| Collaborative and Licensing Arrangements | Collaborative and Licensing Arrangements The Company has entered into collaborative arrangements for the research and development, manufacture and/or commercialization of medicines and drug candidates. To date, these collaborative arrangements have included out-licenses of and options to out-license internally developed products and drug candidates to other parties, in-licenses of products and drug candidates from other parties, and profit- and cost-sharing arrangements. These arrangements may include non-refundable upfront payments, contingent obligations for potential development, regulatory and commercial performance milestone payments, cost-sharing and reimbursement arrangements, royalty payments, and profit sharing. Out-Licensing Arrangements For the three and nine months ended September 30, 2023 and 2022, the Company’s collaboration revenue primarily consisted of the recognition of previously deferred revenue from its former collaboration agreements with Novartis for tislelizumab and ociperlimab. The following table summarizes total collaboration revenue recognized for the three and nine months ended September 30, 2023 and 2022: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenue from Collaborators $ $ $ $ Research and development service revenue 59,052 9,834 79,432 34,074 Right to access intellectual property revenue 51,978 26,249 104,475 78,746 Material rights revenue 71,980 — 71,980 — Other 3,008 2,039 9,157 7,416 Total 186,018 38,122 265,044 120,236 Novartis Tislelizumab Collaboration and License In January 2021, the Company entered into a collaboration and license agreement with Novartis, granting Novartis rights to develop, manufacture and commercialize tislelizumab in the United States, Canada, Mexico, member countries of the European Union, United Kingdom, Norway, Switzerland, Iceland, Liechtenstein, Russia and Japan (“Novartis Territory”). The Company and Novartis agreed to jointly develop tislelizumab in the Novartis Territory, with Novartis responsible for regulatory submissions and Novartis had the right to commercialization upon regulatory approvals. In addition, both companies had the ability to conduct clinical trials globally to explore combinations of tislelizumab with other cancer treatments, and the Company was provided with an option to co-detail the product in North America, funded in part by Novartis. Under the agreement the Company received an upfront cash payment of $650,000 from Novartis. The Company was eligible to receive up to $1,300,000 upon the achievement of regulatory milestones, $250,000 upon the achievement of sales milestones, and royalties on future sales of tislelizumab in the licensed territory. Under the terms of the agreement, the Company was responsible for funding ongoing clinical trials of tislelizumab, Novartis agreed to fund new registrational, bridging, or post-marketing studies in its territory, and each party was responsible for funding clinical trials evaluating tislelizumab in combination with its own or third party products. Each party retained the worldwide right to commercialize its propriety products in combination with tislelizumab. The Company evaluated the Novartis agreement under ASC 606 as all the material units of account within the agreement represented transactions with a customer. The Company identified the following material components under the agreement: (1) exclusive license for Novartis to develop, manufacture, and commercialize tislelizumab in the Novartis Territory, transfer of know-how and use of the tislelizumab trademark; (2) conducting and completing ongoing trials of tislelizumab (“tislelizumab R&D services”); and (3) supplying Novartis with required quantities of the tislelizumab drug product, or drug substance, upon receipt of an order from Novartis. The Company determined that the license, transfer of know-how and use of trademarks were not distinct from each other and represented a single performance obligation. The tislelizumab R&D services represented a material promise and were determined to be a separate performance obligation at the outset of the agreement as the promise is distinct and had standalone value to Novartis. The Company evaluated the supply component of the contract and noted the supply would not be provided at a significant incremental discount to Novartis. The Company concluded that, for the purpose of ASC 606, the provision related to providing clinical and commercial supply of tislelizumab in the Novartis Territory was an option but not a performance obligation of the Company at the outset of the agreement. A performance obligation for the clinical and commercial supply would be established as quantities of drug product or drug substance were ordered by Novartis. The Company determined that the transaction price as of the outset of the arrangement was the upfront payment of $650,000. The potential milestone payments that the Company was eligible to receive were excluded from the transaction price, as all milestone amounts were fully constrained due to uncertainty of achievement. The transaction price was allocated to the two identified performance obligations based on a relative fair value basis. The standalone selling price of the license, transfer of know-how and use of trademarks performance obligation was determined using the adjusted market assessment approach. Based on the valuation performed by the Company, the standalone selling price of the license, transfer of know-how and use of trademarks was valued at $1,231,000. The standalone selling price of the tislelizumab R&D services was valued at $420,000 using a cost plus margin valuation approach. Based on the relative standalone selling prices of the two performance obligations, $484,646 of the total transaction price was allocated to the license and $165,354 was allocated to the tislelizumab R&D services. The Company satisfied the license performance obligation at a point in