With a more than 40% reduction in losses, "the number one innovative drug" BeiGene is exploring its next blockbuster product

The financial report of the "Innovative Drug Leader" has injected a strong stimulant into the cold biopharmaceutical industry.

On August 8th, BeiGene (688235.SH) released its interim report for the first half of 2024, with a revenue of 11.996 billion yuan, a year-on-year increase of 65.4%; the net loss attributable to shareholders for the same period was 2.877 billion yuan, a decrease of over 40% compared to the same period last year.

Moreover, in the second quarter of 2024, BeiGene's revenue was 6.637 billion yuan, a year-on-year increase of 58.59%; after excluding non-cash items such as share-based payment expenses, depreciation, and amortization expenses, the operating profit reached 345 million yuan.

This marks the first time that BeiGene has achieved a positive adjusted operating profit.

Such performance is inseparable from the outstanding performance of its blockbuster drug zanubrutinib. In the first half of 2024, the global sales of this product reached 8.018 billion yuan, a year-on-year increase of 122%.

However, the growth rate of another major product, tislelizumab, was mediocre. In the first half of 2024, it generated revenue of 2.191 billion yuan, a year-on-year increase of 19.4%, a decrease of 27.36 percentage points compared to the same period in 2023.

This may be related to the fact that tislelizumab's main market is in China, where the industry competition is fierce.

However, tislelizumab has already been approved for listing in the United States, Europe, and other regions, which is expected to bring in more revenue in the future.

In terms of pipeline research, BeiGene is currently advancing the clinical development of the BCL-2 (B-cell lymphoma-2) inhibitor sonrutoclax. However, there are already at least three domestic enterprises targeting this target and advancing clinical trials, indicating the level of competition.

Turnaround in Sight?

The biopharmaceutical industry is currently in a cold winter, but as the "Innovative Drug Leader," BeiGene still shows a strong growth trend.

On August 8th, BeiGene disclosed its interim report for the first half of 2024, with a revenue of 11.996 billion yuan, a year-on-year increase of 65.4%.

"The growth in product revenue is mainly due to the sales growth of self-developed products Brukinsa (zanubrutinib capsules) and Baizean (tislelizumab injection) as well as the sales growth of authorized products from AbbVie." BeiGene pointed out.

The BTK (Bruton's tyrosine kinase) inhibitor zanubrutinib remains the "flagship product" of BeiGene.

In the first half of 2024, global sales of zanubrutinib reached 8.018 billion yuan, a year-on-year increase of 122%, with a growth rate slowing down by 16.57 percentage points compared to the same period in 2023.

Among them, the growth in the European and American markets is strong, but limited in the Chinese market.

The sales in the United States and Europe were 5.903 billion yuan and 1.057 billion yuan respectively, with year-on-year growth rates of 134.4% and 231.6%; while the Chinese market was only 0.873 billion yuan, with a year-on-year growth of 30.5%.

This poses a strong challenge to zanubrutinib's "arch-rival," the first-generation BTK inhibitor "ibrutinib" developed by AbbVie.

Recent financial data disclosed by AbbVie shows that in the first half of 2024, global sales of ibrutinib were 1.671 billion US dollars (equivalent to 11.978 billion yuan), a year-on-year decrease of 6.4% Compared to Zejula, another major PD-1 drug under BeiGene, the growth of the PD-1 drug tislelizumab is mediocre.

In the first half of 2024, the sales of tislelizumab reached 2.191 billion RMB, with a year-on-year growth of 19.4%, a decrease of 27.36 percentage points compared to the same period in 2023.

This is partly due to the fierce competition in the PD-1 drug market where tislelizumab is located, and partly because the main market for tislelizumab is still China, where growth has a ceiling.

However, tislelizumab has been successively approved in the United States, European Union, United Kingdom, and Australia this year for second-line treatment of adult patients with esophageal squamous cell carcinoma (ESCC), and has been approved in the EU and Australia for combination chemotherapy in first-line and monotherapy in second-line treatment of metastatic non-small cell lung cancer (NSCLC) for three indications.

