Goldman Sachs Reiterates Buy on BeOne Medicines: Dual Drivers of Pipeline and Commercialization

Overview

This report comprises meeting notes from Goldman Sachs following the 47th Annual Global Healthcare Conference regarding BeOne Medicines. The core conclusion is the maintenance of Buy ratings on both the company's ADRs and A-shares, with 12-month target prices of US$414.46 and Rmb371.56, respectively. Management highlighted four key themes at the conference: commitment to developing drugs with differentiated impact, the continued critical advantage of the global development 'Highway', increased confidence in two major solid tumor pipeline assets (CDK4i and GPC3/4-1BB), and sustained growth momentum in the hematology business.

Core views

R&D Strategy and Pipeline Selection Criteria: Management emphasized that as a mid-cap biopharma company, BeOne Medicines adopts a highly disciplined 'Quick-to-POC' strategy for its solid tumor pipeline layout. All assets entering the clinical stage must pass a unified Go/No-Go assessment lens, requiring not only eligibility for Phase III trials but also the potential to ultimately change treatment paradigms. Recent data for CDK4i and GPC3/4-1BB presented at ASCO 2026 are viewed as typical cases exceeding these high standards, with both demonstrating highly competitive efficacy and favorable safety management. Global Development 'Highway' Advantage: Once an asset is approved for advancement, the company leverages its globally integrated clinical development model (the 'Highway') to rapidly generate data meeting global regulatory requirements. This model avoids the inefficiencies of traditional out-licensing, where partners often need to repeat early-stage clinical data overseas. Taking CDK4i as an example, it took only 30 months from First Patient Dosed (FPD) to the enrollment of the first Phase III patient. The company plans to replicate this speed in the B7H4 ADC program and further shorten the cycle for the GPC3/4-1BB program. CDK4i (BGB-43395) Latest Updates: Compared to data presented at ASCO (cORR 63-68%, median follow-up approx. 9 months), management disclosed that two additional patients recently achieved confirmed responses, bolstering confidence that the cORR for the 240mg and 400mg dose cohorts will reach the 70% level. Regarding safety, hematologic toxicity is the primary cause of dose reduction in similar drugs; however, this drug has a low incidence of hematologic toxicity, facilitating combination therapies. Gastrointestinal toxicity can be effectively mitigated by taking the medication with food (e.g., Grade ≥2 diarrhea decreased from 38% to 0%). On dose selection, although ORR was similar between the two cohorts, exposure-response analysis indicates superior characteristics for the 400mg dose, aligning with FDA Project Optimus feedback; if dose reduction is required, 240mg remains an efficacious dose. GPC3/4-1BB (BGB-B2033) and Platform Value: This drug demonstrated a 30% ORR in solid tumors such as hepatocellular carcinoma, significantly superior to the 5% ORR of the current TKI standard of care, while avoiding risks of cirrhosis-related comorbidities common with GPC3-targeted CAR-T/ADC therapies. Later-line treatment will focus primarily on monotherapy while exploring combinations with TKIs; data from the triplet regimen (+ tislelizumab + bevacizumab) will provide signals for first-line opportunities. Its unique 4-1BB binding domain design enables conditional T-cell activation within the tumor microenvironment. Strong POC data validates the platform's value, with two additional 4-1BB-based bispecific antibodies in the pipeline expected to deliver improved efficacy and safety. Sustained Growth in Hematology Business: Since Zanubrutinib (Brukinsa) became the world's leading BTK inhibitor in Q3 2025, it remains in different lifecycle stages across various regions. Q1 2026 data showed YoY growth of 82% in ROW (Rest of World), 57% in the EU, and 35% in the US, reflecting a healthy rhythm of staggered ramp-up. Although the initial approved indication for the new drug Sonrotoclax (relapsed/refractory MCL) addresses a smaller market, real-world feedback aligns with clinical development findings (deep remissions and improved safety), aiding deeper market penetration across regions. The company anticipates greater opportunities in the first-line CLL indication, expecting to share uMRD data from the CELESTIAL Phase III trial in Q3.

Analysis framework

This report employs a typical 'Pipeline + Commercialization' dual-driver analytical framework for innovative pharmaceutical companies. The institution first updates its qualitative assessment of the company's R&D strategy and execution based on management's latest statements at industry conferences. It then focuses on key clinical data for specific pipelines (e.g., ORR, safety, rationale for dose optimization), conducting horizontal and vertical comparisons against competitors and historical data to assess peak sales potential and competitive landscape. Finally, it validates commercial realization capabilities by combining regional revenue growth rates of marketed products with product lifecycle theory. At the valuation level, the institution explicitly uses a risk-adjusted DCF model as the foundation, overlaying the historical average premium of A-shares relative to ADRs to determine target prices for the dual-listed entity, reflecting considerations for cross-regional pricing differentials.

