20221111-招银国际-Strong_sales_momentum_maintained_in_3Q22_6页_1mb

BeiGene (BGNE US) Summary

Core Content

BeiGene (BGNE US) demonstrated strong sales momentum in 3Q22, with continued growth in product revenue and cost efficiency improvements. The company's focus on key products, zanubrutinib (BTK) and tislelizumab (PD-1), has been central to its financial performance and future prospects.

Main Points

• Sales Growth:

  • Product revenue in 3Q22 reached US$349.5 million, with a 15% quarter-over-quarter (QoQ) increase.
  • Zanubrutinib sales increased to US$155.5 million, showing a 21% QoQ growth (vs. 23% in 2Q22).
  • Tislelizumab sales rose by 22% QoQ to US$128.2 million (vs. 20% in 2Q22).

• Gross Margin:

  • Gross margin improved to 78.1% in 3Q22 from 76.6% in 2Q22, driven by a higher sales mix of zanubrutinib and tislelizumab.

• Cost Efficiency:

  • SG&A expenses as a percentage of product sales decreased to 92% in 3Q22 from 109% in 2Q22, reflecting improved cost management.
  • Net loss in 3Q22 was US$557.6 million, slightly better than the US$571.4 million in the prior quarter.

• Cash Position:

  • As of 3Q22, BeiGene has a US$5.1 billion cash balance, which supports R&D and global expansion.

Key Developments

• Zanubrutinib Approvals:

  • The BLA for CLL/SLL in Europe received a positive CHMP opinion.
  • The sBLA for the US is expected to be approved by the FDA in January 2023.
  • Zanubrutinib was approved in Europe for MZL, becoming the first and only approved BTK inhibitor for this indication in the region.

• Tislelizumab Expansion:

  • Tislelizumab is expected to add four new indications to the NRDL through simplified renewal procedures with a moderate price reduction.
  • The sBLA for 1L GC and 1L ESCC is under review by the CDE.
  • The sBLA for 1L HCC is in discussion with the CDE.
  • BeiGene and Novartis plan to file US BLAs for 1L GC, 1L ESCC, and 1L HCC in 2023E.

Financial Outlook

• Earnings Forecast:

  • Revenue is projected to grow from US$1,491 million in FY22E to US$3,267 million in FY24E.
  • Net profit is expected to move from US$2,110 million in FY22E to US$674 million in FY24E.
  • EPS is forecasted to be (US$20.3) in FY22E, (US$13.0) in FY23E, and (US$6.5) in FY24E.

• Valuation:

  • The target price (TP) was revised from US$253.13 to US$255.56, with a 35.9% upside.
  • The DCF valuation suggests an equity value of US$26,516 million as of 3Q22.
  • The P/B ratio is 61.7 as of 3Q22.

Strategic Highlights

• Clinical Development:

  • BGB-11417 (Bcl-2) is in Ph2 trials for r/r MCL and r/r CLL/SLL.
  • Additional Ph1 data will be released at the upcoming ASH meeting.

• Investor Confidence:

  • Analysts maintain a BUY rating, citing strong sales momentum and upcoming approvals.

Key Financial Figures

Valuation Metrics

• DCF Valuation (US$ mn):

  • 2022E: 22,629
  • 2023E: (not provided)
  • 2024E: (not provided)
  • Terminal Value (2035E): 58,532

• Terminal Growth Rate: 3.0%

• WACC: 9.20%

• Cost of Equity: 11.5%

• Cost of Debt: 4.5%

• Equity Beta: 0.9

Market Performance

• 12-Month Price Performance:

  • Absolute: (not provided)
  • Relative: (not provided)

• Shareholding Structure:

  • Amgen: 18.5%
  • Baker Bros: 11.4%

• Stock Data:

  • Mkt Cap (US$ mn): 21,709
  • Avg 3 mths t/o (US$ mn): 37.36
  • 52w High/Low (US$): 392.30/118.18
  • Total Issued Shares (mn): 104

Analyst Notes

• CMBIGM estimates show a revised DCF-based TP of US$255.56.
• Sensitivity analysis indicates the TP is sensitive to changes in terminal growth rate and WACC.
• The target debt to asset ratio is 30.0%, and the current ratio is 3.3 as of 2022E.

Disclaimer

• This report is not a recommendation and is for informational purposes only.
• CMBIGM is not a registered broker-dealer in the United States or Singapore.
• The report is subject to change and not guaranteed.
• Investors are advised to consult with a financial advisor before making any investment decisions.