2022-05-08 16:00PART I. FINANCIAL INFORMATION Financial Statements The company's unaudited statements show a Q1 2022 net loss of $434.3 million and total assets of $8.02 billion Condensed Consolidated Balance Sheet Data (Unaudited) | Account | March 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | 4,347,162 | 4,375,678 | | Short-term investments | 1,897,783 | 2,241,962 | | Total current assets | 6,948,139 | 7,613,880 | | Total assets | 8,021,388 | 8,645,949 | | Liabilities and Equity | | | | Total current liabilities | 1,376,306 | 1,599,555 | | Total liabilities | 2,135,888 | 2,402,962 | | Total equity | 5,885,500 | 6,242,987 | Condensed Consolidated Statements of Operations (Unaudited) | Account | Three Months Ended March 31, 2022 ($ thousands) | Three Months Ended March 31, 2021 ($ thousands) | | :--- | :--- | :--- | | Product revenue, net | 261,573 | 106,117 | | Collaboration revenue | 45,053 | 499,755 | | Total revenues | 306,626 | 605,872 | | Research and development | 389,915 | 320,726 | | Selling, general and administrative | 294,573 | 182,106 | | Total expenses | 749,913 | 535,705 | | (Loss) income from operations | (443,287) | 70,167 | | Net (loss) income | (434,274) | 66,495 | | Net (loss) income per ADS - Basic | (4.24) | 0.73 | Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2022 ($ thousands) | Three Months Ended March 31, 2021 ($ thousands) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | (236,563) | 125,095 | | Net cash provided by investing activities | 210,393 | 291,948 | | Net cash (used in) provided by financing activities | (11,267) | 107,419 | | Net (decrease) increase in cash | (28,437) | 520,401 | Note 3. Collaborative and Licensing Arrangements Collaboration revenue decreased significantly due to a large one-time license fee from Novartis in the prior year Collaboration Revenue Breakdown (Q1 2022 vs Q1 2021) | Revenue from Collaborators | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2021 ($) | | :--- | :--- | :--- | | License revenue | — | 484,646 | | Research and development service revenue | 13,427 | 15,109 | | Right to access intellectual property revenue | 26,249 | — | | Other | 5,377 | — | | Total | 45,053 | 499,755 | - In January 2021, the company received a $650 million upfront payment from Novartis for the tislelizumab collaboration, of which $484.6 million was recognized as license revenue in Q1 2021646869 - In December 2021, the company entered an option and collaboration agreement with Novartis for ociperlimab, receiving a $300 million upfront payment in January 2022707475 - Under the Amgen collaboration, BeiGene's portion of co-development funding for pipeline assets was $44.2 million in Q1 2022, with a remaining commitment of $746.8 million81 Note 11. Product Revenue Net product revenue grew 146.5% to $261.6 million, driven by strong sales of BRUKINSA® and tislelizumab Net Product Sales by Product (Q1 2022 vs Q1 2021) | Product | Three Months Ended March 31, 2022 ($ thousands) | Three Months Ended March 31, 2021 ($ thousands) | | :--- | :--- | :--- | | BRUKINSA® | 104,325 | 22,090 | | Tislelizumab | 87,643 | 48,879 | | REVLIMID® | 21,660 | 16,629 | | XGEVA® | 13,499 | 14,454 | | BLINCYTO® | 11,866 | — | | Total product revenue – net | 261,573 | 106,117 | Note 17. Commitments and Contingencies The company holds significant financial commitments of $1.87 billion, primarily for co-development and capital projects Summary of Commitments as of March 31, 2022 | Commitment Type | Amount ($ thousands) | | :--- | :--- | | Co-Development Funding (Amgen) | 746,844 | | Capital Commitments | 239,436 | | Purchase Commitments | 122,485 | | Research and Development Commitment | 26,579 | Management's Discussion and Analysis of Financial Condition and Results of Operations Product revenue grew significantly, but a drop in collaboration revenue and rising expenses led to a net loss Results of Operations Total revenues fell 49.4% due to lower collaboration revenue, despite a 146.5% increase in product sales Key Operational Results (Q1 2022 vs Q1 2021) | Metric | Q1 2022 ($M) | Q1 2021 ($M) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | 306.6 | 605.9 | (49.4)% | | Product Revenue, net | 261.6 | 106.1 | 146.5% | | Collaboration Revenue | 45.1 | 499.8 | (91.0)% | | Total Expenses | 749.9 | 535.7 | 40.0% | | Net (Loss) Income | (434.3) | 66.5 | (753.1)% | - The increase in R&D expense was primarily due to a $80.0 million (49.5%) increase in internal costs, reflecting global expansion188190 - The increase in SG&A expense was driven by a $62.5 million rise in employee costs and a $20.8 million increase in external commercial expenses191 Liquidity and Capital Resources The company maintains a strong liquidity position sufficient for the next 12 months despite significant future commitments