Summary of BeOne Medicines FY Conference Call Company Overview - **Company**: BeOne Medicines (NasdaqGS:BGNE) - **Industry**: Biotechnology - **Key Achievement**: First year of profitability and recognized as one of the fastest-growing large biotech companies [3][4] Competitive Advantages - **Integrated Development**: Fully integrated CRO-free clinical development organization with over 3,600 professionals [4] - **Product Pipeline**: Deep product pipeline with 10 internally developed New Molecular Entities (NMEs) entering the clinic in 2024 and 16 to date [3] - **Cost Efficiency**: 70% of the cost to develop medicines is in clinical development; BeOne aims to reduce this through its integrated approach [4] Product Performance - **Brukinsa**: - Leading market share in the BTK inhibitor market with 47% year-over-year growth in the U.S. and 71% growth in Europe [6][8] - Demonstrated durable progression-free survival (PFS) with 74% landmark PFS at 72 months [6][7] - Significant real-world impact and prescription growth globally [8][9] Market Dynamics - **Fixed Duration Treatments**: - BeOne supports finite treatments that meet four criteria: deep response, sustained PFS, acceptable safety profile, and convenience [10][11] - Current market dynamics show continuous use BTK inhibitors capturing about 50% of the market, with opportunities for growth through fixed-duration offerings [11][12] Pipeline Developments - **Sonrotoclax**: - Designed to be more potent and selective than venetoclax, with a half-life of five hours [14][15] - Breakthrough designation in relapsed refractory MCL, with plans for global filing based on upcoming data [30] - Phase 3 study planned for multiple myeloma, targeting the translocation 11;14 population [32][33] - **BDK CDAC**: - A degrader molecule with a different mechanism, potentially effective against mutations that standard inhibitors cannot target [24][25] - Phase 2 cohort fully enrolled, with data expected in the first half of next year [26] Competitive Landscape - **Comparison with Competitors**: - BeOne's zanubrutinib shows superior response rates compared to pirtobrutinib and acalabrutinib in specific patient populations [20][21] - Ongoing head-to-head studies to validate BeOne's offerings against competitors [16][17] Future Outlook - **Clinical Trials**: - Upcoming data presentations at ASH for various products, including BDK CDAC and sonrotoclax [28][29] - Commitment to advancing solid tumor pipeline, particularly CDK4/6 inhibitors, with a focus on first-line breast cancer [34][36] Conclusion - BeOne Medicines is positioned strongly within the biotechnology sector with a robust product pipeline, innovative clinical development strategies, and a commitment to addressing patient needs through differentiated therapies. The company is actively pursuing growth opportunities in both hematology and solid tumors while maintaining a competitive edge against established players in the market.

Financial Data and Key Metrics Changes - Revenue reached $1.4 billion, representing a 41% year-on-year growth [5][16] - GAAP earnings per ADS were $1.09, an increase of over $2 compared to Q3 of the previous year [5][18] - Free cash flow generated during the quarter was over $350 million, with ending cash and cash equivalents totaling $4.1 billion, an increase of $1.3 billion from Q2 [5][20] - Non-GAAP net income reached $304 million, reflecting an increase of $252 million compared to the previous year, translating to diluted non-GAAP earnings per ADS of $2.65 [19] Business Line Data and Key Metrics Changes - BRUKINSA® global revenues exceeded $1 billion for the first time, growing 51% year-on-year, with U.S. volume increasing by approximately 40% [6][16] - TEVIMBRA reported a 17% increase in revenue, reflecting continued market leadership in China [16] - In-license products grew 17% year-over-year, driven by a 31% increase from the Amgen In-Licensed Asset Portfolio [17] Market Data and Key Metrics Changes - U.S. revenue totaled $743 million, with a year-over-year growth of 47% [17] - China revenue was $435 million, a 17% increase supported by TEVIMBRA and BRUKINSA®'s market leadership [17] - Europe contributed $167 million, with a significant year-over-year growth of 71% [17] - Rest of world markets grew 133%, driven by market expansions and new launches [17] Company Strategy and Development Direction - The company aims to develop a more efficacious, time-limited regimen that does not come with caveats or accommodations, focusing on the combination of Zanu and Sonro [11][13] - BeOne Medicines is committed to a vertically integrated approach in clinical development and manufacturing, which is seen as a competitive advantage [14] - The company plans to run more than 20 phase three trials and anticipates over 10 proof of concept data readouts by the end of 