $ % 2024 2023 $ %

12 unchanged sentences

Interest income, net 13,225 15,070 (1,845) (12.2) % 29,385 31,086 (1,701) (5.5) %

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

Other expense, net (11,984) (63,818) 51,834 (81.2) % (10,222) (45,515) 35,293 (77.5) %

Loss before income taxes (105,920) (367,463) 261,543 (71.2) % (349,346) (704,402) 355,056 (50.4) %

1 unchanged sentence

Net loss $ (120,405) $ (381,137) $ 260,732 (68.4) % $ (371,555) $ (729,568) $ 358,013 (49.1) %

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.

Comparison of the Three Months Ended June 30, 2024 and 2023

Total revenue increased to $929.2 million for the three months ended June 30, 2024, from $595.3 million for the three months ended June 30, 2023, due to an increase in sales of BRUKINSA, tislelizumab, and 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:

The following table summarizes the components of revenue for the three months ended June 30, 2024 and 2023, respectively:

Three Months Ended

March 31, Changes

June 30, Changes

2024 2023 $ %

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Three Months Ended

March 31, Changes

June 30, Changes

2024 2023 $ %

9 unchanged sentences

Total product revenue $ 921,146 $ 553,745 $ 367,401 66.3 %

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.

Net product revenue increased 66.3% to $921.1 million for the three months ended June 30, 2024, compared to $553.7 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 second quarter of 2024 were positively impacted by sales of in-licensed products from Amgen in China and tislelizumab.

Global sales of BRUKINSA totaled $637.4 million in the second quarter, representing a 106.8% increase compared to the prior-year period;

sales of BRUKINSA totaled $479.4 million in the second quarter, compared to $223.5 million in the prior-year period, representing growth of 114.4%, as BRUKINSA gained share in treatment-naïve (“TN”) CLL, and is now the BTKi class leader in new-patient share in CLL.

In addition U.S.

sales were also positively impacted by timing of customer order patterns of approximately $15.0 million.

BRUKINSA sales in Europe totaled $81.4 million in the second quarter, compared to $26.3 million in the prior-year period, representing growth of 209.2%, driven by increased market share across all major markets, primarily in Germany, Italy, Spain, France and the UK.

BRUKINSA sales in China totaled $63.6 million, representing growth of 31.2%.

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).

BRUKINSA rest of world sales totaled $13.0 million in the second quarter, representing growth of 31.0% compared to the prior-year period.

Sales of tislelizumab in China totaled $158.3 million in the second quarter, compared to $149.5 million in the prior-year period, representing a 5.9% increase.

Sales of Amgen products in China totaled $90.1 million in the second quarter, compared to $49.6 million in the prior-year period, representing a 81.7% increase, driven primarily by increased XGEVA sales volume.

Collaboration revenue totaled $8.0 million for the three months ended June 30, 2024, primarily related to revenue generated under the Novartis broad markets marketing and promotion agreement.

Collaboration revenue totaled $41.5 million for the three months ended June 30, 2023, recognized from deferred revenue associated with the former Novartis tislelizumab and ociperlimab collaborations.

Cost of Sales

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.

Cost of sales increased to $138.1 million for the three months ended June 30, 2024 from $96.0 million for the three months ended June 30, 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 $783.0 million for the three months ended June 30, 2024, compared to $457.8 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 85.0% for the three months ended June 30, 2024, from 82.7% 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 $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:

Research and development expense increased by $31.7 million, or 7.5%, to $454.5 million for the three months ended June 30, 2024 from $422.8 million for the three months ended June 30, 2023.

The following table summarizes external clinical, external non-clinical and internal research and development expense for the three months ended June 30, 2024 and 2023, respectively:

Three Months Ended

March 31, Changes

June 30, Changes

2024 2023 $ %

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$ 382,509 $ 363,735 $ 18,774 5.2 %

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.

Our co-funding obligation for the development of the pipeline assets under the Amgen collaboration for the three months ended June 30, 2024 totaled $44.4 million, of which $22.5 million was recorded as R&D expense.

The remaining $21.9 million was recorded as a reduction of the R&D cost share liability.

1 unchanged sentence

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.

The increase in external research and development expenses in the second quarter was primarily attributable to an increase in Amgen co-development expense related to timing of study costs and higher development milestone fees.

Internal research and development expense increased modestly by $8.0 million, or 2.8%, to $295.7 million, and was primarily attributable to the expansion of our global development organization and our clinical and preclinical drug candidates, as well as our continued efforts to internalize research and clinical trial activities and control spend.

