UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________________ FORM 10-Q ___________________________________________________________ (Mark One) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ☐ TRANSITION REPORT P ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________________ FORM 10-Q ___________________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37686 _ ...

Commercialization and Market Expansion - BeiGene successfully commercialized BRUKINSA™ in the US and 百澤安® in China, with regulatory approvals for adult patients with specific types of lymphoma[8] - The company aims to expand the approval and commercialization of BRUKINSA and替雷利珠單抗 for additional indications and regions[8] - BeiGene is focused on the successful commercialization of licensed drugs in China, including ABRAXANE®, 瑞復美®, and others from various partners[8] - The company is enhancing its sales and marketing capabilities and plans to launch new drugs upon approval[9] - The company is focused on the market access, acceptance, and reimbursement rates for its drugs and candidates[9] - The company has established significant commercial capabilities in both China and the United States, with two internally developed drugs and three licensed drugs currently on the market[11] - Five licensed drugs are expected to enter the Chinese market within the next one to two years[11] - The company plans to launch additional licensed products from partners, including Amgen's XGEVA, Kyprolis, and Blincyto in China[11] - The company has submitted three new indication applications for regulatory approval in China[11] - The company has a commercial team of over 100 people promoting BRUKINSA in the United States[18] Clinical Development and Trials - BeiGene is actively involved in clinical trials and research projects, with a focus on advancing candidate drugs through clinical phases[9] - The company has a global clinical development team of over 1,100 people managing more than 60 ongoing or planned clinical trials involving over 7,500 patients and healthy subjects[12] - The company is conducting late-stage clinical trials for BRUKINSA and Tislelizumab, including 26 registration trials for 15 distinct cancer indications[12] - The company has initiated 12 global key studies and 26 critical or potential registration studies, enrolling over 7,500 patients and healthy volunteers[15] - The company has multiple candidate drugs in Phase 3 trials, including AMG 510 for solid tumors and AMG 596 for glioblastoma[35] - The company is conducting a Phase 3 head-to-head trial (ASPEN) comparing Zebutinib as a monotherapy against Ibrutinib for patients with Waldenström's macroglobulinemia, with significant results reported and follow-up studies ongoing[55] - The company is exploring additional pivotal trials for Tislelizumab as a monotherapy and in combination with standard treatments for various solid and hematological tumors[56] Strategic Partnerships and Collaborations - A strategic partnership with Amgen was established in October 2019 to commercialize Amgen's anti-tumor products in China, including up to 20 clinical and late-stage pipeline products[13] - The company has a collaboration agreement with Amgen for the commercialization of three cancer drugs in China, with a profit-sharing model during the commercialization period[94] - The collaboration agreement includes a commitment to jointly fund global development costs for 20 cancer pipeline products, with a maximum contribution of $1.25 billion from the company[95] - The strategic cooperation agreement with Amgen includes the commercialization of three anti-tumor products in China for a period of five to seven years, contingent on the sale of at least one product[108] - The strategic partnership with Bristol-Myers Squibb includes exclusive rights to commercialize approved cancer treatment drugs in China, which began marketing in September 2017[108] Regulatory Approvals and Compliance - The company is committed to maintaining and expanding regulatory approvals for its drugs and candidates[9] - The company has received fast track approval qualifications for certain drugs in China[17] - The company is positioned to benefit from recent regulatory reforms in China, which aim to accelerate drug development and approval processes[15] - The company must demonstrate the safety and efficacy of its candidate drugs in well-controlled clinical trials before obtaining regulatory approval[113] - The approval process for new drug applications is lengthy and uncertain, potentially impacting the company's revenue generation capabilities[115] - The company is subject to strict regulations from the FDA, NMPA, EMA, and other health authorities regarding drug manufacturing standards, which include quality control and documentation requirements[117] Financial Performance and Funding - The cumulative deficit of the company reached $2 billion and $1 billion as of December 31, 2019, and 2018, respectively[144] - The company has incurred significant net losses since its establishment and expects to continue doing so for the foreseeable future[144] - The company has raised approximately $2.78 billion through the issuance of common stock in the form of American Depositary Shares to Amgen in January 2020[146] - The company expects to incur significant losses in the foreseeable future, with an investment of up to $1.25 billion for the global development of 20 pipeline drugs in collaboration with Amgen[145] - The company may need to seek additional financing through public or private sales, debt financing, or other sources to support operations[148] Intellectual Property and Competition - The company holds global commercial rights for several cancer drugs, including QARZIBA and BRUKINSA[17] - The company faces potential competition from generics for ABRAXANE and other products, which could significantly impact potential sales[103] - The company relies on trade secrets and non-patented technologies to protect its proprietary technologies and processes[105] - The company anticipates facing competition from generic drug manufacturers for its cancer treatment drugs, even if patent protection is obtained[156] - The company’s ability to exclude others from commercializing similar products may be limited by the expiration of patents before the commercialization of new candidates[156] Manufacturing and Supply Chain - The company has advanced small molecule and biologics manufacturing facilities in China to support internal product launches and future demand[12] - The company relies on third-party manufacturers for commercial-scale production of its drugs, including BRUKINSA and Tislelizumab[116] - The company experienced supply interruptions for ABRAXANE in 2019 and 2020, which could recur in the future[168] - The company relies on multiple suppliers for raw materials, but some supply chains may depend on single-source suppliers, posing potential risks[171] - The company is working closely with the supplier to restore ABRAXANE supply as quickly as possible, including rectification of existing production facilities[170] Risks and Challenges - The company may face risks related to the effectiveness and market recognition of its drugs, which could limit sales and profitability[107] - The company is aware of various risks that could adversely affect its business and financial condition, which investors should consider[106] - The company may encounter delays in drug development due to disagreements with regulatory bodies or failure to demonstrate safety and efficacy[128] - The company faces significant risks related to regulatory approvals, which may delay or prevent the commercialization of its drug candidates[127] - The company may face challenges in recruiting, training, and retaining marketing and sales personnel due to competition from other pharmaceutical and biotechnology companies[111] Employee and Management Considerations - Employee count increased by approximately 62% from 2,070 at the beginning of 2019 to 3,359 by the end of the year[181] - The company relies heavily on key management personnel, and their departure could hinder the achievement of research and commercialization goals[179] - Attracting and retaining qualified scientific, clinical, manufacturing, and sales personnel is crucial for the company's success[179] - The company does not have "key person" insurance for any of its management or employees, increasing risk if key personnel leave[179]

Part I [Business](index=5&type=section&id=Item%201.%20Business) BeiGene is a global biotechnology company focused on developing and commercializing innovative oncology therapeutics, leveraging its R&D and commercial capabilities in the U.S. and China [Overview](index=5&type=section&id=Overview) BeiGene has evolved into a fully-integrated global biotechnology firm with significant commercial, manufacturing, and R&D capabilities - BeiGene has evolved from a research and development company into a fully-integrated global biotechnology firm with significant commercial, manufacturing, and R&D capabilities[10](index=10&type=chunk) - The company is currently marketing two internally-developed drugs (**BRUKINSA™** and **tislelizumab**) and three in-licensed drugs (**ABRAXANE®**, **REVLIMID®**, and **VIDAZA®**)[11](index=11&type=chunk) - BeiGene's clinical development team consists of over **1,100 people** managing more than **60 clinical trials**, which have enrolled over **7,500 patients** and subjects[12](index=12&type=chunk) - A strategic collaboration was formed with Amgen in October 2019 to commercialize Amgen's oncology products in China and co-develop up to **20 of Amgen's pipeline products**[13](index=13&type=chunk) [Our Strategy](index=5&type=section&id=Our%20Strategy) The company's strategy focuses on maximizing its wholly-owned drugs, leveraging global capabilities, expanding its portfolio through collaborations, and pursuing global growth via China's market - Realize the large commercial opportunities for its wholly-owned drugs, **BRUKINSA (zanubrutinib)** and **tislelizumab**, targeting the global BTK inhibitor and PD-1 antibody markets[14](index=14&type=chunk)[15](index=15&type=chunk)[16](index=16&type=chunk) - Utilize its strategic clinical and commercial capabilities, particularly its **1,100-person global oncology development team** and **over 900-person commercial team in China**, to capitalize on regulatory reforms and improved national reimbursement[17](index=17&type=chunk) - Expand its portfolio by leveraging its China-inclusive development and commercial capabilities to secure collaborations and licensing opportunities, such as the one with Amgen[18](index=18&type=chunk) - Pursue a new model for global growth by leveraging the large patient population and expanding reimbursement in China to support R&D investment, enabling broader worldwide access with more affordable pricing[19](index=19&type=chunk) [Our Commercial Products](index=7&type=section&id=Our%20Commercial%20Products) This