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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 September 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 Islands98-1209416
(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 IslandsKY1-1108
(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 classTrading Symbol(s)Name of each exchange on which registered
American Depositary Shares, each representing 13 Ordinary Shares, par value $0.0001 per shareBGNEThe NASDAQ Global Select Market
Ordinary Shares, par value $0.0001 per share*06160The 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 October 31, 2020, 1,182,916,659 ordinary shares, par value $0.0001 per share, were outstanding, of which 966,419,675 ordinary shares were held in the form of 74,339,975 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  


Table of Contents

BeiGene, Ltd.
Quarterly Report on Form 10-Q
  Page
   
   
   
   
  
  
  
  
  
  
  
  
  
  

2

Table of Contents

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
  September 30,December 31, 
 Note20202019
  $$
  (unaudited)(audited)
Assets   
Current assets:   
Cash and cash equivalents 1,464,470 618,011 
Short-term restricted cash4295 288 
Short-term investments43,254,300 364,728 
Accounts receivable, net1060,266 70,878 
Inventories535,525 28,553 
Prepaid expenses and other current assets10150,880 90,238 
Total current assets 4,965,736 1,172,696 
Long-term restricted cash44,950 2,476 
Property, plant and equipment, net6291,218 242,402 
Operating lease right-of-use assets88,689 82,520 
Intangible assets, net85,188 5,846 
Deferred tax assets948,009 37,894 
Other non-current assets10162,600 68,455 
Total non-current assets 600,654 439,593 
Total assets 5,566,390 1,612,289 
Liabilities and shareholders' equity 
Current liabilities: 
Accounts payable 146,265 122,488 
Accrued expenses and other payables10279,323 163,556 
Tax payable99,244 13,454 
Operating lease liabilities, current portion13,280 10,814 
Research and development cost share liability, current portion3147,387  
Short-term debt1150,222  
Total current liabilities 645,721 310,312 
Non-current liabilities: 
Long-term debt11151,551 83,311 
Shareholder loan11 157,384 
Operating lease liabilities, non-current portion28,679 25,833 
Deferred tax liabilities11,884 10,532 
Research and development cost share liability, non-current portion3384,151  
Other long-term liabilities1047,890 46,562 
Total non-current liabilities 624,155 323,622 
Total liabilities 1,269,876 633,934 
Commitments and contingencies18
Equity: 
Ordinary shares, US$0.0001 par value per share; 9,500,000,000 shares authorized; 1,182,916,659 and 801,340,698 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively
 118 79 
Additional paid-in capital 7,367,799 2,925,970 
Accumulated other comprehensive loss15(419)(8,001)
Accumulated deficit (3,080,004)(1,955,843)
Total BeiGene, Ltd. shareholders’ equity 4,287,494 962,205 
Noncontrolling interest9,020 16,150 
Total equity4,296,514 978,355 
Total liabilities and equity 5,566,390 1,612,289 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3

Table of Contents

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 EndedNine Months Ended
  September 30,September 30,
 Note2020201920202019
  