2026 [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustained momentum of BRUKINSA® and the potential of Sonro, especially following its FDA breakthrough designation [6][15] - The company is focused on achieving positive GAAP operating income and generating positive free cash flow for the year [20] - Management highlighted the importance of long-term data in CLL treatment and the competitive landscape for fixed-duration therapies [10][11] Other Important Information - The company is preparing for a significant presentation at ASH, showcasing 47 abstracts from its Hematology Portfolio [7][23] - The company has achieved proof of concept for several innovative programs in solid tumors, including CDK4 and PRMT5 inhibitors [23][25] Q&A Session Summary Question: Update on BRUKINSA® in Europe and CDAC data expectations - Management noted that BRUKINSA® is growing in Europe, but the overall market is flattening, and CDAC data will likely be based on overall response and duration of response [44][47] Question: Insights on early-stage pipeline and new molecular entities - Management indicated that clear criteria for success are established for early programs, with some likely progressing to phase three trials [50][52] Question: Commercial dynamics in CLL and future therapy mix - Management confirmed strong new patient start share across therapy lines, with confidence in the overall CLL franchise leadership strategy [75][78] Question: Details on CDK4 phase III design and rationale for ZS vs AV study - Management provided insights on the CDK4 phase III study design and emphasized the importance of establishing ZS as the best oral fixed duration regimen [66][70]

Financial Data and Key Metrics Changes - Revenue reached $1.4 billion, representing a 41% year-on-year growth [5][16] - GAAP earnings per ADS were $1.09, an increase of over $2 compared to Q3 of the previous year [5][16] - Free cash flow generated during the quarter was over $350 million, with ending cash and cash equivalents totaling $4.1 billion, an increase of $1.3 billion from Q2 [5][20] - Non-GAAP net income reached $304 million, reflecting an increase of $252 million compared to the previous year, translating to diluted non-GAAP earnings per ADS of $2.65 [19] Business Line Data and Key Metrics Changes - Rukinza, the leading BTK inhibitor, generated over $1 billion in quarterly global revenue for the first time, growing 51% [6][7] - Tivimra reported a 17% increase in revenue, reflecting continued market leadership in China [16] - In-license products grew 17% year-over-year, driven by a 31% increase from the Amgen in-license asset portfolio [16] Market Data and Key Metrics Changes - U.S. revenue totaled $743 million, with year-over-year growth of 47% [17] - China revenue was $435 million, a 17% increase supported by Tivimra and Rukinza's market leadership [17] - Europe contributed $167 million, with 71% year-over-year growth [17] - Rest of the world markets grew 133%, driven by market expansions and new launches [17] Company Strategy and Development Direction - The company aims to develop innovative medicines that deliver long-term outcomes for patients, focusing on Rukinza, Sonro, and BTK CDAC as core elements in B cell malignancies [6][13] - A global superhighway strategy has been established, integrating clinical development and manufacturing to enhance R&D investment returns [14] - The company plans to run more than 20 phase three trials and anticipates over 10 proof of concept data readouts by the end of 2026 [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the commercial success of Rukinza, citing strong clinical data and market leadership [8][9] - The company is focused on achieving positive GAAP operating income and generating positive free cash flow for the year [20] - Management highlighted the importance of long-term data in CLL treatment and the competitive landscape for fixed-duration therapies [10][11] Other Important Information - Sonro received FDA breakthrough designation for relapsed refractory mantle cell lymphoma, with plans for global filing [23] - The company has achieved proof of concept for several innovative programs in solid tumors, including CDK4 and PRMT5 inhibitors [24][26] Q&A Session Summary Question: Update on Bakensa's performance in Europe - Management noted significant growth for Bakensa in Europe, but prescription levels have not been extremely high, leading to flattening total ACALA numbers [45] Question: Expectations for CDAC data in CLL - Management indicated that the CDAC data will likely be based on overall response rates and duration of response, with further discussions with the agency ongoing [46] Question: Insights on earlier stage pipeline and new molecular entities - Management emphasized that clear criteria for success have been established for early programs, with some likely progressing to phase three trials [52] Question: Commercial dynamics in relapsed refractory CLL - Management confirmed strong new patient start share for Rukinza across therapy lines, with confidence in the overall CLL franchise leadership strategy [78] Question: Details on CDK4 phase three design - Management shared that three dose levels are being explored, with a head-to-head study planned against currently available CDK4/6 inhibitors [67] Question: Rationale for additional investment in ZS versus AV study - Management stated the importance of establishing ZS as the best oral fixed duration regimen, despite existing long-term data supporting its efficacy [70][72]