section details BeiGene's portfolio of commercialized oncology products, including internally developed and in-licensed drugs, along with their indications, mechanisms, and regulatory status Commercial Product Portfolio Summary | PRODUCT | LEAD INDICATIONS | MECHANISM OF ACTION | REGULATORY STATUS | BEIGENE COMMERCIAL RIGHTS | PARTNER | | :--- | :--- | :--- | :--- | :--- | :--- | | **BRUKINSA** | R/R mantle cell lymphoma | BTK inhibitor | Approved in the United States | Global | N/A | | **tislelizumab** | R/R classical Hodgkin's lymphoma | Anti-PD-1 antibody | Approved in China | Global | N/A | | **ABRAXANE** | Breast cancer | Microtubule inhibitor | Approved in China | Mainland China | BMS | | **REVLIMID** | Multiple myeloma | Anti-angiogenesis, immuno-modulation | Approved in China | Mainland China | BMS | | **VIDAZA** | Myelodysplastic syndromes, AML, CMML | DNA hypomethylation | Approved in China | Mainland China | BMS | | **XGEVA** | Giant cell tumor of bone | Anti-RANK ligand antibody | Approved in China | Mainland China | Amgen | | **KYPROLIS** | Multiple myeloma | Proteasome inhibitor | NDA filed in China | Mainland China | Amgen | | **BLINCYTO** | Acute lymphocytic leukemia | Anti-CD19 x antiCD3 bispecific (BiTE) antibody | NDA filed in China | Mainland China | Amgen | | **SYLVANT** | Idiopathic multicentric Castleman disease | IL-6 antagonist | Fast track listed in China | Greater China | EUSA | | **QARZIBA** | High-risk neuroblastoma | Anti-GD2 antibody | Fast track listed in China | Mainland China | EUSA | [Our Pipeline Products](index=12&type=section&id=Our%20Pipeline%20Products) BeiGene's pipeline includes internally-discovered late-stage assets like zanubrutinib, tislelizumab, and pamiparib, alongside early-stage candidates and in-licensed products from collaborations - The internally-discovered pipeline is led by late-stage assets **zanubrutinib** (BTK inhibitor), **tislelizumab** (PD-1 antibody), and **pamiparib** (PARP inhibitor), which are being evaluated in numerous pivotal trials across various cancer indications[54](index=54&type=chunk) - Early-stage internally-developed clinical candidates include **lifirafenib** (RAF Dimer), **BGB-A333** (PD-L1), **BGB-A425** (TIM-3), **BGB-A1217** (TIGIT), and **BGB-11417** (Bcl-2)[54](index=54&type=chunk) - The in-licensed pipeline includes multiple candidates from a collaboration with Amgen, such as **AMG 510** (KRAS G12C inhibitor), and candidates from collaborations with Mirati (**Sitravatinib**) and Zymeworks (**ZW25, ZW49**)[56](index=56&type=chunk)[57](index=57&type=chunk) [Manufacturing and Supply](index=28&type=section&id=Manufacturing%20and%20Supply) BeiGene operates manufacturing facilities in China for small molecule and biologics, while also relying on third-party Contract Manufacturing Organizations for global supply - BeiGene operates an **11,000 square meter** manufacturing facility in Suzhou, China for small molecule and biologics clinical supply, with plans for commercial supply[141](index=141&type=chunk) - A commercial-scale biologics manufacturing facility is being built in Guangzhou, China through a joint venture, with the initial phase completed in September 2019, expected to manufacture **tislelizumab**[142](index=142&type=chunk) - The company relies on third-party Contract Manufacturing Organizations (CMOs) for production, including Catalent for **BRUKINSA** supply outside of China and Boehringer Ingelheim for **tislelizumab** supply in China[143](index=143&type=chunk)[144](index=144&type=chunk) [Collaborations](index=30&type=section&id=Collaborations) BeiGene engages in strategic collaborations, notably with Amgen for commercialization and co-development, and with BMS for exclusive distribution rights in mainland China - A strategic collaboration with Amgen, effective January 2, 2020, involves commercializing Amgen's oncology products (**XGEVA, KYPROLIS, BLINCYTO**) in China and co-funding the global development of **20 Amgen pipeline products**, with BeiGene contributing up to **$1.25 billion**[149](index=149&type=chunk)[150](index=150&type=chunk) - In connection with the Amgen collaboration, Amgen purchased approximately **20.5% of BeiGene's outstanding shares** for **$2.78 billion**[153](index=153&type=chunk) - BeiGene holds an exclusive **10-year license** from BMS (formerly Celgene) to distribute and promote **ABRAXANE, REVLIMID, and VIDAZA** in mainland China, effective since August 2017[157](index=157&type=chunk)[158](index=158&type=chunk) [Intellectual Property](index=31&type=section&id=Intellectual%20Property) The company protects its drugs and candidates through patents in the U.S. and China, and relies on trade secrets and confidentiality for other aspects of its business - As of January 29, 2020, the company owned **25 issued U.S. patents** and **11 issued China patents**, along with numerous pending applications internationally to protect its drugs and drug candidates[161](index=161&type=chunk) Key Patent Expirations for Internally Developed Drugs | Molecule | Territory | General Subject Matter | Expiration¹ | | :--- | :--- | :--- | :--- | | **BRUKINSA™ (Zanubrutinib)** | U.S. & China | Compound and composition | 2034 | | **Tislelizumab** | U.S. & China | Antibodies | 2033 | | **Pamiparib** | U.S. & China | Compound and composition | 2031 | - The company relies on trade secrets, know-how, and confidentiality agreements to protect aspects of its business not covered by patents, such as manufacturing processes[160](index=160&type=chunk)[168](index=168&type=chunk) [Government Regulation](index=33&type=section&id=Government%20Regulation) The company's operations are subject to extensive and evolving government regulations in the U.S. (FDA) and China (NMPA), covering drug approval, expedited programs, and pricing policies - In the U.S., the FDA regulates drugs and biologics, requiring a rigorous process of preclinical studies and multi-phase clinical trials before an NDA or BLA can be approved for marketing[171](index=171&type=chunk)[173](index=173&type=chunk) - The FDA offers expedited programs such as Fast Track, Accelerated Approval, Breakthrough Designation, and Priority Review to facilitate the development and review of drugs for serious conditions, with **Zanubrutinib** receiving multiple such designations[194](index=194&type=chunk)[197](index=197&type=chunk)[201](index=201&type=chunk)[203](index=203&type=chunk) - In the PRC, the NMPA is the primary regulator, with the revised Drug Administration Law (rDAL) effective December 2019 implementing a nationwide Marketing Authorization Holder (MAH) system, strengthening life-cycle management, and increasing penalties for violations[234](index=234&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk) - China has implemented policies to expedite drug approvals, including accepting foreign clinical trial data, a priority review program for innovative drugs, and a volume-based centralized procurement program to control drug prices[252](index=252&type=chunk)[268](index=268&type=chunk)[293](index=293&type=chunk) [Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including commercialization challenges, uncertain clinical development, extensive government regulation, financial losses, intellectual property issues, reliance on third parties, operational complexities, and specific risks related to doing business in China [Risks Related to Commercialization](index=54&type=section&id=Risks%20Related%20to%20Commercialization) Commercial success is uncertain due to market acceptance challenges, competition from established players, and the company's limited experience in drug launch and marketing - The commercial success of the company's drugs depends on achieving market acceptance from physicians, patients, and payors, which is uncertain due to competition from established treatments and other novel products[326](index=326&type=chunk)[327](index=327&type=chunk) - With limited experience in launching and marketing drugs, the company's ability to generate substantial revenue is at risk if it cannot effectively build its sales capabilities or secure successful third-party collaborations[330](index=330&type=chunk)[335](index=335&type=chunk) - The company faces substantial competition from major pharmaceutical and biotechnology companies with greater financial resources and expertise, which could result in competitors developing or commercializing drugs more successfully[338](index=338&type=chunk)[342](index=342&type=chunk) [Risks Related to Clinical Development and Regulatory Approval](index=59&type=section&id=Risks%20Related%20to%20Clinical%20Development%20and%20Regulatory%20Approval) Drug development is long, expensive, and uncertain, with risks of trial failures, non-predictive early-stage results, and delays due to patient enrollment difficulties - The company's business is highly dependent on the successful clinical development and regulatory approval of its drug candidates, a process that is long, expensive, and has an uncertain outcome[369](index=369&type=chunk)[370](index=370&type=chunk) - Results from early-stage clinical trials may not be predictive of later-stage trial outcomes, and drug candidates may fail to demonstrate the required safety and efficacy, leading to significant setbacks[374](index=374&type=chunk) - Difficulties in enrolling a sufficient number of patients in clinical trials could cause delays, increase costs, and adversely affect the development timeline for drug candidates[381](index=381&type=chunk)[382](index=382&type=chunk) [Risks Related to Extensive Government Regulation](index=61&type=section&id=Risks%20Related%20to%20Extensive%20Government%20Regulation) The pharmaceutical industry is heavily regulated, and non-compliance can lead to sanctions, while adverse events or unfavorable reimbursement policies could harm commercial prospects - The pharmaceutical industry is heavily regulated in all jurisdictions, and failure to comply with complex and evolving requirements can lead to significant sanctions, including refusal to approve applications, withdrawal of approvals, or product recalls[385](index=385&type=chunk)[387](index=387&type=chunk) - Undesirable adverse events from drug candidates could halt clinical trials, delay or prevent regulatory approval, or result in a restrictive label, significantly harming commercial prospects[403](index=403&type=chunk)[404](index=404&type=chunk) - The availability of reimbursement and favorable pricing from government and third-party payors is critical for commercial success but is not guaranteed and is subject to increasing cost-containment pressures and legislative changes[420](index=420&type=chunk)[423](index=423&type=chunk)[424](index=424&type=chunk) [Risks Related to Our Financial Position and Need for Additional Capital](index=69&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position%20and%20Need%20for%20Additional%20Capital) The company has a history of net losses and may require additional