The metamorphosis code in BeiGene's 2023 financial report

The oversold innovative drug sector is accumulating positive signals: accelerated overseas BD for innovative drugs, moderate price reductions in national negotiations, and clear timelines for drug review meetings in multiple provinces...

The short-term oversold condition has brought higher investment win rates and odds for the innovative drug sector.

As the release of 2023 annual reports for innovative drug companies gradually concludes, it is evident that despite the still quiet primary and secondary markets, leading innovative drug companies have shown warm growth performance, setting new records.

A small clue may reveal the general trend. BeiGene's recently released 2023 A-share performance report, with business data growth and core pipeline progress far exceeding expectations, perfectly illustrates the value of innovative drug companies and reveals the transformation code of BeiGene from a newcomer to a global enterprise.

First Breakthrough of 10 Billion Revenue

The performance report shows that BeiGene achieved another record high in 2023, with total revenue reaching 17.423 billion yuan, a year-on-year increase of 82.1%. Global product revenue continued to rise, generating 15.504 billion yuan, up 82.8% year-on-year.

In 2023, BeiGene's revenue exceeded 10 billion yuan for the first time, joining the A-share pharmaceutical "10 Billion Club." The revenue growth rate remained high, and its cash and cash equivalents were among the most abundant in the 10-billion-revenue tier. By the end of 2023, BeiGene's cash and cash equivalents stood at $3.2 billion, approximately 15.038 billion yuan.

According to its U.S. stock performance, with strict cost management, the adjusted operating loss narrowed by 47% year-on-year in 2023. Looking ahead, the company's global revenue growth momentum remains strong, and with continued operational efficiency improvements, the breakeven point is highly anticipated.

Clearly, the company's performance is emerging from a long and winding tunnel, with a bright and smooth road ahead becoming increasingly visible. The future has never seemed so promising.

First "Billion-Dollar Molecule"

BeiGene's significant revenue growth is mainly attributed to the strong sales of its two core self-developed drugs, with the "Double Hundred Overseas" strategy creating a miracle in drug commercialization.

In terms of product revenue composition, zanubrutinib outperformed its competitor ibrutinib in head-to-head trials, leveraging its "best-in-class" BTK inhibitor advantage to expand market share and contributing over half of the company's sales.

In 2023, zanubrutinib's global sales totaled 9.138 billion yuan, a year-on-year increase of 138.7%, setting a new record for product sales revenue since the company's inception. According to its U.S. stock annual report, zanubrutinib's global sales reached $1.3 billion, making it China's first "billion-dollar molecule."

Compared to other companies listed under Hong Kong's 18A or A-shares, zanubrutinib's sales as a single core product are close to Hengrui Medicine's 2023 full-year innovative drug revenue of 10.637 billion yuan (+22.1%), far ahead in globalization. Currently, zanubrutinib has been approved in 70 markets, including Nicaragua, Thailand, Ecuador, and Uruguay, becoming the BTK inhibitor with the broadest coverage of indications.

In the global biopharmaceutical field, drugs with annual revenues exceeding $1 billion are often called "blockbuster" drugs. Their emergence requires both transformative therapeutic capabilities and strong commercialization and supply chain management, making them rare worldwide.

From approval to surpassing $1 billion in sales, zanubrutinib took only four years (most drugs take 10 years), validating BeiGene's successful globalization path and paving the way for future drug successes.

PD-1's "Zero Breakthrough" Overseas

One flower does not make a spring, and BeiGene is now in its "dynamic duo" phase.

The company's other self-developed PD-1 product, tislelizumab (BAVENCIO^®), achieved sales of 3.806 billion yuan in 2023, up 33.1% year-on-year from 2.859 billion yuan in the previous year, delivering impressive results.

Tislelizumab is the only PD-1 monoclonal antibody with an engineered Fc segment to eliminate FcγR binding, preventing T-cell depletion and maintaining anti-tumor efficacy. As a global drug, under the company's adept management, it is poised to replicate zanubrutinib's explosive growth path.

In 2023, tislelizumab was approved in the EU and the UK, marking a "zero breakthrough" for PD-1 products overseas. This year, it has also gained approvals in the U.S. and EU for indications such as esophageal squamous cell carcinoma and non-small cell lung cancer. Undoubtedly, 2024 will be a year of global commercialization breakthroughs for tislelizumab.