Revenues     
Product revenue, net1291,080 50,141 208,774 165,704 
Collaboration revenue3   205,616 
Total revenues 91,080 50,141 208,774 371,320 
Expenses 
Cost of sales - product 21,123 20,106 49,579 53,206 
Research and development 349,070 236,968 939,340 644,079 
Selling, general and administrative 160,837 105,002 391,967 244,895 
Amortization of intangible assets 187 331 658 994 
Total expenses 531,217 362,407 1,381,544 943,174 
Loss from operations (440,137)(312,266)(1,172,770)(571,854)
Interest (expense) income, net (614)2,206 7,184 9,569 
Other income (expense), net 5,711 (1,817)29,368 (967)
Loss before income taxes (435,040)(311,877)(1,136,218)(563,252)
Income tax benefit 9(8,423)(3,217)(8,344)(569)
Net loss (426,617)(308,660)(1,127,874)(562,683)
Less: net loss attributable to noncontrolling interests (1,393)(1,303)(3,713)(2,116)
Net loss attributable to BeiGene, Ltd. (425,224)(307,357)(1,124,161)(560,567)
Net loss per share attributable to BeiGene, Ltd., basic and diluted13(0.37)(0.39)(1.07)(0.72)
Weighted-average shares outstanding, basic and diluted131,148,973,077 781,482,459 1,052,940,583 777,938,599 
Net loss per American Depositary Share (“ADS”), basic and diluted(4.81)(5.11)(13.88)(9.37)
Weighted-average ADSs outstanding, basic and diluted
88,382,544 60,114,035 80,995,429 59,841,431 
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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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 EndedNine Months Ended
 September 30,September 30,
 2020201920202019
 $$$$
Net loss(426,617)(308,660)(1,127,874)(562,683)
Other comprehensive (loss)/ income, net of tax of nil:
Foreign currency translation adjustments10,143 (13,670)7,526 (17,252)
Unrealized holding (loss) gain, net(1,044)(1,260)184 326 
Comprehensive loss(417,518)(323,590)(1,120,164)(579,609)
Less: comprehensive loss attributable to noncontrolling interests(1,174)(1,628)(3,585)(2,686)
Comprehensive loss attributable to BeiGene, Ltd.(416,344)(321,962)(1,116,579)(576,923)
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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BEIGENE, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of U.S. Dollars (“$”), except for number of shares and per share data)
(Unaudited)
  Nine months ended September 30,
 Note20202019
  $$
Operating activities:   
Net loss (1,127,874)(562,683)
Adjustments to reconcile net loss to net cash used in operating activities: 
Depreciation and amortization expense 23,961 11,133 
Share-based compensation expenses14134,020 95,812 
Unrealized gains on equity method investments4(9,974) 
Gain on deconsolidation of a subsidiary4(11,307) 
Acquired in-process research and development89,500 49,000 
Amortization of research and development cost share liability(85,296) 
Deferred income tax benefits (8,762)(13,334)
Other items, net 1,144 (2,733)
Changes in operating assets and liabilities: 
Accounts receivable 10,497 (14,856)
Inventories (6,972)(21,270)
Prepaid expenses and other current assets (52,941)(5,653)
Operating lease right-of-use assets(5,207)(4,303)
Other non-current assets (5,980)(15,307)
Accounts payable 21,979 (8,151)
Accrued expenses and other payables 115,872 33,494 
Tax payable (12,272)3,173 
Deferred revenue  (27,982)
Operating lease liabilities 5,312 2,072 
Other long-term liabilities(26,827)(1,500)
Net cash used in operating activities (951,127)(483,088)
Investing activities: 
Purchases of property, plant and equipment (82,819)(74,148)
Deconsolidation of a subsidiary(2,025) 
Purchases of investments (4,879,705)(850,825)
Proceeds from sale or maturity of investments 1,972,608 1,552,028 
Purchase of in-process research and development(89,500)(49,000)
Net cash (used in) provided by investing activities (3,081,441)578,055 
Financing activities: 
Proceeds from sale of ordinary shares, net of cost164,232,017  
Proceeds from research and development cost share liability 616,834  
Capital contribution from noncontrolling interest 4,000 
Prepayment to acquire joint venture ("JV") minority interest7(28,723) 
Proceeds from long-term loans1164,288 67,489 
Repayment of long-term loans11(132,061)(8,394)
Proceeds from short-term loans1148,983  
Proceeds from option exercises and employee share purchase plan 75,830 20,387 
Net cash provided by financing activities 4,877,168 83,482 
Effect of foreign exchange rate changes, net 4,340 (18,339)
Net increase in cash, cash equivalents, and restricted cash 848,940 160,110 
Cash, cash equivalents, and restricted cash at beginning of period 620,775 740,713 
Cash, cash equivalents, and restricted cash at end of period 1,469,715 900,823 
Supplemental cash flow information: 
Cash and cash equivalents 1,464,470 856,851 
Short-term restricted cash 295 14,271 
Long-term restricted cash4,950 30,401 
Income taxes paid 10,596 8,951 
Interest paid 41,577 3,335 
Supplemental non-cash information: 
Acquisitions of equipment included in accounts payable 30,926 29,255 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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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 SharesAdditional
Paid-In
Capital
Accumulated
Other Comprehensive Income
Accumulated
Deficit
TotalNoncontrolling
Interests
 