Financial Data and Key Metrics Changes - Revenue reached $1.4 billion, representing a 41% year-on-year growth [4][16] - GAAP earnings per ADS were $1.09, an increase of over $2 compared to Q3 of the previous year [4] - Free cash flow generated during the quarter was over $350 million, with ending cash and cash equivalents totaling $4.1 billion, an increase of $1.3 billion from Q2 [4][20] - Non-GAAP net income reached $304 million, reflecting an increase of $252 million compared to the previous year, translating to diluted non-GAAP earnings per ADS of $2.65 [19] Business Line Data and Key Metrics Changes - Rukinza, the leading BTK inhibitor, grew 51% and exceeded $1 billion in quarterly global revenue for the first time [5][16] - Tivimra reported a 17% increase in revenue, reflecting continued market leadership in China [16] - In-license products grew 17% year-over-year, driven by a 31% increase from the Amgen in-license asset portfolio [16] Market Data and Key Metrics Changes - U.S. revenue totaled $743 million, with year-over-year growth of 47% [17] - China revenue was $435 million, a 17% increase supported by Tivimra and Rukinza's market leadership [17] - Europe contributed $167 million, with 71% year-over-year growth [17] - Rest of the world markets grew 133%, driven by market expansions and new launches [17] Company Strategy and Development Direction - The company aims to develop a more efficacious, time-limited regimen that does not come with caveats or accommodations, focusing on the combination of Zanu and Sonro [10][12] - The company is committed to advancing its innovative pipeline, with plans for over 20 phase three trials and more than 10 proof of concept data readouts by the end of 2026 [14][15] - The company emphasizes a vertically integrated approach to clinical development and manufacturing as a competitive advantage [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term data for Rukinza, stating it sets a high standard for BTK inhibitors in CLL treatment [8][9] - The company anticipates continued strong performance in the BTK market, with a focus on maintaining leadership in B cell malignancies [5][12] - Management highlighted the importance of long-term follow-up data in understanding treatment efficacy in CLL [9] Other Important Information - The company has received FDA breakthrough designation for Sonro in relapsed refractory mantle cell lymphoma [24] - The company plans to present 47 abstracts from its heme portfolio at the upcoming ASH conference [5][24] Q&A Session Summary Question: What is the status of Bakensa in Europe? - The company has seen close to 70% growth for Bakensa in Europe, but excitement among healthcare professionals has been limited [40] Question: Can you provide more details on the CDAC data expected in the first half of next year? - The CDAC data will likely be based on overall response rates and duration of response, with further discussions with regulatory agencies ongoing [40] Question: What is the outlook for the earlier stage pipeline? - The company has established clear criteria for success based on preclinical data, with some programs actively planning acceleration to phase three studies [42][44] Question: What is the rationale for the CDK4 phase three study design? - The study aims to establish the CDK4 inhibitor as superior to currently available CDK4/6 inhibitors, with final decisions on study size and powering pending [50] Question: How is Rukinza's share holding up in the relapsed refractory setting? - The company continues to see strong new patient start share across therapy lines, including in the relapsed setting [54]

November 6, 2025 Q3 2025 Results Clinical Trial Appendix Disclosures Certain statements contained in this presentation and in any accompanying oral presentation, other than statements of fact that are independently verifiable at the date hereof, may constitute forward-looking statements. Examples of such forward-looking statements include statements regarding BeOne's research, discovery, pre-clinical and clinical programs and plans. Actual results may differ materially from those indicated in the forward- l ...

