What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-12 compared with 2024-08-07 · 141 added, 148 removed, 296 unchanged (49% of the section changed)

50 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 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.

BeiGene’s strong third-quarter results underscore the Company’s global oncology leadership driven by our unique R&D and clinical advantages as well as the tremendous launch trajectory of BRUKINSA.

In the U.S., BRUKINSA, with the broadest label of any BTK inhibitor, is now the leader in new patient starts in both frontline and relapsed/refractory (R/R) CLL in addition to all other approved B-cell malignancies.

As the cornerstone of our hematology franchise, BRUKINSA shows tremendous promise for patients as a monotherapy and as a backbone for best-in-class combinations with our late-stage BCL2 inhibitor, sonrotoclax, and BTK degrader BGB-16673.

In the solid tumor area, we’re expanding access to our PD-1 inhibitor, TEVIMBRA, for patients worldwide and building global commercial capabilities to support our prolific pipeline of exciting potential cancer medicines.

We are laying the foundation for future franchises in breast, lung, and gastrointestinal cancers across three signature platform technologies including multi-specific antibodies, protein degraders, and antibody-drug conjugates.

This progress not only highlights our achievements but also emphasizes our commitment to positively impacting patients' lives globally, fostering hope and advancements in the fight against cancer.

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

• Continued financial progress with $1 billion in quarterly total revenue, reduced GAAP loss and second consecutive quarter of positive non-GAAP operating income;

• Strengthened franchise leadership in chronic lymphocytic leukemia (CLL) with foundational therapy BRUKINSA, global revenue of $690 million, rapidly progressing pivotal programs for late-stage hematology pipeline;

• Expanded oncology pipeline with four new molecular entities (NMEs) entering the clinic this quarter (eight year-to-date);

reaffirmed on track to achieve goal to enter 10+ by end of year;

in-house innovative “Fast to Proof of Concept” strategy quickly explores the clinical potential of molecules in parallel with industry leading speed of execution.

Recent Developments

Recent Business Developments

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.

On October 21, 2024, we announced that the Committee for Medicinal Products for Human Use of the European Medicines Agency issued positive opinions recommending an extended authorization for TEVIMBRA in gastric or gastroesophageal junction adenocarcinoma and esophageal squamous cell carcinoma (“ESCC”).

On October 4, 2024, we announced that TEVIMBRA ® (tislelizumab-jsgr) is now available for commercial sale in the U.S.

for the treatment of adult patients with unresectable or metastatic ESCC after prior systemic chemotherapy that did not include a PD-(L)1 inhibitor, and subsequently dosed our first TEVIMBRA patient in the U.S.

On September 17, 2024, we announced that the Israeli Ministry of Health approved TEVIMBRA as monotherapy for the treatment of adult patients with unresectable or metastatic oesophageal squamous cell carcinoma after prior systemic chemotherapy.

On August 26, 2024, we announced that the FDA granted Fast Track Designation to BGB-16673, an orally available investigational BTK targeting chimeric degradation activation compound, for adult patients with relapsed or refractory CLL or

small lymphocytic lymphoma who have been previously treated with at least two prior lines of therapy, including BTK inhibitor and BCL2 inhibitor.

Results of Operations

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

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

Three Months Ended Nine Months Ended

September 30, Change September 30, Change

2024 2023 $ % 2024 2023 $ %

8 unchanged sentences

Selling, general and administrative 455,223 365,708 89,515 24.5 % 1,326,379 1,089,616 236,763 21.7 %

Amortization of intangible assets — 188 (188) (100.0) % — 375 (375) (100.0) %

Total operating expenses 951,402 818,967 132,435 16.2 % 2,737,662 2,374,223 363,439 15.3 %

1 unchanged sentence

Interest income, net 10,643 26,649 (16,006) (60.1) % 40,028 57,735 (17,707) (30.7) %

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) %

Other income, net 11,318 336,657 (325,339) (96.6) % 1,096 291,142 (290,046) (99.6) %

(Loss) income before income taxes (98,304) 229,338 (327,642) (142.9) % (447,650) (475,064) 27,414 (5.8) %

Income tax expense 23,046 13,925 9,121 65.5 % 45,255 39,091 6,164 15.8 %

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

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.

