BeOne Medicines Ltd. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Cautionary Note Regarding Forward-Looking Statements You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements (unaudited) and related notes included in the section of this Quarterly Report on Form 10-Q (this “Quarterly Report”), titled “Part I – Item 1 – Financial Statements.” This Quarterly Report contains forward-looking statements t hat involve substantial risks and uncertainties. These forward-looking statements are based on management’s current expectations and projections about future events and trends that may affect the business, financial condition, and operating results. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. Forward-looking statements often include words such as “aim,” “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these terms or other similar expressions. These forward-looking statements include, among other things, statements about: our ability to successfully commercialize our approved medicines and to obtain approvals in additional indications and territories for our medicines; our ability to successfully develop and commercialize our in-licensed medicines and drug candidates and any other medicines and drug candidates we may in-license; our ability to further develop sales and marketing capabilities and launch and commercialize new medicines, if approved; our ability to maintain and expand regulatory approvals for our medicines and drug candidates, if approved; the pricing and reimbursement of our medicines and drug candidates, if approved; the initiation, timing, progress and results of our preclinical studies and clinical trials and our research and development programs; our ability to advance our drug candidates into, and successfully complete, clinical trials and obtain regulatory approvals; our reliance on the success of our clinical stage drug candidates; our plans, expected milestones and the timing or likelihood of regulatory filings and approvals; the implementation of our business model, strategic plans for our business, medicines, drug candidates and technology; the scope of protection we (or our licensors) are able to establish and maintain for intellectual property rights covering our medicines, drug candidates and technology; our ability to operate our business without infringing, misappropriating or otherwise violating the intellectual property rights and proprietary technology of third parties; 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 (“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; the potential benefits of strategic collaboration and licensing agreements and our ability to enter into and maintain strategic arrangements; our construction and operation of independent production facilities for small molecule medicines and large molecule biologics, as well as clinical R&D facilities, to support the global demand for both commercial and clinical supply; our reliance on third parties to conduct drug development, manufacturing and other services; our ability to manufacture and supply, or have manufactured and supplied, drug candidates for clinical development and medicines for commercial sale; the rate and degree of market access and acceptance of our medicines and drug candidates, if approved; developments relating to our competitors and our industry, including competing therapies; the size of the potential markets for our medicines and drug candidates and our ability to serve those markets; our ability to effectively manage our growth; our ability to attract and retain qualified employees and key personnel; statements regarding future revenue, key milestones, expenses, capital expenditures, capital requirements and share performance; and the future trading price of our ADSs, ordinary shares and RMB Shares, and impact of securities analysts’ reports on these prices. These statements involve risks and uncertainties, including those that are described in “Part II—Item 1A—Risk Factors” of this Quarterly Report, that may cause actual future events or results to differ materially from those expected. Given these uncertainties, you should not place undue reliance on these forward-looking statements. We do not assume any obligation to update any forward-looking statements where as a result of new information or otherwise, except as required by law. This Quarterly Report includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, you are cautioned not to give undue weight to this information. Unless the context requires otherwise, in this Quarterly Report, the terms “BeiGene,” the “Company,” “we,” “us” and “our” refer to BeiGene, Ltd., a Cayman Islands holding company with operations conducted by its subsidiaries, and its subsidiaries, on a consolidated basis. 