HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>BeiGene maintained strong product sales in 23H1 and its net loss continued to narrow. This means that BeiGene has realized the cost control problem and entered a healthy growth phase.</li>
<li>Our revenue forecast indicates BeiGene is approaching the minimum threshold for turning losses into profits. A more likely scenario is revenue need to reach over US$4 billion to be breakeven</li>
<li>However, regardless of the calculation, BeiGene ‘s valuation is still unreasonably high. Its potential/certainty is nowhere near that of Alnylam. Maintaining sustained high growth is not easy because "accidents" remain.</li>
</ul>


BeiGene maintained strong product sales in 23H1 and its net loss continued to narrow. This means that BeiGene has realized the cost control problem and entered a healthy growth phase.
Our revenue forecast indicates BeiGene is approaching the minimum threshold for turning losses into profits. A more likely scenario is revenue need to reach over US$4 billion to be breakeven
However, regardless of the calculation, BeiGene ‘s valuation is still unreasonably high. Its potential/certainty is nowhere near that of Alnylam. Maintaining sustained high growth is not easy because "accidents" remain.


BeiGene (6160.HK/​BGNE.US) 23H1 - "Accidents" Behind the Strong 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 in 2Q23 driven by zanubrutinib’s US sales ramp-up. In 2Q23, BeiGene recorded US$554mn product sales (+35% QoQ or +82% YoY).</li><li>Zanubrutinib (zanu) maintained a strong sales momentum, with sales revenue increasing 46% QoQ or 139% YoY to US$308mn in 2Q23 (accelerated from the +20% QoQ rate in 1Q23), mainly driven by the growth in the US. Zanu sales in the US increased by 61% QoQ to US$234mn in 2Q23 (accelerated from +11% QoQ in 1Q23), mainly due to the accelerated adoption among CLL/SLL patients, in our view.</li><li>The sales in overseas markets other than the US grew by 47% QoQ to US$36mn, while sales in China remained stable on a quarterly basis. </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 in 2Q23 driven by zanubrutinib’s US sales ramp-up. In 2Q23, BeiGene recorded US$554mn product sales (+35% QoQ or +82% YoY).Zanubrutinib (zanu) maintained a strong sales momentum, with sales revenue increasing 46% QoQ or 139% YoY to US$308mn in 2Q23 (accelerated from the +20% QoQ rate in 1Q23), mainly driven by the growth in the US. Zanu sales in the US increased by 61% QoQ to US$234mn in 2Q23 (accelerated from +11% QoQ in 1Q23), mainly due to the accelerated adoption among CLL/SLL patients, in our view.The sales in overseas markets other than the US grew by 47% QoQ to US$36mn, while sales in China remained stable on a quarterly basis. 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) – Product Sales Soared in 2Q with Improved Cost Efficiency

<ul><li>BGNE hosted its 2023 R&amp;D Day on 18 Jul. The Company highlighted 3 major synergetic assets in haematology, Brukinsa (BTKi), sonrotoclax (BCL2i) and BGB11673 (BTK CDAC).</li><li>With superior efficacy and safety shown in H2H and multiple pivotal trials, Brukinsa has been widely approved globally for multiple indications, including CLL/SLL, WM, MCL, MZL and potentially FL, and is the backbone of the Company’s haematology franchise.</li><li>Ph3 trial of sonrotoclax to be initiated. Sonrotoclax is a potential BIC BCL2 inhibitor with differentiated profiles. In the Ph1/2 study, in 56 efficacy evaluable treatment-naïve (TN) CLL/SLL patients receiving sonrotoclax + Brukinsa, the ORR reached 100% (CR 26.8%), and in the patients with at least 3 postbaseline response assessments (n=37), the CR reached 35%. 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.

BGNE hosted its 2023 R&amp;D Day on 18 Jul. The Company highlighted 3 major synergetic assets in haematology, Brukinsa (BTKi), sonrotoclax (BCL2i) and BGB11673 (BTK CDAC).With superior efficacy and safety shown in H2H and multiple pivotal trials, Brukinsa has been widely approved globally for multiple indications, including CLL/SLL, WM, MCL, MZL and potentially FL, and is the backbone of the Company’s haematology franchise.Ph3 trial of sonrotoclax to be initiated. Sonrotoclax is a potential BIC BCL2 inhibitor with differentiated profiles. In the Ph1/2 study, in 56 efficacy evaluable treatment-naïve (TN) CLL/SLL patients receiving sonrotoclax + Brukinsa, the ORR reached 100% (CR 26.8%), and in the patients with at least 3 postbaseline response assessments (n=37), the CR reached 35%. 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) – Solidifying Leadership in Haematology with Three Synergistic BIC Molecules

<ul>
<li>BeiGene and Novartis mutually terminate the Option Agreement on ociperlimab. Our interpretation is Novartis may think its clinical data wouldn’t meet expectations, and is therefore unwilling to take the risk.</li>
<li>Theoretically, BeiGene still has the possibility of creating miracles to turn things around, but based on the current situation, the risk of TIGIT project failure is already very high.</li>
<li>We suggest that investors can reduce the position of BeiGene in advance or even consider offload entirely (In case its stock price falls due to unsatisfactory clinical data in 23H2).</li>
</ul>


BeiGene and Novartis mutually terminate the Option Agreement on ociperlimab. Our interpretation is Novartis may think its clinical data wouldn’t meet expectations, and is therefore unwilling to take the risk.
Theoretically, BeiGene still has the possibility of creating miracles to turn things around, but based on the current situation, the risk of TIGIT project failure is already very high.
We suggest that investors can reduce the position of BeiGene in advance or even consider offload entirely (In case its stock price falls due to unsatisfactory clinical data in 23H2).


