BeOne Medicines Ltd 10-Q for FY2020 Q2

BeOne Medicines Ltd. (ONC)

10-Q 2020-08-06 For: 2020-06-30

Added on April 06, 2026

About this 10-Q

BeOne Medicines Ltd filed this 10-Q on August 6, 2020, covering the quarter ended June 30, 2020 (FY2020 Q2).

Headline figures

Quarter ended June 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $65.64M; down 73.0% from $243.35M a year earlier
Net loss: $335.2M; compared with a net loss of $85.57M a year earlier

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Cayman Islands			98-1209416
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

c/o Mourant Governance Services (Cayman) Limited
94 Solaris Avenue, Camana Bay
Grand Cayman
Cayman Islands			KY1-1108
(Address of principal executive offices)			(Zip Code)


		Page

PART I.	FINANCIAL INFORMATION	3

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	45

Item 4.	Controls and Procedures	46

PART II.	OTHER INFORMATION	47

Item 1.	Legal Proceedings	47

Item 1A.	Risk Factors	47

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	100

Item 3.	Defaults Upon Senior Securities	100

Item 4.	Mine Safety Disclosures	100

Item 5.	Other Information	100

Item 6.	Exhibits	100

SIGNATURES			103


		As of
		June 30,	December 31,
	Note	2020	2019
		$	$
		(unaudited)	(audited)
Assets
Current assets:
Cash and cash equivalents		1,345,014	618,011
Short-term restricted cash	4	283	288
Short-term investments	4	1,807,744	364,728
Accounts receivable, net	10	61,663	70,878
Inventories	5	33,234	28,553
Prepaid expenses and other current assets	10	144,466	90,238
Total current assets		3,392,404	1,172,696
Long-term restricted cash	4	4,602	2,476
Property, plant and equipment, net	6	258,106	242,402
Operating lease right-of-use assets		90,620	82,520
Intangible assets, net	8	5,375	5,846
Deferred tax assets	9	39,801	37,894
Other non-current assets	10	112,382	68,455
Total non-current assets		510,886	439,593
Total assets		3,903,290	1,612,289
Liabilities and shareholders' equity
Current liabilities:
Accounts payable		157,173	122,488
Accrued expenses and other payables	10	207,921	163,556
Tax payable	9	10,448	13,454
Operating lease liabilities, current portion		12,888	10,814
Research and development cost share liability, current portion	3	136,704	—
Short-term bank loans	11	26,061	—
Total current liabilities		551,195	310,312
Non-current liabilities:
Long-term bank loan	11	131,491	83,311
Shareholder loan	12	160,164	157,384
Operating lease liabilities, non-current portion		31,165	25,833
Deferred tax liabilities		11,379	10,532
Research and development cost share liability, non-current portion	3	424,890	—
Other long-term liabilities	10	46,514	46,562
Total non-current liabilities		805,603	323,622
Total liabilities		1,356,798	633,934
Commitments and contingencies	19
Equity:
Ordinary shares, US$0.0001 par value per share; 9,500,000,000 shares authorized; 1,014,976,692 and 801,340,698 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		102	79
Additional paid-in capital		5,200,275	2,925,970
Accumulated other comprehensive loss	16	(9,299)	(8,001)
Accumulated deficit		(2,654,780)	(1,955,843)
Total BeiGene, Ltd. shareholders’ equity		2,536,298	962,205
Noncontrolling interest		10,194	16,150
Total equity		2,546,492	978,355
Total liabilities and equity		3,903,290	1,612,289


		Three Months Ended			Six Months Ended
		June 30,			June 30,
	Note	2020	2019	2020	2019
		$	$	$	$
Revenues
Product revenue, net	13	65,635	58,142	117,694	115,563
Collaboration revenue	3	—	185,204	—	205,616
Total revenues		65,635	243,346	117,694	321,179
Expenses
Cost of sales - product		14,307	17,839	28,456	33,100
Research and development		285,968	228,760	590,270	407,111
Selling, general and administrative		124,049	82,248	231,130	139,893
Amortization of intangible assets		188	332	471	663
Total expenses		424,512	329,179	850,327	580,767
Loss from operations		(358,877)	(85,833)	(732,633)	(259,588)
Interest income, net		1,108	2,886	7,798	7,363
Other income, net		19,976	(878)	23,657	850
Loss before income taxes		(337,793)	(83,825)	(701,178)	(251,375)
Income tax (benefit) expense	9	(1,475)	2,129	79	2,648
Net loss		(336,318)	(85,954)	(701,257)	(254,023)
Less: net loss attributable to noncontrolling interests		(1,116)	(384)	(2,320)	(813)
Net loss attributable to BeiGene, Ltd.		(335,202)	(85,570)	(698,937)	(253,210)

