Q1 Performance Beats Expectations, Full-Year Guidance Upgraded; Focus on ASCO Solid Tumor Data

Overview

Goldman Sachs released a research report reviewing BeOne Medicines (BeOne Medicines) 2026 Q1 performance. The report indicates the company achieved robust sales growth in Q1, further consolidating Zanubrutinib (Brukinsa)'s global leadership position, while Tislelizumab (Tevimbra) continued steady expansion outside the China market. Due to high gross margins and effective expense control, the company's EBIT significantly beat expectations, demonstrating strong operating leverage. Based on this, the company slightly upgraded its full-year 2026 revenue and profit guidance. Institutions maintain 'Buy' ratings for both A-shares and ADRs and correspondingly raised target prices, believing current stock prices are undervalued due to macro factors and pipeline concerns, and remain bullish on its long-term global commercialization capabilities and R&D output.

Core views

Performance and Guidance: First-quarter product sales reached $1.49 billion, up 34% YoY, slightly above Goldman Sachs estimates ($1.45 billion) and market consensus ($1.43 billion). Among them, core product Zanubrutinib global sales were $1.1 billion (YoY +38%), with global market share reaching 36%, driven mainly by markets outside the US (YoY +46%); Tislelizumab sales were $206 million (YoY +20%), with non-China market growth of 17% QoQ. Based on robust Q1 performance and stable net pricing expectations, the company upgraded 2026 total revenue guidance from $6.2-6.4 billion to $6.3-6.5 billion, GAAP EBIT guidance from $700 million-$800 million to $750 million-$850 million. Profitability: First-quarter GAAP EBIT reached $250 million, far exceeding previous quarter levels and expectations, mainly benefiting from high gross margin (89%) product sales and controllable operating expenses ($1.1 billion, +16% YoY, below expected $1.2 billion). Management reiterated long-term operational goals: achieving high-quality growth through differentiated R&D output, and continuously utilizing operating leverage to drive bottom-line growth. Pipeline Progress: Management emphasized a 'Quick-to-POC' strategy for non-hematology pipelines. Key projects re-emphasized included five major items (CDK4 inhibitor, B7H4 ADC, GPC3/4-1BB, PRMT5 inhibitor, CEA-ADC). The upcoming ASCO meeting will release Phase I data for CDK4 inhibitor and GPC3/4-1BB bispecific antibody; the former showed promising gastrointestinal tolerability preliminarily, the latter showed better safety than ADCs and faster onset speed than TCE. Meanwhile, based on data-driven principles, the company downgraded priority on CDK2 inhibitor, EGFR-CDAC and other projects, but this does not mean abandoning related targets. Additionally, new licensed multispecific antibodies (TsAb) plan to enter First-In-Human (FIH) trials in June.

Analysis framework

Institutions adopt a top-down fundamental analysis framework. First, break down Q1 financial data to verify the competitive market power of core products (e.g., Zanubrutinib market share changes) via volume-price split; second, evaluate the company's operating leverage effects and profitability quality by analyzing changes in gross margin and operating expense ratio; finally, assess future growth potential and risks by combining pipeline milestone events (such as ASCO data readouts, clinical stage advancements), ultimately valuing through risk-adjusted DCF models.

Methodology notes

• Valuation MethodologyDCF Cash Flow Discounting

  Risk-adjusted DCF valuation

  The institution uses a risk-adjusted discounted cash flow model with a discount rate of 10% and terminal growth rate of 3% to calculate the company's intrinsic value, which is a common valuation method for biopharmaceutical companies reflecting R&D risks and time value.

• Company Fundamentals and Financial FrameworkOperating/Financial Leverage Analysis

  Operating leverage analysis

  The research report focuses on the phenomenon where EBIT growth rate exceeds revenue growth rate, pointing out that the increasing proportion of high-gross-margin product sales and expense control jointly drove significant improvement in profit margins, reflecting economies of scale.

• Industry/Industrial Analysis Framework

  Quick-to-POC Strategy

  Refers to the strategy of quickly obtaining concept validation data in the early clinical stage to decide on project continuation or progression, which helps improve R&D efficiency and reduce later-stage failure risks.

Asset mapping & comparison

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

• BeOne Medicines (688235.SS / ONC)

  Direct beneficiary, performance beats expectations and guidance upgraded, pipeline progress smooth

  Strengths

  Zanubrutinib global leadership established, Tislelizumab overseas expansion smooth, significant operating leverage, high R&D efficiency

  Weaknesses

  Solid tumor pipeline still in early stages, faces fierce competition

  Comparison

  Compared to peers, possesses stronger global commercialization capabilities and richer late-stage pipeline

  Risks

  R&D uncertainty, intensifying PD-1/BTK competition, market access bottlenecks

Key data

• Product Sales (Q1)$1.49 Billion+34% YoY, slightly beat expectations
• Zanubrutinib Global Sales$1.1 Billion+38% YoY, global market share 36%
• GAAP EBIT (Q1)$250 MillionSignificantly beat expectations, shows strong operating leverage
• 2026 Revenue Guidance$6.3-6.5 BillionPreviously $6.2-6.4 Billion
• 2026 GAAP EBIT Guidance$750 Million-$850 MillionPreviously $700-$800 Million
• ADR Target Price$414.46Previously $405.13, implied upside 39.3%
• A-Share Target PriceRMB371.56Previously RMB363.20, implied upside 50.5%

Impact & implications

The research report believes that BeOne Medicines has demonstrated powerful global commercialization capabilities and differentiated competitive advantages, particularly establishing a leadership position in hematologic malignancies. With gradual disclosure of solid tumor pipeline data and improvement in operational efficiency, the company is expected to achieve high-quality growth. Current stock prices may be suppressed by macro factors and worries about early solid tumor pipelines, offering space for valuation repair. The upgraded target price reflects a re-assessment of its profitability and pipeline value.

Risks

• Uncertainty in R&D and regulatory approval, especially regarding early solid tumor pipelines
• Intensifying market competition in PD-1 and BTK inhibitor areas
• Development risks of assets in clinical stage
• Market access bottlenecks

What to watch

• Phase I data readout for CDK4 inhibitor and GPC3/4-1BB bispecific antibody at ASCO meeting
• Mid-term analysis of Zanubrutinib in Phase III for first-line MCL (MANGROVE study)
• Approval progress of Sonrotoclax for US R/R MCL
• Approval progress of Tislelizumab for US first-line HER2+ gastric cancer
• Launch status of First-In-Human trials for multispecific antibodies (TsAb)