time when the license was delivered and the transfer of know-how completed which occurred during the nine months ended September 30, 2021. As such, the Company recognized the entire amount of the transaction price allocated to the license as collaboration revenue during the nine months ended September 30, 2021. The portion of the transaction price allocated to the tislelizumab R&D services was deferred and was being recognized as collaboration revenue as the tislelizumab R&D services were performed using a percentage-of-completion method. Estimated costs to complete were reassessed on a periodic basis and any updates to the revenue earned were recognized on a prospective basis. In September 2023, the Company and Novartis agreed to mutually terminate the collaboration and license agreement, effective immediately. Pursuant to the termination agreement, the Company regained full, global rights to develop, manufacture and commercialize tislelizumab with no royalty payments due to Novartis. Novartis may continue its ongoing clinical trials and has the ability to conduct future combination trials with tislelizumab subject to BeiGene’s approval. BeiGene agreed to provide Novartis with ongoing clinical supply of tislelizumab to support its clinical trials. Pursuant to the termination agreement, Novartis agreed to provide transition services to the Company to enable key aspects of the tislelizumab development and commercialization plan to proceed without disruption, including manufacturing, regulatory, safety and clinical support. Upon termination of the agreement in September 2023, there were no further performance obligations, and the remaining deferred revenue balance associated with the tislelizumab R&D services was recognized in full. The Company recognized R&D service revenue of $55,483 and $72,279 during the three and nine months ended September 30, 2023, respectively, and $8,043 and $28,699 during the three and nine months ended September 30, 2022, respectively. The Company also recognized other collaboration revenue of $54 and $5,067 during the three and nine months ended September 30, 2023, respectively, and $2,039 and $7,416 during the three and nine ended September 30, 2022, respectively, related to the sale of tislelizumab clinical supply to Novartis in conjunction with the collaboration. Ociperlimab Option, Collaboration and License Agreement and China Broad Market Development Agreement In December 2021, the Company expanded its collaboration with Novartis by entering into an option, collaboration and license agreement with Novartis to develop, manufacture and commercialize the Company's investigational TIGIT inhibitor ociperlimab in the Novartis Territory. In addition, the Company and Novartis entered into an agreement granting the Company rights to market, promote and detail five approved Novartis oncology products, TAFINLAR ® (dabrafenib), MEKINIST ® (trametinib), VOTRIENT ® (pazopanib), AFINITOR ® (everolimus), and ZYKADIA ® (ceritinib), across designated regions of China referred to as “broad markets.” In the first quarter of 2022, the Company initiated marketing and promotion of these five products. Under the terms of the option, collaboration and license agreement, the Company received an upfront cash payment of $300,000 in January 2022 from Novartis and would have received an additional payment of $600,000 or $700,000 in the event Novartis exercised its exclusive time-based option prior to mid-2023 or between then and late-2023, respectively. Following option exercise, the Company was eligible to receive up to $745,000 upon the achievement of regulatory approval milestones, $1,150,000 upon the achievement of sales milestones, and royalties on future sales of ociperlimab in the Novartis Territory. Subject to the terms of the option, collaboration and license agreement, during the option period, Novartis agreed to initiate and fund additional global clinical trials with ociperlimab and the Company agreed to expand enrollment in two ongoing trials. Following the option exercise, Novartis agreed to share development costs of global trials. Following approval, the Company agreed to provide 50 percent of the co-detailing and co-field medical efforts in the United States, and had an option to co-detail up to 25 percent in Canada and Mexico, funded in part by Novartis. Each party retained the worldwide right to commercialize its propriety products in combination with ociperlimab. The prior tislelizumab collaboration and license agreement was not modified as a result of the ociperlimab option, collaboration and license agreement. The Company evaluated the Novartis agreements under ASC 606 as the units of account within the agreement represented transactions with a customer. The Company identified the following material promises under the agreement: (1) exclusive option for Novartis to license the rights to develop, manufacture, and commercialize ociperlimab in the Novartis Territory; (2) Novartis' right to access ociperlimab in its own clinical trials during the option period; (3) initial transfer of BeiGene know-how; and (4) conducting and completing ongoing trials of ociperlimab during the option period (“ociperlimab R&D Services”, together with “tislelizumab R&D services”, “R&D services”). The market development activities are considered immaterial in the context of the contracts. The Company concluded that, at the inception of the agreement, the option for the exclusive product license constituted a material right as it represents a significant and incremental discount to the fair value of the exclusive product license that Novartis would not have received without entering into the agreement and was therefore considered a distinct performance obligation. The Company determined that Novartis' right to access ociperlimab in its own trials over the option period and the initial transfer of know-how were not distinct from each other, as the right to access ociperlimab has limited