financing, while also being exposed to foreign currency exchange risk, particularly with the RMB - The company has a history of significant net losses, with an accumulated deficit of **$2.0 billion** as of December 31, 2019, and anticipates continued losses as it expands R&D and commercialization efforts[444](index=444&type=chunk)[445](index=445&type=chunk) - The company may need to obtain additional financing to fund its operations, and an inability to do so on acceptable terms could force it to delay, reduce, or eliminate development programs or commercialization efforts[449](index=449&type=chunk)[453](index=453&type=chunk) - Operations are exposed to foreign currency exchange risk, particularly fluctuations in the RMB against the U.S. dollar, which could result in losses and reduce the value of investments[459](index=459&type=chunk)[461](index=461&type=chunk) [Risks Related to Our Intellectual Property](index=72&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) Protecting intellectual property is crucial but challenging due to the expensive and uncertain patent process, global enforcement difficulties, and potential infringement lawsuits - The company's success depends on its ability to obtain and maintain patent protection for its drugs, but the patent process is expensive and uncertain, and patents may be challenged, invalidated, or circumvented by competitors[470](index=470&type=chunk)[471](index=471&type=chunk)[477](index=477&type=chunk) - Protecting intellectual property rights globally is difficult and costly, as the laws of some countries, including China, may not protect these rights as robustly as U.S. law[482](index=482&type=chunk)[484](index=484&type=chunk) - The company may face lawsuits from third parties claiming infringement of their intellectual property rights, which could be costly, time-consuming, and could prevent the commercialization of its products[490](index=490&type=chunk)[491](index=491&type=chunk) [Risks Related to Our Reliance on Third Parties](index=77&type=section&id=Risks%20Related%20to%20Our%20Reliance%20on%20Third%20Parties) Reliance on third-party distributors, manufacturers, and CROs exposes the company to risks of supply shortages, quality issues, and delays in regulatory approval or commercialization - The company relies on third-party distributors for its approved drugs, and any failure to maintain an effective distribution channel could adversely affect sales and business operations[511](index=511&type=chunk)[512](index=512&type=chunk) - Reliance on a limited number of third-party manufacturers for commercial and clinical drug supplies exposes the company to risks of supply shortages, quality issues, and compliance failures with GMP requirements[515](index=515&type=chunk)[517](index=517&type=chunk) - The company depends on third-party CROs to conduct preclinical studies and clinical trials, and if these parties fail to perform their duties successfully or meet deadlines, regulatory approval and commercialization could be delayed or prevented[524](index=524&type=chunk)[525](index=525&type=chunk) [Risks Related to Our Industry, Business and Operations](index=82&type=section&id=Risks%20Related%20to%20Our%20Industry,%20Business%20and%20Operations) Operational risks include retaining key personnel, managing rapid growth, vulnerability to IT security breaches, and disruptions from public health crises like COVID-19 - Future success is highly dependent on retaining key executives and attracting qualified scientific, clinical, and commercial personnel in a competitive industry[541](index=541&type=chunk)[542](index=542&type=chunk) - The company has grown rapidly, increasing its employee count by approximately **62% in 2019**, and may experience difficulties in managing this growth, which imposes significant responsibilities on management[547](index=547&type=chunk)[548](index=548&type=chunk) - Internal IT systems and those of third-party collaborators are vulnerable to security breaches and failures, which could disrupt development programs and compromise sensitive data[574](index=574&type=chunk)[575](index=575&type=chunk) - Business operations are subject to disruption from public health crises, such as the **COVID-19 outbreak**, which could negatively impact clinical trials, regulatory interactions, and commercial revenue[592](index=592&type=chunk)[594](index=594&type=chunk) [Risks Related to Doing Business in the PRC](index=92&type=section&id=Risks%20Related%20to%20Doing%20Business%20in%20the%20PRC) Operating in China involves risks from highly regulated and changing pharmaceutical laws, uncertainties in legal enforcement, potential PRC resident enterprise tax status, and limited PCAOB audit inspections - The pharmaceutical industry in China is highly regulated and subject to significant changes, which could increase compliance costs or delay commercialization of drugs[616](index=616&type=chunk)[617](index=617&type=chunk) - Uncertainties in the interpretation and enforcement of PRC laws, including the new Foreign Investment Law, could adversely affect business operations and increase compliance costs[621](index=621&type=chunk)[622](index=622&type=chunk)[625](index=625&type=chunk) - The company may be treated as a PRC resident enterprise for tax purposes, which could subject it to PRC income tax on its worldwide income and subject foreign investors to PRC tax on dividends and capital gains[641](index=641&type=chunk)[642](index=642&type=chunk)[645](index=645&type=chunk) - The company's auditor is not fully inspected by the PCAOB due to its substantial operations in the PRC, which could deprive investors of the benefits of such inspections and lead to a loss of confidence in financial reporting[654](index=654&type=chunk)[655](index=655&type=chunk)[656](index=656&type=chunk) [Risks Related to Our American Depositary Shares and Ordinary Shares](index=98&type=section&id=Risks%20Related%20to%20Our%20American%20Depositary%20Shares%20and%20Ordinary%20Shares) The trading prices of the company's shares are highly volatile, shareholders may have fewer rights as a Cayman Islands company, and significant insider control could deter changes in control - The trading prices of the company's ordinary shares and ADSs can be highly volatile due to a variety of factors, including clinical trial results, regulatory decisions, and market conditions[662](index=662&type=chunk)[663](index=663&type=chunk)[664](index=664&type=chunk) - As a Cayman Islands company, shareholders may have fewer rights and face more difficulties in protecting their interests compared to shareholders of U.S. or Hong Kong corporations[678](index=678&type=chunk)[679](index=679&type=chunk) - The company's directors, executive officers, and principal shareholders control a significant percentage of outstanding shares, allowing them to exert substantial influence over corporate matters, which could discourage a change in control[710](index=710&type=chunk)[711](index=711&type=chunk) - The company may be classified as a Passive Foreign Investment Company (PFIC) in future taxable years, which could result in adverse U.S. federal income tax consequences for U.S. shareholders[712](index=712&type=chunk)[713](index=713&type=chunk) [Properties](index=104&type=section&id=Item%202.%20Properties) The company primarily leases its global office and laboratory facilities, with owned properties including a manufacturing site in Guangzhou and offices in Changping, Beijing - The company leases most of its facilities, with major locations in Beijing, Shanghai, Suzhou, and Guangzhou in China; Cambridge, MA, Ridgefield Park, NJ, and Emeryville/San Mateo, CA in the U.S.; and Basel, Switzerland[719](index=719&type=chunk) - Owned facilities include the manufacturing site in Guangzhou, China, and the offices and laboratories in Changping, Beijing[719](index=719&type=chunk) [Legal Proceedings](index=104&type=section&id=Item%203.%20Legal%20Proceedings) As of the report date, BeiGene is not a party to any legal proceedings expected to have a material adverse effect on its business or financial condition - As of the report date, BeiGene is not involved in any material legal proceedings[721](index=721&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=105&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) BeiGene's ADSs trade on NASDAQ and ordinary shares on HKEX, with the company intending to retain all earnings for business development rather than paying cash dividends Security Trading Information | Security | Trading Symbol | Exchange | | :--- | :--- | :--- | | American Depositary Shares (ADSs) | BGNE | The NASDAQ Global Select Market | | Ordinary Shares | 06160 | The Stock Exchange of Hong Kong Limited | - The company has adopted a dividend policy stating its intention to retain all available funds and earnings for business development and does not anticipate paying cash dividends in the foreseeable future[726](index=726&type=chunk)[727](index=727&type=chunk) [Selected Consolidated Financial Data](index=109&type=section&id=Item%206.%20Selected%20Consolidated%20Financial%20Data) The company's selected financial data shows significant revenue growth from **$1.1 million** in 2016 to **$428.2 million** in 2019, accompanied by increased R&D expenses and widening net losses Selected Consolidated Financial Data (in thousands of U.S. Dollars) | | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $428,212 | $198,220 | $238,387 | $1,070 | $8,816 | | **Research and development** | $(927,338) | $(679,005) | $(269,018) | $(98,033) | $(58,250) | | **Loss from operations** | $(959,891) | $(705,769) | $(98,457) | $(117,060) | $(56,745) | | **Net loss** | $(950,578) | $(674,033) | $(93,299) | $(119,217) | $(57,102) | | **Total assets** | $1,612,289 | $2,249,684 | $1,046,479 | $405,813 | $116,764 | | **Total liabilities** | $633,934 | $496,037 | $362,248 | $52,906 | $42,445 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=111&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Total revenues increased by **116%** to **$428.2 million** in 2019, driven by product and collaboration revenue, while operating expenses rose **54%** to **$1.39 billion**, resulting in a net loss of **$950.6 million**, with strong liquidity bolstered by a **$2.8 billion** Amgen infusion [Results of Operations](index=115&type=section&id=Results%20of%20Operations) Total revenues increased by **116%** in 2019 due to product and collaboration revenue, while R&D and SG&A expenses significantly rose, leading to a **41%** increase in net loss Comparison of Results of Operations for Years Ended Dec 31, 2019 and 2018 (in thousands) | | 2019 | 2018 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $428,212 | $198,220 | $229,992 | 116% | | Product revenue, net | $222,596 | $130,885 | $91,711 | 70% | | Collaboration revenue | $205,616 | $67,335 | $138,281 | 205% | | **Total Expenses** | $(1,388,103) | $(903,989) | $(484,114) | 54% | | Cost of sales - product | $(71,190) | $(28,705) | $(42,485) | 