BeOne Medicines (NasdaqGS:BGNE) FY Conference September 08, 2025 01:50 PM ET Company ParticipantsMark Lanasa - SVP & Chief Medical Officer - Solid TumorsMatt Shaulis - General Manager - North AmericaConference Call ParticipantsSean Laaman - Research Analyst - Biotechnology Small & MidcapSean LaamanGood afternoon, everyone, and welcome to the Morgan Stanley Global Healthcare Conference. I'm Sean M. Laaman, Head of U.S. Mid-Cap Biotech Equity Research here at the firm. Before we begin, for important disclosur ...

Group 1 - The Hong Kong stock market is experiencing significant inflows from southbound funds, with a total net inflow exceeding 687 billion HKD in the first half of the year, and a record single-day net inflow of 35.88 billion HKD on August 15 [1] - Analysts predict that the total net inflow of southbound funds for the entire year of 2025 could exceed 1.2 trillion HKD, indicating a strong upward trend for the Hong Kong stock market in the second half of the year [1] - The valuation of the China Securities Hong Kong Stock Connect Technology Index has dropped to around 24 times PE, which is at the 30th percentile level over the past decade, suggesting a good safety margin and investment value [1] Group 2 - Four key factors are supporting the positive outlook for the Hong Kong stock market: attractive valuations, potential foreign capital inflow, continuous southbound fund inflows, and the presence of scarce assets in emerging industries such as AI and innovative pharmaceuticals [2] - For ordinary investors, participating in the market through related ETFs is recommended due to the high risks and investment thresholds associated with individual stock investments [2] - The Hong Kong Stock Connect Technology ETF (159101) closely tracks the China Securities Hong Kong Stock Connect Technology Index, selecting 30 large-cap technology leaders, with the top ten stocks accounting for 77% of the weight, covering major players like Tencent and Alibaba, as well as emerging forces like Li Auto and BeiGene [2]

Market Performance - Major US stock indices closed lower due to weak non-farm employment data, reinforcing expectations for a Federal Reserve rate cut [1][2] - The Dow Jones Industrial Average fell by 0.48% to 45400.86 points, the S&P 500 decreased by 0.32% to 6481.5 points, and the Nasdaq dropped by 0.03% to 21700.39 points [1] - European indices also closed down, with Germany's DAX down 0.73%, France's CAC40 down 0.31%, and the UK's FTSE 100 down 0.09% [1] Employment Data - The US added only 22,000 jobs in August, significantly below the expected 75,000, with an unemployment rate of 4.3%, marking a 0.1 percentage point increase for the second consecutive month [2] - Job growth was primarily in the healthcare sector, which added 31,000 positions, while manufacturing, wholesale trade, and government sectors saw losses of over 10,000 jobs each [2] - Analysts suggest that tariff policy uncertainties are a major factor contributing to the labor market's weakness [2] Gold Market - International gold prices reached a new high, with COMEX gold futures rising by 0.92% to $3639.8 per ounce [3] - In August, gold ETFs saw a net inflow of $5.5 billion, mainly from North America ($4.1 billion) and Europe ($1.9 billion) [3] - The price of gold has increased by 31% year-to-date, driven by a weak dollar, geopolitical tensions, and continued inflows into gold ETFs [3] Oil Market - US oil prices fell sharply, with the main contract down 2.38% to $61.97 per barrel, and Brent crude down 2.06% to $65.61 per barrel [4][5] - The decline in oil prices is attributed to rising expectations of increased production from OPEC+ and concerns over economic recession [5][6] - OPEC+ is considering further increasing oil production to regain market share, having already raised output by approximately 2.5 million barrels per day since April [6]

Market Overview - Major US stock indices collectively declined due to weak non-farm employment data, which reinforced expectations for a Federal Reserve rate cut [1][4] - As of the close, the Dow Jones Industrial Average fell by 0.48% to 45400.86 points, the S&P 500 decreased by 0.32% to 6481.50 points, and the Nasdaq dropped by 0.03% to 21700.39 points [2] Employment Data - The US Labor Department reported that 22,000 jobs were added in August, with an unemployment rate of 4.3%, marking a 0.1 percentage point increase for the second consecutive month [4] - The job growth was primarily in the healthcare sector, while manufacturing, wholesale trade, and government sectors saw significant job losses [4] Gold Market - International gold prices reached a new high, with COMEX gold futures rising by 0.92% to $3639.8 per ounce [6] - In August, gold ETFs saw a net inflow of $5.5 billion, mainly from North America and Europe, while Asia experienced outflows [6] Oil Market - Crude oil prices fell significantly, with US oil main contract down 2.38% to $61.97 per barrel and Brent crude down 2.06% to $65.61 per barrel [8] - The decline in oil prices is attributed to rising expectations of increased production from OPEC+ and concerns over economic recession [9]