 SharesAmountTotal
$$$$$$$
Balance at December 31, 2019801,340,698 79 2,925,970 (8,001)(1,955,843)962,205 16,150 978,355 
Issuance of ordinary shares in connection with collaboration206,635,013 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, 20201,007,976,816 101 5,138,239 (6,548)(2,319,578)2,812,214 14,842 2,827,056 
Exercise of options, ESPP issuances and release of RSUs10,493,392 1 16,568 — — 16,569 — 16,569 
Use of shares reserved for share option exercises and RSU releases(3,493,516)— — — — — — — 
Share-based compensation— — 45,468 — — 45,468 — 45,468 
Deconsolidation of a subsidiary— — — — — — (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, 20201,014,976,692 102 5,200,275 (9,299)(2,654,780)2,536,298 10,194 2,546,492 
Proceeds from issuance of ordinary shares, net of cost145,838,979 14 2,069,596 — — 2,069,610 — 2,069,610 
Exercise of options, ESPP and release of RSUs16,575,806 1 47,631 — — 47,632 — 47,632 
Issuance of shares reserved for share option exercises5,525,182 1 — — — 1 — 1 
Share-based compensation— — 50,297 — — 50,297 — 50,297 
Other comprehensive loss— — — 8,880 — 8,880 219 9,099 
Net loss— — — — (425,224)(425,224)(1,393)(426,617)
Balance at September 30, 20201,182,916,659 118 7,367,799 (419)(3,080,004)4,287,494 9,020 4,296,514 
Balance at December 31, 2018776,263,184 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 RSUs2,066,383 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, 2019777,413,184 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 RSUs3,802,747 — 4,373 — — 4,373 — 4,373 
Issuance of shares reserved for share option exercises3,223,701 — — — — — — — 
Share-based compensation— — 32,602 — — 32,602 — 32,602 
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Other comprehensive income— — — (6,297)— (6,297)(139)(6,436)
Net loss— — — — (85,570)(85,570)(384)(85,954)
Balance at June 30, 2019784,439,632 78 2,814,449 (225)(1,260,425)1,553,877 17,387 1,571,264 
Exercise of options, ESPP and release of RSUs4,171,349 — 9,745 — — 9,745 — 9,745 
Use of shares reserved for share option exercises(4,170,283)— — — — — — — 
Share-based compensation— — 36,818 — — 36,818 — 36,818 
Other comprehensive loss— — — (14,605)— (14,605)(325)(14,930)
Net loss— — — — (307,357)(307,357)(1,303)(308,660)
Balance at September 30, 2019784,440,698 78 2,861,012 (14,830)(1,567,782)1,278,478 15,759 1,294,237 
The accompanying notes are an integral part of these condensed consolidated financial statements.

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BEIGENE, LTD.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands of U.S. Dollar (“$”) and Renminbi (“RMB”), except for number of shares and per share data)
(Unaudited)
1. Description of Business, Basis of Presentation and Consolidation and Significant Accounting Policies
Description of business
BeiGene, Ltd. (the “Company”) is a global, commercial-stage biotechnology company focused on discovering, developing, manufacturing, and commercializing innovative medicines to improve treatment outcomes and access for patients worldwide. The Company started as a research and development company in Beijing in 2010. Over the last ten years, it has developed into a fully integrated global biotechnology company, with significant commercial, manufacturing, and research and development capabilities.