148% | | Research and development | $(927,338) | $(679,005) | $(248,333) | 37% | | Selling, general and administrative | $(388,249) | $(195,385) | $(192,864) | 99% | | **Loss from operations** | $(959,891) | $(705,769) | $(254,122) | 36% | | **Net loss** | $(950,578) | $(674,033) | $(276,545) | 41% | - The increase in collaboration revenue was primarily due to a **$150.0 million** payment received upon the termination of the **tislelizumab** collaboration agreement with BMS[779](index=779&type=chunk) - The **37%** increase in R&D expense was driven by the advancement of clinical programs for **zanubrutinib** and **tislelizumab** and increased internal R&D personnel costs[782](index=782&type=chunk)[783](index=783&type=chunk)[785](index=785&type=chunk) - The **99%** increase in SG&A expense was mainly due to hiring more personnel to support the expansion of commercial organizations in China and the U.S., and increased external selling and marketing expenses[786](index=786&type=chunk) [Liquidity and Capital Resources](index=118&type=section&id=Liquidity%20and%20Capital%20Resources) The company ended 2019 with **$985.5 million** in cash and investments, further strengthened by a **$2.8 billion** Amgen infusion in January 2020, expected to fund operations for at least 12 months Cash Flow Summary (in thousands) | | 2019 | 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(750,269) | $(547,717) | | Net cash provided by (used in) investing activities | $554,163 | $(637,613) | | Net cash provided by financing activities | $85,680 | $1,690,537 | - As of December 31, 2019, the company had **$985.5 million** in cash, cash equivalents, restricted cash, and short-term investments[792](index=792&type=chunk) - On January 2, 2020, the company received approximately **$2.8 billion** from the sale of ADSs to Amgen in connection with their strategic collaboration[792](index=792&type=chunk) - The company expects existing cash and investments, including the Amgen proceeds, to be sufficient to fund operating expenses and capital expenditures for at least the next **12 months**[807](index=807&type=chunk) [Critical Accounting Policies](index=122&type=section&id=Critical%20Accounting%20Policies) Key accounting policies include revenue recognition (ASC 606) for product sales and collaborations, expensing R&D costs as incurred, and recognizing share-based compensation (ASC 718) based on fair value - Revenue Recognition (ASC 606): Revenue is recognized when a customer obtains control of goods or services, occurring upon delivery for product sales, and involving identification and allocation for distinct performance obligations in collaborations[824](index=824&type=chunk)[826](index=826&type=chunk)[830](index=830&type=chunk) - Research and Development Expenses: R&D costs are expensed as incurred, clinical trial costs are accrued based on estimates, and upfront/pre-commercial milestone payments for acquired in-process R&D are expensed immediately if they have no alternative future use[838](index=838&type=chunk)[839](index=839&type=chunk)[842](index=842&type=chunk) - Share-Based Compensation (ASC 718): Equity awards are recognized based on their grant-date fair value using a binomial option-pricing model, requiring subjective assumptions, with compensation expense recorded net of estimated forfeitures[843](index=843&type=chunk)[848](index=848&type=chunk)[849](index=849&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=127&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risks include interest rate risk impacting investments, credit risk managed through reputable institutions, and foreign currency exchange rate risk, particularly from RMB fluctuations - The primary market risk is from fluctuations in interest rates, which affect the value of the company's cash equivalents and short-term investments, with a hypothetical **100-basis point** change impacting the portfolio's fair value by **$1.1 million** as of December 31, 2019[857](index=857&type=chunk) - The company is exposed to foreign currency exchange risk, primarily from the fluctuation of the Chinese RMB against the U.S. dollar, as a significant portion of operations are in the PRC[861](index=861&type=chunk)[862](index=862&type=chunk) - Credit risk is associated with cash, cash equivalents, and short-term investments deposited in various financial institutions, mitigated by using major reputable institutions and investing in high-quality securities[856](index=856&type=chunk) [Financial Statements and Supplementary Data](index=128&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements and notes for 2017-2019, along with the independent auditor's unqualified opinions on both the financial statements and internal control over financial reporting [Report of Independent Registered Public Accounting Firm](index=133&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Ernst & Young Hua Ming LLP issued unqualified opinions on the consolidated financial statements and internal control over financial reporting, highlighting R&D expense accrual as a critical audit matter - The independent auditor, Ernst & Young Hua Ming LLP, issued an unqualified opinion on the consolidated financial statements, stating they present fairly, in all material respects, the financial position and results of operations in conformity with U.S. GAAP[885](index=885&type=chunk) - The auditor also issued an unqualified opinion on the company's internal control over financial reporting as of December 31, 2019, based on the COSO framework[894](index=894&type=chunk) - The audit identified the accrual of research and development expenses as a critical audit matter due to the significant management judgments and estimates required in determining the accrued balances for outsourced service providers[890](index=890&type=chunk)[892](index=892&type=chunk) [Consolidated Financial Statements](index=136&type=section&id=Consolidated%20Financial%20Statements) This section provides the company's consolidated balance sheets, statements of operations, and cash flows, offering a comprehensive overview of its financial performance and position Consolidated Balance Sheet Highlights (As of Dec 31, in thousands) | | 2019 | 2018 | | :--- | :--- | :--- | | **Total Assets** | $1,612,289 | $2,249,684 | | Cash, cash equivalents, and restricted cash | $620,775 | $740,713 | | Short-term investments | $364,728 | $1,068,509 | | **Total Liabilities** | $633,934 | $496,037 | | **Total Equity** | $978,355 | $1,753,647 | Consolidated Statement of Operations Highlights (Year Ended Dec 31, in thousands) | | 2019 | 2018 | 2017 | | :--- | :--- | :--- | | **Total Revenues** | $428,212 | $198,220 | $238,387 | | **Loss from operations** | $(959,891) | $(705,769) | $(98,457) | | **Net loss** | $(950,578) | $(674,033) | $(93,299) | Consolidated Cash Flow Highlights (Year Ended Dec 31, in thousands) | | 2019 | 2018 | 2017 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(750,269) | $(547,717) | $12,752 | | **Net cash provided by (used in) investing activities** | $554,163 | $(637,613) | $(356,319) | | **Net cash provided by financing activities** | $85,680 | $1,690,537 | $490,356 | [Controls and Procedures](index=128&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2019, with no material changes during the fourth quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2019[867](index=867&type=chunk)[868](index=868&type=chunk) - Management's assessment concluded that the company maintained effective internal control over financial reporting as of December 31, 2019, based on the COSO framework[869](index=869&type=chunk)[870](index=870&type=chunk) - No changes in internal control over financial reporting occurred during the fourth quarter of 2019 that have materially affected, or are reasonably likely to materially affect, internal controls[872](index=872&type=chunk) Part III Part III of this Annual Report on Form 10-K, covering Items 10 through 14, incorporates information by reference from the company's definitive proxy statement, which will be filed with the SEC within 120 days of the fiscal year-end. These items relate to Directors, Executive Officers, and Corporate Governance; Executive Compensation; Security Ownership; Certain Relationships and Related Transactions; and Principal Accounting Fees and Services [Directors, Executive Officers and Corporate Governance](index=130&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) The information required for this item is incorporated by reference from the company's definitive proxy statement to be filed with the SEC - Information regarding directors, executive officers, and corporate governance is incorporated by reference from the definitive proxy statement[874](index=874&type=chunk) [Executive Compensation](index=130&type=section&id=Item%2011.%20Executive%20Compensation) The information required for this item is incorporated by reference from the company's definitive proxy statement to be filed with the SEC - Information regarding executive compensation is incorporated by reference from the definitive proxy statement[875](index=875&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=130&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) The information required for this item is incorporated by reference from the company's definitive proxy statement to be filed with the SEC - Information regarding security ownership is incorporated by reference from the definitive proxy statement[876](index=876&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=130&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) The information required for this item is incorporated by reference from the company's definitive proxy statement to be filed with the SEC - Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the definitive proxy statement[877](index=877&type=chunk) [Principal Accounting Fees and Services](index=130&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) The information required for this item is incorporated by reference from the company's definitive proxy statement to be filed with the SEC - Information regarding principal accounting fees and services is incorporated by reference from the definitive proxy statement[878](index=878&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=131&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists the financial statements and exhibits filed as part of the Annual Report, with financial statement schedules omitted as they are not applicable - The financial statements are filed as part of this Annual Report, and the Exhibit Index lists all filed exhibits[880](index=880&type=chunk)[881](index=881&type=chunk) - No financial statement schedules have been filed as they are not applicable or the required information is included in the financial statements or notes[880](index=880&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________________ FORM 10-Q ___________________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-376 ...