Net loss per share attributable to BeiGene, Ltd., basic and diluted	14	(0.33)	(0.11)	(0.69)	(0.33)
Weighted-average shares outstanding, basic and diluted	14	1,010,230,470	777,509,102	1,007,967,904	776,137,299

Net loss per American Depositary Share (“ADS”), basic and diluted		(4.31)	(1.43)	(9.01)	(4.24)
Weighted-average ADSs outstanding, basic and diluted		77,710,036	59,808,392	77,535,993	59,702,869


	Three Months Ended			Six Months Ended
	June 30,			June 30,
	2020	2019	2020	2019
	$	$	$	$
Net loss	(336,318)	(85,954)	(701,257)	(254,023)
Other comprehensive (loss)/ income, net of tax of nil:
Foreign currency translation adjustments	1,732	(7,337)	(2,617)	(3,582)
Unrealized holding gain, net	(4,470)	901	1,228	1,586
Comprehensive loss	(339,056)	(92,390)	(702,646)	(256,019)
Less: comprehensive loss attributable to noncontrolling interests	(1,103)	(523)	(2,411)	(1,058)
Comprehensive loss attributable to BeiGene, Ltd.	(337,953)	(91,867)	(700,235)	(254,961)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


		Six months ended June 30,
	Note	2020	2019
		$	$
Operating activities:
Net loss		(701,257)	(254,023)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		15,617	7,111
Share-based compensation expenses	15	83,723	58,994

Unrealized gains on equity method investments	4	(11,264)	—
Gain on deconsolidation of entity	4	(11,307)	—
Acquired in-process research and development		43,000	49,000
Amortization of research and development cost share liability		(55,240)	—

Non-cash interest expense		5,106	3,759
Deferred income tax benefits		(1,060)	(1,456)
Other items, net		(863)	(5,458)
Changes in operating assets and liabilities:
Accounts receivable		9,094	(17,052)
Inventories		(4,681)	(32,806)
Prepaid expenses and other current assets		(54,590)	(5,923)
Operating lease right-of-use assets		(7,465)	(3,604)
Other non-current assets		2,628	(10,293)
Accounts payable		34,851	21,431
Accrued expenses and other payables		44,471	3,535
Tax payable		(3,006)	(3,713)
Deferred revenue		—	(27,982)
Operating lease liabilities		7,406	383
Other long-term liabilities		(49)	21
Net cash used in operating activities		(604,886)	(218,076)
Investing activities:
Purchases of property, plant and equipment		(54,138)	(43,275)
Deconsolidation of entity		(2,025)	—
Purchases of investments		(2,442,943)	(710,791)
Proceeds from sale or maturity of investments		997,242	1,167,491
Purchase of in-process research and development		(43,000)	(49,000)
Net cash (used in) provided by investing activities		(1,544,864)	364,425
Financing activities:
Proceeds from sale of ordinary shares, net of cost		2,162,407	—
Proceeds from research and development cost share liability		616,834	—
Capital contribution from noncontrolling interest		—	4,000
Proceeds from long-term bank loan	11	49,525	43,704

Proceeds from short-term bank loan	11	26,197	—
Proceeds from option exercises and employee share purchase plan		28,198	10,642
Net cash provided by financing activities		2,883,161	58,346
Effect of foreign exchange rate changes, net		(4,287)	(2,732)
Net increase in cash, cash equivalents, and restricted cash		729,124	201,963
Cash, cash equivalents, and restricted cash at beginning of period		620,775	740,713
Cash, cash equivalents, and restricted cash at end of period		1,349,899	942,676
Supplemental cash flow information:
Cash and cash equivalents		1,345,014	918,948
Short-term restricted cash		283	14,567
Long-term restricted cash		4,602	9,161
Income taxes paid		9,250	7,874
Interest paid		3,354	2,090
Supplemental non-cash information:
Acquisitions of equipment included in accounts payable		28,962	35,927