BeiGene (6160.HK/​BGNE.US) - Novartis Chose to Escape Before Tragedy of TIGIT Truly Comes

<ul>
<li>AbbVie's patent infringement allegations against <a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene Ltd (6160 HK)</a> is an attempt to obstruct BeiGene through legal means and save Imbruvica’s sales decline in the market. AbbVie came prepared this time.</li>
<li>BeiGene has a chance to win the lawsuit if without any political factors.But if BeiGene fails to walk away unscathed, any damages/patent royalty would be detrimental to its financial performance/forecast.</li>
<li>The real key point in determining BeiGene's future turnaround is not this lawsuit, but the clinical results of TIGIT project. Even with the correction since May, BeiGene is still expensive.</li>
</ul>


AbbVie's patent infringement allegations against BeiGene Ltd (6160 HK) is an attempt to obstruct BeiGene through legal means and save Imbruvica’s sales decline in the market. AbbVie came prepared this time.
BeiGene has a chance to win the lawsuit if without any political factors.But if BeiGene fails to walk away unscathed, any damages/patent royalty would be detrimental to its financial performance/forecast.
The real key point in determining BeiGene's future turnaround is not this lawsuit, but the clinical results of TIGIT project. Even with the correction since May, BeiGene is still expensive.


BeiGene (6160.HK/​BGNE.US) - AbbVie‘s Patent Infringement Allegations Are Not as Simple as Imagined

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.

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BeiGene (BGNE US)

BeiGene (6160.HK/BGNE.US) 23H1 - "Accidents" Behind the Strong Growth

BeiGene's financial performance starts to become healthier in 23H1. As BeiGene approaches breakeven, it's particularly crucial to avoid "accidents"...

Xinyao (Criss) Wang

BeiGene (BGNE US) – Product Sales Soared in 2Q with Improved Cost Efficiency

Strong sales in 2Q23 driven by zanubrutinib’s US sales ramp-up. In 2Q23, BeiGene recorded US$554mn product sales (+35% QoQ or +82% YoY).

CMB International

BeiGene (BGNE US) – Solidifying Leadership in Haematology with Three Synergistic BIC Molecules

BGNE hosted its 2023 R&D Day on 18 Jul. The Company highlighted 3 major synergetic assets in haematology, Brukinsa (BTKi), sonrotoclax (BCL2i) and...

CMB International

BeiGene (6160.HK/BGNE.US) - Novartis Chose to Escape Before Tragedy of TIGIT Truly Comes

Our understanding of Novartis' decision to abandon TIGIT project is that it believes there's a high failure risk. Since TIGIT is critical for...

Xinyao (Criss) Wang

BeiGene (6160.HK/BGNE.US) - AbbVie‘s Patent Infringement Allegations Are Not as Simple as Imagined

AbbVie clearly felt more pressure in front of Brukinsa. It's common to use legal means to hinder competitor. BeiGene has a chance to win the...

Xinyao (Criss) Wang

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P/E

Dividend (Yield)

BeiGene (6160.HK/​BGNE.US) 23H1 - "Accidents" Behind the Strong Growth

BeiGene's financial performance starts to become healthier in 23H1. As BeiGene approaches breakeven, it's particularly crucial to avoid "accidents"...

Xinyao (Criss) Wang

BeiGene (BGNE US) – Product Sales Soared in 2Q with Improved Cost Efficiency

Strong sales in 2Q23 driven by zanubrutinib’s US sales ramp-up. In 2Q23, BeiGene recorded US$554mn product sales (+35% QoQ or +82% YoY).

CMB International

BeiGene (BGNE US) – Solidifying Leadership in Haematology with Three Synergistic BIC Molecules

BGNE hosted its 2023 R&D Day on 18 Jul. The Company highlighted 3 major synergetic assets in haematology, Brukinsa (BTKi), sonrotoclax (BCL2i) and...

CMB International

BeiGene (6160.HK/​BGNE.US) - Novartis Chose to Escape Before Tragedy of TIGIT Truly Comes

Our understanding of Novartis' decision to abandon TIGIT project is that it believes there's a high failure risk. Since TIGIT is critical for...

Xinyao (Criss) Wang

BeiGene (6160.HK/​BGNE.US) - AbbVie‘s Patent Infringement Allegations Are Not as Simple as Imagined

AbbVie clearly felt more pressure in front of Brukinsa. It's common to use legal means to hinder competitor. BeiGene has a chance to win the...

Xinyao (Criss) Wang

BeiGene (6160.HK/BGNE.US) 23H1 - "Accidents" Behind the Strong Growth

BeiGene (6160.HK/BGNE.US) - Novartis Chose to Escape Before Tragedy of TIGIT Truly Comes

BeiGene (6160.HK/BGNE.US) - AbbVie‘s Patent Infringement Allegations Are Not as Simple as Imagined