UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________________________

FORM 10-Q

___________________________________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from  to

Commission File Number: 001-37686

___________________________________________________________

BEIGENE, LTD.

(Exact name of registrant as specified in its charter)

___________________________________________________________

Cayman Islands	98-1209416
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
c/o Mourant Governance Services (Cayman) Limited
94 Solaris Avenue, Camana Bay
Grand Cayman
Cayman Islands	KY1-1108
(Address of principal executive offices)	(Zip Code)

+1 (345) 949-4123

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
American Depositary Shares, each representing 13 Ordinary Shares, par value $0.0001 per share	BGNE	The NASDAQ Global Select Market
Ordinary Shares, par value $0.0001 per share*	06160	The Stock Exchange of Hong Kong Limited

*Included in connection with the registration of the American Depositary Shares with the Securities and Exchange Commission. The ordinary shares are not registered or listed for trading in the United States but are listed for trading on The Stock Exchange of Hong Kong Limited.

As of July 31, 2020, 1,176,415,671 ordinary shares, par value $0.0001 per share, were outstanding, of which 965,069,391 ordinary shares were held in the form of 74,236,107 American Depositary Shares, each representing 13 ordinary shares.

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒   No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ☐     No  ☒

BeiGene, Ltd.

Quarterly Report on Form 10-Q

		Page
PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	45
Item 4.	Controls and Procedures	46
PART II.	OTHER INFORMATION	47
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	100
Item 3.	Defaults Upon Senior Securities	100
Item 4.	Mine Safety Disclosures	100
Item 5.	Other Information	100
Item 6.	Exhibits	100
SIGNATURES		103

2

PART I.     FINANCIAL INFORMATION

Item 1.     Financial Statements

BEIGENE, LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands of U.S. Dollars (“$”), except for number of shares and per share data)

		As of
		June 30,	December 31,
	Note	2020	2019
		$	$
		(unaudited)	(audited)
Assets
Current assets:
Cash and cash equivalents		1,345,014	618,011
Short-term restricted cash	4	283	288
Short-term investments	4	1,807,744	364,728
Accounts receivable, net	10	61,663	70,878
Inventories	5	33,234	28,553
Prepaid expenses and other current assets	10	144,466	90,238
Total current assets		3,392,404	1,172,696
Long-term restricted cash	4	4,602	2,476
Property, plant and equipment, net	6	258,106	242,402
Operating lease right-of-use assets		90,620	82,520
Intangible assets, net	8	5,375	5,846
Deferred tax assets	9	39,801	37,894
Other non-current assets	10	112,382	68,455
Total non-current assets		510,886	439,593
Total assets		3,903,290	1,612,289
Liabilities and shareholders' equity
Current liabilities:
Accounts payable		157,173	122,488
Accrued expenses and other payables	10	207,921	163,556
Tax payable	9	10,448	13,454
Operating lease liabilities, current portion		12,888	10,814
Research and development cost share liability, current portion	3	136,704	—
Short-term bank loans	11	26,061	—
Total current liabilities		551,195	310,312
Non-current liabilities:
Long-term bank loan	11	131,491	83,311
Shareholder loan	12	160,164	157,384
Operating lease liabilities, non-current portion		31,165	25,833
Deferred tax liabilities		11,379	10,532
Research and development cost share liability, non-current portion	3	424,890	—
Other long-term liabilities	10	46,514	46,562
Total non-current liabilities		805,603	323,622
Total liabilities		1,356,798	633,934
Commitments and contingencies	19
Equity:
Ordinary shares, US$0.0001 par value per share; 9,500,000,000 shares authorized; 1,014,976,692 and 801,340,698 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		102	79
Additional paid-in capital		5,200,275	2,925,970
Accumulated other comprehensive loss	16	(9,299)	(8,001)
Accumulated deficit		(2,654,780)	(1,955,843)
Total BeiGene, Ltd. shareholders’ equity		2,536,298	962,205
Noncontrolling interest		10,194	16,150
Total equity		2,546,492	978,355
Total liabilities and equity		3,903,290	1,612,289

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

BEIGENE, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands of U.S. Dollars (“$”), except for number of shares and per share data)

(Unaudited)

