Despite a modest QoQ revenue dip due to seasonal factors, BeiGene delivered its first quarter of profitability thanks to disciplined cost control and operating leverage. Zanubrutinib continues to lead globally in BTKi for CLL, and the company’s diversified pipeline has a clearly defined roadmap with near-term catalysts. We maintain our positive long-term outlook on BeiGene’s growth trajectory. Reiterate BUY.
　　Key Factors for Rating
　　Strong YoY revenue growth, slight QoQ decline; zanubrutinib momentum slows but retains market leadership. In 1Q25, BeiGene reported total revenue of US$1.1bn, up 49% YoY, though slightly down QoQ, coming in slightly below market expectations. The company’s flagship product zanubrutinib achieved global sales of US$792m, representing a robust 62% YoY increase but a 4% QoQ decline. In the U.S., zanubrutinib generated US$563m in sales (+60% YoY, -9% QoQ). The QoQ decline was primarily due to seasonal factors, including the impact of Medicare Part D redesign (shifting manufacturer liabilities), annual patient insurance resets, higher out-of-pocket costs at the start of the year, inventory destocking (~US$30m), and one fewer shipping week. In comparison, other BTK inhibitors like ibrutinib and acalabrutinib saw larger QoQ declines in U.S. revenue - U$529m (-15%) and US$507m (-12%) respectively - highlighting zanubrutinib’s more resilient demand base. Meanwhile, tislelizumab recorded US$171m in sales, up 18% YoY and 11% QoQ, reflecting steady upward momentum. The company maintained its full-year revenue guidance of US$4.9bn-US$5.3bn.
　　Significant margin expansion and operational leverage. In 1Q25, BeiGene achieved GAAP profitability for the first time, with net profit of US$1m (vs. a US$251m loss in 1Q24). GPM improved to 85.1%, driven by higher zanubrutinib contribution and better cost efficiencies. SG&A expenses grew 7% YoY, but as a percentage of product revenue declined from 57% to 41%, reflecting enhanced sales productivity and strong cost discipline. R&D expenses increased 5% YoY due to the advancement of early-stage assets into late development. Overall, expenses grew more slowly than revenue, supporting earlier-than-expected profitability.
　　Mitigating the impact of tariffs and geopolitical risks. BeiGene has proactively addressed the potential impacts of tariffs and geopolitical risks by incorporating expected tariff exposure into its 2025 financial guidance and emphasising that its partnered products will not be affected. To mitigate these risks, the company has built a resilient and regionally diversified manufacturing network, including an US$800m facility in Hopewell, New Jersey, to supply the U.S. market with zanubrutinib, tislelizumab, and pipeline assets. Additionally, it has secured alternative sources of API supply from Switzerland and Spain and maintains strategic stockpiles to ensure continuity.
　　Key Risks for Rating
　　Intensified competition; geopolitical risks; delay or failure on key pipeline progress.
　　Valuation
　　After fine-tuning our DCF model, we maintain BUY and TP of HK$183/US$293 for HK/ADR shares.
　　Multiple milestones across hematology and solid tumour programmes. In hematology, sonrotoclax (BCL-2i) has completed enrollment in key PhIII trials for TN CLL (CELESTIAL-301) and r/r CLL (CELESTIAL-303), with a China NDA under review and global filing for MCL expected in 2H25. Its BGB-16673 (BTK CDAC) began a PhIII trial (CADENCE-302) for r/r CLL in early 2025, with another head-to- head PhIII against pirtobrutinib launching in 2H25 and pivotal PhII data anticipated in 2026. In solid tumours, BeiGene plans to share early efficacy and safety data from its BGB-43395 (CDK4i) at its June 2025 R&D Day and expects to initiate a PhIII trial in 2L HR+ breast cancer by late 2025 or early 2026. More than ten proof-of- concept readouts are also expected in 2H25 from solid tumour assets including B7H4, EGFR CDAC, PRMT5, and a 2nd gen BCL-2 inhibitor. Additionally, in immunology, BeiGene’s IRAK4 CDAC is showing early promise with tissue PD data expected in 2H25, alongside over a dozen preclinical I&I programs advancing in parallel.