BeOne Medicines Ltd. - Sponsored ADR (ONC) Earnings & Analysis

Latest quarter

BeOne reported third-quarter revenue of $1.9 billion, up from $1.4 billion a year earlier. Its filing attributed the increase to sales growth for BRUKINSA, TEVIMBRA and in-licensed Amgen products.

The filing showed global BRUKINSA sales of $1,390.9 million, with U.S. sales rising to $1,005.1 million from $738.7 million, primarily on higher demand. TEVIMBRA sales rose to $243.3 million from $190.6 million, while Amgen product revenue in China increased to $167.0 million from $133.1 million, principally on higher XGEVA volume.

Gross margin as a percentage of product sales rose to 88.3% from 85.9%, which the filing attributed to a higher proportion of BRUKINSA sales and production improvements. Research and development expense rose to $660.8 million from $523.7 million as BeOne invested in its pipeline. The company reported diluted earnings of $3.28 per American Depositary Share, compared with $1.09 a year earlier. Free cash flow was $473.5 million, up from $354.5 million.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CFO Aaron Rosenberg said U.S. BRUKINSA growth reflected new patient starts across approved uses, improved adherence and longer treatment duration against historical benchmarks. He added that approximately $50 million of U.S. sales came from order timing, including an extra shipping day in the quarter.

Rosenberg said TEVIMBRA benefited from launches outside China and that prescribers had begun using its HERIZON regimen following the U.S. launch. For BEQALZI, he said the size of its approved use and launch timing meant it was not expected to be a meaningful revenue driver this year.

In China, Rosenberg said BeOne was beginning to see an effect from XGEVA biosimilars. He expected that competition, alongside potential inclusion of XGEVA and KYPROLIS in volume-based procurement, to pressure revenue for those brands beyond 2026.

On pricing, Rosenberg expected a modest U.S. net pricing benefit for BRUKINSA for the rest of the year and relatively stable net pricing in 2027. He said higher Medicare Part D manufacturer liability would likely turn this year’s modest benefit into a flat to modest headwind next year.

Asked about future profitability, Rosenberg said BeOne intended to keep investing in its pipeline while growing operating income. He expected operating-expense growth in 2027 to be at least consistent with recent years and margin expansion to be more modest than in 2025 and 2026. CEO John Oyler said the company wanted to retain financial flexibility to fund opportunities in the business.

Rosenberg also expected a fourth-quarter reversal of part of the company’s tax valuation allowance to produce a material tax benefit, though the company was still assessing its magnitude. In response to a question about a PRMT5 inhibitor combination, solid-tumor chief medical officer Mark Lanasa said enrollment was expected to begin imminently.

Guidance

BeOne raised its 2026 revenue outlook to $6.9 billion–$7.0 billion from $6.6 billion–$6.8 billion. It narrowed expected operating expenses to $4.9 billion–$5.0 billion from $4.8 billion–$5.0 billion.

The company raised its GAAP operating-income outlook to $1.2 billion–$1.3 billion from $1.0 billion–$1.1 billion. It also raised its non-GAAP operating-income outlook to $1.9 billion–$2.0 billion from $1.7 billion–$1.8 billion.