The Company has built substantial commercial capabilities in China and the United States and is currently marketing both internally developed drugs and in-licensed drugs. In the United States, the Company markets BRUKINSA® (zanubrutinib) for adult patients with mantle cell lymphoma ("MCL") who have received at least one prior therapy. In China, the Company markets BRUKINSA® in two indications: for adult patients with chronic lymphocytic leukemia ("CLL") /small lymphocytic lymphoma ("SLL") who have received at least one prior therapy, and for adult patients with MCL who have received at least one prior therapy. In China, the Company also markets tislelizumab in two indications: for patients with classical Hodgkin’s Lymphoma ("cHL") who have received at least two prior therapies, and for patients with locally advanced or metastatic urothelial carcinoma ("UC"), a form of bladder cancer, with PD-L1 high expression whose disease progressed during or following platinum-containing chemotherapy or within 12 months of neoadjuvant or adjuvant treatment with platinum-containing chemotherapy.
The Company has filed additional new or supplementary new drug applications for regulatory approvals in China or elsewhere for its internally developed products and is planning to launch these additional products or indications in 2020 and beyond. The Company's commercial portfolio also includes the following drugs in-licensed from third parties: REVLIMID®, VIDAZA® and ABRAXANE®, which the Company has been marketing in China since 2017 under a license from Celgene Logistics Sàrl, a Bristol Myers Squibb company (“BMS”); and XGEVA® (denosumab), from Amgen Inc. ("Amgen"), which the Company began commercializing in July 2020. On March 25, 2020, the Company announced that the China National Medical Products Administration ("NMPA") suspended the importation, sales and use of ABRAXANE® in China supplied to BeiGene by Celgene Corporation, a BMS company, and the drug was subsequently recalled by BMS and is not currently available for sale in China. The Company plans on launching additional in-licensed products once approved in China, including KYPROLIS® (carfilzomib) and BLINCYTO® (blinatumomab) from Amgen, and SYLVANT® (siltuximab) and QARZIBA® (dinutuximab beta) from EUSA Pharma ("EUSA").
Basis of presentation and consolidation
The accompanying condensed consolidated balance sheet as of September 30, 2020, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2020 and 2019, the condensed consolidated statements of cash flows for the nine months ended September 30, 2020 and 2019, and the condensed consolidated statements of shareholders' equity for the three and nine months ended September 30, 2020 and 2019, and the related footnote disclosures are unaudited. The accompanying unaudited interim condensed financial statements were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), including guidance with respect to interim financial information and in conformity with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for annual financial statements. These financial statements should be read in conjunction with the consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the "Annual Report").
The unaudited interim condensed consolidated interim financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all normal recurring adjustments, necessary to present a fair statement of the results for the interim periods presented. Results of the operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results expected for the full fiscal year or for any future annual or interim period.
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The unaudited interim condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant intercompany transactions and balances between the Company and its subsidiaries are eliminated upon consolidation.
Noncontrolling interests are recognized to reflect the portion of the equity of subsidiaries which are not attributable, directly or indirectly, to the controlling shareholders. The Company consolidates its interests in its joint venture, BeiGene Biologics Co., Ltd. ("BeiGene Biologics"), under the voting model and recognizes the minority shareholder's equity interest as a noncontrolling interest in its condensed consolidated financial statements. In September 2020, BeiGene (Hong Kong) Co., Limited ("BeiGene HK") entered into a share purchase agreement with the minority shareholder to acquire its equity interest in BeiGene Biologics. The share purchase is expected to be completed in the fourth quarter of 2020.
Use of estimates
The preparation of the unaudited interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Areas where management uses subjective judgment include, but are not limited to, estimating the useful lives of long-lived assets, estimating variable consideration in product sales and collaboration revenue arrangements, identifying separate accounting units and the standalone selling price of each performance obligation in the Company’s revenue arrangements, estimating the fair value of net assets acquired in business combinations, assessing the impairment of long-lived assets, valuation and recognition of share-based compensation expenses, realizability of deferred tax assets, estimating uncertain tax positions, measurement of right-of-use assets and lease liabilities and the fair value of financial instruments. Management bases the estimates on historical experience, known trends and various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from these estimates.
Recent accounting pronouncements