Net (loss) income $ (121,350) $ 215,413 $ (336,763) (156.3) % $ (492,905) $ (514,155) $ 21,250 (4.1) %

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

Total revenue increased to $1,001.6 million for the three months ended September 30, 2024, from $781.3 million for the three months ended September 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 June 30, 2024 and 2023, respectively:

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

Three Months Ended

June 30, Changes

September 30, Changes

2024 2023 $ %

4 unchanged sentences

Right to access intellectual property revenue — 51,978 (51,978) (100.0) %

Material rights revenue — 71,980 (71,980) (100.0) %

Other 8,152 3,008 5,144 171.0 %

1 unchanged sentence

Total Revenue $ 1,001,599 $ 781,308 $ 220,291 28.2 %

Net product revenues consisted of the following:

Net product revenue consisted of the following:

Three Months Ended

June 30, Changes

September 30, Changes

2024 2023 $ %

9 unchanged sentences

Total product revenue $ 993,447 $ 595,290 $ 398,157 66.9 %

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 $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 $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.

Net product revenue increased 66.9% to $993.4 million for the three months ended September 30, 2024, compared to $595.3 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 third quarter of 2024 were positively impacted by sales of in-licensed products from Amgen in China and tislelizumab.

Global revenue for BRUKINSA totaled $690.3 million in the third quarter, representing a 93.0% increase compared to the prior-year period;

revenue for BRUKINSA totaled $503.7 million in the third quarter, compared to $270.1 million in the prior-year period, representing growth of 86.5%, due to quarter over quarter demand growth coming primarily from expanded use in CLL as BRUKINSA continued to gain share in CLL new patient starts.

BRUKINSA revenue in Europe totaled $97.3 million in the third quarter, compared to $30.7 million in the prior-year period, representing growth of 217.2%, driven by increased market share across all major markets, including Germany, Italy, Spain, France and the UK.

BRUKINSA revenue in China totaled $67.8 million, representing growth of 43.0%.

BRUKINSA rest of world revenue totaled $21.4 million in the third quarter, representing growth of 125.0% compared to the prior-year period.

Revenue for tislelizumab in China totaled $162.9 million in the third quarter, compared to $144.4 million in the prior-year period, representing a 12.8% increase.

Certain additional tislelizumab indications are eligible for 2025 NRDL inclusion.

We do not believe price reductions resulting from inclusion, if any, will be significant.

Revenue for Amgen products in China totaled $101.6 million in the third quarter, compared to $50.4 million in the prior-year period, representing a 101.5% increase, driven primarily by increased XGEVA sales volume.

Collaboration revenue totaled $8.2 million for the three months ended September 30, 2024, primarily related to revenue generated under the Novartis broad markets marketing and promotion agreement.

Collaboration revenue totaled $186.0 million for the three months ended September 30, 2023, recognized from deferred revenue associated with the former Novartis tislelizumab and ociperlimab collaborations.

Gross margin on global product sales increased to $823.0 million for the three months ended September 30, 2024, compared to $499.0 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 decreased to 82.8% for the three months ended September 30, 2024, from 83.8% in the comparable period of the prior year.

The decrease is the result of accelerated depreciation expense of $16.9 million resulting from the move to more efficient, larger scale production lines for tislelizumab, with a similar amount to be incurred in the fourth quarter related to this move.

On an adjusted basis, gross margin as a percentage of product sales increased to 84.9%, from 84.4% in the comparable period of the prior year 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 $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:

Research and development expense increased by $42.9 million, or 9.5%, to $496.2 million for the three months ended September 30, 2024 from $453.3 million for the three months ended September 30, 2023.

