BeiGene Ltd

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands of U.S. Dollars (“$”), except for number of shares and per share data)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands of U.S. Dollars (“$”))

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands of U.S. Dollars (“$”), except for number of shares and per share data)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands of U.S. Dollars (“$”))

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Amounts in thousands of U.S. Dollars (“$”), except for number of shares)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of U.S. Dollar (“$”) and Renminbi (“RMB”), except for number of shares and per share data)

1. Description of Business, Basis of Presentation and Consolidation and Significant Accounting Policies

Description of business

BeiGene, Ltd. (the “Company”, “BeiGene”, “it”, “its”) is a global oncology company discovering and developing innovative treatments that are more accessible and affordable to cancer patients worldwide.

The Company currently hasthree approved medicines that were internally discovered and developed, including BRUKINSA® (zanubrutinib), a small molecule inhibitor of Bruton’s Tyrosine Kinase (“BTK”) for the treatment of various blood cancers; TEVIMBRA® (tislelizumab), an anti-PD-1 antibody immunotherapy for the treatment of various solid tumor and blood cancers; and PARTRUVIX® (pamiparib), a selective small molecule inhibitor of PARP1 and PARP2. The Company markets BRUKINSA in the United States (“U.S.”), the People’s Republic of China (“China” or the “PRC”), the European Union (“EU”), the United Kingdom (“UK”), Canada, Australia, and additional international markets; TEVIMBRA (tislelizumab) in the U.S., EU and China; and PARTRUVIX in China. By leveraging its strong commercial capabilities, the Company has in-licensed the rights to distribute additional approved medicines for the China market. Supported by its global clinical development and commercial capabilities, the Company has entered into collaborations with world-leading biopharmaceutical companies such as Amgen Inc. (“Amgen”) and Beijing Novartis Pharma Co., Ltd. (“Novartis”) to develop and commercialize innovative medicines.

The Company is committed to advancing best- and first-in-class clinical candidates internally or with like-minded partners to develop impactful and affordable medicines for patients across the globe. Recognizing the importance of clinical trial activities in its industry and the challenges associated with outsourcing to third-party contract research organizations (“CROs”), the Company has built a fully dedicated 3,000+ person clinical team that is largely CRO free, the majority of which are in the Americas, Europe, Australia, Japan and Korea.

Basis of presentation and consolidation

The accompanying condensed consolidated balance sheet as of June 30, 2024, the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2024 and 2023, the condensed consolidated statements of cash flows for the six months ended June 30, 2024 and 2023, and the condensed consolidated statements of shareholders’ equity for the three and six months ended June 30, 2024 and 2023, and the related footnote disclosures are unaudited. The accompanying unaudited interim condensed financial statements were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), including guidance with respect to interim financial information and in conformity with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for annual financial statements. These financial statements should be read in conjunction with the consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “Annual Report”).

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all normal recurring adjustments, necessary to present a fair statement of the results for the interim periods presented. Results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results expected for the full fiscal year or for any future annual or interim period.

The unaudited interim condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant intercompany transactions and balances between the Company and its subsidiaries are eliminated upon consolidation.

Use of estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Areas where management uses subjective judgment include, but are not limited to, estimating the useful lives of long-lived assets, estimating variable consideration in product sales and collaboration revenue arrangements, identifying separate accounting units and determining the standalone selling price of each performance obligation in the Company’s revenue arrangements, assessing the impairment of long-lived assets, valuation and recognition of share-based compensation expenses, realizability of deferred tax assets, estimating uncertain tax positions, valuation of inventory, estimating the allowance for credit losses, determining defined benefit pension plan obligations, measurement of right-of-use assets and lease liabilities and the fair value of financial instruments. Management bases the estimates on historical experience, known trends and various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities and reported amounts of revenues and expenses. Actual results could differ from these estimates.

Recent accounting pronouncements

New accounting standards which have not yet been adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This update requires disclosure of incremental segment information on an annual and interim basis. This update is effective for annual periods beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024. Early adoption is permitted. This guidance should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact on its financial statements of adopting this guidance.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This update requires that public entities on an annual basis, (1) in the rate reconciliation, disclose specific categories and provide additional information for reconciling items that meet a quantitative threshold; (2) about income taxes paid, disclose the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and by individual jurisdiction in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received); and (3) disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) disaggregated by federal, state, and foreign. This update is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. This guidance should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating the impact on its financial statements of adopting this guidance.

Significant accounting policies

For a more complete discussion of the Company’s significant accounting policies and other information, the unaudited interim condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report for the year ended December 31, 2023.

There have been no material changes to the Company’s significant accounting policies as of and for the six months ended June 30, 2024, as compared to the significant accounting policies described in the Annual Report.

2. Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value. Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:

Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability.

The Company considers an active market to be one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis, and considers an inactive market to be one in which there are infrequent or few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers.

The following tables present the Company’s financial assets and liabilities measured and recorded at fair value on a recurring basis using the above input categories as of June 30, 2024 and December 31, 2023:

The Company’s cash equivalents are highly liquid investments with original maturities of 3 months or less. The Company’s investments in available-for-sale debt securities include U.S. Treasury securities. The Company determines the fair value of cash equivalents and available-for-sale debt securities using a market approach based on quoted prices in active markets.

The Company’s equity securities carried at fair value consist of holdings in common stock and warrants to purchase additional shares of common stock of Leap Therapeutics, Inc. (“Leap”), a publicly-traded biotechnology company. The common stock investment is measured and carried at fair value and classified as a Level 1 investment. The warrants to purchase additional shares of common stock are measured using the Black-Scholes option-pricing valuation model and classified as a Level 2 investment. Refer to Note 4, Restricted Cash and Investments for details of the determination of the carrying amount of private equity investments without readily determinable fair values and equity method investments.

The Company holds convertible notes issued by private biotech companies. The Company elected the fair value option method of accounting for the convertible notes. Accordingly, the convertible notes are remeasured at fair value on a recurring basis using Level 3 inputs, with any changes in the fair value option recorded in other expense, net.

As of June 30, 2024 and December 31, 2023, the fair values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and short-term debt approximated their carrying values due to their short-term nature. Long-term bank loans approximate their fair value due to the fact that the related interest rates approximate the rates currently offered by financial institutions for similar debt instrument of comparable maturities.

3. 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. For detailed descriptions of each arrangement, see the Company’s Form 10-K for the year ended December 31, 2023 filed with the U.S. Securities and Exchange Commission on February 26, 2024.

Out-Licensing Arrangements

For the three and six months ended June 30, 2024, the Company’s collaboration revenue consisted primarily of revenue generated under the Novartis broad markets agreement. For the three and six months ended June 30, 2023, 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 six months ended June 30, 2024 and 2023:

Novartis

Tislelizumab Collaboration and License

In September 2023, the Company and Novartis agreed to mutually terminate the tislelizumab collaboration and license agreement. 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.

No research and development service collaboration revenue was recognized in connection with the tislelizumab collaboration and license agreement during the three and six months ended June 30, 2024 due to termination of the agreement in 2023. The following table summarizes revenue recognized related to the sale of tislelizumab clinical supply to Novartis for the three and six months ended June 30, 2024 and research and development service revenue recognized for the three and six months ended June 30, 2023:

(1) Represents revenue recognized on final shipment of tislelizumab clinical supply to Novartis in conjunction with the former collaboration.

Ociperlimab Option, Collaboration and License Agreement and China Broad Market Development Agreement

In July 2023, the Company and Novartis mutually agreed to terminate the ociperlimab option, collaboration and license agreement. 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 following table summarizes collaboration revenue recognized in connection with the China broad markets agreement for the three and six months ended June 30, 2024 and the terminated ociperlimab option, collaboration and license agreement for the three and six months ended June 30, 2023:

In-Licensing Arrangements - Commercial

Amgen

During the three and six months ended June 30, 2024 and 2023, the Company recorded the following amounts related to its collaboration arrangement with Amgen. For a detailed description of the arrangement and related rights and obligation, see the Company’s Form 10-K for the year ended December 31, 2023 filed on February 26, 2024.

Amounts recorded related to the Company’s portion of the co-development funding on the pipeline assets for the three and six months ended June 30, 2024 and 2023 were as follows:

As of June 30, 2024 and December 31, 2023, the research and development cost share liability recorded in the Company’s balance sheet was as follows:

The total reimbursement paid under the commercial profit-sharing agreement for product sales is classified in the income statement for the three and six months ended June 30, 2024 and 2023 as follows:

The Company purchases commercial inventory from Amgen to distribute in China. Inventory purchases amounted to $47,653 and $109,879 during the three and six months ended June 30, 2024, respectively, and $20,146 and $39,277 during the three and six months ended June 30, 2023, respectively. Net amounts payable to Amgen was $66,824 and $55,474 as of June 30, 2024 and December 31, 2023, respectively.

In-Licensing Arrangements - Development

The Company has in-licensed the rights to develop, manufacture and, if approved, commercialize multiple development stage drug candidates globally or in specific territories. These arrangements typically include non-refundable upfront payments, contingent obligations for potential development, regulatory and commercial performance milestone payments, cost-sharing arrangements, royalty payments, and profit sharing.

Upfront and milestone payments incurred under these arrangements for the three and six months ended June 30, 2024 and 2023 are set forth below. All upfront and development milestones were expensed to research and development expense.