Financial Performance - Total revenues for Q3 2025 increased by 41% to $1.4 billion compared to Q3 2024[104] - Net income for Q3 2025 was $124.8 million, a significant improvement from a net loss of $121.4 million in Q3 2024[109] - Total product revenue for the nine months ended September 30, 2025, was $3.8 billion, up 43% from $2.7 billion in the same period of 2024[109] - Net product revenue increased by 40.4% to $1,395.0 million for the three months ended September 30, 2025, compared to $993.4 million in the prior-year period, driven primarily by increased sales of BRUKINSA in the U.S. and Europe[111] - GAAP net income improved, with basic and diluted earnings per share at $0.16 and $0.15, compared to a loss of $0.36 per share in the prior-year period[140] - Adjusted net income for the nine months ended September 30, 2025, was $692,622 thousand, while the adjusted net loss for the same period in 2024 was $71,020 thousand[141] Revenue Breakdown - Global BRUKINSA revenues rose by 51% to $1.0 billion in Q3 2025 versus Q3 2024[104] - BRUKINSA global revenue totaled $1.0 billion in the third quarter, representing a 50.8% increase year-over-year; U.S. revenue for BRUKINSA was $738.7 million, a growth of 46.6%[112] - TEVIMBRA revenue totaled $190.6 million in the third quarter, reflecting a 16.7% increase compared to the prior-year period[113] - Revenue for TEVIMBRA totaled $555.3 million, representing an 18.9% increase compared to the prior-year period[127] - Net product revenue rose 43.0% to $3,805.6 million, driven by increased sales of BRUKINSA, TEVIMBRA, and Amgen products, particularly XGEVA[126] Expenses and Costs - Operating expenses increased by 10.6% to $1.05 billion in Q3 2025, driven by higher research and development costs[109] - Research and development expenses increased by 5.5% to $523.7 million for the three months ended September 30, 2025, compared to $496.2 million in the prior-year period[115] - Selling, general and administrative expenses rose by 16.2% to $528.998 million for the three months ended September 30, 2025, from $455.223 million in the prior-year period[120] - Research and development expenses increased by $119.2 million, or 8.4%, totaling $1,530.4 million for the nine months ended September 30, 2025[130] - Selling, general and administrative expenses rose by $199.8 million, or 15.1%, to $1,526.2 million, with expenses as a percentage of product sales decreasing to 40.1%[135] Cash Flow and Debt - Free cash flow for the three months ended September 30, 2025, was $354,469 thousand, significantly up from $54,714 thousand in the same period of 2024[143] - Cash, cash equivalents, and restricted cash as of September 30, 2025, totaled $4,110,542 thousand, an increase from $2,638,747 thousand as of December 31, 2024[144] - Total debt as of September 30, 2025, was $952,867 thousand, down from $1,018,013 thousand as of December 31, 2024[144] - The company paid down $75.3 million of its debt in the nine months ended September 30, 2025[144] - Total debt obligations due in the next twelve months are $813.3 million, with long-term debt obligations at $139.6 million[158] Regulatory Approvals and Developments - The FDA granted Breakthrough Therapy Designation for sonrotoclax on October 13, 2025, for treating relapsed or refractory mantle cell lymphoma[105] - The European Commission approved TEVIMBRA for neoadjuvant and adjuvant treatment of high-risk non-small cell lung cancer on August 27, 2025[107] Other Financial Metrics - Interest income, net decreased by 71.5% to $3.0 million for the three months ended September 30, 2025, from $10.6 million in the prior-year period[121] - Other expense, net was $19.0 million for the three months ended September 30, 2025, primarily due to impairment losses and foreign exchange losses[122] - Income tax expense was $22.3 million for the three months ended September 30, 2025, compared to $23.0 million in the prior-year period[123] - Gross profit for Q3 2025 was $1.22 billion, reflecting a 46.3% increase from Q3 2024[109] - Gross margin on global product sales increased to $1,198.5 million, with a gross margin percentage of 85.9% for the three months ended September 30, 2025, up from 82.8% in the prior-year period[114] - Gross margin on product sales increased to $3,279.5 million, with a gross margin percentage of 86.2%, up from 83.7% in the prior-year period[129] Market and Collaboration - A Royalty Purchase Agreement was entered into with Royalty Pharma for $885 million, related to royalty payments from Amgen's IMDELLTRA[108] - Nearly 50 abstracts were accepted for presentation at the American Society of Hematology Annual Meeting, showcasing the late-stage hematology portfolio[104] - The company expects that its operating cash flows and existing cash will fund operating expenses and planned long-term investments for at least the next 12 months[144] - As of September 30, 2025, the remaining co-development funding commitment was $183.6 million under the Amgen collaboration[161] Foreign Exchange and Market Conditions - The RMB appreciated approximately 2.5% against the U.S. dollar in the nine months ended September 30, 2025[168] - The company recognized $4.0 million in foreign exchange gains during the nine months ended September 30, 2025, compared to $2.2 million in the prior year[169]