Drug Development and Clinical Trials - BeiGene's core candidate drugs, including zanubrutinib, tislelizumab, and pamiparib, are currently in late-stage clinical trials, with over 50 ongoing or planned clinical trials globally[7]. - The FDA accepted the new drug application for zanubrutinib for the treatment of relapsed or refractory mantle cell lymphoma (MCL), with a PDUFA date set for February 27, 2020[8]. - The NMPA granted priority review status for tislelizumab's supplemental new drug application for the treatment of previously treated locally advanced or metastatic urothelial carcinoma[8]. - The company has submitted regulatory approvals for zanubrutinib in the U.S. and China for various indications, including relapsed chronic lymphocytic leukemia (CLL)[7]. - BeiGene's commercial team is responsible for the sales of existing licensed drugs in China and preparing for the launch of its own developed candidates in China and the U.S.[7]. - The company is conducting extensive clinical trials for zanubrutinib, a potential best-in-class BTK inhibitor, with two Phase 2 trials approved in China for relapsed/refractory chronic lymphocytic leukemia/small lymphocytic lymphoma and relapsed/refractory mantle cell lymphoma[16]. - The company expects to receive approval for zanubrutinib in China for treating relapsed/refractory mantle cell lymphoma and chronic lymphocytic leukemia/small lymphocytic lymphoma by mid-2020[16]. - The company has submitted a new drug application for tislelizumab for relapsed/refractory classical Hodgkin lymphoma in China, which has been accepted and prioritized for review, with expected approval in 2019[17]. - There are currently 15 registered or potential registration clinical trials targeting eight types of tumors, with additional global key trials expected to start in 2019 and 2020[17]. - The company is focusing on enhancing its global clinical development capabilities and commercial strength in China to seek collaborations with other biopharmaceutical companies[19]. Financial Performance - Total revenue increased from $85.3 million for the six months ended June 30, 2018, to $321.2 million for the six months ended June 30, 2019, representing a 276% increase[26]. - Product revenue for the six months ended June 30, 2019, was $115.6 million, up 111% from $54.7 million in the same period of 2018[27]. - Collaboration revenue totaled $205.6 million, primarily due to $150.0 million received after the termination of the collaboration agreement with NewGen[28]. - The company reported a net loss of $254.0 million for the six months ended June 30, 2019, a decrease of 3% from a net loss of $262.8 million in the same period of 2018[25]. - The company anticipates an increase in product sales revenue in 2019 due to the further promotion of ABRAXANE®, REVLIMID®, and the launch of VIDAZA® in China[20]. - The company reported a total comprehensive loss of $256,019,000 for the six months ended June 30, 2019, compared to $259,478,000 in the same period of 2018[117]. - The company reported a net product revenue of $115,563,000 for the six months ended June 30, 2019, compared to $54,676,000 for the same period in 2018, representing a 111% increase[182]. Research and Development Expenses - Research and development expenses increased by $133.2 million or 48.6% to $407.1 million for the six months ended June 30, 2019[30]. - The company incurred research and development costs of $407,111,000 for the six months ended June 30, 2019, compared to $273,951,000 for the same period in 2018, reflecting a 49% increase[185]. - The increase in internal R&D expenses was driven by higher employee salaries and benefits, which rose by $34.8 million due to hiring more R&D personnel[32]. - Current R&D activities involve clinical progress on multiple candidate drugs, including zanubrutinib, tislelizumab, and pamiparib[22]. - The company faces significant uncertainties regarding the successful development and commercialization of its candidate drugs, including clinical trial completion and regulatory approvals[23]. Cash Flow and Liquidity - Cash, cash equivalents, restricted cash, and short-term investments totaled $1.6 billion as of June 30, 2019, including approximately $160.3 million held by a joint venture for establishing a commercial biopharmaceutical facility in Guangzhou[45]. - The net cash used in operating activities was $218.1 million for the six months ended June 30, 2019, compared to $221.6 million for the same period in 2018[46]. - The company expects to continue incurring losses as it develops drug candidates and seeks regulatory approvals, with significant commercialization expenses anticipated in China[52]. - The existing cash, cash equivalents, and short-term investments are expected to meet operational and capital expenditure needs for at least 12 months from the report date[52]. - The company plans to fund ongoing research and clinical development, including key trials for zanubrutinib, tislelizumab, and pamiparib in China and globally[52]. Shareholder Information - As of June 30, 2019, the total number of issued shares was 780,434,800[79]. - The largest shareholder, Julian C. Baker, holds 161,880,677 shares, representing approximately 20.74% of the total shares[78]. - Felix J. Baker also holds 161,880,677 shares, equivalent to 20.74% of the total shares[78]. - Baker Bros. Advisors (GP) LLC holds 161,745,282 shares, accounting for 20.73% of the total shares[78]. - Baker Brothers Life Sciences Capital, L.P. owns 145,425,622 shares, which is 18.63% of the total shares[78]. - FMR Co., Inc. has a beneficial ownership of 86,849,946 shares, representing 11.13% of the total shares[78]. - Fidelity Management & Research Company holds 78,907,004 shares, equivalent to 10.11% of the total shares[78]. Corporate Governance - The company emphasizes strict corporate governance to enhance transparency and accountability to shareholders[101]. - The audit committee consists of three independent non-executive directors, ensuring compliance with financial reporting and regulatory requirements[104]. - The governance committee has established standards for board member qualifications and recommended governance guidelines[103]. - The company continues to review and monitor its corporate governance practices to maintain high standards[104]. Accounting and Financial Reporting - The company's financial statements are prepared in accordance with U.S. GAAP, requiring estimates and judgments that may differ from actual results[60]. - The interim financial statements include the financial results of the company and its subsidiaries, with significant intercompany transactions eliminated upon consolidation[129]. - The company adopted the new lease accounting standard effective January 1, 2019, recognizing lease liabilities of $27,446,000 and right-of-use assets of $25,978,000[131]. - The cumulative impact on the balance sheet as of December 31, 2018, included a decrease of $271,000 in prepaid expenses and other current assets, and an increase of $71,036,000 in operating lease right-of-use assets[133]. Acquisitions and Collaborations - The company entered a global collaboration agreement with BioAtla LLC for the development of the CAB-CTLA-4 antibody, which includes an upfront payment of $20,000,000 and milestone payments upon achieving specific clinical targets[145]. - The acquisition of Beijing Yingren Weiye Biotechnology Co., Ltd. was completed for a total cash consideration of $38,654,000, classified as an asset acquisition[147]. - The company received $150 million from NewGen upon terminating the collaboration agreement for the PD-1 inhibitor tislelizumab (BGB-A317), which has been recognized as other collaboration income for the six months ended June 30, 2019[142].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________________ FORM 10-Q ___________________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37686 __ ...

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis for the three months ended March 31, 2019 [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents BeiGene, Ltd.'s unaudited condensed consolidated financial statements, covering balance sheets, operations, comprehensive loss, cash flows, and equity, with detailed notes on business and accounting policies [Condensed Consolidated Balance Sheets](index=4&type=section&id=BEIGENE%2C%20LTD.%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheets (Amounts in thousands of U.S. Dollars) | Item | March 31, 2019 ($) | December 31, 2018 ($) | Change ($) | Change (%) | |:---|:---|:---|:---|:---| | **Assets** ||||| | Cash and cash equivalents | 764,492 | 712,937 | 51,555 | 7.23% | | Short-term investments | 849,167 | 1,068,509 | (219,342) | -20.53% | | Total current assets | 1,796,730 | 1,943,842 | (147,112) | -7.57% | | Property, plant and equipment, net | 197,806 | 157,061 | 40,745 | 25.94% | | Total assets | 2,172,232 | 2,249,684 | (77,452) | -3.44% | | **Liabilities** ||||| | Total current liabilities | 238,809 | 246,452 | (7,643) | -3.10% | | Total non-current liabilities | 310,744 | 249,585 | 61,159 | 24.50% | | Total liabilities | 549,553 | 496,037 | 53,516 | 10.79% | | **Equity** ||||| | Total BeiGene, Ltd. shareholders' equity | 1,608,769 | 1,739,202 | (130,433) | -7.50% | | Total equity | 1,622,679 | 1,753,647 | (130,968) | -7.47% | [Condensed Consolidated Statements of Operations](index=6&type=section&id=BEIGENE%2C%20LTD.%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) This section outlines the company's revenues, expenses, and net loss over specific periods, reflecting operational performance Condensed Consolidated Statements of Operations (Amounts in thousands of U.S. Dollars) | Item | Three Months Ended March 31, 2019 ($) | Three Months Ended March 31, 2018 ($) | Change ($) | Change (%) | |:---|:---|:---|:---|:---| | Product revenue, net | 57,421 | 23,250 | 34,171 | 147.0% | | Collaboration revenue | 20,412 | 9,294 | 11,118 | 119.6% | | Total revenues | 77,833 | 32,544 | 45,289 | 139.1% | | Cost of sales - product | (15,261) | (4,550) | (10,711) | 235.4% | | Research and development | (178,351) | (109,700) | (68,651) | 62.6% | | Selling, general and administrative | (57,645) | (28,915) | (28,730) | 99.4% | | Total expenses | (251,588) | (143,353) | (108,235) | 75.5% | | Loss from operations | (173,755) | (110,809) | (62,946) | 56.8% | | Net loss | (168,069) | (105,116) | (62,953) | 59.9% | | Net loss attributable to BeiGene, Ltd. | (167,640) | (104,596) | (63,044) | 60.3% | | Net loss per share, basic and diluted | (0.22) | (0.16) | (0.06) | 37.5% | | Net loss per American Depositary Share ("ADS"), basic and diluted | (2.81) | (2.03) | (0.78) | 38.4% | [Condensed Consolidated Statements of Comprehensive Loss](index=7&type=section&id=BEIGENE%2C%20LTD.