Report Interpretation

Overview

This earnings review argues that BeOne’s better-than-expected second quarter, stronger operating leverage and increasingly registrational solid-tumor pipeline reinforce its long-term growth case. Goldman Sachs maintains Buy ratings on the ADR and A-share while raising estimates and target prices.

Core views

BeOne delivered 2Q product sales of US$1.68bn, up 29% year on year and slightly above both Goldman Sachs estimates and Visible Alpha consensus of US$1.6bn. Brukinsa was the main driver, with global sales of US$1.25bn, up 31% year on year, including US$893mn in the United States, also up 31% and above the US$822mn Goldman Sachs estimate. The report says Brukinsa strengthened its global leadership with 38% market share and could gain further support from indication expansion following the positive Phase 3 MANGROVE study in first-line mantle cell lymphoma. Tevimbra generated US$229mn of sales, up 18% year on year. Ex-China sales of US$30mn grew 40% quarter on quarter as reimbursement expanded, while China sales of US$199mn rose 6% year on year and remained ahead of Tyvyt's US$130mn. Goldman Sachs expects a further potential catalyst from the anticipated FDA decision on the zanidatamab/Tevimbra/chemotherapy combination for first-line HER2-positive gastroesophageal adenocarcinoma, with a PDUFA date of August 25. Management again raised FY26 guidance after the quarter: total revenue moved to US$6.6–6.8bn from US$6.3–6.5bn, GAAP EBIT to US$1.0–1.1bn from US$750–850mn, and non-GAAP EBIT to US$1.7–1.8bn from US$1.45–1.55bn. GAAP EBIT was US$325mn in 2Q26, up 30% quarter on quarter. The report attributes the higher profit outlook to scale-driven gross-margin improvement—gross profit margin reached 90% versus 89% in 1Q—and controlled operating expenses of US$1.2bn, up 13% year on year. Goldman Sachs characterizes the 31% increase in GAAP EBIT guidance as a major step-up, especially because operating expense guidance increased by only US$100mn, or 2%. The report links this operating leverage to BeOne's two stated long-term objectives: high-quality growth from differentiated R&D output and continuing efficiency gains. It highlights several registrational or planned pivotal programs, including CDK4 inhibition in first-line HR-positive/HER2-negative breast cancer, GPC3/4-1BB in hepatocellular carcinoma, and B7H4 ADC in first-line ovarian-cancer maintenance. For the ZS combination in first-line CLL/SLL, the Phase 3 CELESTIAL-301 uMRD analysis did not achieve statistical superiority over the venetoclax/obinutuzumab combination, according to the independent data monitoring committee. The study remains blinded and continues to its primary progression-free-survival analysis. Management maintained confidence in PFS superiority, arguing that venetoclax/obinutuzumab has a high uMRD benchmark and that uMRD may not reliably predict PFS across therapies with different mechanisms of action; the report cites CLL17, where similar three-year PFS of 79% versus 81% was observed despite a 26% lower uMRD result for IV. Goldman Sachs also emphasizes faster progress in solid tumors. Five programs that have achieved proof of concept are described as potentially reaching first patient in pivotal trials within 2.5 years. GPC3/4-1BB completed enrollment for a potentially registration-enabling China study in third-line-or-later post-IO/TKI hepatocellular carcinoma within three months, with a Phase 3 first patient in second-line HCC planned by year-end 2026. The CDK4 inhibitor Phase 3 first-line breast-cancer study began enrollment in 2Q26; B7H4 ADC Phase 3 initiation is planned by year-end 2026, with safety presented as its key differentiator; and CEA ADC and PRMT5 inhibitor proof-of-concept data are expected at ESMO 2026. The pan-KRAS inhibitor was deprioritized, while a pan-RAS (ON) inhibitor entered Phase 1 and KRAS degrader/RAS (ON) ADC programs remain in active development. Goldman Sachs raises FY26E–FY28E EPS from US$6.56/US$5.28/US$10.88 to US$7.85/US$10.58/US$11.59. The revisions incorporate 2Q26 results, refined near-term gross-margin and operating-expense assumptions, postponed potential US tariff effects because of limited policy updates, and updated Imdelltra royalty estimates. The institution maintains Buy ratings and raises 12-month targets to US$441.3 from US$414.46 for ONC and to Rmb381.06 from Rmb371.56 for the A-share.