Revenue Growth - Total revenue for Q3 2025 increased by 41% to $1.4 billion compared to Q3 2024, driven primarily by BRUKINSA sales growth [4] - BRUKINSA global revenues rose by 51% to $1.0 billion in Q3 2025, with U.S. sales reaching $739 million, a 47% increase year-over-year [10] - Product revenue for Q3 2025 reached $1,395,013, an increase of 40.5% compared to $993,447 in Q3 2024 [29] - Total revenues for the nine months ended September 30, 2025, were $3,844,863, up 43.2% from $2,682,417 in the same period of 2024 [29] - Full year 2025 revenue guidance updated to $5.1 billion to $5.3 billion, reflecting strong growth expectations for BRUKINSA [13] Profitability - Adjusted net income for Q3 2025 was $303.7 million, a 489% increase from $51.6 million in Q3 2024 [3] - GAAP net income for Q3 2025 was $125 million, a significant improvement from a loss of $121 million in Q3 2024 [9] - The company reported a net income of $124,841 for Q3 2025, compared to a net loss of $121,350 in Q3 2024 [29] - Adjusted net income for the nine months ended September 30, 2025, was $692.622 million, compared to a loss of $71.020 million in the same period of 2024 [36] - GAAP earnings per share (EPS) for Q3 2025 was $0.09, compared to a loss of $0.09 in Q3 2024 [37] - Adjusted EPS for Q3 2025 was $0.21, up from $0.04 in Q3 2024, indicating improved profitability [37] Cash Flow and Financial Position - Free cash flow for Q3 2025 was $354.5 million, an increase of $300 million compared to the prior-year period [11] - Cash, cash equivalents, and restricted cash at the end of Q3 2025 totaled $4,110,542, up from $2,713,428 at the end of Q3 2024 [33] - Total assets as of September 30, 2025, were $7,632,586, an increase from $5,920,910 as of December 31, 2024 [31] - Total equity increased to $4,129,326 as of September 30, 2025, compared to $3,332,222 as of December 31, 2024 [31] - Free cash flow for Q3 2025 was $354.469 million, a substantial increase from $54.714 million in Q3 2024 [39] Expenses - Operating expenses for Q3 2025 totaled $1.05 billion, an 11% increase from $951 million in Q3 2024 [7] - Research and development expenses for Q3 2025 were $523,662, an increase of 5.1% from $496,179 in Q3 2024 [29] - Adjusted operating expenses for the nine months ended September 30, 2025, were $2.582 billion, compared to $2.310 billion in the same period of 2024 [36] Research and Development - The company achieved 47 abstracts accepted at the American Society of Hematology (ASH) Annual Meeting, highlighting its research advancements [4] - Sonrotoclax received FDA Breakthrough Therapy Designation for relapsed or refractory mantle cell lymphoma, indicating progress in clinical development [20] - Anticipated R&D milestones include initiating Phase 3 trials for Sonrotoclax and BGB-43395 in 1H 2026 [21] Operational Performance - Gross margin for Q3 2025 was 85.9%, up from 82.8% in the prior-year period, attributed to a higher sales mix of BRUKINSA [6] - Gross profit for Q3 2025 was $1,215,774, representing a gross margin of approximately 86.1% compared to $831,137 in Q3 2024 [29] - The company reported a GAAP income from operations of $163.114 million in Q3 2025, a recovery from a loss of $120.265 million in Q3 2024 [36] Future Outlook - The company plans to continue investing in new product development and market expansion strategies to drive future growth [36] - The company has entered into an agreement with Royalty Pharma to sell royalty rights for up to $950 million [25]

Summary of BeOne Medicines FY Conference Call Company Overview - **Company**: BeOne Medicines (NasdaqGS:BGNE) - **Employees**: 11,000 across six continents - **Focus**: Global R&D and commercial strategy with strengths in the U.S., EMEA, and China [3][3] Industry Insights - **Biotech Innovation in China**: BeOne Medicines recognizes the rise of biotech innovation in China and is strategically positioned to leverage this growth through its R&D presence in the region [3][3] - **AI in Development**: The company is extensively exploring AI applications across the development lifecycle, achieving significant efficiency improvements, such as reducing review times for serious adverse events (SAEs) from 200-400 hours to 20-40 hours per month [4][5] Regulatory Environment - **MFN and Tariffs**: BeOne is monitoring the Most Favored Nation (MFN) pricing model and tariffs, emphasizing a global manufacturing strategy to mitigate potential impacts [7][8] - **FDA Interactions**: The company reports stable interactions with the FDA, with no significant changes in review times or feedback quality [9][9] Product Performance - **BRUKINSA**: The product has over 50% new patient starts, outpacing competitors like