4. Restricted Cash and Investments

Restricted Cash

The Company’s restricted cash primarily consists of RMB-denominated cash deposits held in designated bank accounts for collateral for letters of credit. The Company classifies restricted cash as current or non-current based on the term of the restriction. Restricted cash as of June 30, 2024 and December 31, 2023 was as follows:

In addition to the restricted cash balances above, the Company is required by the PRC securities law to use the proceeds from its offering on the STAR Market of the Shanghai Stock Exchange (the “STAR Offering”) in strict compliance with the planned uses as disclosed in the PRC prospectus as well as those disclosed in the Company’s proceeds management policy approved by the board of directors. As of June 30, 2024, the Company had cash remaining related to the STAR Offering proceeds of $856,722.

Investments in Equity Securities

The following table summarizes the Company’s investments in equity securities:

(1) Represents common stock and warrants to purchase additional shares of common stock of Leap Therapeutics, Inc. (“Leap”). The Company measures the investment in the common stock and warrants at fair value, with changes in fair value recorded to other expense, net.

(2) In the first quarter of 2024, the Company divested the net assets comprising substantially all of its Pi Health business with a carrying value of $38,063. The consideration received for the divestiture consisted of preferred stock in a newly formed entity, Pi Health, Inc., with a fair value of $40,798 and cash consideration of $1,000. The transaction resulted in a pre-tax gain of $3,735 recorded within other expense, net during the six months ended June 30, 2024. The Company will account for its investment prospectively as a private equity security without a readily determinable fair value and the divestiture is not treated as a discontinued operation in the Statement of Operations and therefore the historical results of operations of the Pi Health business will remain in the Company’s continuing operations.

The following table summarizes unrealized (losses) gains related to investments in equity securities recorded in other expense, net for the three and six months ended June 30, 2024 and 2023:

5. Inventories, Net

The Company’s inventories, net consisted of the following:

6. Property, Plant and Equipment, Net

Property, plant and equipment, net are recorded at cost and consisted of the following:

The Company has made a significant investment in its newly opened manufacturing and R&D center in Hopewell, New Jersey. As of June 30, 2024, the Company had land and construction in progress of $677,126 related to the Hopewell facility, the majority of which will be put into service in the second half of 2024.

In March 2024, the Company acquired a land use right and the facility currently being constructed on the land for $73,373. The Company plans to complete the construction of the facility and build a research and development center on the land. Based on the relative fair values of the land use right and construction in progress, $28,699 of the total purchase price was allocated to the land use right and $44,674 was allocated to the construction in progress. In May 2024, the Company acquired additional construction in progress in connection with the properties for $22,637. As of June 30, 2024, title of the land use right was being transitioned to the Company. As such, the purchase price allocated to the land use right was recorded as a long-term prepaid as of June 30, 2024 and will be transferred to operating lease right-of-use asset upon the closing of the transaction.

Depreciation expense was $23,754 and $47,864 for the three and six months ended June 30, 2024, respectively, and $21,307 and $40,332 for the three and six months ended June 30, 2023, respectively.

7. Intangible Assets

Intangible assets as of June 30, 2024 and December 31, 2023 are summarized as follows:

Developed products represent post-approval milestone payments under license and commercialization agreements. The Company is amortizing the developed products over the remainder of the respective product patent or the term of the commercialization agreements.

Amortization expense for developed products is included in cost of sales - product in the accompanying consolidated statements of operations. Amortization expense for other intangible assets is included in operating expenses in the accompanying consolidated statements of operations.

The weighted-average life for each finite-lived intangible assets is approximately 12 years. Amortization expense was as follows:

Estimated amortization expense for each of the five succeeding years and thereafter, as of June 30, 2024 is as follows:

8. Income Taxes

Income tax expense was $14,485 and $22,209 for the three and six months ended June 30, 2024, respectively, and $13,674 and $25,166 for the three and six months ended June 30, 2023, respectively. The income tax expense for the three and six months ended June 30, 2024 and 2023 was primarily attributable to current U.S. tax expense determined after other special tax deductions and research and development tax credits, current Switzerland tax expense based on year to date earnings, and current China tax expense due to certain non-deductible expenses.

On a quarterly basis, the Company evaluates the realizability of deferred tax assets by jurisdiction and assesses the need for a valuation allowance. In assessing the realizability of deferred tax assets, the Company considers historical profitability, evaluation of scheduled reversals of deferred tax liabilities, projected future taxable income and tax-planning strategies. Valuation allowances have been provided on deferred tax assets where, based on all available evidence, it was considered more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. After consideration of all positive and negative evidence, as of June 30, 2024, the Company will maintain a full valuation allowance against its net deferred tax assets.