24 Table of Contents Non-GAAP Financial Measures We provide certain financial measures that are not defined under accounting principles generally accepted in the United States of America (“GAAP”), commonly referred to as non-GAAP financial measures, including Adjusted Operating Expenses, Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss), Adjusted Earnings Per Share and certain other non-GAAP measures, each of which include adjustments to GAAP figures. These non-GAAP measures are intended to provide additional information on our operating performance. Adjustments to our GAAP figures exclude, as applicable, non-cash items such as share-based compensation, depreciation and amortization. Certain other special items or substantive events may also be included in the non-GAAP adjustments periodically when their magnitude is significant within the periods incurred. Non-GAAP adjustments are tax effected to the extent there is US GAAP current tax expense. The Company currently records a valuation allowance on its net deferred tax assets, so there is no net impact recorded for deferred tax effects. We maintain an established non-GAAP policy that guides the determination of what items may be excluded in non-GAAP financial measures. We believe that these non-GAAP measures, when considered together with the GAAP figures, can enhance an overall understanding of our operating performance. The non-GAAP financial measures are included with the intent of providing investors with a more complete understanding of our historical and expected financial results and trends and to facilitate comparisons between periods and with respect to projected information. In addition, these non-GAAP financial measures are among the indicators BeiGene’s management uses for planning and forecasting purposes and measuring our performance. These non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, GAAP financial measures. The non-GAAP financial measures used by BeiGene may be calculated differently from, and therefore may not be comparable to, non-GAAP financial measures used by other companies. Overview We achieved GAAP profitability in the first quarter of 2025 with continued global revenue growth. In the U.S., BRUKINSA remains the leader in new CLL patient starts across all lines of therapy, and for the first time has become the overall BTKi market share leader. We’ve made progress across our late-stage hematology and solid tumor pipelines, with multiple proof-of-concept readouts expected this year across our broad portfolio of antibody-drug conjugates, multispecific antibodies and targeted protein degraders. Key highlights for the first quarter of 2025 are as follows: • First quarter 2025 total revenues increased 49% to $1.1 billion with BRUKINSA® (zanubrutinib) global sales increasing 62%to $792 million on strong demand growth versus first quarter 2024 • Achieved GAAP profitability and significantly improved operating cash flow • Advanced late-stage hematology and solid tumor pipelines with plan to host Investor R&D Day on June 26 • Secured shareholder approval to rename the Company to BeOne Medicines Ltd. and redomicile to Switzerland Recent Developments Recent Business Developments On April 29, 2025, we announced that the U.S. Patent and Trademark Office rendered a Final Written Decision invalidating all claims of Pharmacyclics LLC’s U.S. Patent No. 11,672,803 (the “‘803 patent”) that were challenged by BeiGene in a post-grant review (“PGR”) proceeding. On April 3, 2025, we announced the discontinuation of our clinical development program for ociperlimab (BGB-A1217), an anti-TIGIT antibody, as a potential treatment for lung cancer. On March 31, 2025, we announced the Committee for Medicinal Products for Human Use of the European Medicines Agency issued a positive opinion recommending approval of TEVIMBRA ® (tislelizumab), in combination with etoposide and platinum chemotherapy, as a first-line treatment for adult patients with extensive-stage small cell lung cancer. On March 4, 2025, we announced the U.S. Food and Drug Administration has approved TEVIMBRA (tislelizumab-jsgr), in combination with platinum-containing chemotherapy, for the first-line treatment of adults with unresectable or metastatic esophageal squamous cell carcinoma whose tumors express PD-L1 (≥1). 25 Table of Contents Results of Operations The following table summarizes our results of operations for the three months ended March 31, 2025 and 2024: Three Months Ended March 31, Change 2025 2024 $ % (dollars in thousands) Revenues Product revenue, net $ 1,108,530 $ 746,918 $ 361,612 48.4 % Collaboration revenue 8,749 4,734 4,015 84.8 % Total revenues 1,117,279 751,652 365,627 48.6 % Cost of sales - product 165,002 124,935 40,067 32.1 % Gross profit 952,277 626,717 325,560 51.9 % Operating expenses Research and development 481,887 460,638 21,249 4.6 % Selling, general and administrative 459,288 427,427 31,861 7.5 % Total operating expenses 941,175 888,065 53,110 6.0 % Income (loss) from operations 11,102 (261,348) 272,450 (104.2) % Interest income, net 5,848 16,160 (10,312) (63.8) % Other income, net 3,950 1,762 2,188 124.2 % Income (loss) before income taxes 20,900 (243,426) 264,326 (108.6) % Income tax expense 19,630 7,724 11,906 154.1 % Net income (loss) $ 1,270 $ (251,150) $ 252,420 (100.5) % Comparison of the Three Months Ended March 31, 2025 and 2024 Revenue Total revenue increased to $1,117.3 million for the three months ended March 31, 2025, from $751.7 million for the three months ended March 31, 2024, due to increased sales of BRUKINSA, TEVIMBRA, and our in-licensed products from Amgen. Net product revenue consisted of the following: Three Months Ended March 31, Changes 2025 2024 $ % (dollars in thousands) BRUKINSA ® $ 791,664 $ 488,515 $ 303,149 62.1 % TEVIMBRA ® 171,164 145,277 25,887 17.8 % XGEVA ® 70,423 43,381 27,042 62.3 % BLINCYTO ® 23,906 14,366 9,540 66.4 % KYPROLIS ® 19,728 14,111 5,617 39.8 % POBEVCY ® 13,745 16,633 (2,888) (17.4) % Other 17,900 24,635 (6,735) (27.3) % Total product revenue $ 1,108,530 $ 746,918 $ 361,612 48.4 % Net product revenue increased 48.4% to $1,108.5 million for the three months ended March 31, 2025, compared to $746.9 million in the prior-year period, primarily due to increased sales of BRUKINSA globally, driven by continued growth in the U.S. and Europe. In addition, product revenues in the first quarter of 2025 were positively impacted by sales of TEVIMBRA and in-licensed products from Amgen. 