		Three Months Ended		Six Months Ended
		June 30,		June 30,
	Note	2020	2019	2020	2019
		$	$	$	$
Revenues
Product revenue, net	13	65,635	58,142	117,694	115,563
Collaboration revenue	3	—	185,204	—	205,616
Total revenues		65,635	243,346	117,694	321,179
Expenses
Cost of sales - product		14,307	17,839	28,456	33,100
Research and development		285,968	228,760	590,270	407,111
Selling, general and administrative		124,049	82,248	231,130	139,893
Amortization of intangible assets		188	332	471	663
Total expenses		424,512	329,179	850,327	580,767
Loss from operations		(358,877)	(85,833)	(732,633)	(259,588)
Interest income, net		1,108	2,886	7,798	7,363
Other income, net		19,976	(878)	23,657	850
Loss before income taxes		(337,793)	(83,825)	(701,178)	(251,375)
Income tax (benefit) expense	9	(1,475)	2,129	79	2,648
Net loss		(336,318)	(85,954)	(701,257)	(254,023)
Less: net loss attributable to noncontrolling interests		(1,116)	(384)	(2,320)	(813)
Net loss attributable to BeiGene, Ltd.		(335,202)	(85,570)	(698,937)	(253,210)
Net loss per share attributable to BeiGene, Ltd., basic and diluted	14	(0.33)	(0.11)	(0.69)	(0.33)
Weighted-average shares outstanding, basic and diluted	14	1,010,230,470	777,509,102	1,007,967,904	776,137,299
Net loss per American Depositary Share (“ADS”), basic and diluted		(4.31)	(1.43)	(9.01)	(4.24)
Weighted-average ADSs outstanding, basic and diluted		77,710,036	59,808,392	77,535,993	59,702,869

 The accompanying notes are an integral part of these condensed consolidated financial statements.

4

BEIGENE, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Amounts in thousands of U.S. Dollars (“$”), except for number of shares and per share data)

(Unaudited)

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2020	2019	2020	2019
	$	$	$	$
Net loss	(336,318)	(85,954)	(701,257)	(254,023)
Other comprehensive (loss)/ income, net of tax of nil:
Foreign currency translation adjustments	1,732	(7,337)	(2,617)	(3,582)
Unrealized holding gain, net	(4,470)	901	1,228	1,586
Comprehensive loss	(339,056)	(92,390)	(702,646)	(256,019)
Less: comprehensive loss attributable to noncontrolling interests	(1,103)	(523)	(2,411)	(1,058)
Comprehensive loss attributable to BeiGene, Ltd.	(337,953)	(91,867)	(700,235)	(254,961)

 The accompanying notes are an integral part of these condensed consolidated financial statements.

5

BEIGENE, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands of U.S. Dollars (“$”), except for number of shares and per share data)

(Unaudited)

		Six months ended June 30,
	Note	2020	2019
		$	$
Operating activities:
Net loss		(701,257)	(254,023)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		15,617	7,111
Share-based compensation expenses	15	83,723	58,994
Unrealized gains on equity method investments	4	(11,264)	—
Gain on deconsolidation of entity	4	(11,307)	—
Acquired in-process research and development		43,000	49,000
Amortization of research and development cost share liability		(55,240)	—
Non-cash interest expense		5,106	3,759
Deferred income tax benefits		(1,060)	(1,456)
Other items, net		(863)	(5,458)
Changes in operating assets and liabilities:
Accounts receivable		9,094	(17,052)
Inventories		(4,681)	(32,806)
Prepaid expenses and other current assets		(54,590)	(5,923)
Operating lease right-of-use assets		(7,465)	(3,604)
Other non-current assets		2,628	(10,293)
Accounts payable		34,851	21,431
Accrued expenses and other payables		44,471	3,535
Tax payable		(3,006)	(3,713)
Deferred revenue		—	(27,982)
Operating lease liabilities		7,406	383
Other long-term liabilities		(49)	21
Net cash used in operating activities		(604,886)	(218,076)
Investing activities:
Purchases of property, plant and equipment		(54,138)	(43,275)
Deconsolidation of entity		(2,025)	—
Purchases of investments		(2,442,943)	(710,791)
Proceeds from sale or maturity of investments		997,242	1,167,491
Purchase of in-process research and development		(43,000)	(49,000)
Net cash (used in) provided by investing activities		(1,544,864)	364,425
Financing activities:
Proceeds from sale of ordinary shares, net of cost		2,162,407	—
Proceeds from research and development cost share liability		616,834	—
Capital contribution from noncontrolling interest		—	4,000
Proceeds from long-term bank loan	11	49,525	43,704
Proceeds from short-term bank loan	11	26,197	—
Proceeds from option exercises and employee share purchase plan		28,198	10,642
Net cash provided by financing activities		2,883,161	58,346
Effect of foreign exchange rate changes, net		(4,287)	(2,732)
Net increase in cash, cash equivalents, and restricted cash		729,124	201,963
Cash, cash equivalents, and restricted cash at beginning of period		620,775	740,713
Cash, cash equivalents, and restricted cash at end of period		1,349,899	942,676
Supplemental cash flow information:
Cash and cash equivalents		1,345,014	918,948
Short-term restricted cash		283	14,567
Long-term restricted cash		4,602	9,161
Income taxes paid		9,250	7,874
Interest paid		3,354	2,090
Supplemental non-cash information:
Acquisitions of equipment included in accounts payable		28,962	35,927

