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Consumer Daily News (Reporter Lu Yue Wang Xinkun) Recently,BeiGeneCo., Ltd. (hereinafter referred to as "BeiGene") released its 2024 first half financial report, showing that its revenue increased significantly, but it still did not make a profit. The financial report shows that in the first half of 2024, BeiGene achieved revenue of 11.996 billion yuan, a year-on-year increase of 65.4%; the net profit attributable to the parent company was a loss of 2.877 billion yuan, and the non-net profit loss was 3.125 billion yuan.

BeiGene's revenue growth is mainly due to the sales growth of its self-developed products BeiGene (generic name: Zanubrutinib capsules) and BeiGene (tislelizumab injection) as well as Amgen's licensed products. However, the company's loss trend has not been reversed. Financial data shows that BeiGene has been losing money for nearly seven consecutive years. From 2017 to 2023, BeiGene's annual losses were 1.15 billion yuan, 4.74 billion yuan, 6.91 billion yuan, 11.38 billion yuan, 9.74 billion yuan, 13.64 billion yuan, and 6.716 billion yuan, respectively.

BeiGene's continued losses are closely related to its growing R&D expenses. During the reporting period, the company's R&D expenses were US$788 million, a year-on-year increase of 8.62%. From 2018 to the first half of 2024, its R&D expenses totaled more than RMB 60 billion.

1

Revenue growth but still in the red

Public information shows that BeiGene was founded in 2010.Nasdaq, Hong Kong andA sharesListed in three places, it is a global biotechnology company focused on the research and development of oncology drugs.

In recent years, BeiGene has ranked first in innovative drug revenue and R&D investment and is known as the "No. 1 in innovative drugs." However, behind the growth in its innovative drug revenue is the dilemma that it has not yet achieved profitability.

On August 7, BeiGene released its second quarter 2024 U.S. stock performance report and A-share semi-annual performance report. During the reporting period, the company achieved operating income of approximately 11.996 billion yuan; net profit attributable to shareholders of the listed company was -2.877 billion yuan; net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses was -3.125 billion yuan.

In the U.S. stock financial report, according to non-U.S. Generally Accepted Accounting Principles (GAAP), the company's adjusted operating profit for the second quarter of 2024 was US$48 million after deducting the impact of non-cash items such as equity incentive expenses, depreciation and amortization. However, it still lost about US$372 million in the first half of 2024.

Looking at the long-term trend, BeiGene has not yet achieved profitability since its public operating data in 2017, and has been losing money for more than seven consecutive years. Financial data show that from 2017 to 2023, the company's operating income was approximately 1.611 billion yuan, 1.310 billion yuan, 2.954 billion yuan, 2.120 billion yuan, 7.589 billion yuan, 9.566 billion yuan and 17.423 billion yuan, respectively. Although it has been growing year by year, the company has been in a loss-making state. During the same period, the net profit loss was approximately 982 million yuan, 4.747 billion yuan, 6.915 billion yuan, 11.384 billion yuan, 9.748 billion yuan, 13.642 billion yuan and 6.716 billion yuan, respectively. If the net loss amount in this year's semi-annual report is added, BeiGene has lost nearly 60 billion yuan in seven and a half years.

In terms of product revenue, BeiGene achieved a significant increase in operating income during the reporting period, mainly due to the growth in sales of its products BeiGene (Zabutinib Capsules), BeiGene (Tislelizumab Injection) and Amgen's authorized products.

The financial report shows that in the first half of 2024, the global sales of BeiGene totaled 8.018 billion yuan, a year-on-year increase of 122.0%, of which the sales in the United States totaled 5.903 billion yuan, a year-on-year increase of 134.4%. More than 60% of the quarter-on-quarter demand growth for this product came from the expansion of its use in chronic lymphocytic leukemia (CLL) indications. During the same period, BeiGene's sales totaled 2.191 billion yuan, a year-on-year increase of 19.4%, mainly due to the new patient demand brought about by the inclusion of new indications in medical insurance and the increase in the number of drug admissions.

However, the sales of the above two products account for too high a proportion of BeiGene's total revenue, which may cause the company to be dependent on a single product. In the first half of 2024, the sales of BeiGene's BeiGene and BeiGene accounted for approximately 66.84% and 18.26% of the company's operating income, respectively.

In the secondary market, since BeiGene was listed on the Shanghai Stock Exchange, its stock price has fallen by nearly 30% from the issue price. At that time, the company raised a total of approximately 22.1 billion yuan. However, since its listing on the A-share market, it has lost approximately 23.2 billion yuan.

As of the first half of 2024, BeiGene's cash and cash equivalents balance was approximately US$2.593 billion, down approximately US$579 million from the end of 2023. Total assets were approximately RMB 41.058 billion, down 0.2% from the beginning of the period; owners' equity attributable to the parent company was RMB 24.278 billion, down 3.3% from the beginning of the period.

It is worth mentioning that BeiGene announced the resignation of its Chief Financial Officer Wang Aijun shortly before the release of this semi-annual report. It is reported that Wang Aijun has served as the company's CFO since June 2021. During his tenure, Wang Aijun's annual salary increased by more than 1 million yuan. In 2023, his total pre-tax remuneration exceeded 7.5 million yuan.

2

R&D and sales expensesHigh

The losses of BeiGene are closely related to its high R&D expenses year after year, which have increased to more than 10 billion yuan since 2022. However, it currently still mainly relies on BeiGene's BeiGene and BeiGene's BeiGene products for profits.

Financial data shows that from 2018 to the first half of 2024, the company's R&D investment was approximately RMB 4.597 billion, RMB 6.588 billion, RMB 8.943 billion, RMB 9.538 billion, RMB 11.152 billion, RMB 12.813 billion and RMB 6.522 billion respectively. In total, the company's R&D investment in six and a half years has exceeded RMB 60 billion, which is almost the same as the net loss in the same period.

BeiGene stated in its 2023 annual report that it had not yet made a profit during the reporting period and had accumulated losses. The main reason was that most of the company's product pipelines were still in the new drug research and development stage and had not yet generated sales. In addition, the amount of R&D expenditure was large, and there were many R&D pipelines. R&D expenses showed an increasing trend during the reporting period. The sales revenue of self-developed drugs and authorized sales products sold during the reporting period could not cover the costs and expenses.

The financial report shows that as of the end of 2023, BeiGene's total liabilities were approximately 16 billion yuan, including 4.684 billion yuan in short-term loans and 1.404 billion yuan in long-term loans, with a debt ratio of 38.95%.

According to Wind data, BeiGene's net cash flow from operating activities has been negative for many consecutive years. From 2020 to the first quarter of 2024, the figures were approximately -5.18 billion yuan, -8.285 billion yuan, -7.799 billion yuan, -7.793 billion yuan and -2.396 billion yuan, respectively.

When BeiGene was planning to list on the A-share market, the company disclosed the risks associated with negative net cash flow from operating activities. The company stated in an announcement that its liquidity and financial condition may be significantly adversely affected by negative net cash flow from operating activities. There is no guarantee that financing can be obtained on acceptable terms, or if more equity securities are issued to raise funds, shareholders' equity may be diluted. If funds cannot be obtained when needed, it may be forced to delay, reduce or cancel R&D plans or future commercialization processes, which will seriously damage the company's business development.

In addition, the company's sales expenses have also been increasing year by year. Financial data shows that from 2021 to 2023, its sales expenses will be approximately 4.452 billion yuan, 5.997 billion yuan and 7.304 billion yuan respectively, up 70.06%, 34.72% and 21.80% year-on-year.

This newspaper will continue to pay attention to the company's continued net profit losses and high R&D expenses.