IMBRUVICA and CALQUENCE. The B-cell malignancies class is valued at approximately $1.8 billion, growing at around 11% [10][11] - **Sonrotoclax**: Positive top-line results in mantle cell lymphoma are expected to support regulatory approval, with no existing BCL-2 approvals in this indication [14][14] - **Combination Therapy Potential**: The potential combination of BRUKINSA and sonrotoclax could significantly exceed market expectations, with projected revenues potentially doubling if successful [16][16] Competitive Landscape - **CDK4 Inhibitor Development**: BeOne has narrowed the development gap with Pfizer from 40 months to 15 months for its selective CDK4 inhibitor, aiming for a competitive edge in the market [26][28] - **Efficacy and Safety Profile**: The company aims to improve efficacy while reducing hematologic toxicity compared to existing CDK4/6 inhibitors, with promising early data [29][30] Commercial Strategy - **European Market Growth**: BeOne is focused on expanding its presence in Europe, which is seen as a significant growth opportunity [42][43] - **Pipeline Investments**: The company plans to balance profitability with continued investment in its robust pipeline, including potential out-licensing opportunities [56][56] Future Outlook - **Regulatory Submissions**: Global submissions for sonrotoclax are anticipated later this year, with expectations for U.S. approval in the following year [15][15] - **Franchise Leadership Strategy**: BeOne aims to establish a leadership strategy in chronic lymphocytic leukemia (CLL) through multiple therapeutic options, including BTK and BCL-2 inhibitors [46][57] Conclusion - BeOne Medicines is strategically positioned in the biotech industry with a strong focus on innovation, regulatory navigation, and market expansion, particularly in the U.S. and Europe. The company is optimistic about its product pipeline and the potential for significant growth in the coming years [57][58]

Financial Data and Key Metrics Changes - The company has approximately $500 million left in regulatory milestones and about $860 million in commercial milestones, with royalties ranging from 10% to 20% based on net sales [10][11][12] Business Line Data and Key Metrics Changes - The zanidatamab program is a significant focus, with upcoming Phase 3 study readouts expected in Q4, which could drive value for the company [6][10] - ZW171 has been discontinued due to on-target, off-tumor toxicity, reflecting the company's disciplined approach to capital allocation [14][16][17] Market Data and Key Metrics Changes - The competitive landscape for zanidatamab includes potential opportunities in breast cancer, with Jazz Pharmaceuticals exploring this area [11][12] - ZW191 is positioned as a strong contender in the folate receptor alpha ADC space, with a focus on differentiating its product through superior internalization and potency [20][21][22] Company Strategy and Development Direction - The company emphasizes a disciplined approach to capital allocation and decision-making regarding its pipeline programs, focusing on those with the highest potential for patient benefit [14][16] - The strategy includes exploring partnerships for various programs, particularly ZW191, to enhance development and market reach [30][39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming data readouts and the potential for zanidatamab to capture significant market value, estimating a valuation of over $2 billion [12][13][45] - The company is preparing for multiple catalysts over the next 12 to 18 months, including clinical studies for ZW251 and ZW209 [45] Other Important Information - The ZW209 program, utilizing a tri-TCE platform, is expected to enter clinical trials in the first half of 2026, showcasing the company's commitment to advancing its innovative pipeline [34][45] - The company is also exploring early-stage pipeline opportunities, including novel targets and ADCs, to leverage its protein engineering capabilities [33][34] Q&A Session Summary Question: What is the significance of the upcoming zanidatamab readout? - The readout is expected to provide clarity on the differentiation of zanidatamab in the competitive landscape, particularly in gastroesophageal adenocarcinoma [6][7] Question: What are the financial implications of the zanidatamab program? - The company has significant regulatory and commercial milestones associated with zanidatamab, which could lead to substantial revenue through royalties and milestone payments [10][11] Question: What led to the discontinuation of ZW171? - The decision was based on a lack of efficacy and on-target, off-tumor toxicity, demonstrating the company's commitment to prudent capital allocation [14][16][17] Question: How does Zymeworks differentiate its ADCs? - The company focuses on the holistic design of ADCs, ensuring that the antibody is optimized for internalization and payload delivery, which sets it apart from competitors [20][21][22] Question: What are the next steps for ZW191? - The company is considering partnerships for ZW191 and exploring various tumor types for clinical trials, including ovarian and endometrial cancers [30][39]