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

BEIGENE, LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Amounts in thousands of U.S. Dollars (“$”), except for number of shares and per share data)

(Unaudited)

	Attributable to BeiGene, Ltd.
	Ordinary Shares		Additional Paid-In Capital	Accumulated Other Comprehensive Income	Accumulated Deficit	Total	Noncontrolling Interests
	Shares	Amount						Total
		$	$	$	$	$	$	$
Balance at December 31, 2019	801,340,698	79	2,925,970	(8,001)	(1,955,843)	962,205	16,150	978,355
Issuance of ordinary shares in connection with collaboration	206,635,013	21	2,162,386	—	—	2,162,407	—	2,162,407
Use of shares reserved for share option exercises	(3,705,468)	—	—	—	—	—	—	—
Exercise of options, ESPP and release of Restricted Share Units ("RSUs")	3,706,573	1	11,628	—	—	11,629	—	11,629
Share-based compensation	—	—	38,255	—	—	38,255	—	38,255
Other comprehensive income	—	—	—	1,453	—	1,453	(104)	1,349
Net loss	—	—	—	—	(363,735)	(363,735)	(1,204)	(364,939)
Balance at March 31, 2020	1,007,976,816	101	5,138,239	(6,548)	(2,319,578)	2,812,214	14,842	2,827,056
Exercise of options, ESPP issuances and release of RSUs	10,493,392	1	16,568	—	—	16,569	—	16,569
Issuance of shares reserved for share option exercises and RSU releases	(3,493,516)	—	—	—	—	—	—	—
Share-based compensation	—	—	45,468	—	—	45,468	—	45,468
Deconsolidation of entity	—	—	—	—	—	—	(3,545)	(3,545)
Other comprehensive loss	—	—	—	(2,751)	—	(2,751)	13	(2,738)
Net loss	—	—	—	—	(335,202)	(335,202)	(1,116)	(336,318)
Balance at June 30, 2020	1,014,976,692	102	5,200,275	(9,299)	(2,654,780)	2,536,298	10,194	2,546,492
Balance at December 31, 2018	776,263,184	77	2,744,814	1,526	(1,007,215)	1,739,202	14,445	1,753,647
Use of shares reserved for share option exercises	(916,383)	—	—	—	—	—	—	—
Exercise of options, ESPP and release of RSUs	2,066,383	1	6,268	—	—	6,269	—	6,269
Share-based compensation	—	—	26,392	—	—	26,392	—	26,392
Other comprehensive income	—	—	—	4,546	—	4,546	(106)	4,440
Net loss	—	—	—	—	(167,640)	(167,640)	(429)	(168,069)
Balance at March 31, 2019	777,413,184	78	2,777,474	6,072	(1,174,855)	1,608,769	13,910	1,622,679
Contributions from shareholders	—	—	—	—	—	—	4,000	4,000
Exercise of options, ESPP and release of RSUs	3,802,747	—	4,373	—	—	4,373	—	4,373
Issuance of shares reserved for share option exercises	3,223,701	—	—	—	—	—	—	—
Share-based compensation	—	—	32,602	—	—	32,602	—	32,602
Other comprehensive income	—	—	—	(6,297)	—	(6,297)	(139)	(6,436)
Net loss	—