New accounting standards which have been adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses. Subsequently, the FASB issued ASU 2019-05, Financial Instruments- Credit Losses (Topic 326): Targeted Transition Relief and ASU 2019-11 Codification Improvements to Topic 326, Financial Instruments- Credit Losses (collectively, the "Credit Loss ASUs"). The Credit Loss ASUs change the methodology to be used to measure credit losses for certain financial instruments and financial assets, including trade receivables. The new methodology requires the recognition of an allowance that reflects the current estimate of credit losses expected to be incurred over the life of the financial asset. This new standard also requires that credit losses related to available-for-sale debt securities be recorded as an allowance through net income rather than reducing the carrying amount under the current, other-than-temporary-impairment model. The Company adopted the standard on January 1, 2020. Based on the composition of the Company's trade receivables and investment portfolio, the adoption of this standard did not have a material impact on the Company’s financial position or results of operations upon adoption. The Company has updated its accounting policy for trade accounts receivable and is providing additional disclosure about its allowance for credit losses, as required by the standard, upon adoption.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurement. The update eliminates, modifies, and adds certain disclosure requirements for fair value measurements. The added disclosure requirements and the modified disclosure on the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented. All other changes to disclosure requirements in this update should be applied retrospectively to all periods presented upon their effective date. The Company adopted this standard on January 1, 2020. There was no material impact to the Company's financial position or results of operations upon adoption.
In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This update requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to defer and recognize as an asset. This guidance should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company adopted this standard on January 1, 2020. There was no material impact to the Company's financial position or results of operations upon adoption.
In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606. This update clarifies that certain transactions between participants in a collaborative
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arrangement should be accounted for under ASC 606 when the counterparty is a customer and precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. This guidance should be applied retrospectively to the date of initial application of Topic 606. The Company adopted this standard on January 1, 2020. There was no material impact to the Company's financial position or results of operations upon adoption.
New accounting standards which have not yet been adopted
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This update simplifies the accounting for income taxes as part of the FASB's overall initiative to reduce complexity in accounting standards. The amendments include removal of certain exceptions to the general principles of ASC 740, Income taxes, and simplification in several other areas such as accounting for a franchise tax (or similar tax) that is partially based on income. The update is effective in fiscal years beginning after December 15, 2020, and interim periods therein, and early adoption is permitted. Certain amendments in this update should be applied retrospectively or modified retrospectively, and all other amendments should be applied prospectively. The Company is currently evaluating the impact on its financial statements of adopting this guidance.
Significant accounting policies
For a more complete discussion of the Company’s significant accounting policies and other information, the unaudited interim condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report for the year ended December 31, 2019.
Accounts Receivable and Allowance for Credit Losses
Trade accounts receivable are recorded at their invoiced amounts, net of trade discounts and allowances as well as an allowance for credit losses. The allowance for credit losses reflects the Company's current estimate of credit losses expected to be incurred over the life of the receivables. The Company considers various factors in establishing, monitoring, and adjusting its allowance for credit losses including the aging of receivables and aging trends, customer creditworthiness and specific exposures related to particular customers. The Company also monitors other risk factors and forward-looking information, such as country specific risks and economic factors that may affect a customer's ability to pay in establishing and adjusting its allowance for credit losses. Accounts receivable are written off after all collection efforts have ceased.
Except for the changes to the Company’s significant accounting policies related to the adoption of the Credit Loss ASUs, there have been no other material changes to the Company’s significant accounting policies as of and for the nine months ended September 30, 2020, as compared to the significant accounting policies described in the Annual Report.
2. Fair Value Measurements
The Company measures certain financial assets and liabilities at fair value. Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:
Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in market with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability.
The Company considers an active market to be one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis, and considers an inactive market to be one in which there are infrequent or few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers.
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The following tables present the Company’s financial assets and liabilities measured and recorded at fair value on a recurring basis using the above input categories as of September 30, 2020 and December 31, 2019:
 Quoted Price  
 in ActiveSignificant 
 Market forOtherSignificant
 IdenticalObservableUnobservable
 AssetsInputsInputs
As of September 30, 2020(Level 1)(Level 2)(Level 3)
 $$$
Short-term investments (Note 4):   
U.S. treasury securities3,254,300   
Cash equivalents:
U.S. treasury securities634,655   
Money market funds236,500   
Other non-current assets:
Equity securities (Note 4)9,513 5,703  
Total 4,134,968 5,703  
 
