BeiGene heads for profit milestone after hemorrhaging cash

With a blockbuster drug under its belt and another product approved for U.S. sale, the biopharma firm says it is on track to post an annual operating profit this year
Key Takeaways:
- Global sales of the firm’s flagship drug for blood cancers reached $1.82 billion in the first nine months of 2024 and could top $2 billion for the full year
- The company has built a global clinical team to speed up the testing and launch of new drugs, aiming to become less reliant on research partners
By Molly Wen
After bleeding red ink for years, one of China’s leading makers of next-generation cancer drugs may be approaching a financial turning point.
Armed with a blockbuster drug, BeiGene Ltd. (688235.SH; 6160.HK; ONC.US) has served notice that it expects its operating results to land in the black this year, when the company’s revenue is projected to exceed research and business costs.
BeiGene has invested heavily in developing innovative cancer therapies, running one of the most generous R&D budgets in the biopharma industry. The strategy has delivered a standout drug for blood cancers that brings in more than $1 billion a year, as well as other promising therapies, but at the cost of nearly 60 billion yuan ($8.2 billion) in losses over the last seven years.
BeiGene CEO John Oyler gave the positive earnings outlook in a keynote speech to a healthcare conference in San Francisco last week, backed up by a business update issued on January 14 predicting a full-year operating profit in 2025 under U.S. GAAP accounting rules.
Up until now, the drug developer had been cautious about commenting on the timetable for reaching breakeven, but sales figures for its two flagship cancer drugs have been strong enough to trigger a confident profit prediction, at least at the level of operating income.
The company turned in adjusted operating profits of $48 million and $66 million in the second and third quarters of 2024, while operating revenue rose 28.3% in the third quarter to more than $1 billion.
The most powerful earnings engine is zanubrutinib, marketed as Brukinsa in the United States, a kinase inhibitor that blocks growth-related proteins in cancers affecting white blood cells. Sales have boomed since the drug was approved by U.S. regulators to treat chronic lymphocytic leukemia and other cancers.
Zanubrutinib racked up $690 million of global sales in the third quarter of 2024, a 91% year-on-year gain. Sales in the United States rose 87% to $504 million and more than tripled in Europe to $97 million during the period. In 2023, annual sales had amounted to $1.3 billion, making it the highest-grossing drug in the Chinese pharmaceutical industry. Zanubrutinib’s sales kept rising in 2024, reaching $1.82 billion over three quarters and putting the drug on track for $2 billion for the full year.
Meanwhile, BeiGene has also made headway in the fiercely competitive arena for PD-1 antibody drugs, which help the immune system attack tumor cells. BeiGene’s tislelizumab ranks as China’s best-selling PD-1 drug developed by a domestic company. Third-quarter sales of the product rose 13% to $163 million from the year-earlier period. The drug gained U.S. marketing approval in October and will be launched there in 2025, likely accelerating the company’s path to profitability.
With cutthroat competition within China, BeiGene was attracted to the huge buying power of U.S. and European markets. The international strategy has come at a cost, however, as the need to fund global clinical trials and sales teams has acted as a drain on corporate coffers. But BeiGene has given hope to other ambitious Chinese biopharma firms by breaking into the big league of blockbuster drug makers.
Building an R&D machine
According to the CEO’s speech, the company had 13 active ingredients – known as new molecular entities – under clinical development last year, and was working on more than 30 cancer drugs in fields such as small molecules, antibodies, antibody-drug conjugates and other drugs that recruit the body’s cell recycling processes to fight cancer.
The drug pipelines require a global development team. Many Chinese drug developers contract out their research but BeiGene has been weaning itself off that business model, disclosing last August it had built a global clinical team with more than 3,000 staff to contain costs and speed up the process. Oyler said the investment had put the company at the industry forefront for preclinical and dose-related studies.
In the short term the drive for self-sufficiency has boosted costs. In the third quarter of 2024 alone, $496 million was invested in R&D, up 9% from the year-earlier period. R&D spending rose 10% to $1.41 billion in the first three quarters, accounting for 52.6% of operating revenue, while the company made a net loss of $493 million.
BeiGene has been a popular stock with investors. It went public on Nasdaq in 2016, joined the Hong Kong Stock Exchange in 2018 and added a listing on the STAR market in 2021.
Even during the period between 2017 and the first three quarters of 2024, when it logged accumulated losses of 57.77 billion yuan, the company could boast a price-to-sales (P/S) ratio of 6.2 times compared with 5.8 times for China’s Junshi Biosciences (688180.SH; 1877.HK), which has also brought a PD-1 drug to market. BeiGene’s Hong Kong share price has risen by around a fifth since the start of the year, lifted by the company’s upbeat earnings outlook.
With its core drugs acting as dual engines for growth, BeiGene could be closing in on a new phase of profitability.
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