26 Table of Contents Global revenue for BRUKINSA totaled $791.7 million in the first quarter, representing a 62.1% increase compared to the prior-year period; U.S. revenue for BRUKINSA totaled $563.2 million in the first quarter, compared to $351.5 million in the prior-year period, representing growth of 60.2%, driven primarily by demand, with the quarter over quarter growth coming primarily from expanded use in CLL as BRUKINSA continued to gain share as the leader in new patient starts in the U.S. in CLL and all other approved indications. BRUKINSA revenue in Europe totaled $115.9 million in the first quarter, compared to $66.8 million in the prior-year period, representing growth of 73.4%, driven by increased market share across all major European markets, including Germany, Italy, Spain, France and the UK. BRUKINSA revenue in China totaled $81.1 million, representing growth of 41.3%. BRUKINSA rest of world revenue totaled $31.4 million in the first quarter, representing growth of 145.4% compared to the prior-year period. Revenue for TEVIMBRA totaled $171.2 million in the first quarter, compared to $145.3 million in the prior-year period, representing a 17.8% increase. Revenue for Amgen products in China totaled $114.1 million in the first quarter, compared to $71.9 million in the prior-year period, representing a 58.7% increase, driven primarily by increased XGEVA ® sales volume. Collaboration revenue totaled $8.7 million and $4.7 million for the three months ended March 31, 2025 and 2024, respectively, primarily related to revenue generated under the Novartis broad markets marketing and promotion agreement and royalty revenue under the Amgen collaboration. Gross Margin Gross margin on global product sales increased to $943.5 million for the three months ended March 31, 2025, compared to $622.0 million in the prior-year period, primarily due to increased product sales in the current year period. Gross margin as a percentage of product sales increased to 85.1% for the three months ended March 31, 2025, from 83.3% in the comparable period of the prior year. The gross margin percentage increased due to a proportionally higher sales mix of global BRUKINSA compared to other products in our portfolio. Gross margin also benefited from cost of sales productivity improvements for both BRUKINSA and TEVIMBRA. On an adjusted basis, which does not include depreciation and amortization, gross margin as a percentage of product sales increased to 85.5%, from 83.7% in the comparable period of the prior year. Research and Development Expense Research and development expense increased by $21.2 million, or 4.6%, to $481.9 million for the three months ended March 31, 2025 from $460.6 million for the three months ended March 31, 2024. The following table summarizes external clinical, external non-clinical and internal research and development expense for the three months ended March 31, 2025 and 2024, respectively: Three Months Ended March 31, Changes 2025 2024 $ % (dollars in thousands) External research and development expense: Cost of development programs $ 170,046 $ 122,871 $ 47,175 38.4 % Upfront license and development milestone fees — 35,028 (35,028) (100.0) % Amgen co-development expense 1 20,707 13,484 7,223 53.6 % Total external research and development expenses 190,753 171,383 19,370 11.3 % Internal research and development expenses 291,134 289,255 1,879 0.6 % Total research and development expenses $ 481,887 $ 460,638 $ 21,249 4.6 % Adjusted research and development expenses 2 $ 421,195 $ 405,440 $ 15,755 3.9 % 1. Our co-funding obligation for the development of the pipeline assets under the Amgen collaboration for the three months ended March 31, 2025 totaled $40.5 million, of which $20.7 million was recorded as R&D expense. The remaining $19.8 million was recorded as a reduction of the R&D cost share liability. 2. 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. 27 Table of Contents The increase in external research and development expenses in the first 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, including Sonrotoclax (BCL2i), and slightly offset by lower development upfront and milestone fees. Internal research and development expense increased modestly by $1.9 million, or 0.6%, to $291.1 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. Selling, General and Administrative Expense Three Months Ended March 31, Changes 2025 2024 $ % (dollars in thousands) Selling, general and administrative expenses $ 459,288 $ 427,427 $ 31,861 7.5 % Adjusted selling, general and administrative expenses 1 $ 395,511 $ 372,146 $ 23,365 6.3 % 1. 