Core Viewpoint - The innovative drug sector is expected to continue as a strong investment theme, with significant clinical data releases from Chinese innovative drugs anticipated in the upcoming months, coinciding with a peak season for licensing agreements with multinational pharmaceutical companies [1] Group 1: Market Performance - BeiGene (ONC.US) saw a 6% increase in stock price, reaching $338.19 [1] - The innovative drug sector is projected to maintain rapid revenue growth and a trend of reduced losses year-on-year, with some leading companies approaching breakeven points [1] Group 2: Upcoming Events - Major conferences such as the World Lung Cancer Conference, European Society for Medical Oncology, and American Society of Hematology are scheduled for the second half of the year, where key clinical data for Chinese innovative drugs will be presented [1] Group 3: International Collaboration - There is an increasing trend of active licensing transactions for Chinese innovative drugs, with both the number and value reaching new highs [1] - Global multinational pharmaceutical companies are expected to focus more on Chinese pipelines as many blockbuster drug patents will expire in the next two to three years, creating a demand for new research pipelines [1]

Core Viewpoint - The innovative drug sector is expected to continue its strong performance, with significant clinical data releases from Chinese innovative drugs at major conferences in the latter half of the year, potentially leading to a market surge similar to the one seen in May at the American Oncology Conference [1] Group 1: Market Performance - BeiGene (ONC.US) shares rose by 6%, reaching $338.19 [1] - The innovative drug sector is anticipated to maintain high revenue growth and a trend of reduced losses year-on-year, with some leading companies approaching breakeven [1] Group 2: Upcoming Events - Major conferences such as the World Lung Cancer Conference, European Oncology Congress, and American Hematology Annual Meeting are set to showcase key clinical data for Chinese innovative drugs [1] Group 3: International Collaboration - There is an increase in licensing negotiations between Chinese companies and multinational corporations (MNCs), with several potential blockbuster drugs entering advanced negotiation stages [1] - The next two to three years will see a significant number of patent expirations for major drugs from global pharmaceutical companies, creating opportunities for Chinese innovative drugs to fill the gaps [1] Group 4: Industry Outlook - The innovative drug sector is experiencing a rise in international recognition for its innovative capabilities, with active licensing transactions reaching new highs in both quantity and value [1] - Increased collaboration between multinational pharmaceutical companies and Chinese firms is expected to enhance market valuation expectations for the innovative drug sector [1]

Core Viewpoint - The innovative drug sector is expected to continue its strong growth trajectory, with significant clinical data releases and potential licensing agreements on the horizon, particularly for Chinese companies [1] Group 1: Market Performance - BeiGene (ONC.US) saw a 6% increase in stock price, reaching $338.19 [1] - The innovative drug sector is highlighted as the strongest investment theme, with expectations for sustained performance [1] Group 2: Upcoming Events - Major conferences such as the World Lung Cancer Conference, European Society for Medical Oncology, and American Society of Hematology are set to showcase key clinical data for Chinese innovative drugs in the latter half of the year [1] - The end of the year is anticipated to bring a peak in licensing activities from multinational pharmaceutical companies, with several Chinese potential BICs in advanced negotiations [1] Group 3: Financial Outlook - The innovative drug sector is projected to maintain high revenue growth and a trend of reduced losses year-on-year, with some leading companies approaching breakeven points [1] - The overall industry is showing signs of improving profitability [1] Group 4: International Expansion - Chinese innovative drugs are gaining international recognition for their innovative capabilities, with a surge in outbound licensing transactions in terms of both quantity and value [1] - In the next two to three years, a significant number of blockbuster drug patents from global pharmaceutical companies will expire, creating a demand for new research pipelines [1] - Increased collaboration between multinational companies and Chinese firms is expected to enhance market valuation expectations for the innovative drug sector [1]