 Quoted Price  
 in ActiveSignificant 
 Market forOtherSignificant
 IdenticalObservableUnobservable
 AssetsInputsInputs
As of December 31, 2019(Level 1)(Level 2)(Level 3)
 $$$
Short-term investments (Note 4):   
U.S. treasury securities364,728   
Cash equivalents
U.S. treasury securities16,442   
Money market funds50,461   
Total431,631   
The Company's equity securities consist of holdings in common stock and warrants to purchase additional shares of common stock of Leap Therapeutics, Inc. ("Leap"), which were acquired in connection with a collaboration and license agreement entered into in January 2020. The common stock investment in Leap, a publicly-traded biotechnology company, is measured and carried at fair value and classified as Level 1. The warrants to purchase additional shares of common stock in Leap are classified as a Level 2 investment and are measured using the Black-Scholes option-pricing valuation model, which utilizes a constant maturity risk-free rate and reflects the term of the warrants, dividend yield and stock price volatility, that is based on the historical volatility of similar companies.
The Company had no liabilities measured and recorded at fair value on a recurring basis as of September 30, 2020 or December 31, 2019. 
3. Collaborative Arrangements
The Company enters into collaborative arrangements for the research and development, manufacture and/or commercialization of drug products and drug candidates. To date, these collaborative arrangements have included out-licenses of internally developed drug candidates to other parties, in-licenses of drug products and drug candidates from other parties, and profit and cost sharing arrangements.
Amgen
On October 31, 2019, the Company entered into a global strategic oncology collaboration with Amgen (the "Amgen Collaboration Agreement") for the commercialization and development in China, excluding Hong Kong, Taiwan and Macao, of
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Amgen’s XGEVA®, KYPROLIS®, and BLINCYTO®, and the joint global development of a portfolio of oncology assets in Amgen’s pipeline, with BeiGene responsible for development and commercialization in China. On January 2, 2020, following approval by the Company's shareholders and satisfaction of other closing conditions, the agreement became effective.
Under the agreement, the Company is responsible for the commercialization of XGEVA®, KYPROLIS® and BLINCYTO® in China for five or seven years. Amgen is responsible for manufacturing of the products globally and will supply the products to the Company at an agreed upon price. The Company and Amgen will share equally in the China commercial profits and losses during the commercialization period. Following the commercialization period, the Company has the right to retain one product and is entitled to receive royalties on sales in China for an additional five years on the products not retained. XGEVA® was approved in China in 2019 for patients with giant cell tumor of the bone and a supplemental new drug application has been filed for prevention of skeletal-related events in cancer patients with bone metastases. In July 2020, the Company began commercializing XGEVA® in China. Additionally, new drug applications have been filed in China for KYPROLIS® as a treatment for patients with multiple myeloma and BLINCYTO® as a treatment for adult patients with relapsed or refractory acute lymphoblastic leukemia ("ALL").
Amgen and the Company are also jointly developing a portfolio of Amgen oncology pipeline assets under the collaboration. The Company is responsible for conducting clinical development activities in China and co-funding global development costs by contributing cash and development services up to a total cap of $1,250,000. Amgen is responsible for all development, regulatory and commercial activities outside of China. For each pipeline asset that is approved in China, the Company will receive commercial rights for seven years from approval. The Company has the right to retain approximately one out of every three approved pipeline assets, other than sotorasib (AMG 510), Amgen's investigational KRAS G12C inhibitor, for commercialization in China. The Company and Amgen will share equally in the China commercial profits and losses during the commercialization period. The Company is entitled to receive royalties from sales in China for pipeline assets returned to Amgen for five years after the seven-year commercialization period. The Company is also entitled to receive royalties from global sales of each product outside of China (with the exception of sotorasib).