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 $31.9 million, or 7.5%, to $459.3 million for the three months ended March 31, 2025, from $427.4 million for the three months ended March 31, 2024. The increase was primarily attributable to continued investment in the global commercial expansion of BRUKINSA primarily in the U.S. and Europe. Selling, general and administrative expenses as a percentage of product sales were 41.4% in the first quarter of 2025 compared to 57.2% in the prior-year period. We expect continued investment in selling and marketing activities as our product sales increase. Interest Income, Net Interest income, net decreased by $10.3 million, or 63.8%, to $5.8 million for the three months ended March 31, 2025, from $16.2 million for three months ended March 31, 2024. 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 $4.0 million for the three months ended March 31, 2025, primarily due to foreign exchange gains and government subsidy income, partially offset by unrealized losses on our equity investments. For the three months ended March 31, 2024, other income, net was $1.8 million, primarily due to 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 was $19.6 million for the three months ended March 31, 2025 as compared to $7.7 million for the three months ended March 31, 2024. The income tax expense for the three months ended March 31, 2025 and 2024 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, current China tax expense due to certain non-deductible expenses, and other intercompany discrete adjustments. Net Income (Loss) and Earnings Per Share GAAP net income improved for the first quarter of 2025, as compared to the prior-year period loss, primarily attributable to revenue growth and improved operating leverage. For the first quarter of 2025, both basic and diluted earnings per share was $0.00 per share and $0.01 per American Depositary Share (“ADS”), respectively, compared to basic loss of $0.19 per share and $2.41 per ADS in the prior-year period. 28 Table of Contents Non-GAAP Reconciliation Three Months Ended March 31, 2025 2024 ( in thousands) Reconciliation of GAAP to adjusted cost of sales - products: GAAP cost of sales - products $ 165,002 $ 124,935 Less: Depreciation 2,613 2,345 Less: Amortization of intangibles 1,173 1,183 Adjusted cost of sales - products $ 161,216 $ 121,407 Reconciliation of GAAP to adjusted research and development: GAAP research and development $ 481,887 $ 460,638 Less: Share-based compensation expenses 41,767 38,045 Less: Depreciation 18,925 17,153 Adjusted research and development $ 421,195 $ 405,440 Reconciliation of GAAP to adjusted selling, general and administrative: GAAP selling, general and administrative $ 459,288 $ 427,427 Less: Share-based compensation expenses 53,684 50,669 Less: Depreciation 10,076 4,612 Less: Amortization of intangibles 17 — Adjusted selling, general and administrative $ 395,511 $ 372,146 Reconciliation of GAAP to adjusted operating expenses GAAP operating expenses $ 941,175 $ 888,065 Less: Share-based compensation expenses 95,451 88,714 Less: Depreciation 29,001 21,765 Less: Amortization of intangibles 17 — Adjusted operating expenses $ 816,706 $ 777,586 Reconciliation of GAAP to adjusted income (loss) from operations: GAAP income (loss) from operations $ 11,102 $ (261,348) Plus: Share-based compensation expenses 95,451 88,714 Plus: Depreciation 31,614 24,110 Plus: Amortization of intangibles 1,190 1,183 Adjusted income (loss) from operations $ 139,357 $ (147,341) Reconciliation of GAAP to adjusted net income (loss): GAAP net income (loss) $ 1,270 $ (251,150) Plus: Share-based compensation expenses 95,451 88,714 Plus: Depreciation 31,614 24,110 Plus: Amortization of intangibles 1,190 1,183 Plus: Impairment of equity investments 12,376 — Plus: Income tax effect of non-GAAP adjustments (5,764) (8,753) Adjusted net income (loss) $ 136,137 $ (145,896) Reconciliation of GAAP to adjusted EPS - basic GAAP earnings (loss) per share - basic $ 0.00 $ (0.19) Plus: Share-based compensation expenses 0.07 0.07 Plus: Depreciation 0.02 0.02 Plus: Amortization of intangibles 0.00 0.00 Plus: Impairment of equity investments 0.01 0.00 Plus: Income tax effect of non-GAAP adjustments (0.00) (0.01) Adjusted earnings (loss) per share - basic $ 0.10 $ (0.11) 29 Table of Contents Reconciliation of GAAP to adjusted EPS - diluted GAAP earnings (loss) per share - diluted $ 0.00 $ (0.19) Plus: Share-based compensation expenses 0.07 0.07 Plus: Depreciation 0.02 0.02 Plus: Amortization of intangibles 0.00 0.00 Plus: Impairment of equity investments 0.01 0.00 Plus: Income tax effect of non-GAAP adjustments (0.00) (0.01) Adjusted earnings (loss) per share - diluted $ 0.09 $ (0.11) Reconciliation of GAAP to adjusted earnings (loss) per ADS - basic GAAP earnings (loss) per ADS - basic $ 0.01 $ (2.41) Plus: Share-based compensation expenses 0.89 0.85 Plus: Depreciation 0.30 0.23 Plus: Amortization of intangibles 0.01 0.01 Plus: Impairment of equity investments 0.12 0.00 Plus: Income tax effect of non-GAAP adjustments (0.05) (0.08) Adjusted earnings (loss) per