Selling, General and Administrative Expense

Three Months Ended

March 31, Changes

June 30, Changes

2024 2023 $ %

3 unchanged sentences

$ 363,922 $ 331,607 $ 32,315 9.7 %

Adjusted selling, general and administrative expense is intended to provide investors and others with information about our performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items.

Refer to Non-GAAP Financial Measures and Non-GAAP Reconciliation in this MD&A for more information about, and a detailed reconciliation of, these items.

Selling, general and administrative expense increased by $48.7 million, or 12.3%, to $443.7 million for the three months ended June 30, 2024, from $395.0 million for the three months ended June 30, 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 48.2% in the second quarter of 2024 compared to 71.3% 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 decrease gradually throughout 2024.

Interest Income, Net

Interest income, net decreased by $1.8 million, or 12.2%, to $13.2 million for the three months ended June 30, 2024, from $15.1 million for three months ended June 30, 2023.

The decrease in interest income, net, was primarily attributable to decreased interest income resulting from lower interest rates on our cash balance.

Interest expense remained flat as the increase in interest expense resulting from a higher debt balance was offset by higher interest capitalized related to Hopewell construction in process.

Other Expense, Net

Other expense, net was $12.0 million for the three months ended June 30, 2024, primarily due to foreign exchange losses.

For the three months ended June 30, 2023, other expense, net was $63.8 million, 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.

The decrease in other expense, net, was primarily due to reduced RMB-denominated cash held by U.S.

functional currency entities compared to the prior-year period.

Income Tax Expense

Income tax expense was $14.5 million for the three months ended June 30, 2024 as compared to $13.7 million for the three months ended June 30, 2023.

The income tax expense for the three months ended June 30, 2024 and 2023 was primarily attributable to current U.S.

tax expense determined after other special tax deductions and research and development tax credits, current Switzerland tax expense based on year to date earnings, and current China tax expense due to certain non-deductible expenses.

Comparison of the Six Months Ended June 30, 2024 and 2023

Total revenue increased to $1,680.8 million, or 61.1%, for the six months ended June 30, 2024, from $1,043.1 million for the six months ended June 30, 2023, 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.

The following table summarizes the components of revenue for the six months ended June 30, 2024 and 2023, respectively:

Six Months Ended

June 30, Changes

2024 2023 $ %

(dollars in thousands)

Product revenue $ 1,668,064 $ 964,036 $ 704,028 73.0 %

Collaboration revenue:

Research and development service revenue — 20,380 (20,380) (100.0) %

Right to access intellectual property revenue — 52,497 (52,497) (100.0) %

Other 12,754 6,149 6,605 107.4 %

Total collaboration revenue 12,754 79,026 (66,272) (83.9) %

Total Revenue $ 1,680,818 $ 1,043,062 $ 637,756 61.1 %

Net product revenues consisted of the following:

Six Months Ended

June 30, Changes

2024 2023 $ %

(dollars in thousands)

$ 1,125,914 $ 519,658 $ 606,256 116.7 %

303,687 264,314 39,373 14.9 %

98,435 44,165 54,270 122.9 %

33,497 25,524 7,973 31.2 %

30,047 15,995 14,052 87.9 %

28,205 27,764 441 1.6 %

21,366 45,005 (23,639) (52.5) %

Other 26,913 21,611 5,302 24.5 %

Total product revenue $ 1,668,064 $ 964,036 $ 704,028 73.0 %

Net product revenue increased 73.0% to $1,668.1 million for the six months ended June 30, 2024, compared to $964.0 million in the prior-year period, primarily due to increased sales of BRUKINSA in the U.S.

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 $1,125.9 million in the six months ended June 30, 2024, representing a 116.7% increase compared to the prior-year period.

sales of BRUKINSA totaled $830.8 million in the six months ended June 30, 2024, compared to $362.3 million in the prior-year period, representing growth of 129.3%.

sales continued to accelerate in the period, as BRUKINSA gained share in TN CLL and emerged as the BTKi class leader in new-patient share in CLL.

BRUKINSA sales in Europe totaled $148.2 million in the six months ended June 30, 2024, representing growth of 223.5% compared to the prior-year period, driven by continued gains in market share across all major markets.

Sales of tislelizumab in China totaled $303.5 million in the six months ended June 30, 2024, compared to $264.3 million representing a 14.8% increase compared to the prior-year period.

In the six months ended June 30, 2024, 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.

Sales of Amgen products in China totaled $162.0 million in the six months ended June 30, 2024, compared to $85.7 million in the prior-year period, driven primarily by increased XGEVA sales volume.