%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20LOSS) This section presents the company's net loss and other comprehensive income/loss components, providing a complete view of changes in equity from non-owner sources Condensed Consolidated Statements of Comprehensive Loss (Amounts in thousands of U.S. Dollars) | Item | Three Months Ended March 31, 2019 ($) | Three Months Ended March 31, 2018 ($) | Change ($) | Change (%) | |:---|:---|:---|:---|:---| | Net loss | (168,069) | (105,116) | (62,953) | 59.9% | | Other comprehensive income, net of tax of nil: ||||| | Foreign currency translation adjustments | 3,755 | 272 | 3,483 | 1280.5% | | Unrealized holding gain, net | 685 | 329 | 356 | 108.2% | | Comprehensive loss | (163,629) | (104,515) | (59,114) | 56.6% | | Comprehensive loss attributable to BeiGene, Ltd. | (163,094) | (104,059) | (59,035) | 56.7% | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=BEIGENE%2C%20LTD.%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section details the company's cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (Amounts in thousands of U.S. Dollars) | Item | Three Months Ended March 31, 2019 ($) | Three Months Ended March 31, 2018 ($) | Change ($) | Change (%) | |:---|:---|:---|:---|:---| | Net cash used in operating activities | (171,975) | (104,501) | (67,474) | 64.6% | | Net cash provided by (used in) investing activities | 172,416 | (394,352) | 566,768 | -143.7% | | Net cash provided by financing activities | 42,964 | 763,901 | (720,937) | -94.4% | | Net increase in cash, cash equivalents, and restricted cash | 47,670 | 268,492 | (220,822) | -82.2% | | Cash, cash equivalents, and restricted cash at end of period | 788,383 | 508,094 | 280,289 | 55.2% | [Consolidated Statements of Shareholders' Equity](index=10&type=section&id=BEIGENE%2C%20LTD.%20CONSOLIDATED%20STATEMENTS%20OF%20SHAREHOLDERS%27%20EQUITY) This section tracks changes in the company's shareholders' equity, including ordinary shares, additional paid-in capital, and accumulated deficit Consolidated Statements of Shareholders' Equity (Amounts in thousands of U.S. Dollars) | Item | Balance at December 31, 2018 ($) | Balance at March 31, 2019 ($) | Change ($) | |:---|:---|:---|:---| | Ordinary Shares Amount | 77 | 78 | 1 | | Additional Paid-In Capital | 2,744,814 | 2,777,474 | 32,660 | | Accumulated Other Comprehensive Income | 1,526 | 6,072 | 4,546 | | Accumulated Deficit | (1,007,215) | (1,174,855) | (167,640) | | Total BeiGene, Ltd. shareholders' equity | 1,739,202 | 1,608,769 | (130,433) | | Noncontrolling Interests | 14,445 | 13,910 | (535) | | Total Equity | 1,753,647 | 1,622,679 | (130,968) | [Notes to the Condensed Consolidated Financial Statements](index=11&type=section&id=BEIGENE%2C%20LTD.%20NOTES%20TO%20THE%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed explanations and disclosures for the condensed consolidated financial statements, covering accounting policies and specific line items [Note 1. Description of Business, Basis of Presentation and Consolidation and Significant Accounting Policies](index=11&type=section&id=1.%20Description%20of%20Business%2C%20Basis%20of%20Presentation%20and%20Consolidation%20and%20Significant%20Accounting%20Policies) This note describes BeiGene, Ltd.'s business, basis of financial statement presentation, consolidation principles, and significant accounting policies - BeiGene, Ltd. is a commercial-stage biotechnology company focused on developing and commercializing innovative molecularly targeted and immuno-oncology drugs for cancer treatment. The company is dual-listed on NASDAQ (February 2016) and HKEx (August 2018)[21](index=21&type=chunk)[22](index=22&type=chunk) - The company adopted new lease accounting standards (ASU No. 2016-2 and related ASUs) effective January 1, 2019, recognizing a lease liability of **$27.4 million** and corresponding right-of-use (ROU) assets of **$26.0 million**. Land use rights of **$45.1 million** were reclassified to ROU assets. This adoption did not impact the statements of operations or cash flows[31](index=31&type=chunk)[32](index=32&type=chunk)[35](index=35&type=chunk) [Note 2. Fair Value Measurements](index=14&type=section&id=2.%20Fair%20Value%20Measurements) This note details the fair value measurements of the company's financial assets and liabilities, categorized by valuation inputs Fair Value of Financial Assets (Amounts in thousands of U.S. Dollars) | Item | March 31, 2019 ($) | December 31, 2018 ($) | |:---|:---|:---| | **Short-term investments:** ||| | U.S. treasury securities | 825,435 | 1,068,509 | | U.S. agency securities | 23,732 | — | | **Cash equivalents:** ||| | U.S. treasury securities | 124,856 | — | | Money market funds | 59,884 | 159,810 | | **Total** | **1,033,907** | **1,228,319** | [Note 3. Research and Development Collaborative Arrangements](index=15&type=section&id=3.%20Research%20and%20Development%20Collaborative%20Arrangements) This note outlines the company's research and development collaboration agreements and the associated revenue recognition Collaboration Revenue (Amounts in thousands of U.S. Dollars) | Item | Three Months Ended March 31, 2019 ($) | Three Months Ended March 31, 2018 ($) | Change ($) | Change (%) | |:---|:---|:---|:---|:---| | Reimbursement of research and development costs | 18,174 | 7,555 | 10,619 | 140.6% | | Research and development service revenue | 2,238 | 1,739 | 499 | 28.7% | | **Total** | **20,412** | **9,294** | **11,118** | **119.6%** | - Collaboration revenue primarily stems from an agreement with Celgene for tislelizumab, including R&D reimbursement and service revenue. A prior agreement with Merck KGaA was terminated in December 2018[53](index=53&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) [Note 4. Business Combinations and Asset Acquisitions](index=16&type=section&id=4.%20Business%20Combinations%20and%20Asset%20Acquisitions) This note describes the company's business combinations and asset acquisitions, including their financial impact - In September 2018, BeiGene (Guangzhou) Co., Ltd. acquired Baiji Shenzhou (Guangzhou) Pharmaceuticals Co., Ltd. for **$0.6 million**, primarily for a drug distribution license, classified as an asset acquisition[58](index=58&type=chunk) - In October 2018, BeiGene (Hong Kong) Co., Ltd. acquired Beijing Innerway Bio-tech Co., Ltd. for **$38.7 million**, primarily for a building and associated land use right, also classified as an asset acquisition[59](index=59&type=chunk)[60](index=60&type=chunk) [Note 5. Restricted Cash and Short-term Investments](index=16&type=section&id=5.%20Restricted%20Cash%20and%20Short-term%20Investments) This note provides details on the company's restricted cash balances and short-term investment portfolio - As of March 31, 2019, restricted cash totaled **$23.9 million**, comprising secured deposits for letters of credit and as security for a long-term bank loan[61](index=61&type=chunk) Short-term Investments (Available-for-Sale Debt Securities) (Amounts in thousands of U.S. Dollars) | Item | March 31, 2019 Fair Value ($) | December 31, 2018 Fair Value ($) | |:---|:---|:---|\n| U.S. treasury securities | 825,435 | 1,068,509 | | U.S. agency securities | 23,732 | — | | **Total** | **849,167** | **1,068,509** | [Note 6. Inventories](index=17&type=section&id=6.%20Inventories) This note details the composition and valuation of the company's inventory balances - Inventories, consisting entirely of finished goods product purchased from Celgene for distribution in the PRC, decreased from **$16.2 million** as of December 31, 2018, to **$13.1 million** as of March 31, 2019[64](index=64&type=chunk) [Note 7. Property, plant and equipment](index=17&type=section&id=7.%20Property%2C%20plant%20and%20equipment) This note provides information on the company's property, plant, and equipment, including additions, disposals, and depreciation Property, Plant and Equipment, Net (Amounts in thousands of U.S. Dollars) | Item | March 31, 2019 ($) | December 31, 2018 ($) | |:---|:---|:---|\n| Property, plant and equipment, at cost | 82,550 | 77,296 | | Less accumulated depreciation | (23,267) | (19,722) | | Construction in progress | 138,523 | 99,487 | | **Property, plant and equipment, net** | **197,806** | **157,061** | - Construction in progress, primarily for the Guangzhou manufacturing facility, increased by **$39.0 million** to **$138.5 million** as of March 31, 2019. Depreciation expense for the three months ended March 31, 2019, was **$3.1 million**, up from **$2.0 million** in the prior year period[65](index=65&type=chunk) [Note 8. Manufacturing Facility in Guangzhou](index=19&type=section&id=8.%20Manufacturing%20Facility%20in%20Guangzhou) This note describes the joint venture and funding for the company's commercial-scale biologics manufacturing facility in Guangzhou - BeiGene HK and Guangzhou GET Technology Development Co., Ltd. (GET) established BeiGene Biologics, a joint venture, to build a commercial scale biologics manufacturing facility in Guangzhou. BeiGene HK holds a **95%** equity interest[67](index=67&type=chunk)[68](index=68&type=chunk)[70](index=70&type=chunk) - As of March 31, 2019, **$143.3 million** in cash and cash equivalents and **$23.9 million** in restricted cash were held by BeiGene Biologics for facility construction and R&D funding[71](index=71&type=chunk) [Note 9. Leases](index=19&type=section&id=9.%20Leases) This note details the company's lease arrangements, including right-of-use assets, lease liabilities, and lease costs - The Company has operating leases for office and manufacturing facilities in the US, Switzerland, and China, with remaining terms up to five years. Land use rights in Guangzhou and Changping, Beijing, are also treated as operating leases[72](index=72&type=chunk) Lease Costs (Amounts in thousands of U.S. Dollars) | Item | Three Months Ended March 31, 2019 ($) | |:---|:---|\n| Operating lease cost | 3,393 | | Variable lease cost | 297 | | Short-term lease cost | 133 | | **Total lease cost** | **3,823** | Supplemental Balance Sheet Information Related to Leases (Amounts in thousands of U.S. Dollars) | Item | As of March 31, 2019 ($) | |:---|:---|\n| Operating lease right-of-use assets | 27,518 | | Land use rights, net | 45,106 | | **Total operating lease right-of-use assets** | **72,624** | | Current portion of operating lease liabilities | 9,451 | | Operating lease liabilities | 19,545 | | **Total lease liabilities** | **28,996** | [Note 10. Intangible Assets](index=21&type=section&id=10.%20Intangible%20Assets) This note provides information on the company's intangible assets, including their nature, carrying amounts, and amortization Intangible Assets, Net (Amounts in thousands of U.S. Dollars) | Item | March 31, 2019 Net ($) | December 31, 2018 Net ($) | |:---|:---|:---|\n| Product distribution rights | 6,313 | 6,500 | | Trading license | 528 | 672 | | **Total finite-lived intangible assets** | **6,841** | **7,172** | - Amortization expense for intangible assets increased to **$0.3 million** for the three months ended March 31, 2019, from **$0.2 million** in the prior year period. Expected amortization for the remainder of 2019 is approximately **$1.0 million**[80](index=80&type=chunk) [Note 11. Income Taxes](index=21&type=section&id=11.