value without the corresponding know-how transfer, and therefore should be combined into one distinct performance obligation. The ociperlimab R&D Services represent a material promise and were determined to be a separate performance obligation at the outset of the agreement as the promise is distinct and has standalone value to Novartis. The Company determined the transaction price at the outset of the arrangement as the upfront payment of $300,000. The option exercise fee was contingent upon Novartis exercising its right and was considered fully constrained until the option was exercised. Additionally, the milestone and royalty payments were not applicable until after the option is exercised, at which point the likelihood of meeting milestones, regulatory approval and meeting certain sales thresholds would be assessed. The transaction price was allocated to the three identified performance obligations based on a relative fair value basis. The standalone selling price of the material right for the option to the exclusive product license was calculated as the incremental discount between (i) the value of the license determined using a discounted cash flow method adjusted for probability of the option being exercised and (ii) the expected option exercise fee using the most-likely-amount method at option exercise. The standalone selling price of the combined performance obligation for Novartis' right to access ociperlimab for its own clinical trials during the option period and the initial transfer of BeiGene know-how was determined using a discounted cash flow method. The standalone selling price of the ociperlimab R&D Services was determined using an expected cost plus margin approach. Based on the relative standalone selling prices of the three performance obligations, $71,980 of the total transaction price was allocated to the material right, $213,450 was allocated to Novartis' right to use ociperlimab in its own clinical trials during the option period and the transfer of BeiGene know-how, and $14,570 was allocated to the ociperlimab R&D Services. The Company would have satisfied the material right performance obligation at a point in time at the earlier of when Novartis exercised the option and the license was delivered or the expiration of the option period. As such, the entire amount of the transaction price allocated to the material right was deferred. The portion of the transaction price allocated to Novartis' right to access ociperlimab in its own clinical trials during the option period and the initial transfer of BeiGene know-how was deferred and was recognized over the expected option period. The portion of the transaction price allocated to the ociperlimab R&D Services was deferred and was recognized as collaboration revenue as the ociperlimab R&D Services were performed over the expected option period. In July 2023, the Company and Novartis mutually agreed to terminate the ociperlimab option, collaboration and license agreement, effective immediately. Pursuant to the termination agreement, the Company regained full, global rights to develop, manufacture and commercialize ociperlimab. Upon termination the Company had no further performance obligations under the collaboration, and all remaining deferred revenue balances were recognized in full. The China broad markets agreement remains in place. The Company recognized collaboration revenue of $51,978 and $104,475 related to Novartis’ right to access ociperlimab in clinical trials and the transfer of know how performance obligation during the three and nine months ended September 30, 2023, respectively, and $26,249 and $78,746 during the three and nine months ended September 30, 2022, respectively. The Company recognized R&D service revenue of $3,569 and $7,153 during the three and nine months ended September 30, 2023 and $1,791 and $5,375 during the three and nine months ended September 30, 2022, respectively. The Company recognized the $71,980 allocated to the material right as collaboration revenue upon termination during the quarter ended September 30, 2023. The Company also recognized other collaboration revenue of $2,954 and $5,590 related to revenue generated under the broad markets marketing and promotion agreement in conjunction with the collaboration during the three and nine months ended September 30, 2023, respectively. In-Licensing Arrangements - Commercial Amgen In October 2019, the Company entered into a global strategic oncology collaboration with Amgen (“Amgen Collaboration Agreement”) for the commercialization and development in China, excluding Hong Kong, Taiwan and Macau, of Amgen’s XGEVA ® , KYPROLIS ® and BLINCYTO ® , and the joint global development of a portfolio of oncology assets in Amgen’s pipeline, with BeiGene responsible for development and commercialization in China. The agreement became effective on January 2, 2020, following approval by the Company's shareholders and satisfaction of other closing conditions. Under the agreement, the Company is responsible for the commercialization of XGEVA, KYPROLIS and BLINCYTO in China for five Amgen and the Company are also jointly developing a portfolio of Amgen oncology pipeline assets under the collaboration. The Company is responsible for conducting clinical development activities in China and co-funding global development costs by contributing cash and development services up to a total cap of $1,250,000. Amgen is responsible for all development, regulatory and commercial activities outside of China. For each pipeline asset that is approved in China, the Company will receive commercial rights for seven years from approval. The Company has the right to retain approximately one out of every three approved pipeline assets, other than LUMAKRAS ® (sotorasib), Amgen's KRAS G12C inhibitor, for commercialization in China. The Company and Amgen will share equally in the China commercial profits and losses during the commercialization period. The Company is