Methodology notes

• Valuation MethodologyDCF Discounted Cash Flow

  Risk-Adjusted DCF Valuation

  For innovative pharma companies not yet fully profitable, institutions typically adjust future pipeline cash flows for clinical success probability before discounting. This report uses a 10% discount rate and a 3% terminal growth rate to calculate base value, serving as a common anchor for biotech valuations.

• Valuation Methodology

  A/H/ADR Cross-Market Price Differential Premium Method

  For companies listed on both A-share and US markets, the institution applies an additional 63% A-share premium (based on the trailing 12-month average) atop the DCF valuation to determine the A-share target price. This reflects pricing differences for the same asset under varying liquidity environments and investor structures, representing standard practice in cross-market research.

• Industry/Sector Analysis FrameworkProduct life cycle

  Drug Launch Lifecycle and Regional Staggered Ramp-Up

  Differences in approval and reimbursement access timelines across countries lead to staggered regional revenue growth. By comparing YoY growth differentials among the US, EU, and ROW, the report determines that Zanubrutinib remains in the early-to-mid stage of global ramp-up rather than maturity in a single market.

• Company Fundamentals & Financial Framework

  Go/No-Go Pipeline Decision Discipline

  Mid-cap Biotechs have limited resources and must establish strict continuation/termination criteria early on. The report highlights the company's requirement that all assets must not only support Phase III trials but also possess 'paradigm-shifting' potential. This screening mechanism is a key non-financial metric for evaluating R&D efficiency and future success rates.

Asset mapping & comparison

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

• BeOne Medicines (688235.SS / ONC)

  Primary coverage subject, benefiting from solid tumor pipeline breakthroughs and global hematology ramp-up

  Strengths

  High efficiency in global clinical development; excellent CDK4i/GPC3/4-1BB data; solid position as global #1 BTKi with Zanubrutinib; preliminary validation of 4-1BB platform value

  Weaknesses

  Solid tumor pipeline still in early stages, requiring time for commercial validation; small market size for Sonrotoclax's initial indication

  Risks

  Uncertainties in R&D and regulatory approvals; intense competition in PD-1/BTK sectors; bottlenecks in market access

Key data

• Expected CDK4i Confirmed Objective Response Rate (cORR)70%Further improvement over the 63-68% reported at ASCO; both 240mg/400mg cohorts expected to achieve this level
• GPC3/4-1BB Objective Response Rate (ORR)30%Significantly superior to the 5% ORR of current TKI standard of care
• Zanubrutinib Q1 2026 US Revenue YoY Growth+35%Reflects sustained growth in mature markets
• Zanubrutinib Q1 2026 EU Revenue YoY Growth+57%In an earlier accelerated ramp-up phase compared to the US
• Zanubrutinib Q1 2026 ROW Revenue YoY Growth+82%Emerging markets and newly accessed countries contributing high elasticity
• CDK4i Phase III Initiation Speed30 months post-FPDDemonstrates efficiency of global development 'Highway'
• Assumed A-Share Premium Relative to ADR63%Based on trailing 12-month average, used for deriving A-share target price

Impact & implications

The report suggests that BeOne Medicines is successfully expanding from a hematology-centric company into the solid tumor space. Excellent early data for CDK4i and GPC3/4-1BB not only validate the potential of specific assets but, more importantly, demonstrate the replicability of the company's 4-1BB bispecific antibody platform and globally integrated development capabilities. If subsequent pivotal trials proceed smoothly, these assets could become new growth engines. Meanwhile, the staggered global ramp-up of marketed Zanubrutinib and the commercial launch of the new drug Sonrotoclax provide a robust cash flow foundation and channel synergies, supporting medium-to-long-term valuation upside.

Risks

• Risk of R&D failure or regulatory approval delays falling short of expectations
• Risk of intensified competition in PD-1 and BTK inhibitor markets
• Risk of bottlenecks in national reimbursement negotiations and market access

What to watch

• uMRD data from the CELESTIAL Phase III trial for Sonrotoclax first-line CLL indication (expected Q3 2026)
• Whether clinical development progress for the B7H4 ADC program replicates CDK4i's 30-month Phase III initiation speed
• Data readout for GPC3/4-1BB triplet regimen (+ tislelizumab + bevacizumab) in first-line treatment
• Continued ramp-up trajectory of Zanubrutinib in EU and ROW markets