%20Income%20Taxes) This note details the company's income tax expense, deferred tax assets and liabilities, and unrecognized tax benefits - The Company reported an income tax expense of **$0.5 million** for the three months ended March 31, 2019, a shift from an income tax benefit of **$3.4 million** in the same period of 2018. This change is primarily due to increased income in U.S. and certain China subsidiaries, offset by U.S. R&D tax credits[81](index=81&type=chunk) - Valuation allowances have been provided for deferred tax assets in Australia, Switzerland, and certain China subsidiaries where realization is not considered more likely than not. Gross unrecognized tax benefits were **$2.6 million** as of March 31, 2019[82](index=82&type=chunk)[83](index=83&type=chunk) [Note 12. Supplemental Balance Sheet Information](index=22&type=section&id=12.%20Supplemental%20Balance%20Sheet%20Information) This note provides additional detail on specific balance sheet accounts, such as prepaid expenses and accrued liabilities Prepaid Expenses and Other Current Assets (Amounts in thousands of U.S. Dollars) | Item | March 31, 2019 ($) | December 31, 2018 ($) | |:---|:---|:---|\n| Prepaid research and development costs | 66,817 | 58,673 | | Prepaid taxes | 9,078 | 10,479 | | Interest receivable | 2,580 | 3,096 | | Other | 11,466 | 9,694 | | **Total** | **89,941** | **81,942** | Accrued Expenses and Other Payables (Amounts in thousands of U.S. Dollars) | Item | March 31, 2019 ($) | December 31, 2018 ($) | |:---|:---|:---|\n| Compensation related | 18,540 | 35,887 | | External research and development activities related | 46,889 | 34,588 | | Commercial activities | 9,437 | 10,433 | | Individual income tax and other taxes | 8,626 | 8,030 | | Sales rebates and returns related | 3,366 | 4,749 | | Professional fees and other | 3,879 | 6,727 | | **Total** | **90,737** | **100,414** | [Note 13. Long-term Bank Loans](index=23&type=section&id=13.%20Long-term%20Bank%20Loans) This note describes the company's long-term bank loan agreements, including terms, outstanding balances, and interest expenses - BeiGene (Suzhou) has a RMB120,000 loan at **7% interest**, with **$8.9 million** (RMB60,000) remaining, due September 30, 2019[91](index=91&type=chunk) - BeiGene Guangzhou Factory has a nine-year RMB580,000 loan with China Construction Bank at a floating interest rate (**4.9% for Q1 2019**). As of March 31, 2019, **$77.5 million** (RMB520,000) has been drawn, with **$36.7 million** drawn in Q1 2019[92](index=92&type=chunk) - Interest expense recognized for Q1 2019 was **$0.9 million**, with **$0.6 million** capitalized[93](index=93&type=chunk) [Note 14. Shareholder Loan](index=23&type=section&id=14.%20Shareholder%20Loan) This note details the shareholder loan agreement, including its terms, interest rate, and debt-to-equity conversion feature - BeiGene Biologics has a RMB900,000 shareholder loan from GET, bearing **8% annual interest**, with a **72-month term** ending April 13, 2023. The loan includes a debt-to-equity conversion feature[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) - Total interest expense from the shareholder loan was **$2.6 million** for Q1 2019, with **$0.8 million** capitalized[99](index=99&type=chunk) [Note 15. Product Revenue](index=24&type=section&id=15.%20Product%20Revenue) This note provides a breakdown of the company's net product revenue and its primary sources Net Product Sales (Amounts in thousands of U.S. Dollars) | Item | Three Months Ended March 31, 2019 ($) | Three Months Ended March 31, 2018 ($) | Change ($) | Change (%) | |:---|:---|:---|:---|:---| | Product revenue – gross | 58,536 | 23,485 | 35,051 | 149.2% | | Less: Rebates and sales returns | (1,115) | (235) | (880) | 374.5% | | **Product revenue – net** | **57,421** | **23,250** | **34,171** | **147.0%** | - Net product revenue is derived from sales of ABRAXANE®, REVLIMID®, and VIDAZA® in China under a distribution license from Celgene[100](index=100&type=chunk) [Note 16. Loss Per Share](index=25&type=section&id=16.%20Loss%20Per%20Share) This note presents the calculation of basic and diluted net loss per share for the company Loss Per Share (Amounts in thousands of U.S. Dollars, except per share data) | Item | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | |:---|:---|:---|\n| Net loss attributable to BeiGene, Ltd. | (167,640) | (104,596) | | Weighted average shares outstanding, basic and diluted | 774,750,255 | 670,510,605 | | Net loss per share, basic and diluted | (0.22) | (0.16) | | Net loss per American Depositary Share ("ADS"), basic and diluted | (2.81) | (2.03) | [Note 17. Share-Based Compensation Expense](index=25&type=section&id=17.%20Share-Based%20Compensation%20Expense) This note details the company's share-based compensation plans, grants, and associated expenses - The company granted options for **590,967 ordinary shares** and restricted share units for **2,266,550 ordinary shares** under the 2016 Plan during Q1 2019[107](index=107&type=chunk) Share-Based Compensation Expense (Amounts in thousands of U.S. Dollars) | Item | Three Months Ended March 31, 2019 ($) | Three Months Ended March 31, 2018 ($) | |:---|:---|:---|\n| Research and development | 15,771 | 12,052 | | Selling, general and administrative | 10,621 | 5,344 | | **Total** | **26,392** | **17,396** | [Note 18. Accumulated Other Comprehensive Income](index=26&type=section&id=18.%20Accumulated%20Other%20Comprehensive%20Income) This note outlines the components and movements of the company's accumulated other comprehensive income Movement of Accumulated Other Comprehensive Income (Amounts in thousands of U.S. Dollars) | Item | Foreign Currency Translation Adjustments ($) | Gains on Available-for-Sale Securities ($) | Total ($) | |:---|:---|:---|:---|\n| Balance as of December 31, 2018 | (212) | 1,738 | 1,526 | | Other comprehensive income before reclassifications | 3,861 | 1,495 | 5,356 | | Amounts reclassified from accumulated other comprehensive income | — | (810) | (810) | | Net-current period other comprehensive income | 3,861 | 685 | 4,546 | | **Balance as of March 31, 2019** | **3,649** | **2,423** | **6,072** | [Note 19. Shareholders' Equity](index=26&type=section&id=19.%20Shareholders%27%20Equity) This note provides details on changes in the company's shareholders' equity, including capital raises and share issuances - On August 8, 2018, the Company completed an IPO on the Hong Kong Stock Exchange and a follow-on public offering, selling **65,600,000 ordinary shares** for net proceeds of **$869.7 million**[114](index=114&type=chunk) - On January 22, 2018, the Company completed a follow-on public offering of ADSs, representing **96,534,750 ordinary shares**, for net proceeds of **$757.6 million**[115](index=115&type=chunk) [Note 20. Restricted Net Assets](index=28&type=section&id=20.%20Restricted%20Net%20Assets) This note explains restrictions on the net assets of PRC subsidiaries and their impact on dividend payments - PRC statutory laws and regulations restrict the ability of PRC subsidiaries to pay dividends, requiring at least **10%** of annual after-tax profit to be set aside as statutory reserves until it reaches **50%** of registered capital[117](index=117&type=chunk)[118](index=118&type=chunk) - As of March 31, 2019, restricted net assets of PRC subsidiaries amounted to **$105.7 million**, up from **$93.3 million** as of December 31, 2018[120](index=120&type=chunk) [Note 21. Commitments and Contingencies](index=28&type=section&id=21.%20Commitments%20and%20Contingencies) This note discloses the company's significant purchase and capital commitments and potential contingencies - As of March 31, 2019, the Company had purchase commitments of **$56.1 million** for finished goods inventory from Celgene[121](index=121&type=chunk) - Capital commitments amounted to **$26.6 million**, mainly for the BeiGene Guangzhou Factory's manufacturing facility[122](index=122&type=chunk) [Note 22. Segment and geographic information](index=28&type=section&id=22.%20Segment%20and%20geographic%20information) This note provides information on the company's operating segments and geographic distribution of revenues and assets - The Company operates in one segment, with long-lived assets substantially located in the PRC[123](index=123&type=chunk) Total Net Revenues by Geographic Area (Amounts in thousands of U.S. Dollars) | Geographic Area | Three Months Ended March 31, 2019 ($) | Three Months Ended March 31, 2018 ($) | |:---|:---|:---|\n| PRC | 57,421 | 23,250 | | United States | 13,268 | 6,041 | | Other | 7,144 | 3,253 | | **Total** | **77,833** | **32,544** | [Note 23. Subsequent Event](index=28&type=section&id=23.%20Subsequent%20Event) This note describes significant events that occurred after the balance sheet date but before the financial statements were issued - On April 9, 2019, the Company entered into a global co-development and collaboration agreement with BioAtla LLC for the CAB-CTLA-4 antibody (BA3071), involving an upfront payment of **$20 million** and potential milestone payments and royalties[123](index=123&type=chunk)[125](index=125&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results for the three months ended March 31, 2019, compared to the same period in 2018, highlighting revenue drivers, expense trends, liquidity, capital resources, and critical accounting policies [Overview](index=30&type=section&id=Overview) This section provides a high-level summary of BeiGene's business, strategic focus, and global operational presence - BeiGene is a commercial-stage biotechnology company focused on developing and commercializing innovative molecularly-targeted and immuno-oncology drugs for cancer treatment[128](index=128&type=chunk) - Lead drug candidates include zanubrutinib (BTK inhibitor), tislelizumab (PD-1 inhibitor), and pamiparib (PARP1/PARP2 inhibitor), all in Phase 2 or 3 pivotal trials globally and/or in China[128](index=128&type=chunk) - The company has evolved into a fully-integrated global biotechnology company with operations in China, the United States, Europe, and Australia, including a global clinical development team and growing commercial team[129](index=129&type=chunk) [Recent Developments](index=31&type=section&id=Recent%20Developments) This section highlights key recent corporate and R&D collaboration agreements and their financial implications - On April 9, 2019, BeiGene entered a global co-development and collaboration agreement with BioAtla LLC for the CAB-CTLA-4 antibody (BA3071), involving an upfront payment of **$20 million** and potential milestone payments and royalties[132](index=132&type=chunk) - On March 6, 2019, the company announced a global R&D collaboration with Ambrx, Inc. for next-generation biologics, with Ambrx receiving an upfront payment of **$10 million** and eligibility for additional upfront, milestone, and royalty