Liquidity Position | Account | March 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :--- | :--- | :--- | | Cash, cash equivalents and restricted cash | 4,354,450 | 4,382,887 | | Short-term investments | 1,897,783 | 2,241,962 | | Total debt | 608,992 | 629,678 | - The company received an upfront cash payment of $300 million from Novartis in January 2022 for the ociperlimab collaboration198 Material Cash Requirements as of March 31, 2022 | Obligation | Total ($ thousands) | Short Term ($ thousands) | Long Term ($ thousands) | | :--- | :--- | :--- | :--- | | Co-development funding commitment | 746,844 | 245,146 | 501,698 | | Debt obligations | 608,992 | 407,387 | 201,605 | | Capital commitments | 239,436 | 239,436 | — | | Purchase commitments | 122,485 | 64,143 | 58,342 | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks include interest rates and foreign currency, particularly the Chinese Renminbi - The company is exposed to foreign exchange risk from transactions in currencies like the RMB, Euro, and Australian dollar232233 - The company's ability to convert RMB is subject to PRC government controls, potentially limiting fund remittances236544 - A hypothetical 100-basis point change in interest rates would impact investment value by approximately $10 million229 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of the quarter-end - Disclosure controls and procedures are effective at a reasonable assurance level as of March 31, 2022239 - In Q1 2022, the company implemented new controls for key financial processes including order-to-cash and R&D accruals240 PART II. OTHER INFORMATION Legal Proceedings The company is engaged in an ongoing arbitration with a Bristol Myers Squibb company regarding a supply agreement - The company initiated an arbitration proceeding against BMS-Celgene in June 2020 over the ABRAXANE® supply agreement in China242 Risk Factors The company faces significant risks in commercialization, clinical development, and operations in China Risks Related to Commercialization Key commercialization risks include market acceptance, intense competition, and securing adequate reimbursement - The company's medicines may fail to achieve market acceptance from physicians, patients, and payors244245 - The company faces substantial competition from larger pharmaceutical companies and potential generic therapies259260 - Successful commercialization depends on achieving adequate reimbursement from government and private payors269270 Risks Related to Clinical Development and Regulatory Approval Drug development is subject to lengthy, expensive, and uncertain clinical trials and regulatory approval processes - Business success depends on successful clinical development and regulatory approval, a lengthy and uncertain process290293 - Clinical trials may fail or be delayed due to safety, efficacy, or enrollment issues296300 - Regulatory approvals from the FDA, NMPA, and EMA are unpredictable and can be delayed by external factors306312 Risks Related to Financial Position and Need for Additional Capital The company has a history of significant net losses and may require additional capital to fund future operations - The company has an accumulated deficit of $5.4 billion and expects to incur further losses345346 - The company may need to obtain additional financing, and failure to do so could delay or reduce programs350354 - The company is exposed to foreign currency exchange risk, particularly with the Chinese RMB357358360 Risks Related to Doing Business in the PRC Operations in China face risks from political uncertainty, U.S.-China relations, and potential delisting under HFCAA - The company's ADSs may be delisted from U.S. exchanges under the HFCAA if the PCAOB cannot inspect its China auditor507508 - To address HFCAA risk, the company has engaged a U.S.-based auditor for FY2022 to satisfy PCAOB inspection requirements510513 - The potential AHFCA Act could shorten the delisting timeline to 2023 if inspection issues are not resolved515516517 - Operations are subject to uncertainty from PRC political policies, U.S.-China relations, and government oversight499500501 - Dividend payments from PRC subsidiaries are restricted by PRC regulations and currency exchange controls529530531 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None615 Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None615 Mine Safety Disclosures This item is not applicable to the company - Not applicable615 Other Information The company reported no other information required to be disclosed under this item - Not applicable615 Exhibits This section lists the exhibits filed with the Quarterly Report, including officer certifications and XBRL data - The report includes a new consulting agreement with Jane Huang, effective April 3, 2022, as an exhibit617