BeiGene (688235.SH) releases its semi-annual report: Product revenue reaches 11.908 billion yuan, accelerating the construction of the research, production, sales, and innovation closed loop.

On August 29, BEIGENE (688235.SH) released its A-share 2024 interim report, continuing to promote the international market penetration of its core products, Brukinsa (zanubrutinib) and Tislelizumab, by leveraging its systemic advantages in global research and development, overseas registration, quality control, and market commercialization. In the first half of 2024, BEIGENE achieved a total operating income of 11.996 billion yuan, a year-on-year increase of 65.4%. Product revenue increased by 77.8% year-on-year, reaching 11.908 billion yuan. In the second quarter, BEIGENE's GAAP operating loss decreased by 66% year-on-year. In terms of non-GAAP calculation, the company achieved an adjusted operating profit of 48 million US dollars, marking a new turning point in its development. Furthzbaster exploring the global commercialization potential of its core products Commercialization capability undoubtedly becomes an important indicator of measuring the differentiated innovation capability of a innovative pharmaceutical company. For BEIGENE, the record high product revenue in the first half of the year represents the company's strong innovation research and development strength and the industry's and market's dual recognition of the differentiated advantages of innovative products. The financial report shows that in the first half of 2024, BEIGENE achieved a total operating income of 11.996 billion yuan, a year-on-year increase of 65.4%. Product revenue increased by 77.8% year-on-year, reaching 11.908 billion yuan. Thanks to the significant increase in product revenue and the continuous expense management efforts of CKH HOLDINGS, BEIGENE further improved its operating efficiency, leading to a continuous decrease in operating losses. In the second quarter, BEIGENE's GAAP operating loss decreased by 66% year-on-year. In terms of non-GAAP calculation, the company achieved an adjusted operating profit of 48 million US dollars. During the reporting period, the global commercial performance and layout of BEIGENE's two core products, Brukinsa and Tislelizumab, played a vital role. After achieving a sales revenue of 1.3 billion US dollars in the previous year and becoming the first domestic "billion-dollar molecule," Brukinsa is facing increasingly intense competition in the BTK inhibitor market, with new players from multinational companies such as AstraZeneca, INNOCARE, and Roche entering the market. Data shows that in the first half of 2024, Brukinsa's global sales totaled 8.018 billion yuan, a significant increase of 122% year-on-year. In terms of regional breakdown, in the first half of 2024, Brukinsa's sales in the United States totaled 5.903 billion yuan, an increase of 134.4% year-on-year; sales in Europe reached 1.057 billion yuan, an increase of 231.6%; sales in China totaled 873 million yuan, a 30.5% year-on-year increase. In fact, Brukinsa has been approved in over 70 markets worldwide and is the only BTK inhibitor to demonstrate superior efficacy results compared to ibrutinib in head-to-head trials. It is worth noting that the NCCN in the United States recommended zanubrutinib as a first-line treatment for CLL last January, leading to a downgrade of ibrutinib and a change in the market landscape for BTK inhibitors. In 2023, ibrutinib's sales fell by over 20% year-on-year, and in the first half of this year, its sales decreased by 6.4% year-on-year, indicating a significant impact. Brukinsa's sales in the approved indications area continued to grow globally, further solidifying its leadership position in the global hematologic cancer field. In addition to Brukinsa, the steady growth in the commercialization progress of the PD-1 inhibitor Tislelizumab is also a key factor in BEIGENE's impressive revenue growth. During the reporting period, due to the addition of new indications covered by medical insurance, an increase in patient demand, and an increase in the number of drug placements in hospitals, Tislelizumab achieved sales of 2.191 billion yuan, an increase of 19.4% year-on-year. In the domestic market, Tislelizumab has been approved for 13 indications, with 11 of them included in the national medical insurance catalog. Globally, the drug has been successively approved in multiple markets including the United States, the United Kingdom, South Korea, and Switzerland, and is currently undergoing evaluations by regulatory agencies in multiple countries and regions, with the potential to benefit a wider range of unmet treatment needs in patients worldwide. "Refined management + differentiated R&D potential" raises safety margins During this reporting period, BEIGENE is in the process of achieving a positive development cycle under self-blood-making. This not only requires pharmaceutical companies to have "cash cow" products but also requires refined management at the expense management level on a daily basis. Behind BEIGENE, refined management in all aspects from sales to research and development is indispensable. In terms of sales expense ratio, BEIGENE has achieved a stable downward trend in the sales expense ratio under refined management since 2022. In the first half of 2024, the company's current sales expenses were 4.17 billion yuan, and the sales expense ratio has dropped to approximately 34.76%, now reaching the average level of the innovative drug industry. On the research and development front, in the first half of 2024, BEIGENE's research and development expenses were 6.628 billion yuan, an increase of 12.68% year-on-year. This is mainly due to the fact that some of the company's heavyweight products under research have entered the relatively mature and highly certain mid-to-late stage of research and development, indicating BEIGENE's strong innovation and clinical translation capabilities. It is worth mentioning that under refined management, BEIGENE's pipeline research and development can make differential indications selection, ensuring the broadest coverage of indications for underserved patients while ensuring that products have broad commercialization prospects in the future. For example, in the field of solid tumors, BEIGENE is advancing potential differentiated projects targeting key cancer types such as breast cancer, gastrointestinal cancer, and lung cancer with its profound scientific research capabilities and various technological platforms. For