payments[133](index=133&type=chunk) [Components of Operating Results](index=31&type=section&id=Components%20of%20Operating%20Results) This section explains the key drivers and components of the company's revenues and operating expenses - Revenue consists of product sales (ABRAXANE®, REVLIMID®, VIDAZA® in China) and collaboration revenue (upfront license fees, R&D reimbursement from Celgene). Product sales are expected to increase in 2019[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) - Research and development expenses include costs for CROs, manufacturing, preclinical/clinical activities, regulatory operations, employee-related expenses, and in-process R&D. Key internally-developed drug candidates are zanubrutinib, tislelizumab, and pamiparib[139](index=139&type=chunk)[140](index=140&type=chunk) - Selling, general and administrative expenses cover product promotion, distribution, salaries, professional fees, and other administrative costs. These are expected to increase due to commercialization activities and global expansion[147](index=147&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, detailing changes in revenues, expenses, and net loss over the reporting periods Summary of Results of Operations (Amounts in thousands of U.S. Dollars) | Item | Three Months Ended March 31, 2019 ($) | Three Months Ended March 31, 2018 ($) | Change ($) | Change (%) | |:---|:---|:---|:---|:---| | Total revenues | 77,833 | 32,544 | 45,289 | 139% | | Total expenses | (251,588) | (143,353) | (108,235) | 76% | | Loss from operations | (173,755) | (110,809) | (62,946) | 57% | | Net loss attributable to BeiGene, Ltd. | (167,640) | (104,596) | (63,044) | 60% | - Net product revenue increased by **$34.2 million** (**147%**) to **$57.4 million**, driven by sales of ABRAXANE®, REVLIMID®, and VIDAZA® in China[151](index=151&type=chunk) - Research and development expense increased by **$68.7 million** (**62.6%**) to **$178.4 million**, primarily due to the advancement and expansion of clinical trials for zanubrutinib, tislelizumab, and lifirafenib, and increased employee salaries and benefits[155](index=155&type=chunk)[156](index=156&type=chunk) - Selling, general and administrative expense increased by **$28.7 million** (**99.4%**) to **$57.6 million**, mainly due to hiring more personnel for commercial expansion in China and increased share-based compensation[157](index=157&type=chunk)[159](index=159&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's cash position, funding requirements, and ability to meet its short-term and long-term obligations - The company incurred net losses of **$168.1 million** and **$105.1 million** for the three months ended March 31, 2019 and 2018, respectively, with an accumulated deficit of **$1.2 billion** as of March 31, 2019[163](index=163&type=chunk) Cash Flow Summary (Amounts in thousands of U.S. Dollars) | Item | Three Months Ended March 31, 2019 ($) | Three Months Ended March 31, 2018 ($) | |:---|:---|:---|\n| Net cash used in operating activities | (171,975) | (104,501) | | Net cash provided by (used in) investing activities | 172,416 | (394,352) | | Net cash provided by financing activities | 42,964 | 763,901 | | Net increase in cash, cash equivalents, and restricted cash | 47,670 | 268,492 | | Cash, cash equivalents, and restricted cash at end of period | 788,383 | 508,094 | - As of March 31, 2019, cash, cash equivalents, restricted cash, and short-term investments totaled **$1.6 billion**. The company expects existing capital to fund operations for at least the next **12 months** but will require substantial additional funding for global development and commercialization[164](index=164&type=chunk)[174](index=174&type=chunk) [Contractual Obligations and Commitments](index=40&type=section&id=Contractual%20Obligations%20and%20Commitments) This section outlines the company's significant contractual obligations and commitments, including their timing and amounts Significant Contractual Obligations as of March 31, 2019 (Amounts in thousands of U.S. Dollars) | Contractual obligations | Total ($) | Less Than 1 Year ($) | 1–3 Years ($) | 3–5 Years ($) | More Than 5 Years ($) | |:---|:---|:---|:---|:---|:---|\n| Operating lease commitments | 33,103 | 8,675 | 18,706 | 5,618 | 104 | | Purchase commitments | 56,135 | 56,135 | — | — | — | | Debt obligations | 241,594 | 8,940 | 267 | 162,922 | 69,465 | | Capital commitments | 26,647 | 26,647 | — | — | — | | **Total** | **357,479** | **100,397** | **18,973** | **168,540** | **69,569** | [Critical Accounting Policies and Significant Judgments and Estimates](index=41&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) This section discusses the accounting policies that require management's most difficult, subjective, or complex judgments - No material changes to critical accounting policies were reported for the three months ended March 31, 2019, compared to the Annual Report[188](index=188&type=chunk) [Recent Accounting Pronouncements](index=41&type=section&id=Recent%20Accounting%20Pronouncements) This section provides an overview of new accounting standards adopted or pending adoption and their potential impact - Information regarding recent accounting pronouncements is detailed in Note 1 to the condensed consolidated financial statements[190](index=190&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section discusses the company's exposure to market risks, including interest rate risk, credit risk, and foreign currency exchange rate risk, and the potential impact of these risks on its financial condition and results of operations - The company is exposed to interest rate risk, credit risk (from distributors and financial institutions), and foreign currency exchange rate risk (RMB, AUD, CHF, EUR)[191](index=191&type=chunk)[195](index=195&type=chunk) - A hypothetical **100-basis point** change in market interest rates would impact the fair value of the investment portfolio by **$2.9 million** as of March 31, 2019[193](index=193&type=chunk) - RMB is not freely convertible for capital account transactions, and its value is affected by China's economic conditions and foreign exchange policies, posing risks for U.S. dollar conversions and financial reporting[196](index=196&type=chunk)[197](index=197&type=chunk)[199](index=199&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of March 31, 2019, and notes the implementation of a company-wide ERP system as a significant change in internal control over financial reporting - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2019[202](index=202&type=chunk) - A company-wide Enterprise Resource Planning (ERP) system was implemented in Q1 2019, leading to changes in internal controls to maintain effectiveness[203](index=203&type=chunk) PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, and other disclosures relevant to the company's operations [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings that are believed to have a material adverse effect on its business, financial condition, results of operations, or cash flows, though litigation can still have an adverse impact - The company is not currently involved in any legal proceedings that are expected to have a material adverse effect on its business[206](index=206&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks that could adversely affect the company's business, including those related to clinical development, regulatory approvals, commercialization, financial position, intellectual property, reliance on third parties, industry operations, doing business in the PRC, and risks specific to its American Depositary Shares and Ordinary Shares - The company faces substantial risks in clinical development and regulatory approval, including potential delays, failures to demonstrate safety and efficacy, and the lengthy, expensive, and unpredictable nature of the approval process[208](index=208&type=chunk)[214](index=214&type=chunk)[217](index=217&type=chunk)[226](index=226&type=chunk) - Commercialization risks include failure to achieve market acceptance, limited manufacturing capability, reliance on third-party manufacturers and distributors, and intense competition from other pharmaceutical companies[277](index=277&type=chunk)[282](index=282&type=chunk)[289](index=289&type=chunk)[378](index=378&type=chunk)[397](index=397&type=chunk) - Financial risks include a limited operating history, significant net losses, the need for substantial additional financing, potential dilution from future capital raises, and exposure to foreign currency fluctuations[309](index=309&type=chunk)[311](index=311&type=chunk)[315](index=315&type=chunk)[322](index=322&type=chunk)[324](index=324&type=chunk) - Intellectual property risks involve challenges in obtaining and maintaining patent protection globally, potential infringement lawsuits, and the difficulty of protecting trade secrets[333](index=333&type=chunk)[344](index=344&type=chunk)[348](index=348&type=chunk)[363](index=363&type=chunk) - Operational risks include dependence on key personnel, challenges in managing rapid organizational growth, compliance costs as a public company, and potential liabilities from product claims, environmental issues, and cybersecurity breaches[400](index=400&type=chunk)[406](index=406&type=chunk)[412](index=412&type=chunk)[425](index=425&type=chunk)[429](index=429&type=chunk)[443](index=443&type=chunk) - Risks specific to doing business in the PRC include a highly regulated and evolving pharmaceutical industry, political and economic uncertainties, legal interpretation and enforcement ambiguities, and restrictions on currency exchange and data transfer[458](index=458&type=chunk)[462](index=462&type=chunk)[464](index=464&type=chunk)[475](index=475&type=chunk)[492](index=492&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=83&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[555](index=555&type=chunk) [Item 3. Defaults Upon Senior Securities](index=83&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities to report[555](index=555&type=chunk) [Item 4. Mine Safety Disclosures](index=83&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable to the company[555](index=555&type=chunk) [Item 5. Other Information](index=83&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report for the period - No other information to report[555](index=555&type=chunk) [Item 6. Exhibits](index=83&type=section&id=Item%206.%20Exhibits) This section provides an index of exhibits filed as part of, or incorporated by reference into, the Quarterly Report on Form 10-Q, including certifications and XBRL financial statements - The exhibit index includes certifications from the Principal Executive Officer and Principal Financial Officer, and XBRL formatted financial statements[556](index=556&type=chunk)[557](index=557&type=chunk) [SIGNATURES](index=85&type=section&id=SIGNATURES) This section contains the official signatures certifying the accuracy and completeness of the report