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

Three Months Ended

June 30, Changes

September 30, Changes

2024 2023 $ %

2 unchanged sentences

Cost of development programs $ 149,026 $ 126,301 $ 22,725 18.0 %

Upfront license and development milestone fees 11,500 — 11,500 NM

Upfront license and development milestone fees 5,000 15,000 (10,000) (66.7) %

Amgen co-development expense 1

5 unchanged sentences

$ 405,545 $ 396,146 $ 9,399 2.4 %

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.

Our co-funding obligation for the development of the pipeline assets under the Amgen collaboration for the three months ended September 30, 2024 totaled $33.6 million, of which $17.0 million was recorded as R&D expense.

The remaining $16.6 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 second quarter was primarily attributable to an increase in Amgen co-development expense related to timing of study costs and higher development milestone fees.

The increase in external research and development expenses in the third quarter was primarily attributable to an increase in external costs of development programs primarily due to advancing preclinical programs into the clinic and early clinical programs into late stage, slightly offset by lower development upfront and milestone fees.

Internal research and development expense increased modestly by $29.0 million, or 9.8%, to $325.1 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.

Included within internal research and development expense for the three months ended September 30, 2024 is $24.9 million of accelerated depreciation expense related to the move of clinical production to larger, more efficient production lines with approximately $2.0 million remaining to be incurred in the fourth quarter.

Selling, General and Administrative Expense

Three Months Ended

June 30, Changes

September 30, Changes

2024 2023 $ %

5 unchanged sentences

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.

Selling, general and administrative expense increased by $89.5 million, or 24.5%, to $455.2 million for the three months ended September 30, 2024, from $365.7 million for the three months ended September 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.

Selling, general and administrative expenses as a percentage of product sales were 45.8% in the third quarter of 2024 compared to 61.4% in the prior-year period.

We expect continued investment growth in selling and marketing expenses as our product sales increase.

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.

Interest income, net decreased by $16.0 million, or 60.1%, to $10.6 million for the three months ended September 30, 2024, from $26.6 million for three months ended September 30, 2023.

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

Interest expense increased resulting from a higher debt balance and lower interest capitalized related to Hopewell construction in process.

Other Income, Net

Other income, net was $11.3 million for the three months ended September 30, 2024, primarily due to foreign exchange gains.

For the three months ended September 30, 2023, other income, net was $336.7 million, 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.

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.

functional currency subsidiaries and unrealized losses on our equity investments.

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.

Income tax expense was $23.0 million for the three months ended September 30, 2024 as compared to $13.9 million for the three months ended September 30, 2023.

The income tax expense for the three months ended September 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

Comparison of the Nine Months Ended September 30, 2024 and 2023

Total revenue increased to $2,682.4 million, or 47.0%, for the nine months ended September 30, 2024, from $1,824.4 million for the nine months ended September 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 nine months ended September 30, 2024 and 2023, respectively:

Nine Months Ended

September 30, Changes

2024 2023 $ %

4 unchanged sentences

Right to access intellectual property revenue — 104,475 (104,475) (100.0) %

Material rights revenue — 71,980 (71,980) (100.0) %

Other 20,906 9,157 11,749 128.3 %

1 unchanged sentence

Total Revenue $ 2,682,417 $ 1,824,370 $ 858,047 47.0 %

Net product revenues consisted of the following:

Six Months Ended

June 30, Changes

Net product revenue consisted of the following:

Nine Months Ended

September 30, Changes

2024 2023 $ %

9 unchanged sentences

Total product revenue $ 2,661,511 $ 1,559,326 $ 1,102,185 70.7 %

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.

Net product revenue increased 70.7% to $2,661.5 million for the nine months ended September 30, 2024, compared to $1,559.3 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.

Global revenue for BRUKINSA totaled $1,816.2 million in the nine months ended September 30, 2024, representing a 107.0% increase compared to the prior-year period.

revenue for BRUKINSA totaled $1,334.6 million in the nine months ended September 30, 2024, compared to $632.4 million in the prior-year period, representing growth of 111.0%.

volume growth continued to accelerate in the period due primarily to demand growth coming from expanded use in CLL as BRUKINSA continued to gain share in CLL new patient starts.