breast cancer and gynecological cancers, the CDK4 inhibitor BGB-43395 developed by BEIGENE has shown good safety as a monotherapy and in combination with fluorouracil group and letrozole, with over 60 patients enrolled so far, with the first-phase trial data expected to be announced in the fourth quarter of 2024; in terms of gastrointestinal cancer indications, the NMPA has accepted the application for marketing approval (BLA) of zenidatuzumab monotherapy for second-line treatment of bile duct cancer. At the same time, CEA ADC, FGFR2b ADC, and GPC34-1BB bispecific antibodies are expected to enter the clinical development stage in the second half of 2024; in the field of immunotherapy and inflammation, the company is conducting in-depth discovery and research on new targets and new mechanisms of action to expand its pipeline offerings, which have been published externally showcased positive clinical benefits.The second targeted degrader IRAK4 CDAC developed on the CDAC platform, BGB-43035, has started clinical development.Improve the integration of research, production, and sales to solidify the foundation for the development of Biopharma From the perspective of innovative research and development, BEIGENE's pipeline development shows great potential. To accelerate the continued implementation and commercialization of innovative pipelines, the company is further improving its integrated innovation loop of research, production, and sales, continuously solidifying its foundation for the development of Biopharma. With strong research and development support, BEIGENE has created a comprehensive and unique innovative pipeline lineup, with over 60 investigational drugs covering various technology platforms and drug modalities, including monoclonal antibodies, dual/multi-antibodies, ADCs, cell therapies, mRNA, etc. The company has established a complete portfolio of investigational products with potential FIC/BIC strength in the fields of hematologic cancer and solid tumors. This year, BEIGENE has had 6 first-class new drugs approved for clinical trials in China. In the field of hematologic tumors, the company's potential best-in-class BCL-2 inhibitor sonrotoclax and the targeted BTK degrader compound BGB-16673 have attracted market attention. As an example of the BCL-2 inhibitor sonrotoclax, BEIGENE is gradually establishing a presence in the hematologic tumor field based on the foundation of zebulinib, with sonrotoclax being a key anchor point. As a second-generation highly selective and potent BCL-2 inhibitor developed by BEIGENE, sonrotoclax demonstrates a shorter half-life and no drug accumulation compared to existing BCL-2 inhibitors on the market. In previous clinical studies involving over 500 patients, sonrotoclax has shown long-lasting therapeutic responses at low doses and good safety profiles in both monotherapy and combination with zebulinib. Currently, BEIGENE is advancing four pivotal global Phase III clinical trials for sonrotoclax, including co-administration with bendamustine for first-line CLL patients, with over 1000 participants enrolled. Two potential global registrable Phase II clinical trials for the treatment of R/R Waldenstrom's Macroglobulinemia (WM) and R/R Mantle Cell Lymphoma (MCL) have received Fast Track designation from the FDA. This also means that the commercialization of sonrotoclax is getting closer. Taking the example of the only approved BCL-2 inhibitor in the world, Venetoclax, with sales reaching $2.288 billion in 2023, a 13.9% year-on-year increase, AbbVie predicts that its peak sales will reach $6 billion. Due to its superior safety profile compared to Venetoclax and greater BIC potential, market expectations are for sonrotoclax's peak sales to also reach $6 billion, garnering high expectations. Regarding the BTK CDAC BGB-16673, indications for the treatment of R/R MCL and R/R CLL/SLL have received Fast Track designation from the FDA. This could accelerate the approval process and provide benefit to patients with BTK inhibitor resistance. BEIGENE states that BGB-16673 is the fastest progressing BTK degrader in clinical development and has the potential to be an important treatment option for patients with disease progression and limited treatment options after BTK inhibitor use. The company is expected to initiate a Phase III clinical trial for the treatment of R/R CLL/SLL with BGB-16673 in the fourth quarter of 2024 or the first quarter of 2025. In addition to the aforementioned late-stage pipeline, the financial reports show that the company is continuing to advance its in-house research projects and cooperative drug candidates in terms of registration and clinical progress. It is expected to initiate multiple antibody-drug conjugate (ADC) molecules and bispecific molecules, including pan-KRAS inhibitors, MTA synergistic PRMT5 inhibitors, EGFR-CDAC, CEA-ADC, and FGFR2b-ADC, to accelerate the next wave of differentiated innovative research and development. In terms of international quality management systems and production capacity development, BEIGENE's new flagship site and clinical research center in New Jersey, USA have been officially inaugurated, with dedicated production space of approximately 37,000 square meters. The total production capacity of the Guangzhou biologics production base has reached 65,000 liters, and the ADC production facilities and a new biologics clinical production building have been completed. The newly constructed small molecule innovative drug industrialization base in Suzhou has been completed and put into operation, with the first phase of construction adding over 52,000 square meters, expanding solid dosage form production to 1 billion tablets (capsules) per year. In terms of marketing system construction, the company has established a differentiated global commercialization team with over 3,700 members, including more than 500 spread across North America and Europe, to help the company's innovative products benefit patients globally. In conclusion, the current global biopharmaceutical industry's financing "winter" is expected to accelerate with the expected rate cut by the Federal Reserve in September. In this crucial window, BEIGENE is rapidly and smoothly advancing key pipeline research and development and global commercialization processes, achieving innovative high product revenues that even surpass expectations. In the future, BEIGENE is expected to continue to accelerate its efforts in globalized research and development, overseas registration, and commercialization in various sectors.