Collaboration revenue totaled $12.8 million for the six months ended June 30, 2024, primarily related to revenue generated under the Novartis broad markets marketing and promotion agreement.

Collaboration revenue totaled $79.0 million for the six months ended June 30, 2023, recognized from deferred revenue associated with the former Novartis tislelizumab and ociperlimab collaborations.

Cost of Sales

Cost of sales increased to $263.1 million for the six months ended June 30, 2024 from $177.8 million for the six months ended June 30, 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 product sales increased to $1,405.0 million for the six months ended June 30, 2024, compared to $786.3 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 84.2% for the six months ended June 30, 2024, from 81.6% in the comparable period of the prior year.

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

Research and Development Expense

Research and development expense increased by $83.8 million, or 10.1%, to $915.1 million for the six months ended June 30, 2024 from $831.3 million for the six months ended June 30, 2023.

The following table summarizes external clinical, external non-clinical and internal research and development expense for the six months ended June 30, 2024 and 2023, respectively:

Six Months Ended

June 30, Changes

2024 2023 $ %

(dollars in thousands)

External research and development expense:

Cost of development programs $ 247,633 $ 258,219 $ (10,586) (4.1) %

Upfront license and development milestone fees 46,528 — 46,528 NM

Amgen co-development expense 1

35,966 23,274 12,692 54.5 %

Total external research and development expenses 330,127 281,493 48,634 17.3 %

Internal research and development expenses 584,977 549,855 35,122 6.4 %

Total research and development expenses $ 915,104 $ 831,348 $ 83,756 10.1 %

Adjusted research and development expenses 2

$ 787,949 $ 725,431 $ 62,518 8.6 %

Our co-funding obligation for the development of the pipeline assets under the Amgen collaboration for the six months ended June 30, 2024 totaled $71.0 million, of which $36.0 million was recorded as R&D expense.

The remaining $35.0 million was recorded as a reduction of the R&D cost share liability.

Adjusted research and development expense is intended to provide investors and others with information about our performance without the effect of items that, by their nature, tend to obscure core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items.

Refer to Non-GAAP Financial Measures and Non-GAAP Reconciliation in this MD&A for more information about, and a detailed reconciliation of, these items.

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 in external research and development expenses in the six months ended June 30, 2024 was primarily attributable to higher development milestone fees and increases in Amgen co-development expense, partially offset by lower external clinical trial costs as certain programs wind down and we continue efforts to internalize research and clinical trial activities.

Internal research and development expense increased $35.1 million, or 6.4%, to $585.0 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.

Selling, General and Administrative Expense

Six Months Ended

June 30, Changes

2024 2023 $ %

(dollars in thousands)

Selling, general and administrative expenses $ 871,156 $ 723,533 $ 147,623 20.4 %

Adjusted selling, general and administrative expenses 1

$ 736,068 $ 614,761 $ 121,307 19.7 %

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 $147.6 million, or 20.4%, to $871.2 million, for the six months ended June 30, 2024, from $723.5 million for the six months ended June 30, 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.

Selling, general and administrative expenses as a percentage of product sales were 52.2% for the six months ended June 30, 2024 compared to 75.1% in the prior-year period.

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.

Interest income, net decreased by $1.7 million, or 5.5%, to $29.4 million for the six months ended June 30, 2024, from $31.1 million for the six months ended June 30, 2023.

The decrease in interest income was primarily attributable to lower interest rates earned on our cash and cash equivalents.

Interest expense remained flat as the increase in interest expense resulting from a higher debt balance was offset by higher interest capitalized related to Hopewell construction in process.

Other Expense, Net

Other expense, net decreased to $10.2 million for the six months ended June 30, 2024, from $45.5 million for the six months ended June 30, 2023.

The decrease in expense was primarily related 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.

Income Tax Expense

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.

Income tax expense decreased to $22.2 million for the six months ended June 30, 2024, from $25.2 million for the six months ended June 30, 2023.

The income tax expense for the six months ended June 30, 2024 and June 30, 2023 was primarily attributable to current U.S.

tax expense determined after other special deductions and research and development tax credits, current Switzerland tax expense based on year to date earnings, and current China tax expense due to certain non-deductible expenses.