	Attributable to BeiGene, Ltd.
	Ordinary Shares			Additional Paid-In Capital	Accumulated Other Comprehensive Income	Accumulated Deficit	Total	Noncontrolling Interests
	Shares	Amount							Total
		$	$	$	$	$	$	$
Balance at December 31, 2019	801,340,698	79	2,925,970	(8,001)	(1,955,843)	962,205	16,150	978,355
Issuance of ordinary shares in connection with collaboration	206,635,013	21	2,162,386	—	—	2,162,407	—	2,162,407
Use of shares reserved for share option exercises	(3,705,468)	—	—	—	—	—	—	—
Exercise of options, ESPP and release of Restricted Share Units ("RSUs")	3,706,573	1	11,628	—	—	11,629	—	11,629
Share-based compensation	—	—	38,255	—	—	38,255	—	38,255
Other comprehensive income	—	—	—	1,453	—	1,453	(104)	1,349
Net loss	—	—	—	—	(363,735)	(363,735)	(1,204)	(364,939)
Balance at March 31, 2020	1,007,976,816	101	5,138,239	(6,548)	(2,319,578)	2,812,214	14,842	2,827,056
Exercise of options, ESPP issuances and release of RSUs	10,493,392	1	16,568	—	—	16,569	—	16,569
Issuance of shares reserved for share option exercises and RSU releases	(3,493,516)	—	—	—	—	—	—	—
Share-based compensation	—	—	45,468	—	—	45,468	—	45,468
Deconsolidation of entity	—	—	—	—	—	—	(3,545)	(3,545)
Other comprehensive loss	—	—	—	(2,751)	—	(2,751)	13	(2,738)
Net loss	—	—	—	—	(335,202)	(335,202)	(1,116)	(336,318)
Balance at June 30, 2020	1,014,976,692	102	5,200,275	(9,299)	(2,654,780)	2,536,298	10,194	2,546,492







Balance at December 31, 2018	776,263,184	77	2,744,814	1,526	(1,007,215)	1,739,202	14,445	1,753,647
Use of shares reserved for share option exercises	(916,383)	—	—	—	—	—	—	—
Exercise of options, ESPP and release of RSUs	2,066,383	1	6,268	—	—	6,269	—	6,269
Share-based compensation	—	—	26,392	—	—	26,392	—	26,392
Other comprehensive income	—	—	—	4,546	—	4,546	(106)	4,440
Net loss	—	—	—	—	(167,640)	(167,640)	(429)	(168,069)
Balance at March 31, 2019	777,413,184	78	2,777,474	6,072	(1,174,855)	1,608,769	13,910	1,622,679
Contributions from shareholders	—	—	—	—	—	—	4,000	4,000
Exercise of options, ESPP and release of RSUs	3,802,747	—	4,373	—	—	4,373	—	4,373
Issuance of shares reserved for share option exercises	3,223,701	—	—	—	—	—	—	—
Share-based compensation	—	—	32,602	—	—	32,602	—	32,602
Other comprehensive income	—	—	—	(6,297)	—	(6,297)	(139)	(6,436)
Net loss	—	—	—	—	(85,570)	(85,570)	(384)	(85,954)
Balance at June 30, 2019	784,439,632	78	2,814,449	(225)	(1,260,425)	1,553,877	17,387	1,571,264


	Quoted Price
	in Active	Significant
	Market for	Other	Significant
	Identical	Observable	Unobservable
	Assets	Inputs	Inputs
As of June 30, 2020	(Level 1)	(Level 2)	(Level 3)
	$	$	$
Short-term investments (Note 4):
U.S. treasury securities	1,807,744	—	—
Cash equivalents:
U.S. treasury securities	263,300	—	—
Money market funds	462,522	—	—
Other non-current assets:
Equity securities (Note 4)	10,042	6,222	—
Total	2,543,608	6,222	—


		Gross	Gross	Fair Value
	Amortized	Unrealized	Unrealized	(Net Carrying
	Cost	Gains	Losses	Amount)
	$	$	$	$
U.S. treasury securities	1,805,274	2,470	—	1,807,744
Total	1,805,274	2,470	—	1,807,744


	As of
	June 30, 2020					December 31, 2019
	Gross			Gross
	carrying	Accumulated	Intangible	carrying	Accumulated	Intangible
	amount	amortization	assets, net	amount	amortization	assets, net
	$	$	$	$	$	$
Finite-lived intangible assets:
Product distribution rights	7,500	(2,125)	5,375	7,500	(1,750)	5,750
Trading license	816	(816)	—	816	(720)	96
Total finite-lived intangible assets	8,316	(2,941)	5,375	8,316	(2,470)	5,846


