HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>Although people acknowledged BeiGene's performance, it still makes us uneasy about a long-standing question: When will BeiGene be profitable?With current cost structure, there’s at least two years left until breakeven. </li>
<li>BeiGene’s internationalization only proves decent increase in revenue, but it doesn’t yet verify its profitability.SG&amp;A expense ratio completely deviates from the normal state of Biotech with over US$2 billion sales.</li>
<li>If BeiGene indeed has a plan to turn loss into profits, besides maintaining a high growth rate in sales, reasonable optimization in cost and expenses is the most basic “sincerity”.</li>
</ul>


Although people acknowledged BeiGene's performance, it still makes us uneasy about a long-standing question: When will BeiGene be profitable?With current cost structure, there’s at least two years left until breakeven. 
BeiGene’s internationalization only proves decent increase in revenue, but it doesn’t yet verify its profitability.SG&amp;A expense ratio completely deviates from the normal state of Biotech with over US$2 billion sales.
If BeiGene indeed has a plan to turn loss into profits, besides maintaining a high growth rate in sales, reasonable optimization in cost and expenses is the most basic “sincerity”.


BeiGene (6160.HK/​BGNE.US/688235.CH) - Pain Points Behind the High Growth

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>Strong sales momentum of zanubrutinib eased market concerns. In 4Q23, BeiGene recorded total product sales of US$631mn (+6% QoQ or +86% YoY).</li><li>Zanubrutinib (zanu) maintained strong sales momentum, with revenue increasing 15% QoQ or 135% YoY to US$413mn, mainly driven by market share gains in the US.</li><li>In 4Q23, zanu sales in the US increased 16% QoQ to US$313mn, contributing 76% of zanu’s global sales. I</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Strong sales momentum of zanubrutinib eased market concerns. In 4Q23, BeiGene recorded total product sales of US$631mn (+6% QoQ or +86% YoY).Zanubrutinib (zanu) maintained strong sales momentum, with revenue increasing 15% QoQ or 135% YoY to US$413mn, mainly driven by market share gains in the US.In 4Q23, zanu sales in the US increased 16% QoQ to US$313mn, contributing 76% of zanu’s global sales. IContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

BeiGene (BGNE US) – Expect a Productive 2024 for Early Pipeline Assets

<ul>
<li>Since Imbruvica's sales continued to decline and Calquence hadn’t shown much growth in US since 23Q2, either Zanubrutinib gained more market share or the entire BTK inhibitors market is shrinking. </li>
<li>BeiGene's recent sluggish share price could be related to geopolitical conflicts/weak market sentiment.However, innovative drugs don’t involve supply chain security issues. There’s no need for US to sanction China's biotech.</li>
<li>We are relatively optimistic about BeiGene's 23Q4 sales growth. In our view, BeiGene’s reasonable market value is at least about US$18 billion. <a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene (6160 HK)</a> is undervalued.   </li>
</ul>


Since Imbruvica's sales continued to decline and Calquence hadn’t shown much growth in US since 23Q2, either Zanubrutinib gained more market share or the entire BTK inhibitors market is shrinking. 
BeiGene's recent sluggish share price could be related to geopolitical conflicts/weak market sentiment.However, innovative drugs don’t involve supply chain security issues. There’s no need for US to sanction China's biotech.
We are relatively optimistic about BeiGene's 23Q4 sales growth. In our view, BeiGene’s reasonable market value is at least about US$18 billion. BeiGene (6160 HK) is undervalued.   


BeiGene (6160.HK/​BGNE.US/688235.CH) - 2023 Results Preview and Undervaluation Concerns

<ul><li>Zanubrutinib continued to show PFS superiority vs ibrutinib with longer follow-up.</li><li>Sonrotoclax (BCL2i) could be a game changer.</li><li>BTK-CDAC to solve the BTKi-resistant issues.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Zanubrutinib continued to show PFS superiority vs ibrutinib with longer follow-up.Sonrotoclax (BCL2i) could be a game changer.BTK-CDAC to solve the BTKi-resistant issues.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

BeiGene (BGNE US) – Three Synergistic Haematology BIC/FIC Molecules Showing Promising Data