The Amgen Collaboration Agreement is within the scope of ASC 808, as both parties are active participants and are exposed to the risks and rewards dependent on the commercial success of the activities performed under the agreement. The Company is the principal for product sales to customers in China during the commercialization period and will recognize 100% of net product revenue on these sales. Amounts due to Amgen for its portion of net product sales will be recorded as cost of sales. Cost reimbursements due to or from Amgen under the profit share will be recognized as incurred and recorded to cost of sales; selling, general and administrative expense; or research and development expense, based on the underlying nature of the related activity subject to reimbursement. Costs incurred for the Company's portion of the global co-development funding are recorded to research and development expense as incurred.
In connection with the Amgen Collaboration Agreement, a Share Purchase Agreement ("SPA") was entered into by the parties on October 31, 2019. On January 2, 2020, the closing date of the transaction, Amgen purchased 15,895,001 of the Company's ADSs for $174.85 per ADS, representing a 20.5% ownership stake in the Company. Per the SPA, the cash proceeds shall be used as necessary to fund the Company's development obligations under the Amgen Collaboration Agreement. Pursuant to the SPA, Amgen also received the right to designate one member of the Company's board of directors, and Anthony Hooper joined the Company's board of directors as the Amgen designee in January 2020.
In determining the fair value of the common stock at closing, the Company considered the closing price of the common stock on the closing date of the transaction and included a lack of marketability discount because the shares are subject to certain restrictions. The fair value of the shares on the closing date was determined to be $132.74 per ADS, or $2,109,902 in the aggregate. The Company determined that the premium paid by Amgen on the share purchase represents a cost share liability due to the Company's co-development obligations. The fair value of the cost share liability on the closing date was determined to be $601,857 based on the Company's discounted estimated future cash flows related to the pipeline assets. The total cash proceeds of $2,779,241 were allocated based on the relative fair value method, with $2,162,407 recorded to equity and $616,834 recorded as a research and development cost share liability. The cost share liability is being amortized proportionately as the Company contributes cash and development services to its total co-development funding cap.
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Amounts recorded related to the cash proceeds received from the Amgen collaboration for the nine months ended September 30, 2020 were as follows:
 Nine Months Ended
 September 30,
 2020
 $
Fair value of equity issued to Amgen2,162,407 
Fair value of research and development cost share liability616,834 
Total cash proceeds2,779,241 
Amounts recorded related to the Company's portion of the co-development funding on the pipeline assets for the three and nine months ended September 30, 2020 were as follows:
 Three Months EndedNine Months Ended
 September 30,September 30,
 20202020
 $$
Research and development expense30,795 87,498 
Amortization of research and development cost share liability30,056 85,296 
Total amount due to Amgen for BeiGene's portion of the development funding60,851 172,794 
Total amount of development funding paid or payable in cash57,201 169,144 
Total amount of development funding paid with development services3,650 3,650 
As of
September 30,
2020
Remaining portion of development funding cap 1,077,206 
At September 30, 2020, the research and development cost share liability recorded in the Company's balance sheet was as follows:
 As of
 September 30,
 2020
 $
Research and development cost share liability, current portion147,387 
Research and development cost share liability, non-current portion384,151 
Total research and development cost share liability531,538