Non-GAAP Reconciliation

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

( in thousands)

20 unchanged sentences

Adjusted operating expenses $ 746,431 $ 695,342 $ 1,524,017 $ 1,340,192

Reconciliation of GAAP to adjusted loss from operations:

Reconciliation of GAAP to adjusted income (loss) from operations:

GAAP loss from operations $ (107,161) $ (318,715) $ (368,509) $ (689,973)

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Amortization of intangibles 1,177 1,028 2,360 2,014

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

Adjusted income (loss) from operations $ 48,464 $ (193,051) $ (98,877) $ (468,910)

Liquidity and Capital Resources

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,

The following table represents our cash and debt balances as of June 30, 2024 and December 31, 2023:

June 30, December 31,

(dollars in thousands)

Cash, cash equivalents and restricted cash $ 2,617,931 $ 3,185,984

Short-term investments $ — $ 2,600

Total debt $ 1,036,928 $ 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 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.

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 GAAP 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 $120.4 million and $371.6 million for the three and six months ended June 30, 2024, respectively, and net losses of $381.1 million and $729.6 million for three and six months ended June 30, 2023, respectively.

As of June 30, 2024, we had an accumulated deficit of $8.3 billion.

To date, we have financed our operations principally through proceeds from public and private offerings of our common stock (including ADSs), proceeds from debt, and 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 June 30, 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.

of $1.0 billion at June 30, 2024.

The majority of those debt obligations, or approximately $851.7 million, owed by BeiGene, Ltd., have due dates within the next 12 months.

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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

As of June 30, 2024, the Company had cash remaining related to the STAR Offering proceeds of $0.9 billion.

The following table provides information regarding our cash flows for the six months ended June 30, 2024 and 2023:

Six Months Ended

(dollars in thousands)

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Net cash (used in) provided by investing activities (320,863) 308,863

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

Net cash provided by financing activities 185,310 146,212

Net effect of foreign exchange rate changes (28,340) (50,873)

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

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.

Operating activities used $404.2 million of cash in the six months ended June 30, 2024, principally from our net loss of $371.6 million and an increase in our net operating assets and liabilities of $268.8 million, partially offset by non-cash charges of $236.2 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 driven by share-based compensation expense, depreciation and amortization expense, offset by amortization of the research and development cost share liability.

Operating activities used $857.7 million of cash in the six months ended June 30, 2023, principally from our net loss of $729.6 million and an increase in our net operating assets and liabilities of $329.4 million, partially offset by non-cash charges of $201.3 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 share-based compensation expense, depreciation and amortization expense, offset by amortization of the research and development cost share liability.

Net loss for the three months ended June 30, 2023 includes $63.8 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.

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 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.

Investing activities used $320.9 million of cash in the six months ended June 30, 2024, consisting of capital expenditures of $266.5 million, purchase of IPR&D assets of $31.8 million, purchase of intangible assets of $4.7 million, $20.5 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 $308.9 million of cash in the six months ended June 30, 2023, consisting of sales and maturities of investment securities of $567.5 million, partially offset by capital expenditures of $247.1 million, and $11.6 million in purchases of investment securities.

Financing Activities

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.

Financing activities provided $185.3 million of cash in the six months ended June 30, 2024, consisting primarily of $9.1 million of net proceeds from long-term loans, $324.4 million of proceeds from short-term loans and $20.4 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 $14.0 million in repayments of long-term loans and $157.5 million in repayments of short-term bank 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 $851.7 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.

Financing activities provided $146.2 million of cash in the six months ended June 30, 2023, consisting primarily of $15.8 million of net proceeds from long-term bank loans, $161.8 million of proceeds from short-term bank loans and $35.2 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 $66.6 million in repayment of short-term bank loans.

Effects of Exchange Rates on Cash

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

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.

dollar negatively impacted ending cash by $28.3 million in the six months ended June 30, 2024, compared to a negative impact of $50.9 million in the prior-year period.

Future Liquidity and Material Cash Requirements

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Contractual and Other Obligations

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

The following table summarizes our significant contractual obligations as of the payment due date by period as of June 30, 2024:

Payments Due by Period

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Purchase Commitments

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.

As of June 30, 2024, non-cancellable purchase commitments amounted to $120.4 million, of which $28.8 million related to minimum purchase requirements for supply purchased from contract manufacturers and $91.5 million related to binding purchase obligations of inventory from Amgen.

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

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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.

As of June 30, 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.

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

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

As of June 30, 2024, our remaining co-development funding commitment was $412.6 million.

Funding Commitment

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

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.

As of June 30, 2024, our remaining capital commitment was $8.2 million and is expected to be paid from time to time over the investment period.

Capital Commitments

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.

We had capital commitments amounting to $62.6 million for the acquisition of property, plant and equipment as of June 30, 2024, related to various facilities across the globe, including the manufacturing and clinical R&D campus in Hopewell, New Jersey.

Critical Accounting Policies and Significant Judgments and Estimates

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Our actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting policies as of and for the three months ended March 31, 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.

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