[Financial Performance](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results) The company reported strong Q2 2025 revenue growth, achieved GAAP profitability, and generated positive free cash flow [Q2 2025 Key Financial Metrics](index=1&type=section&id=Q2%202025%20Key%20Financial%20Metrics) The company's Q2 2025 featured 42% revenue growth, a return to GAAP net income, and positive free cash flow Q2 & H1 2025 Financial Highlights (vs. 2024) | | Three Months Ended June 30, | | Six Months Ended June 30, | | | :--- | :--- | :--- | :--- | :--- | | | **2025** | **% Change** | **2025** | **% Change** | | **Total revenue** | $1,315.3M | 42% | $2,432.6M | 45% | | **GAAP income (loss) from operations** | $87.9M | 182% | $99.0M | 127% | | **Adjusted income (loss) from operations*** | $274.9M | 467% | $414.3M | 519% | | **GAAP net income (loss)** | $94.3M | 178% | $95.6M | 126% | | **Adjusted net income (loss)*** | $252.8M | 985% | $389.0M | 417% | | **GAAP diluted EPS per ADS** | $0.84 | 173% | $0.85 | 124% | | **Adjusted diluted EPS per ADS*** | $2.25 | 923% | $3.48 | 397% | | **Free Cash Flow*** | $219.8M | 207% | $207.4M | 131% | - Global BRUKINSA revenues **increased 49% to $950 million** versus the second quarter of 2024[3](index=3&type=chunk) [Revenue Analysis](index=2&type=section&id=Revenue%20Analysis) Product revenue growth was driven by strong BRUKINSA sales, with gross margin improving due to product mix and efficiencies - The increase in product revenue to **$1.3 billion** was primarily attributable to increased sales of BRUKINSA, with the U.S. being the largest market at **$685 million**[5](index=5&type=chunk) Q2 2025 Product Revenue Breakdown (vs. Q2 2024) | Product | Q2 2025 Revenue | YoY Growth | | :--- | :--- | :--- | | **BRUKINSA (Global)** | $950M | 49% | | - U.S. Sales | $684M | 43% | | - Europe Sales | $150M | 85% | | **TEVIMBRA (Global)** | $194M | 22% | - GAAP gross margin as a percentage of global product sales **increased to 87.4%** in Q2 2025 from 85.0% in Q2 2024, due to a higher sales mix of global BRUKINSA and cost productivity improvements[6](index=6&type=chunk) [Operating Expenses](index=2&type=section&id=Operating%20Expenses) Operating expenses rose due to increased R&D and SG&A investments, though operating leverage improved Q2 2025 Operating Expenses (GAAP, in thousands) | Expense Category | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Research and development | $524,896 | $454,466 | 15% | | Selling, general and administrative | $537,913 | $443,729 | 21% | | **Total operating expenses** | **$1,062,809** | **$898,195** | **18%** | - R&D expenses increased primarily due to advancing preclinical and early clinical programs into late-stage development[9](index=9&type=chunk) - SG&A expenses increased due to continued investment in global commercial expansion, while SG&A as a percentage of product sales **improved to 41%** for Q2 2025[10](index=10&type=chunk) [Profitability and Cash Flow](index=3&type=section&id=Net%20Income%20and%20Cash%20Flow) The company achieved significant GAAP net income and positive free cash flow, marking a substantial year-over-year turnaround - GAAP net income for Q2 2025 was **$94 million**, an increase of $215 million over the prior-year period's loss, primarily due to revenue growth and improved operating leverage[11](index=11&type=chunk) - Free Cash Flow for Q2 2025 was **$220 million**, an increase of $425 million over the prior-year period[12](index=12&type=chunk) [Full Year 2025 Guidance](index=4&type=section&id=Full%20Year%202025%20Guidance) The company raised its full-year revenue guidance and upgraded its cash flow outlook to positive free cash flow Updated Full Year 2025 Guidance | Metric | Prior FY 2025 Guidance | Current FY 2025 Guidance | | :--- | :--- | :--- | | **Total Revenue** | $4.9 - $5.3B | **$5.0 - $5.3B** | | **GAAP Operating Expenses** | $4.1 - $4.4B | $4.1 - $4.4B (Unchanged) | | **GAAP Gross Margin %** | Mid-80% range | **Mid to high-80% range** | | **GAAP Operating Income** | Positive FY 2025 | Positive FY 2025 (Unchanged) | | **Cash Flow** | Positive FY 2025 cash flow from operations | **Positive FY 2025 free cash flow** | - The updated guidance is driven by expectations of strong revenue growth from BRUKINSA, improved gross margin, and continued operating leverage[13](index=13&type=chunk) [Business and Pipeline Highlights](index=4&type=section&id=Business%20and%20Pipeline%20Highlights) The company advanced its commercial products and clinical pipeline, anticipating over 20 R&D milestones in 18 months [Core Marketed Products](index=4&type=section&id=Core%20Marketed%20Products) BRUKINSA and TEVIMBRA gained new approvals and expanded market access, strengthening their global commercial presence - **BRUKINSA is now approved in 75 markets** and received U.S. FDA approval and a positive CHMP opinion