entitled to receive royalties from sales in China for pipeline assets returned to Amgen for five years after the seven-year commercialization period. The Company is also entitled to receive royalties from global sales of each product outside of China (with the exception of LUMAKRAS). On April 20, 2022, the parties entered into the First Amendment to Amgen Collaboration Agreement, which amends certain terms and conditions relating to the financial responsibilities of the parties in connections with the development and commercialization of certain Amgen proprietary products for the treatment of oncology-related diseases and conditions. In connection with the Company’s ongoing assessment of the Amgen Collaboration Agreement cost-share contributions, the Company determined that further investment in the development of LUMAKRAS was no longer commercially viable for BeiGene. As a result, in February 2023, the Company and Amgen entered into the Second Amendment to the Amgen Collaboration Agreement to (i) stop sharing costs with Amgen for the further development of LUMAKRAS during the period starting January 1, 2023 and ending August 31, 2023; and (ii) cooperate in good faith to prepare a transition plan with the anticipated termination of LUMAKRAS from the Amgen Collaboration Agreement. The Amgen Collaboration Agreement is within the scope of ASC 808, as both parties are active participants and are exposed to the risks and rewards dependent on the commercial success of the activities performed under the agreement. The Company is the principal for product sales to customers in China during the commercialization period and recognizes 100% of net product revenue on these sales. Amounts due to Amgen for its portion of net product sales will be recorded as cost of sales. Cost reimbursements due to or from Amgen under the profit share will be recognized as incurred and recorded to cost of sales; selling, general and administrative expense; or research and development expense, based on the underlying nature of the related activity subject to reimbursement. Costs incurred for the Company's portion of the global co-development funding are recorded to research and development expense as incurred. In connection with the Amgen Collaboration Agreement, a Share Purchase Agreement (“SPA”) was entered into by the parties in October 2019. On January 2, 2020, the closing date of the transaction, Amgen purchased 15,895,001 of the Company's ADSs for $174.85 per ADS, representing a 20.5% ownership stake in the Company. Per the SPA, the cash proceeds shall be used as necessary to fund the Company's development obligations under the Amgen Collaboration Agreement. Pursuant to the SPA, Amgen also received the right to designate one member of the Company's board of directors, and Anthony Hooper joined the Company's board of directors as the Amgen designee in January 2020. Amgen relinquished its right to appoint a designated director to the Company's board of directors in January 2023. In determining the fair value of the common stock at closing, the Company considered the closing price of the common stock on the closing date of the transaction and included a lack of marketability discount because the shares are subject to certain restrictions. The fair value of the shares on the closing date was determined to be $132.74 per ADS, or $2,109,902 in the aggregate. The Company determined that the premium paid by Amgen on the share purchase represents a cost share liability due to the Company's co-development obligations. The fair value of the cost share liability on the closing date was determined to be $601,857 based on the Company's discounted estimated future cash flows related to the pipeline assets. The total cash proceeds of $2,779,241 were allocated based on the relative fair value method, with $2,162,407 recorded to equity and $616,834 recorded as a research and development cost share liability. The cost share liability is being amortized proportionately as the Company contributes cash and development services to its total co-development funding cap. Amounts recorded related to the Company's portion of the co-development funding on the pipeline assets for the three and nine months ended September 30, 2023 and 2022 were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 $ $ $ $ Research and development expense 16,321 25,462 39,595 72,251 Amortization of research and development cost share liability 15,900 24,806 38,569 70,389 Total amount due to Amgen for BeiGene's portion of the development funding 32,221 50,268 78,164 142,640 As of September 30, 2023 Remaining portion of development funding cap 517,544 As of September 30, 2023 and December 31, 2022, the research and development cost share liability recorded in the Company's balance sheet was as follows: As of September 30, December 31, 2023 2022 $ $ Research and development cost share liability, current portion 63,652 114,335 Research and development cost share liability, non-current portion 191,739 179,625 Total research and development cost share liability 255,391 293,960 The total reimbursement due to (from) Amgen under the commercial profit-sharing agreement for product sales is classified in the income statement for the three and nine months ended September 30, 2023 and 2022 as follows: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 $ $ $ $ Cost of sales - product 3,159 319 4,343 3,797 Research and development 431 (1,125) 1,743 (227) Selling, general and administrative (14,679) (13,854) (44,067) (40,496) Total (11,089) (14,660) (37,981) (36,926) The Company purchases commercial inventory from Amgen to distribute in China. Inventory purchases amounted to $18,746 and $58,023 during the three and nine months ended September 30, 2023, respectively, and $29,269 and $59,330 during the three and nine months ended September 30, 2022, respectively. Net amounts payable to Amgen was $45,918 and $54,064 as of September 30, 2023 and December 31, 2022, respectively. |