ADS - basic $ 1.27 $ (1.40) Reconciliation of GAAP to adjusted earnings (loss) per ADS - diluted GAAP earnings (loss) per ADS - diluted $ 0.01 $ (2.41) Plus: Share-based compensation expenses 0.86 0.85 Plus: Depreciation 0.28 0.23 Plus: Amortization of intangibles 0.01 0.01 Plus: Impairment of equity investments 0.11 0.00 Plus: Income tax effect of non-GAAP adjustments (0.05) (0.08) Adjusted earnings (loss) per ADS - diluted $ 1.22 $ (1.40) Liquidity and Capital Resources The following table represents our cash and debt balances as of March 31, 2025 and December 31, 2024: As of March 31, December 31, 2025 2024 (dollars in thousands) Cash, cash equivalents and restricted cash $ 2,530,591 $ 2,638,747 Total debt $ 923,627 $ 1,018,013 To date, we have financed our operations and investments in long-term assets principally through proceeds from public and private offerings of our securities, proceeds from debt and our collaborations, and since the third quarter of 2024 cash flow from operations. Based on our current operating plan, we expect that our operating cash flows and existing cash and cash equivalents will enable us to fund our operating expenses and planned long-term investments 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 primarily incurred through various banks by both our subsidiaries and the Parent Company of $923.6 million as of March 31, 2025. We paid down $97.1 million of the debt in the first quarter of 2025 using existing cash. The majority of those debt obligations, or approximately $670.5 million, owed by BeiGene, Ltd. mature within the next 12 months. We believe we will have sufficient cash and cash equivalents and other sources of capital to be able to repay and/or refinance those debt obligations on a consolidated basis. On December 15, 2021, we completed our initial public offering on the STAR Market of the Shanghai Stock Exchange (the “STAR Offering”). 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, 2025, the Company had cash remaining related to the STAR Offering proceeds of $461.6 million. 30 Table of Contents The following table provides information regarding our cash flows for the three months ended March 31, 2025 and 2024: Three Months Ended March 31, 2025 2024 (dollars in thousands) Cash, cash equivalents and restricted cash at beginning of period $ 2,638,747 $ 3,185,984 Net cash provided by (used in) operating activities 44,082 (308,572) Net cash used in investing activities (121,941) (209,831) Net cash (used in) provided by financing activities (33,777) 162,293 Net effect of foreign exchange rate changes 3,480 (22,438) Net decrease in cash, cash equivalents, and restricted cash (108,156) (378,548) Cash, cash equivalents and restricted cash at end of period $ 2,530,591 $ 2,807,436 Operating Activities Cash provided by operating activities improved $352.7 million in the three months ended March 31, 2025, versus the prior year period due to our significantly improved revenue and $325.6 million of increase in gross margin in the current year period, offset by continued funding of our development pipeline and commercial operations, increasing working capital to support our global expansion and the timing of compensation-related payments. Investing Activities Investing activities used $121.9 million of cash in the three months ended March 31, 2025, compared to $209.8 million in the prior year period due primarily to a decrease in capital expenditures, partially offset by an increase in acquired in-process research and development. Financing Activities Financing activities used $33.8 million of cash in the three months ended March 31, 2025, compared to $162.3 million of cash provided in the prior year period due primarily to a net reduction in short-term debt borrowings in the current year period, partially offset by higher proceeds from option exercises and employee share purchase plan. Our borrowing and repayment cycle is dictated by the short-term maturities of our debt and the ability to increase our borrowings, if necessary, is dependent on interest rates, credit spreads, bank lending capacity and other factors. We expect to repay approximately $763.5 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. Effects of Exchange Rates on Cash As noted above, we hold RMB denominated cash in our Parent Company (largely arising from the STAR Offering) and incur foreign currency gains or losses when remeasuring such cash to the U.S. dollar. In the three months ended March 31, 2025, we incurred realized gains on cash of $3.2 million that is included in the reconciling items between net income and net cash provided by operating activities on the consolidated statements of cash flows primarily related to the remeasurement of RMB denominated cash to USD. The RMB denominated cash in our Parent Company, however, is required to be used to fund RMB denominated expenditures and thus foreign currency gains or losses on such cash does not affect our ability to fund those expenditures. We also have substantial operations in China and Europe, where the functional currency is the RMB and Euro, and as such the net cash flows are translated to the U.S. dollar for financial reporting. This process generates translation gains and losses primarily