for a new film-coated tablet formulation[16](index=16&type=chunk) - **TEVIMBRA is now approved in 47 markets**, receiving European Commission approval for new indications and a positive CHMP opinion for resectable NSCLC[16](index=16&type=chunk) [Clinical-Stage Programs](index=5&type=section&id=Select%20Clinical-Stage%20Programs) The pipeline advanced with key trial initiations and positive regulatory designations in hematology, oncology, and immunology - Hematology program advancements: - **Sonrotoclax (BCL2 inhibitor):** Submissions accepted in China for R/R CLL and R/R MCL; first patient enrolled in a global Phase 3 trial for R/R CLL[20](index=20&type=chunk) - **BGB-16673 (BTK CDAC):** Received EMA PRIME designation for Waldenstrom's macroglobulinemia (WM); initiated global and China Phase 3 trials for R/R CLL[20](index=20&type=chunk) - **Zanidatamab (HER2-targeting bispecific antibody):** Received regulatory approval and launched commercially in China for second-line HER2-high-expression biliary tract cancer[18](index=18&type=chunk) - **Tarlatamab (AMG 757):** Achieved acceptance of BLA and priority review in China for 3L+ small cell lung cancer (SCLC)[20](index=20&type=chunk) [Anticipated R&D Milestones](index=6&type=section&id=Anticipated%20R&D%20Milestones) Over 20 R&D milestones are expected in the next 18 months, including key approvals and data readouts in 2H 2025 - The company anticipates **more than 20 R&D milestones** in the next 18 months across its hematology and solid tumor pipeline[2](index=2&type=chunk)[3](index=3&type=chunk) Selected Upcoming Milestones | Program | Milestone | Timing | | :--- | :--- | :--- | | **BRUKINSA** | EC approval of tablet formulation | 2H 2025 | | **TEVIMBRA** | EU approval for neoadjuvant/adjuvant early stage NSCLC | 2H 2025 | | **Sonrotoclax** | Data readout of Phase 2 trial and potential global accelerated approval submissions for R/R MCL | 2H 2025 | | **BGB-16673** | Initiate Phase 3 head-to-head trial vs. pirtobrutinib for R/R CLL | 2H 2025 | | **Zanidatamab** | Readout of primary PFS data from Phase 3 trial for 1L HER2+ gastroesophageal adenocarcinoma | 2H 2025 | [Appendix: Financial Statements](index=9&type=section&id=Appendix%3A%20Financial%20Statements) This section provides detailed unaudited financial statements and a reconciliation of GAAP to non-GAAP measures [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20%28U.S.%20GAAP%29) The statement shows a significant turnaround to a net income of $94.3 million for Q2 2025 from a loss in Q2 2024 Q2 2025 Statement of Operations Highlights (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total revenues | $1,315,300 | $929,166 | | Gross profit | $1,150,694 | $791,034 | | Income (loss) from operations | $87,885 | $(107,161) | | **Net income (loss)** | **$94,320** | **$(120,405)** | [Condensed Consolidated Balance Sheet](index=10&type=section&id=Select%20Condensed%20Consolidated%20Balance%20Sheet%20Data%20%28U.S.%20GAAP%29) Total assets grew to $6.3 billion and total equity increased to $3.8 billion as of June 30, 2025 Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash, cash equivalents and restricted cash | $2,786,086 | $2,638,747 | | **Total assets** | **$6,298,394** | **$5,920,910** | | Total liabilities | $2,527,919 | $2,588,688 | | **Total equity** | **$3,770,475** | **$3,332,222** | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Select%20Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%28U.S.%20GAAP%29) The company generated $263.6 million in net cash from operating activities in Q2 2025, a strong year-over-year improvement Cash Flow Highlights (in thousands) | Cash Flow Activity | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $263,598 | $307,680 | | Net cash used in investing activities | $(66,605) | $(188,546) | | Net cash provided by financing activities | $35,025 | $1,248 | | **Net increase in cash** | **$255,495** | **$147,339** | [Reconciliation of GAAP to Non-GAAP Measures](index=12&type=section&id=RECONCILIATION%20OF%20SELECTED%20GAAP%20MEASURES%20TO%20NON-GAAP%20MEASURES) This section details adjustments for non-cash items, reconciling GAAP net income to an adjusted net income of $252.8 million - The company provides non-GAAP measures to offer additional insight into operating performance, excluding non-cash items like share-based compensation, depreciation, and amortization[36](index=36&type=chunk) Q2 2025 GAAP to Non-GAAP Net Income Reconciliation (in thousands) | | Amount | | :--- | :--- | | **GAAP net income** | **$94,320** | | Plus: Share-based compensation expenses | $150,553 | | Plus: Depreciation | $29,854 | | Plus: Amortization of intangibles | $5,760 | | Other adjustments | $(17,072) | | **Adjusted net income** | **$252,822** | Q2 2025 Free Cash Flow Reconciliation (in thousands) | | Amount | | :--- | :--- | | Net cash provided by operating activities (GAAP) | $263,598 | | Less: Purchases of property, plant and equipment | $(43,826) | | **Free Cash Flow (Non-GAAP)** | **$219,772** |