20220617-招银国际-Harvest_season_for_a_global_leading_biopharma_company_79页

BeiGene (BGNE US) Summary

Core Content

BeiGene is a global, commercial-stage biotechnology company incorporated in 2010 in Beijing, China. It is the first triple-listed biotech company, having listed on NASDAQ, HKEx, and the Shanghai STAR Market. The company has established a strong global R&D platform, a growing commercial team, and a rich portfolio of innovative and in-licensed drug candidates. It has entered what is described as the "harvest season," with product revenue growth outpacing operating expenses, indicating improving operating cash flows.

Main Points

Global R&D Platform

• BeiGene has a large R&D and medical affairs team of 3,200+ staff, with 1,000+ outside of China.
• The team includes one of the world's largest oncology research groups (800+ scientists).
• Conducted over 100 clinical trials in 45 countries for more than 30 medicines and drug candidates since 2013, with over 16,000 subjects enrolled, half from outside China.
• Strong ability in conducting large-scale MRCTs (multi-center trials), which is a key competitive advantage.

Revenue Growth

• Product revenue grew at a CAGR of 69% from 2018 to 2021, outpacing operating expenses (CAGR of 41%).
• In 1Q22, product revenue reached US$261.6 million, up 146% YoY, driven by zanubrutinib and tislelizumab.
• The company has a commercial team of over 3,400 staff, with a focus on expanding into solid tumors and other global markets.

Key Drug Candidates

• Zanubrutinib: A second-generation BTK inhibitor with 22+ global approvals in 50 countries. It has superior response rate, improved PFS, and less cardiotoxicity compared to ibrutinib.
• Tislelizumab: A PD-1 inhibitor approved in China for nine indications, including major lung cancer and HCC. It has 11 of 20+ pivotal trials conducted globally.
• Ociperlimab: One of the most advanced TIGIT inhibitors with intact Fc function, currently in pivotal stage trials.
• BGB-11417: A BCL-2 inhibitor that appears more potent than venetoclax and may overcome resistance.
• Sitravatinib: A multi-kinase inhibitor from Mirati, being evaluated in combination with tislelizumab.
• Zanidatamab: A dual HER2-binding bispecific antibody in late-stage trials.
• Sotorasib: The only marketed KRAS G12C inhibitor, approved in nearly 40 countries.

Collaborations

• Partners include Novartis, BMS, Amgen, Zymeworks, Mirati, Bio-Thera, etc.
• Major out-licensing deals:
  • Tislelizumab to Novartis (US$650mn upfront, US$1,300mn regulatory milestones, US$250mn sales milestones).
  • Ociperlimab to Novartis (US$300mn upfront, US$600mn or US$700mn upon option exercise).
• In-licensing deals include products like TAFINLAR® and POBEVCY®.

Financial Highlights

• FY20A Revenue: US$309 million
• FY21A Revenue: US$1,176 million
• FY22E Revenue: US$1,398 million
• FY23E Revenue: US$2,206 million
• FY24E Revenue: US$3,340 million
• Target Price (TP): US$248.52 (up/downside: +85.77%)
• Current Price: US$133.78
• Market Cap: US$15,347 million
• Share Performance (1-mth): +3.6% absolute, +13.5% relative

Investment Thesis

• Strong R&D platform and global commercial capabilities.
• Diverse and innovative product pipeline.
• Strategic BD collaborations enhance global reach and financial support.
• Entry into harvest season with improving operating cash flows.

Investment Risks

• Clinical development or regulatory approval failures.
• Intense competition in China and global markets.

Key Information

• Global Presence: Operations in 23 countries with over 8,400 employees.
• Manufacturing: Facilities in China and plans to build a commercial-stage biologics manufacturing and clinical R&D center in New Jersey.
• Financial Model: DCF valuation used to derive TP of US$248.52 (WACC: 9.20%, terminal growth rate: 3.0%).
• Portfolio: Over 50 clinical and commercial stage drug assets, including 3 in-house developed and 13 in-licensed products.
• Out-License Deals:
  • Tislelizumab with Novartis (Jan 2021, US$2.2bn upfront and milestone payments).
  • Ociperlimab with Novartis (Dec 2021, US$2.9bn upfront and milestone payments).
• In-License Deals:
  • TAFINLAR®, MEKINIST®, VOTRIENT®, AFINITOR®, ZYKADIA® from Novartis.
  • LBL-007 from Leads Biolabs.
  • NK-based cell therapeutics from Shoreline Biosciences.
  • POBEVCY® from Bio-Thera Solutions.

Conclusion

BeiGene is positioned as a global leader in the biopharma industry with a robust R&D platform, strong commercial growth, and strategic collaborations. The company's product revenue is growing rapidly, and its diverse portfolio of innovative and in-licensed assets is expected to drive continued revenue expansion. The investment thesis is supported by its global commercialization efforts and financial performance, with a target price of US$248.52 based on DCF analysis.