BeiGene (688235.SH) released its semi-annual report: product revenue reached 11.908 billion yuan, accelerating the establishment of a closed loop of R&D, production and marketing innovation

On August 29, BeiGene (688235.SH) released its A-share 2024 semi-annual report. Relying on systematic advantages formed in various aspects such as global R&D, overseas registration, quality control, and market commercialization, the company continued to promote the core varieties Baiyuze® (zebutinib) and Baizean® (tiralizumab) to the international market.

In the first half of 2024, BeiGene achieved total revenue of 11.996 billion yuan, an increase of 65.4% over the previous year. Product revenue increased 77.8% year over year to reach 11.908 billion yuan. Among them, in the second quarter, BeiGene GAAP operating losses fell 66% year over year. On a non-GAAP basis, the company achieved an adjusted operating profit of US$48 million, which ushered in a new turning point in development.

Further explore the potential for global commercialization of core products

The ability to commercialize has unquestionably become one of the important indicators for measuring the ability of an innovative pharmaceutical company to differentiate and innovate. For BeiGene, product revenue reached a new high in the first half of the year, indicating that the company's strong innovative R&D strength and differentiated advantages of innovative products were recognized by both the industry and the market.

Financial reports show that in the first half of 2024, BeiGene achieved total revenue of 11.996 billion yuan, an increase of 65.4% over the previous year. Among them, product revenue increased 77.8% year on year to reach 11.908 billion yuan. Thanks to a sharp increase in product revenue and continuous cost management, BeiGene has further improved operating efficiency, and operating losses have continued to decline. In the second quarter, BeiGene GAAP operating losses fell 66% year over year. On a non-GAAP basis, the company achieved adjusted operating profit of $48 million.

During the reporting period, the global commercialization performance and layout of BeiGene's two core varieties, Baiyuze® and Baizean®, contributed greatly. After achieving annual sales of 1.3 billion US dollars last year, becoming the first “billion dollar molecule” in the country. Competition in the BTK inhibitor market, where Baiyueze® is located, is becoming increasingly heated, and new players from MNC such as AstraZeneca, Nuochengjianhua, and Eli Lilly have entered the market.

According to the data, in the first half of 2024, the global sales volume of Baiyuze® totaled 80018 billion yuan, a significant increase of 122% over the previous year.

Looking at regional segments, in the first half of 2024, Baiyuze®'s sales in the US totaled 5.903 billion yuan, up 134.4% year on year; European sales reached 1,057 billion yuan, up 231.6% year on year; and total sales in China were 873 million yuan, up 30.5% year on year.

In fact, Baiyuze® has been approved in more than 70 markets around the world, and is the only BTK inhibitor that has achieved superior efficacy results compared to ibutinib in head-to-head tests. According to the Zhitong Finance App, the US NCCN recommended zebutinib as a first-line drug for CLL treatment in January of last year. Ibutinib was downgraded, and the BTK market pattern changed. In 2023, ibutinib sales fell by more than 20% year on year, and in the first half of this year, sales fell 6.4% year on year again, with an obvious impact. Baiyuze® has been approved globally and continues to grow in sales in the field of approved indications, further consolidating its leading position in the field of global hematologic oncology.

In addition to Baiyuze®, the steady commercialization process of PD-1 Baizean® is also a key factor in BeiGene's impressive revenue.

During the reporting period, thanks to the demand for new patients brought about by the inclusion of new indications in medical insurance and the increase in the number of drugs admitted to hospitals, Baizean® achieved sales of 2.191 billion yuan, an increase of 19.4% over the previous year.

In the domestic market, Baizean® has been approved for 13 indications, 11 of which have been included in the national medical insurance catalogue. Globally, the drug has successively been approved in various markets around the world, including the US, the UK, South Korea, and Switzerland, and is being reviewed by regulators in many countries and regions, and is expected to benefit a wider range of patients around the world who have not met their treatment needs.

“Refined management+R&D differentiation potential” raises safety margins

During this reporting period, BeiGene was achieving a positive cycle of development under autologous hematopoiesis. This not only requires pharmaceutical companies to own “cash cow” products, but also requires detailed management at the cost management level on a daily basis.

Behind BeiGe Shenzhou, fine management of everything from sales to R&D is indispensable.

Judging from the sales expense ratio, since 2022, BeiGene Shenzhou has achieved a steady decline in the sales expense ratio under fine management. In the 2024H1 quarter, the company's current sales expenses were 4.17 billion yuan. The sales expense ratio has dropped to about 34.76%, which has dropped to the current average of the innovative drug industry.

On the R&D side, in the 2024H1 quarter, BeiGene's R&D expenses were 6.628 billion yuan, an increase of 12.68% over the previous year. This is mainly due to the fact that the development stage of some of the company's major products under development has reached the middle and late stages of maturity and certainty. At the same time, it also shows from the side that BeiGene Shenzhou has strong innovation capabilities and clinical transformation capabilities.

It is worth mentioning that under fine management, BeiGene's pipeline research and development can carry out differentiated indication selection, and while achieving the widest coverage of indications that do not meet the needs of patients, it also ensures that the product has broad commercial expectations in the future.

For example, in the field of solid tumors, BeiGene is promoting potentially differentiated projects targeting key cancer types such as breast cancer, gastrointestinal cancer, and lung cancer with deep scientific research capabilities and various technical platforms.