Domestically, despite PD-1 inhibitors being the most competitive field, tislelizumab has emerged as a leader due to its unique advantages. It has received 12 indications approved by China's NMPA, with 11 included in the national reimbursement drug list, the most among PD-1 products, overtaking competitors.

Looking ahead, tislelizumab's growth potential is just beginning.

BeiGene is building a pan-tumor immunotherapy pipeline centered on tislelizumab, accelerating development in key solid tumors such as lung cancer, upper gastrointestinal, and colorectal cancers. PD-1 combination therapies are becoming mainstream, and tislelizumab is currently being studied in over 40 combination trials, including with LAG3, TIM3, OX40, and HPK1 inhibitors, forming a new wave of immunotherapy products.

As tislelizumab solidifies its position as a core drug in solid tumors, it is expected to achieve new breakthroughs in global markets.

Comprehensive Pipeline Layout in Full Bloom

Investment is more about the future. For an innovative drug company, relying on one or two star drugs is far from enough; the subsequent pipeline layout is a key indicator of long-term value.

In terms of BeiGene's new drug "visibility," the hematology direction is the most promising:

1) BCL-2 is a hot target for combination therapy with BTK inhibitors in hematologic malignancies. The company's BCL2 inhibitor sonrotoclax has "best-in-class" potential, with four global registrational trials initiated, including a global Phase 3 trial for first-line chronic lymphocytic leukemia (CLL). It is highly likely to become the company's next blockbuster, further solidifying its leadership in hematology.

2) The differentiated BTK CDAC project BGB-16673 has initiated two expansion cohort studies targeting BTK inhibitor-resistant patients and broader populations, further enhancing the company's footprint in this field.

Overall, BeiGene's R&D pipeline is particularly promising, with over 50 drugs in development covering multiple technology platforms and modalities, including monoclonal antibodies, bispecific/multispecific antibodies, ADCs, cell therapies, and mRNA. Many are potential "first-in-class" or "best-in-class," achieving near-comprehensive coverage of promising immuno-oncology targets.

The U.S. stock performance report also disclosed that in 2023, the company advanced five new molecular entities into clinical trials, including a potential "best-in-class" CDK4 inhibitor.

In 2024, the company plans to initiate first-in-human trials for at least 10 new molecular entities, accelerating the next wave of R&D.

Rare Full-Value-Chain Capabilities

To understand BeiGene's exceptional R&D speed, one must highlight a key differentiator: the company has built a global clinical development team of over 3,000 people, largely independent of CROs. This enables faster enrollment, higher efficiency, and significantly reduces the time and cost of clinical trials, making it one of the few innovative drug companies globally capable of independently conducting late-stage oncology development.

Additionally, among innovative drug companies, BeiGene is exceptionally rare in building its own global commercialization team and independently driving sales of core pipelines. The financial report shows that BeiGene has established a global commercialization team of over 3,700 people, poised to secure more approvals in new regions and indications and lay the foundation for future global drug successes.

In terms of manufacturing, BeiGene's global facilities are expected to achieve multiple milestones this year: the Guangzhou biologics production base has reached a total capacity of 65,000 liters, and the ADC production park in Guangzhou's South Campus was completed and operational in April 2024. The newly built small-molecule innovative drug industrial base in Suzhou has also been completed, expanding solid dosage capacity to 1 billion tablets (capsules) annually. The biologics production base and clinical R&D center in New Jersey, USA, are nearing completion and expected to commence operations in July 2024.

From BeiGene's report card, it is clear that the company has established full-value-chain capabilities from preclinical R&D to clinical trials, market access, large-scale production, and global sales, enabling it to maximize the global value of outstanding drugs on its own.

Looking ahead, with the continuous launch of excellent new drugs and further strengthening of commercialization capabilities, the company's global competitive position and explosive revenue growth are clearly visible.

As Marlon Brando said in *The Godfather*: "A man who doesn't spend time with his family can never be a real man." Similarly, those who see the essence of things in half a minute and those who never see it in a lifetime are destined for vastly different fates.

With its product advantages, pipeline layout, and full-value-chain capabilities, BeiGene is on track to become a global leader in oncology. Future revenue and profit growth will be nonlinear, presenting undeniable investment opportunities.

As the valuation pressures on the innovative drug sector ease and an upward inflection point arrives, the market's theme for the foreseeable future will be the rediscovery of BeiGene's value.

•END•$BEONE MEDICINES(06160.HK) $BeOne Medicines(688235.SH) $Beigene(BGNE.US)

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