BRUKINSA revenue in Europe totaled $245.5 million in the nine months ended September 30, 2024, representing growth of 221.0% compared to the prior-year period, driven by continued gains in market share across all major markets.

Revenue for tislelizumab in China totaled $466.4 million in the nine months ended September 30, 2024, compared to $408.7 million representing a 14.1% increase compared to the prior-year period.

In the nine months ended September 30, 2024, new patient demand volume resulting from broader reimbursement and further expansion of our salesforce and hospital listings continued to drive increased market penetration and market share for tislelizumab.

Certain additional tislelizumab indications are eligible for 2025 NRDL inclusion.

We do not believe price reductions resulting from inclusion, if any, will be significant.

Revenue for Amgen products in China totaled $263.6 million in the nine months ended September 30, 2024, compared to $136.1 million in the prior-year period, driven primarily by increased XGEVA demand since the NRDL inclusion.

Collaboration revenue totaled $20.9 million for the nine months ended September 30, 2024, primarily related to revenue generated under the Novartis broad markets marketing and promotion agreement.

Collaboration revenue totaled $265.0 million for the nine months ended September 30, 2023, recognized from deferred revenue associated with the former Novartis tislelizumab and ociperlimab collaborations.

Gross margin on product sales increased to $2,228.0 million for the nine months ended September 30, 2024, compared to $1,285.2 million in the prior-year period, primarily due to increased product revenue in the current year period.

On a GAAP basis, gross margin as a percentage of product sales increased to 83.7% for the nine months ended September 30, 2024, from 82.4% 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, slightly offset by the impact of accelerated depreciation expense of $16.9 million resulting from the move to more efficient, larger scale production lines for tislelizumab, with a similar amount to be incurred in the fourth quarter related to this move.

On an adjusted basis, which does not include the accelerated depreciation, gross margin as a percentage of product sales increased to 84.8% for the nine months ended September 30, 2024, from 83.0% in the comparable period of the prior year.

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

Research and development expense increased by $126.7 million, or 9.9%, to $1,411.3 million for the nine months ended September 30, 2024 from $1,284.6 million for the nine months ended September 30, 2023.

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

Nine Months Ended

September 30, Changes

2024 2023 $ %

2 unchanged sentences

Cost of development programs $ 396,659 $ 384,520 $ 12,139 3.2 %

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

Upfront license and development milestone fees 51,528 15,000 36,528 243.5 %

Amgen co-development expense 1

5 unchanged sentences

$ 1,193,494 $ 1,121,577 $ 71,917 6.4 %

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.

Our co-funding obligation for the development of the pipeline assets under the Amgen collaboration for the nine months ended September 30, 2024 totaled $104.6 million, of which $53.0 million was recorded as R&D expense.

The remaining $51.6 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 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.

The increase in external research and development expenses in the nine months ended September 30, 2024 was primarily attributable to higher development milestone fees, increases in Amgen co-development expense, and higher external clinical trial costs.

Internal research and development expense increased $64.1 million, or 7.6%, to $910.1 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.

Included within internal research and development expenses for the nine months ended September 30, 2024 is $24.9 million of accelerated depreciation expense related to the move of clinical production to larger, more efficient production lines with approximately $2.0 million remaining to be incurred in the fourth quarter.

Selling, General and Administrative Expense

Six Months Ended

June 30, Changes

Nine Months Ended

September 30, Changes

2024 2023 $ %

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

Selling, general and administrative expense increased by $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.

Selling, general and administrative expense increased by $236.8 million, or 21.7%, to $1,326.4 million, for the nine months ended September 30, 2024, from $1,089.6 million for the nine months ended September 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 52.2% for the six months ended June 30, 2024 compared to 75.1% in the prior-year period.

Selling, general and administrative expenses as a percentage of product sales were 49.8% for the nine months ended September 30, 2024 compared to 69.9% in the prior-year period.

We expect continued investment growth in selling and marketing expenses as our product sales increase.

Interest Income, Net

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.

