BeiGene, Ltd. — FY 2022 Form 10-K
Period: Fiscal year ended December 31, 2022. The filing also reports fourth-quarter results; it is an annual report, not a standalone quarterly filing. Amounts below are U.S. dollars unless stated otherwise.
Business context
BeiGene is a global oncology biotechnology company with commercial products, a broad clinical pipeline, and operations primarily in China and the United States. Its internally developed commercial medicines include BRUKINSA, tislelizumab and pamiparib. The company also sells licensed products in China and collaborates with Amgen and Novartis.
Financial highlights
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Total revenue | $1,415.9 million | $1,176.3 million |
| Net product revenue | $1,254.6 million | $634.0 million |
| Collaboration revenue | $161.3 million | $542.3 million |
| Gross margin on product sales | 77.2% | 74.0% |
| Research and development expense | $1,640.5 million | $1,459.2 million |
| Selling, general and administrative expense | $1,277.9 million | $990.1 million |
| Net loss | $2,003.8 million | $1,457.8 million |
| Operating cash flow | $(1,496.6) million | $(1,298.7) million |
| Cash, cash equivalents and short-term investments at year-end | $4,534.8 million | $6,617.6 million |
| Total debt at year-end | $538.1 million | $629.7 million |
Net loss per ordinary share was $1.49; net loss per ADS was $19.43. Year-end current assets were $5,207.1 million and current liabilities were $1,468.5 million. Capital expenditures were $325.4 million. The company reported an accumulated deficit of $7.1 billion.
Fourth-quarter results
Q4 2022 revenue was $380.1 million, versus $214.0 million in Q4 2021. Q4 2022 operating loss was $468.6 million and net loss was $445.3 million; Q4 2021 operating loss was $571.7 million and net loss was $590.7 million.
Material changes versus prior period
- Annual revenue increased 20.4%, driven by product revenue growth of 97.9%; collaboration revenue declined 70.3%, principally because 2021 included recognition of $484.6 million for the tislelizumab license to Novartis.
- BRUKINSA revenue rose 159.0% to $564.7 million, including U.S. sales growth of 237.0% to $389.7 million. Tislelizumab revenue increased 65.8% to $422.9 million.
- Gross margin improved to 77.2%, reflecting product and geographic sales mix and lower unit costs, partly offset by lower average selling prices.
- Net loss widened 37.5%. R&D rose 12.4% and SG&A rose 29.1%, reflecting expanded development and commercial organizations and related costs.
- Other expense was $223.9 million, compared with $15.9 million of other income in 2021, primarily due to foreign-exchange losses as the U.S. dollar strengthened and unrealized losses on equity investments.
- Cash and short-term investments fell by about $2.1 billion. Operating cash use increased, while 2021 cash balances included the $3.4 billion net proceeds from the STAR Market offering.
Outlook, risks and unusual items
- Management gave no specific revenue or earnings guidance. It expects product revenue to grow significantly in 2023 and product revenue growth to outpace operating-expense growth in the near term.
- Management stated existing cash, cash equivalents and short-term investments should fund operating expenses and capital needs for at least 12 months after issuance of the financial statements, but may not fund all planned global development and launches.
- BeiGene remains loss-making and expects continued losses as it funds R&D, commercialization and manufacturing expansion. It had $404.9 million of capital commitments and $595.7 million of remaining Amgen co-development commitments at year-end.
- In February 2023, BeiGene amended its Amgen collaboration to stop sharing costs for further development of sotorasib (AMG 510) through August 2023 and prepare a transition plan for its anticipated removal from the collaboration.
- BeiGene is pursuing arbitration against BMS over ABRAXANE’s suspension, supply and disputed license termination. BMS-Celgene counterclaimed for approximately $30 million; the company says it is defending the claim. No arbitration decision had been issued as of the filing.
- The company revised prior-period financial statements to correct an error in its deferred-tax-asset valuation allowance. It said the effect was not material to previously issued 2020 and 2021 statements, but recorded the cumulative correction; 2021 total assets and equity each decreased by $110.4 million.
- Key risks include clinical and regulatory uncertainty, competitive and reimbursement pressure, reliance on manufacturing and collaboration partners, foreign-exchange exposure, and evolving PRC oversight of data, cross-border activity and overseas securities offerings. The filing notes the new CSRC overseas-listing filing rules were scheduled to take effect March 31, 2023.
- Ernst & Young LLP issued unqualified opinions on the 2022 financial statements and internal control over financial reporting; management also concluded disclosure controls and internal controls were effective at year-end.
Important facts for investors to verify
- Whether BRUKINSA and tislelizumab sales growth can continue, and how NRDL pricing, reimbursement and channel adjustments affect net revenue and margins.
- Whether the company can reduce operating losses and cash burn while maintaining its development and commercial investment plans.
- Progress and confirmatory evidence for conditionally or accelerated-approved indications, and regulatory decisions for pipeline candidates and global filings.
- Actual funding and construction needs for the Hopewell, Suzhou and Guangzhou facilities, alongside the stated contractual commitments and liquidity runway.
- Developments in the ABRAXANE arbitration, the AMG 510 transition, Novartis collaboration options and milestones, and applicable PRC filing and data-security requirements.
- The impact of the deferred-tax correction and foreign-exchange losses on future reported results; the filing reports no clear standalone fourth-quarter cash-flow figure.