on RMB-denominated cash held in China and Euro-denominted cash held in Europe that are included in the effects of foreign exchange rate changes on the consolidated statements of cash flows, as such translation gains and losses are excluded from cash flows from operating, investing and financing activities. Future Liquidity and Material Cash Requirements Our material cash requirements in the short- and long-term consist of the following operational, capital, and manufacturing expenditures, a portion of which contain contractual or other obligations. We plan to fund our material cash requirements with cash on hand. 31 Table of Contents Contractual and Other Obligations The following table summarizes our significant contractual obligations as of the payment due date by period as of March 31, 2025: Payments Due by Period Total Short Term Long Term (dollars in thousands) Contractual obligations Operating lease commitments $ 81,771 $ 16,022 $ 65,749 Purchase commitments 152,905 130,523 22,382 Debt obligations 923,627 763,470 160,157 Interest on debt 46,952 33,734 13,218 Co-development funding commitment 295,113 225,196 69,917 Funding commitment 5,904 1,463 4,441 Capital commitments 56,293 56,293 — Total $ 1,562,565 $ 1,226,701 $ 335,864 Operating Lease Commitments We lease office facilities in the U.S. and Switzerland, and office and manufacturing facilities in China under non-cancelable operating leases expiring on various dates. Payments under operating leases are expensed on a straight-line basis over the respective lease terms. The aggregate future minimum payments under these non-cancelable operating leases are summarized in the table above. Purchase Commitments As of March 31, 2025, non-cancellable purchase commitments amounted to $152.9 million, of which $31.0 million related to minimum purchase requirements for supply purchased from contract manufacturers and $121.9 million related to binding purchase obligations of inventory from Amgen. We do not have any minimum purchase requirements for inventory from Amgen. Debt Obligations and Interest Total debt obligations coming due in the next twelve months are $763.5 million. Total long-term debt obligations are $160.2 million. We have numerous financial and non-financial covenants on our debt obligations with various banks and other lenders. Some of these covenants include default and/or cross-default provisions that could require acceleration of repayment of loans in the event of default. However, our debt is primarily short-term in nature. Any acceleration would be a matter of months but may impact our ability to refinance debt obligations if an event of default occurs. As of March 31, 2025, we were in compliance with all covenants of our material debt agreements. See above regarding Liquidity and Capital Resources and Note 10 in the Notes to the Financial Statements for further detail of our debt obligations. Interest on bank loans is paid quarterly until the respective loans are fully settled. For the purpose of contractual obligations calculation, current interest rates on floating rate obligations were used for the remainder contractual life of the outstanding borrowings. Co-Development Funding Commitment Under the Amgen collaboration, we are responsible for co-funding global development costs for the licensed Amgen oncology pipeline assets up to a total cap of $1.25 billion. We are funding our portion of the co-development costs by contributing cash and development services. As of March 31, 2025, our remaining co-development funding commitment was $295.1 million. Funding Commitment Funding commitment represents our committed capital related to two equity method investments. As of March 31, 2025, our remaining capital commitment was $5.9 million and is expected to be paid from time to time over the investment period. 32 Table of Contents Capital Commitments We had capital commitments amounting to $56.3 million for the acquisition of property, plant and equipment as of March 31, 2025, 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 Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses. We evaluate our estimates and judgments on an ongoing basis, and our actual results may differ from these estimates. These include, but are not limited to, estimating the useful lives of long-lived assets, estimating variable consideration in product sales and collaboration revenue arrangements, estimating the incremental borrowing rate for operating lease liabilities, identifying separate accounting units and the standalone selling price of each performance obligation in the Company’s revenue arrangements, assessing the impairment of long-lived assets, valuation and recognition of share-based compensation expenses, realizability of deferred tax assets and the fair value of financial instruments. We base our estimates on historical experience, known trends and events, contractual milestones and other various factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. 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, 2025, 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, 2024. For new accounting policies adopted during the three months ended March 31, 2025, 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.