Interest income, net decreased by $17.7 million, or 30.7%, to $40.0 million for the nine months ended September 30, 2024, from $57.7 million for the nine months ended September 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.

Interest expense increased resulting from a higher debt balance, slightly offset by an increase in interest capitalization related to Hopewell construction.

Other Income, Net

Other income, net was $1.1 million for the nine months ended September 30, 2024, primarily due to foreign exchange gains.

For the nine months ended September 30, 2023, other income, net was $291.1 million, 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.

Income Tax Expense

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.

Income tax expense increased to $45.3 million for the nine months ended September 30, 2024, from $39.1 million for the nine months ended September 30, 2023.

The income tax expense for the nine months ended September 30, 2024 and 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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

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Depreciation 7,475 3,959 16,606 13,990

Amortization of intangibles 78 1,287 78 1,662

Adjusted selling, general and administrative $ 380,737 $ 308,493 $ 1,116,805 $ 923,254

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Liquidity and Capital Resources

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

June 30, December 31,

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

September 30, December 31,

(dollars in thousands)

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Total debt $ 1,051,316 $ 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 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.

Based on our current operating plan, we expect that our existing cash and cash equivalents as of September 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 June 30, 2024.

of $1.1 billion at September 30, 2024.

The majority of those debt obligations, or approximately $863.8 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 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

As of September 30, 2024, the Company had cash remaining related to the STAR Offering proceeds of $0.8 billion.

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

Nine Months Ended

September 30,

(dollars in thousands)

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Operating Activities

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

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.

Cash used in operating activities improved $720.0 million in the nine months ended September 30, 2024, versus the prior year period due to our significantly improved revenue and $698.6 million of increase in gross margin in the current year period, offset by continued funding of our development pipeline, commercial operations and increasing working capital to support our global expansion.

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 $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.

Investing activities used $454.7 million of cash in the nine months ended September 30, 2024, compared to $122.6 million of cash provided in the prior year period due primarily to a decrease in proceeds from sales and maturities 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 $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.

Financing activities provided $198.0 million of cash in the nine months ended September 30, 2024, compared to $69.4 million in the prior year period due primarily to higher proceeds from short-term bank loans in the current year period.

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 $863.8 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 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 $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.

dollar positively impacted ending cash by $8.0 thousand in the nine months ended September 30, 2024, compared to a negative impact of $50.3 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.

Until such time, if ever, as we can generate sustained positive operating cash flow, we will continue to use existing cash and net proceeds from short-term financing (see Financing Activities above) to fund our capital expansion needs and business development goals.

We may be required to finance our incremental cash needs through a combination of equity offerings, new debt financings, collaboration agreements, strategic alliances, licensing arrangements, government grants, and other available sources.

Under the rules of the U.S.

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Furthermore, our ability to raise additional capital may be adversely impacted by worsening global economic conditions, with disruptions to, and volatility in, the credit and financial markets in the U.S.

and worldwide, resulting from the effects of inflationary pressures, recent and potential future bank failures and otherwise.

and worldwide, resulting from the effects of inflationary pressures, previous and potential future bank failures and otherwise.

If these conditions persist and deepen, we could experience an inability to access additional capital or our liquidity could otherwise be impacted, which could in the future negatively affect our capacity for certain corporate development transactions or our ability to make other important, opportunistic investments.

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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 June 30, 2024:

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

Payments Due by Period

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Purchase Commitments

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.

As of September 30, 2024, non-cancellable purchase commitments amounted to $155.9 million, of which $30.0 million related to minimum purchase requirements for supply purchased from contract manufacturers and $125.9 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 June 30, 2024, we were in compliance with all covenants of our material debt agreements.

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

As of September 30, 2024, our remaining co-development funding commitment was $379.1 million.

Funding Commitment

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

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.

As of September 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 $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.

We had capital commitments amounting to $66.2 million for the acquisition of property, plant and equipment as of September 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 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.

There have been no material changes to our critical accounting policies as of and for the three and nine months ended September 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 nine months ended September 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