20230301-招银国际-Expect_strong_sales_in_2023_driven_by_the_US_approval_of_zanubrutinib_in_CLL_6页_1mb

BeiGene (BGNE US) Summary

Core Content

BeiGene is a biopharmaceutical company with strong growth potential in 2023, driven by the approval of its key drugs in overseas markets, particularly the US. The report highlights the company's financial performance, strategic developments, and valuation.

Main Points

• Zanubrutinib Sales Growth:

  • Zanubrutinib, a BTK inhibitor, recorded US$176mn in sales in 4Q22, representing a +13% quarter-over-quarter increase and a +101% year-over-year increase.
  • The drug's strong performance is attributed to its approval in the US for both 1L and r/r CLL, and the expected addition of PFS superiority over ibrutinib in r/r CLL to its label in 2023.
  • The company forecasts zanubrutinib sales to reach US$1.2bn in FY23E, a +106% YoY increase.

• Tislelizumab US Approval Outlook:

  • Tislelizumab, a PD-1 inhibitor, had US$102mn in sales in 4Q22, a -20% QoQ decline mainly due to the impact of the pandemic in China.
  • The drug is currently the top-selling PD-(L)1 mAb in China.
  • The company expects to file BLAs for 1L GC and 1L ESCC in the US this year based on positive global Phase 3 trial results.
  • US BLA for 2L ESCC is pending FDA inspections and is viewed as a major catalyst for the company in 2023.

• Cost Efficiency Improvements:

  • Gross margin improved throughout 2022, reaching 78.3% in 4Q22, driven by the increasing proportion of high-margin products like zanubrutinib and tislelizumab.
  • SG&A ratio improved from 156% in FY21 to 101% in FY22, indicating better cost management.
  • Despite a net loss of US$2.00bn in FY22, the company has a strong cash balance of US$4.5bn, sufficient to support R&D and capex investments.

• Early-Stage Assets:

  • The company expects to release Phase 2 data for ociperlimab (TIGIT) in multiple indications (ESCC, HCC, NSCLC) in 2023.
  • Ociperlimab's option execution by Novartis is anticipated, with a potential payment of US$600mn if executed by mid-2023 or US$700mn if executed by late-2023.
  • BeiGene plans to initiate a pivotal trial for BGB-11417 (Bcl-2) in 1L CLL in 2H23E.
  • Preliminary Phase 1 results for BGB-16673 (BTK CDAC) and BGB-A445 (OX40) are expected in 2023E.
  • Several in-house early-stage assets, including BGB-23339 (TYK2), BGB-24714 (SMAC mimetic), and BGB-B167 (CEA/4-1BB bsAb), have entered Phase 1 trials.

• Valuation and Investment Outlook:

  • The company maintains a "BUY" rating, with a revised target price of US$290.42, up from US$255.56.
  • The target price is based on a DCF model with a WACC of 9.90% and a terminal growth rate of 3.0%.
  • The 12-month upside is 29.3%.
  • The company's market capitalization is US$23,394.5mn, with a 3-month average trading volume of US$234.1mn.

Key Information

• Earnings Summary:

  • Revenue is expected to grow from US$1,416mn in FY22 to US$2,343mn in FY23E, US$3,298mn in FY24E, and US$4,432mn in FY25E.
  • Net profit is projected to improve from a loss of US$2,004mn in FY22 to a profit of US$204mn in FY25E.
  • EPS is expected to rise from (US$19.43) in FY22 to US$1.96 in FY25E.

• Valuation Analysis:

  • The DCF valuation is US$27,817mn for 2023E, with a terminal value of US$61,107mn in 2035E.
  • The equity value is estimated at US$30,246mn in 2023E.
  • The company's P/B ratio is 92.6 in 2023E, indicating a high valuation relative to book value.

• Risks and Disclosures:

  • The report includes important disclosures about the risks involved in investing in the securities.
  • The analyst certifies that the views expressed are personal and not influenced by compensation.
  • CMBIGM is not a registered broker-dealer in the US and provides information without investment advice.
  • The report is not intended for distribution to individuals in the US and is only for major institutional investors.

Analyst Ratings

• BUY: Stock with potential return of over 15% over the next 12 months.
• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark over the next 12 months.

Shareholding and Financials

• Shareholding Structure:

  • Amgen holds 18.0% of the shares.
  • Baker Bros holds 11.2% of the shares.

• Financial Highlights:

  • Total issued shares: 104.1mn.
  • Gross margin: Improved to 78.3% in FY22.
  • Net loss in FY22: US$2.00bn.
  • Cash balance at end of 2022: US$4.5bn.

Conclusion

BeiGene is positioned for strong sales growth in 2023, particularly with the US approval of zanubrutinib and the potential approval of tislelizumab. The company is also expanding its pipeline with new early-stage assets and improving its cost efficiency. Despite the net loss in FY22, the company has a solid financial position and a strong cash balance, supporting its ongoing R&D and expansion efforts. The "BUY" rating reflects the analyst's confidence in the company's future performance and potential for significant returns.