For breast cancer and gynecological cancer, the CDK4 inhibitor BGB-43395 monotherapy developed by BeiGene has shown good safety. More than 60 patients have been enrolled so far, and it is expected that phase 1 trial data will be released for the first time in the fourth quarter of 2024; in terms of gastrointestinal cancer indications, NMPA has accepted the marketing license application (BLA) for zenidazumab for second-line treatment of biliary tract cancer. At the same time, CEA ADC, FGFR2b ADC, and GPC3×4-BB Resistance is expected The second half of 2024 will enter the clinical development stage; in the field of immunotherapy and inflammation, IRAK4 CDAC BGB-43035, the second targeted degradation agent developed by the company on its own CDAC platform, has begun clinical development.

Improve the integration of R&D, production and marketing to consolidate Biopharma's development base

From the perspective of innovative research and development, the current BeiGene Shenzhou pipeline is full of momentum in development. In order to accelerate the continuous implementation of the innovation pipeline and large-scale commercialization, the company is further improving its closed loop of integrated R&D, production and marketing innovation, and continuously consolidating its Biopharma development base.

With strong R&D support, BeiGene has built a complete and unique pipeline of innovative research pipelines, with more than 60 drug pipelines, covering various technology platforms and drug models, including monoclonal antibodies, double/multiple antibodies, ADC, cell therapy, mRNA, etc., and has established a complete product pipeline with potential FIC/BIC capabilities in the field of hematoma and solid tumors. Since this year, 6 new Class 1 drugs from BeiGene have been approved in China to enter the clinical stage one after another.

Among them, in the field of hematologic tumors, Sonrotoclax, the company's potential best-in-class BCL-2 inhibitor, and BGB-16673, a chimeric degradation activating compound (CDAC) targeting BTK, have received particular market attention.

Take the BCL-2 inhibitor Sonrotoclax as an example. Currently, BeiGene is implementing a progressive layout in the field of hematoma using zebutinib as the foundation, and sonrotoclax is the key anchor point.

As a second-generation highly selective and potent BCL-2 inhibitor developed by BeiGene, compared to the BCL-2 inhibitors that have already been marketed, sonrotoclax showed a shorter half-life and no drug accumulation. In previous clinical studies on more than 500 patients, sonrotoclax achieved a long-lasting therapeutic response at low doses, and showed good safety characteristics as a single drug or in combination with zebutinib.

Currently, BeiGene is continuing to promote four registered clinical trials of Sonrotoclax, including the global critical phase III clinical trial in combination with Baiyuze® for first-line treatment of CLL patients. More than 1,000 participants have been enrolled. Among them, two potential global registrations for R/R Fahrenheit macroglobulinemia (WM) and R/R mantle cell lymphoma (MCL) can be used to obtain US FDA fast-track qualification.

And this also means that Sonrotoclax is getting closer to the commercialization time point. Take Venetoclax, the only Bcl-2 inhibitor currently approved for marketing in the world. In 2023, sales reached US$2,288 billion, an increase of 13.9% over the previous year. AbbVie expects its sales peak to reach US$6 billion. Since Sonrotoclax has more outstanding safety advantages and greater BIC potential compared to Venetoclax, the market anticipates that the peak sales volume of Sonrotoclax is also expected to hit 6 billion US dollars, which is highly anticipated.

In terms of BTK CDAC BGB-16673, two indications for the treatment of R/R MCL and R/R CLL/SLL have obtained US FDA Fast Track qualification, which is expected to speed up the marketing review process and bring treatment benefits to patients resistant to BTK inhibitors. BeiGene said that BGB-16673 is currently the fastest progressing BTK degrader in clinical development, and has the potential to become an important treatment plan for patients with disease progression and limited choices after using BTK inhibitors. The company anticipates that the phase III clinical trial of BGB-16673 for the treatment of R/R CLL/SLL will enroll the first subjects in the fourth quarter of 2024 or the first quarter of 2025.

In addition to the late-stage pipeline described above, financial reports show that the company is also continuing to promote independent research and development projects and registration and clinical progress of cooperative drug candidates, and is expected to launch multiple antibody-conjugated drug (ADC) molecules and double antimolecules, including pan-KRAS inhibitors, MTA co-PRMT5 inhibitors, EGFR-CDAC, CEA-ADC, and FGFR2b-ADC this year to accelerate the next phase of differentiated innovation and development.

In terms of international quality management systems and production capacity construction, BeiGene's new flagship base and clinical research and development center in New Jersey, USA, was recently officially opened. The base has an exclusive production space covering an area of about 37,000 square meters. The Guangzhou macromolecular biopharmaceutical production base currently has a total production capacity of 65,000 liters, and the ADC production facility and a new biopharmaceutical clinical production building have all been completed. The company's new small molecule innovative drug industrialization base in Suzhou has been completed and put into operation. The first phase of construction added more than 52,000 square meters, and the production capacity of solid preparations was expanded to 1 billion tablets (tablets) per year.

In terms of marketing system construction, the company has built a differentiated global commercialization team of more than 3,700 people, with more than 500 distributed in North America and Europe to help the company's innovative products benefit patients around the world.

Summarize

The current “cold winter” of financing for the global biomedical industry is expected to recede at an accelerated pace with expectations of the Federal Reserve's interest rate cut in September. During this critical window period, BeiGene progressed rapidly and smoothly at the same time as the development of key pipelines and the global commercialization process, and product revenue repeatedly reached new highs and even exceeded expectations.

In the future, BeiGene is expected to continue to accelerate its efforts in systematic competition in various fields such as global R&D, overseas registration, and commercialization through continuous improvement of the closed loop of R&D, production, and marketing innovation.