Analysis framework

Goldman Sachs assesses the quarter through product-level sales versus its estimates and consensus, then connects gross margin and operating-expense trends to EBIT guidance and earnings revisions. It also evaluates clinical programs by trial stage, indication-expansion potential, proof-of-concept status and timing toward pivotal studies, and values the shares using a risk-adjusted DCF with an A-share premium.

Methodology notes

• Valuation methodsDCF (Discounted Cash Flow)

  Risk-adjusted DCF valuation

  Goldman Sachs derives its target values using discounted future cash flows, adjusting for development and approval risk, with a 10% discount rate and 3% terminal growth rate.

• Corporate Fundamentals and FinanceOperating and Financial Leverage Analysis

  Operating leverage analysis

  The report links rising product sales and a higher gross margin with modest operating-expense growth to the large increase in EBIT guidance.

• Industry AnalysisVolume-price decomposition

  Product sales and market-share analysis

  The report evaluates commercial momentum through product-level sales growth, regional performance, reimbursement expansion and Brukinsa's market share.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• BeOne Medicines Ltd. (ADR) (ONC)

  Primary covered security; Goldman Sachs maintains Buy after stronger earnings and raises its 12-month target.

  Strengths

  Strong Brukinsa US performance, global market leadership, rising profitability and advancing oncology pipeline.

  Weaknesses

  The solid-tumor franchise remains relatively early stage.

  Comparison

  Brukinsa held 38% global market share; Tevimbra China sales of US$199mn exceeded Tyvyt's US$130mn.

  Risks

  R&D and regulatory uncertainty, BTK/PD-1 competition, clinical-development risk and market-access bottlenecks.

• BeOne Medicines Ltd. (A) (688235.SS)

  Primary covered security; Goldman Sachs maintains Buy and raises its 12-month target.

  Strengths

  Same commercial franchise, operating leverage and pipeline progress as the ADR.

  Weaknesses

  The solid-tumor franchise remains relatively early stage.

  Comparison

  The target incorporates a 57% A-share premium based on the 12-month average.

  Risks

  R&D and regulatory uncertainty, BTK/PD-1 competition, clinical-development risk and market-access bottlenecks.

Key data

• 2Q product salesUS$1.68bn+29% y/y; versus US$1.6bn Goldman Sachs estimate and Visible Alpha consensus.
• Brukinsa global salesUS$1.25bn+31% y/y; 38% global market share.
• Brukinsa US salesUS$893mn+31% y/y; versus US$822mn Goldman Sachs estimate.
• Tevimbra salesUS$229mn+18% y/y; ex-China sales of US$30mn grew 40% q/q.
• FY26 revenue guidanceUS$6.6–6.8bnRaised from US$6.3–6.5bn.
• FY26 GAAP EBIT guidanceUS$1.0–1.1bnRaised from US$750–850mn.
• 2Q26 GAAP EBITUS$325mn+30% q/q.
• Gross profit margin90%Up from 89% in 1Q.
• FY26E/FY27E/FY28E EPSUS$7.85/US$10.58/US$11.59Raised from US$6.56/US$5.28/US$10.88.

Impact & implications

Goldman Sachs views the sales beat and raised guidance as evidence that BeOne can combine commercial growth with expanding operating leverage. It also sees the advancing solid-tumor portfolio as increasing future pipeline visibility, while the ZS program's key remaining efficacy readout is PFS rather than uMRD.

Risks

• Uncertainty around R&D execution and regulatory approvals, particularly for the relatively early-stage solid-tumor franchise.
• Competition in BTK and PD-1 therapies.
• Clinical-development risk for pipeline assets.
• Market-access bottlenecks.

What to watch

• The FDA decision for the zanidatamab/Tevimbra/chemotherapy regimen in first-line HER2-positive gastroesophageal adenocarcinoma, with PDUFA on August 25.
• The primary PFS analysis from CELESTIAL-301 after the uMRD analysis did not show statistical superiority.
• Pivotal-trial timing for GPC3/4-1BB, CDK4 inhibitor and B7H4 ADC programs.
• Proof-of-concept data for CEA ADC and PRMT5 inhibitor programs expected at ESMO 2026.