A source close to BeiGene confirmed to TradeWind01 that tislelizumab has not yet been officially launched overseas.

With the increase in overseas market volume, tislelizumab may see more performance growth, and BeiGene may be profitable.

Excluding first-quarter data, BeiGene's revenue in the second quarter was 6.637 billion RMB, a year-on-year increase of 58.59%. The net loss attributable to shareholders in the same period was only 969 million RMB, a decrease of over 60%.

After excluding the impact of non-cash items such as share-based payment expenses, depreciation, and amortization expenses, BeiGene's operating profit in the second quarter has reached 345 million RMB, marking the first time BeiGene has achieved positive adjusted operating profit.

This is also the result of BeiGene actively controlling costs.

In the second quarter of 2024, BeiGene's research and development expenses were 3.256 billion RMB, an increase of 7.5% year-on-year, a decrease of 4.3 percentage points compared to the same period in 2023; while sales and administrative expenses were 3.177 billion RMB, with a year-on-year growth rate of 12.3%, a decrease of 6.9 percentage points compared to the same period in 2023.

The market has responded positively to BeiGene's reduced losses.

At the close on August 8th, BeiGene's A-shares and H-shares rose by 2.46% and 5.61% respectively.

Next Major Product: BCL-2 Inhibitor?

After Zejula, all eyes are on whether BeiGene can launch the next major product.

In its pipeline, BeiGene is actively promoting four registration clinical trials of the BCL-2 inhibitor sonrutoclax: a global Phase III clinical trial of sonrutoclax in combination with Zejula for first-line treatment of CLL patients, two potential global registration Phase II clinical trials for relapsed/refractory Waldenström's macroglobulinemia (R/R WM) and relapsed/refractory mantle cell lymphoma (R/R MCL), and a potential China registration Phase II clinical trial for R/R CLL.

However, competition for the BCL-2 target remains intense.

On one hand, as early as 2016, AbbVie's BCL-2 inhibitor Venclexta has been approved and launched in the United States, with indications including CLL, small lymphocytic lymphoma (SLL), acute myeloid leukemia (AML), making it the first and only BCL-2 inhibitor approved and launched to date Referring to the sales situation of Venetoclax, there is indeed a certain market space.

In the first half of 2024, Venetoclax's global sales reached $1.251 billion (equivalent to RMB 8.971 billion), a year-on-year increase of 16%.

On the other hand, according to incomplete statistics from Wind (ID: TradeWind01), in addition to BeiGene, there are currently at least 3 domestic enterprises laying out this target, namely Yasheng Pharmaceutical (6855.HK) with Lisaftoclax, Nuocheng Jianhua (688428.SH) with ICP-248, and Fosun Pharma (600196.SH) with FCN-338. The BCL-2 inhibitors of these three companies have entered clinical trials.

Currently, on par with BeiGene, Yasheng Pharmaceutical's Lisaftoclax has made progress, with indications involving CLL/SLL, R/R CLL/SLL, WM patients who have previously received BTK inhibitors treatment, and has entered phase III clinical trials in both China and the United States.

Furthermore, Yasheng Pharmaceutical also has Pelcitoclax, which adopts a dual-target mechanism of BCL-2/BCL-XL in its pipeline, used to treat small cell lung cancer, among others, and has entered phase II clinical trials.

Fosun Pharma's FCN-338 is used to treat myeloid malignancies and has entered phase II clinical trials; Nuocheng Jianhua's ICP-248 is undergoing a phase I dose escalation trial, aiming to treat CLL/SLL, MCL, and other non-Hodgkin's lymphoma malignant hematologic system tumors.

In the background of fierce competition, the uncertainty remains high on whether Sonrotoclax can replicate the success of Ibrutinib