Group 1 - The pharmaceutical sector has regained momentum, with A-shares in innovative drugs showing strong recovery, particularly the drug ETF (562050) which surged by 3.36%, reaching a record closing high [1] - The Hong Kong stock market saw even greater gains in innovative drugs, with the Hong Kong Stock Connect innovative drug ETF (520880) rising by 4.52%, also hitting a new closing high [1][3] - The innovative drug ETF (520880) currently covers 29 innovative drug concept stocks, all of which have shown positive performance, with notable increases in stocks like Sanofi and Kintor Pharmaceuticals [3] Group 2 - The innovative drug ETF (520880) will undergo a "purification" revision on September 8, 2023, removing CXO companies and focusing solely on innovative drug R&D firms, thus becoming a 100% pure innovative drug index [3] - As of September 3, 2023, the cumulative year-to-date increase for the index tracked by the innovative drug ETF (520880) reached 118.95%, leading among similar indices [3][4] - The Hang Seng Innovative Drug Select Index has shown significant fluctuations in past years, with a notable increase in 2023, indicating a potential upward trend in the innovative drug sector [5] Group 3 - Upcoming key academic conferences, including the World Lung Cancer Conference and the European Oncology Congress, are expected to catalyze further developments in the innovative drug sector [5] - The medical ETF has a total scale of 26.325 billion yuan, making it the largest medical ETF in the market [5]

Core Insights - The Hong Kong biopharmaceutical sector has shown significant growth in the first half of the year, with many companies entering a phase of revenue generation from prior R&D efforts, leading to a rise in related indices [1][5] - Approximately 110 Hong Kong biopharmaceutical companies reported mid-year earnings, with nearly 70 companies experiencing year-on-year revenue growth, and around 10 companies achieving revenue growth exceeding 100% [1] - The Hang Seng Innovative Drug Index has increased by 117.55% year-to-date, indicating a rapid recovery in investor confidence in the Hong Kong biopharmaceutical market [1] Performance Drivers - Multiple factors contributed to the performance improvement, including increased sales of core products, accelerated licensing agreements, and the application of AI technology [1][3] - Leading companies like Hengrui Medicine and WuXi AppTec reported double-digit growth, with Hengrui's net profit increasing by 29.67% and WuXi's net profit rising by 95.5% [1][3] International Expansion - Several Hong Kong biopharmaceutical companies are accelerating their internationalization efforts, with notable examples including Akeso, which received approval for Glecirasib, resulting in a milestone payment of 50 million RMB [2] - Innovent Biologics reported a 74.3% increase in total revenue, with a significant reduction in losses, as it explores collaboration and licensing opportunities abroad [2] AI Technology Impact - The application of AI technology has emerged as a crucial growth driver, with companies like Crystal Holding reporting a 615.2% increase in revenue from drug discovery solutions [3] - Hengrui's collaboration with Insilico Medicine aims to leverage AI for accelerating the discovery and development of innovative therapeutic antibodies [3] R&D Investment - A common characteristic among high-performing companies is the sustained investment in R&D, with Hansoh Pharmaceutical increasing its R&D expenditure by approximately 20.4% to 1.441 billion RMB, representing 19.4% of its revenue [3][4] - Innovent Biologics has commercialized five new drugs and is advancing its next-generation innovation pipeline globally [4] Market Trends - The Hong Kong biopharmaceutical sector is experiencing a listing boom, with nearly 10 companies going public this year, including major players like Hengrui and Silver诺 [6] - The successful IPOs and significant stock price increases of newly listed companies have enhanced market confidence and attracted more firms to consider listing in Hong Kong [6]

Group 1 - The A-share market is experiencing a correction, particularly in the pharmaceutical sector, with leading innovative drug companies like Huadong Medicine and BeiGene dropping over 5% [1] - The Hong Kong market's innovative drug ETF (520880) saw a significant decline of 3.32% after a previous rally, indicating a volatile trading environment [1][3] - The innovative drug ETF (520880) has accumulated over 6.2 billion yuan in net inflows over the past 60 days, reflecting strong investor interest despite recent market fluctuations [3][5] Group 2 - Upcoming major conferences, such as the World Lung Cancer Conference, are expected to catalyze a rebound in the innovative drug sector, with companies like CanSino Biologics and BeiGene presenting new research [5] - The innovative drug sector is anticipated to benefit from global competitiveness, overseas expansion, and supportive policies, which are expected to reshape valuations [5] - The Hong Kong innovative drug ETF (520880) is set to revise its index to focus solely on innovative drug research companies, enhancing its purity and potential performance [6] Group 3 - The innovative drug ETF (520880) has shown a remarkable year-to-date increase of 118.95%, outperforming other indices in the sector [8] - The medical ETF market is currently valued at 271.33 billion yuan, making it the largest in the pharmaceutical and medical category [10]