						Allowance for Credit Losses
						$
Balance as of December 31, 2019						—
Current period provision for expected credit losses						121
Amounts written-off						—
Recoveries of amounts previously written-off						—
Balance as of June 30, 2020						121


						Sales Rebates and Returns
						$
Balance as of December 31, 2018						4,749
Accrual						1,706
Payments						(3,784)
Balance as of June 30, 2019						2,671
Balance as of December 31, 2019						3,198
Accrual						3,183
Payments						(2,485)
Balance as of June 30, 2020						3,896


		Unrealized
	Foreign Currency	Gains on
	Translation	Available-for-Sale
	Adjustments	Securities	Total
	$	$	$
Balance as of December 31, 2019	(9,291)	1,290	(8,001)
Other comprehensive (loss)/ income before reclassifications	(2,526)	2,657	131
Amounts reclassified from accumulated other comprehensive income	—	(1,429)	(1,429)
Net-current period other comprehensive (loss)/ income	(2,526)	1,228	(1,298)
Balance as of June 30, 2020	(11,817)	2,518	(9,299)


	As of
	June 30,	December 31,
	2020	2019
	$	$
Laboratory equipment	50,901	47,154
Leasehold improvements	24,780	24,008
Building	108,188	109,514
Manufacturing equipment	65,431	62,775
Software, electronics and office equipment	15,435	14,705
Property, plant and equipment, at cost	264,735	258,156
Less accumulated depreciation	(51,157)	(36,709)
Construction in progress	44,528	20,955
Property, plant and equipment, net	258,106	242,402


	As of
	June 30,	December 31,
	2020	2019
	$	$
Goodwill	109	109
Prepayment of property and equipment	30,449	10,289
Prepayment of facility capacity expansion activities (1)	26,267	24,881
Prepaid VAT	25,705	29,967
Rental deposits and other	3,611	3,209
Equity method investments (Note 4)	26,241	—
Total	112,382	68,455


	Three Months Ended
	June 30,						Changes
	2020		2019		$		%

	(dollars in thousands)
Tislelizumab	$	29,417	$	—	$	29,417	NM
BRUKINSA®	6,974		—		6,974		NM
REVLIMID®	17,219		16,373		846		5.2	%
VIDAZA®	11,789		7,038		4,751		67.5	%
ABRAXANE®	236		34,731		(34,495)		(99.3)	%
Total product revenue	$	65,635	$	58,142	$	7,493	12.9	%


	Three Months Ended
	June 30,						Changes
	2020		2019		$		%

	(dollars in thousands)
External cost of clinical-stage programs	$	121,313	$	102,960	$	18,353	17.8	%
Upfront license fees and milestones	—		20,000		(20,000)		(100.0)	%
External cost of non-clinical-stage programs	7,164		11,566		(4,402)		(38.1)	%
Amgen co-development expense¹	28,337		—		28,337		NM
Internal research and development expenses	129,154		94,234		34,920		37.1	%
Total research and development expenses	$	285,968	$	228,760	$	57,208	25.0	%


	Six Months Ended June 30,
	2020		2019

	(in thousands)
Cash, cash equivalents and restricted cash at beginning of period	$	620,775	$	740,713
Net cash used in operating activities	(604,886)		(218,076)
Net cash (used in) provided by investing activities	(1,544,864)		364,425
Net cash provided by financing activities	2,883,161		58,346
Net effect of foreign exchange rate changes	(4,287)		(2,732)
Net increase in cash, cash equivalents, and restricted cash	729,124		201,963
Cash, cash equivalents and restricted cash at end of period	$	1,349,899	$	942,676


	Payments Due by Period
			Less Than						More Than
	Total		1 Year		1–3 Years		3–5 Years		5 Years
	(in thousands)
Contractual obligations
Operating lease commitments	$	49,271	$	15,396	$	23,576	$	10,181	$	118
Purchase commitments	126,864		34,390		49,345		22,328		20,801
Debt obligations	317,716		26,061		167,099		40,238		84,318
Co-development funding commitment	1,138,057		292,557		623,000		222,500		—
Capital commitments	61,017		61,017		—		—		—
Total	$	1,692,925	$	429,421	$	863,020	$	295,247	$	105,237


	BEIGENE, LTD.

Date: August 6, 2020	By:	/s/ John V. Oyler
	John V. Oyler
	Chief Executive Officer and Chairman
	(Principal Executive Officer)

Date: August 6, 2020	By:	/s/ Howard Liang
	Howard Liang
	Chief Financial Officer and Chief Strategy Officer
	(Principal Financial and Accounting Officer)