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>With the review period complete, <a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene (6160 HK)</a> could replace <a href="https://www.smartkarma.com/entities/anhui-conch-cement-co-ltd" target="_blank" data-smartkarma-citation="entities:159:1" rel="noopener">Anhui Conch Cement (914 HK)</a> in the <a href="https://www.smartkarma.com/entities/ishares-china-large-cap-etf" target="_blank" data-smartkarma-citation="entities:766:1" rel="noopener">iShares China Large-Cap (FXI) (FXI US)</a> in December.</li>
<li>There will be over 2 days of ADV to buy in <a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene (6160 HK)</a> and nearly 2 days of ADV to sell in <a href="https://www.smartkarma.com/entities/anhui-conch-cement-co-ltd" target="_blank" data-smartkarma-citation="entities:159:1" rel="noopener">Anhui Conch Cement (914 HK)</a>. </li>
<li>Short interest has been increasing in <a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene (6160 HK)</a> and dropping in <a href="https://www.smartkarma.com/entities/anhui-conch-cement-co-ltd" target="_blank" data-smartkarma-citation="entities:159:1" rel="noopener">Anhui Conch Cement (914 HK)</a> over the last few months.</li>
</ul>


With the review period complete, BeiGene (6160 HK) could replace Anhui Conch Cement (914 HK) in the iShares China Large-Cap (FXI) (FXI US) in December.
There will be over 2 days of ADV to buy in BeiGene (6160 HK) and nearly 2 days of ADV to sell in Anhui Conch Cement (914 HK). 
Short interest has been increasing in BeiGene (6160 HK) and dropping in Anhui Conch Cement (914 HK) over the last few months.


FXI Rebalance Preview: One Potential Change in December

China

BeiGene, Ltd. operates as a commercial stage biopharmaceutical company. The Company focuses on discovery, development, and commercialization of molecularly targeted and immuno-oncology drugs for the treatment of cancer. BeiGene serves patients worldwide.

BeiGene (6160 HK)

BeiGene (6160.HK/BGNE.US/688235.CH) - Pain Points Behind the High Growth

Due to quick pick-up of expenses, breakeven is more challenging. BeiGene hasn't proved its profitability. If it indeed has a plan to turn loss into...

Xinyao (Criss) Wang

BeiGene (BGNE US) – Expect a Productive 2024 for Early Pipeline Assets

Strong sales momentum of zanubrutinib eased market concerns. In 4Q23, BeiGene recorded total product sales of US$631mn (+6% QoQ or +86% YoY).

CMB International

BeiGene (6160.HK/BGNE.US/688235.CH) - 2023 Results Preview and Undervaluation Concerns

BeiGene's sluggish share price could be related to geopolitical conflicts/weak market sentiment. But there’s no need for US to sanction China's...

Xinyao (Criss) Wang

BeiGene (BGNE US) – Three Synergistic Haematology BIC/FIC Molecules Showing Promising Data

Additional studies presented at ASH indicated that zanu provided meaningful benefits for acalabrutinib-intolerant patients, which could lead to...

CMB International

FXI Rebalance Preview: One Potential Change in December

Beigene could replace Anhui Conch Cement in the FXI ETF in Dec. Passives will need to trade around 2x ADV in both stocks. Shorts have increased in...

Brian Freitas

BeiGene (6160.HK/​BGNE.US/688235.CH) - Pain Points Behind the High Growth

Due to quick pick-up of expenses, breakeven is more challenging. BeiGene hasn't proved its profitability. If it indeed has a plan to turn loss into...

Xinyao (Criss) Wang

BeiGene (BGNE US) – Expect a Productive 2024 for Early Pipeline Assets

Strong sales momentum of zanubrutinib eased market concerns. In 4Q23, BeiGene recorded total product sales of US$631mn (+6% QoQ or +86% YoY).

CMB International

BeiGene (6160.HK/​BGNE.US/688235.CH) - 2023 Results Preview and Undervaluation Concerns

BeiGene's sluggish share price could be related to geopolitical conflicts/weak market sentiment. But there’s no need for US to sanction China's...

Xinyao (Criss) Wang

BeiGene (BGNE US) – Three Synergistic Haematology BIC/FIC Molecules Showing Promising Data

Additional studies presented at ASH indicated that zanu provided meaningful benefits for acalabrutinib-intolerant patients, which could lead to...

CMB International

FXI Rebalance Preview: One Potential Change in December

Beigene could replace Anhui Conch Cement in the FXI ETF in Dec. Passives will need to trade around 2x ADV in both stocks. Shorts have increased in...

Brian Freitas

BeiGene (6160.HK/BGNE.US/688235.CH) - Pain Points Behind the High Growth

BeiGene (6160.HK/BGNE.US/688235.CH) - 2023 Results Preview and Undervaluation Concerns