As of June 30, 2024, the Company had gross unrecognized tax benefits of $15,804. The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly change within the next 12 months. The Company’s reserve for uncertain tax positions increased by $880 and $1,540 in the three and six months ended June 30, 2024 primarily due to U.S. federal and state tax credits and incentives.

9. Supplemental Balance Sheet Information

Prepaid expenses and other current assets consist of the following:

Other non-current assets consist of the following:

(1) Includes payment for acquired land use right in Shanghai, China that was in the process of being transitioned to the Company as of June 30, 2024 (See Note 6).

Accrued expenses and other payables consist of the following:

Other long-term liabilities consist of the following:

10. Debt

The following table summarizes the Company’s short-term and long-term debt obligations as of June 30, 2024 and December 31, 2023:

(1)The outstanding borrowings bear floating interest rates benchmarking RMB loan interest rates of financial institutions in the PRC. The loan interest rate was 4.2% as of June 30, 2024. The loan is secured by BeiGene Guangzhou Factory’s property ownership certificate. The Company repaid $6,886 (RMB 50,000) during the six months ended June 30, 2024.

(2)The outstanding borrowings bear floating interest rates benchmarking against prevailing interest rates of certain PRC financial institutions. The loan interest rate was 3.7% as of June 30, 2024. The loan is secured by Guangzhou Factory’s second land use right and certain fixed assets in the second phase of the Guangzhou manufacturing facility’s build out. The Company repaid $4,362 (RMB 31,429) during the six months ended June 30, 2024.

(3)The outstanding borrowings bear floating interest rates benchmarking RMB loan interest rates of financial institutions in the PRC. The loan interest rate was 3.9% as of June 30, 2024. The loan is secured by fixed assets placed into service upon completion of the third phase of the Guangzhou manufacturing facility’s build out. The Company repaid $2,772 (RMB 20,000) during the six months ended June 30, 2024.

(4)The outstanding borrowings bear floating interest rates benchmarking the secured overnight financing rate. The loan interest rate was 7.2% as of June 30, 2024. $300,000 of the borrowings matures on December 25, 2024, and $80,000 matures on January 27, 2025.

(5)The outstanding borrowings bear floating interest rates benchmarking RMB loan interest rates of financial institutions in the PRC. The loan interest rate was 2.6% as of June 30, 2024.

(6)The outstanding borrowings bear floating interest rates benchmarking Hong Kong interbank market rate for RMB. The loan interest rate was 5.7% as of June 30, 2024.

(7)$48,160 (RMB 350,000) of the outstanding borrowings matures on November 21, 2024 and March 19, 2025, respectively.

(8)During the two years ended December 31, 2023, the Company entered into short-term working capital loans with China Industrial Bank and China Merchants Bank to borrow up to RMB 875,000 in aggregate. The Company repaid $27,476 (RMB 199,000) during the six months ended June 30, 2024.

(9)In July 2022, the Company entered into a 10-year bank loan agreement with China CITIC Bank to borrow up to RMB 480,000 at a floating interest rate benchmarked against prevailing interest rates of certain PRC financial institutions. The Company drew down $9,053 (RMB 65,000) during the six months ended June 30, 2024. The weighted average loan interest rate was 3.9% as of June 30, 2024. The loan is secured by BeiGene Suzhou Co., Ltd.’s property ownership certificate of the small molecule manufacturing campus in Suzhou, China.

The Company has numerous financial and non-financial covenants on its debt obligations with various banks and other lenders. Some of these covenants include cross-default provisions that could require acceleration of repayment of loans in the event of default. However, the Company’s debt is primarily short-term in nature. Any acceleration would be a matter of months but may impact the Company’s ability to refinance debt obligations if an event of default occurs. As of June 30, 2024, the Company was in compliance with all covenants of its material debt agreements.

Interest Expense

Interest expense recognized for the three and six months ended June 30, 2024 was $13,233 and $25,637, respectively, among which, $8,312 and $17,521 was capitalized, respectively. Interest expense recognized for the three and six months ended June 30, 2023 was $4,891 and $9,465, respectively, among which, $428 and $772 was capitalized, respectively.

11. Product Revenue

The Company’s product revenue is primarily derived from the sale of its internally developed products BRUKINSA in the U.S., Europe, China, and other regions, and tislelizumab in China; XGEVA®, BLINCYTO®and KYPROLIS® in China under a license from Amgen; and POBEVCY®in China under a license from Bio-Thera.

The table below presents the Company’s net product sales for the three and six months ended June 30, 2024 and 2023.

The following table disaggregates net product sales by product for the three and six months ended June 30, 2024 and 2023:

The following table presents the roll-forward of accrued sales rebates and returns for the six months ended June 30, 2024 and 2023:

12. Loss Per Share

The following table reconciles the numerator and denominator in the computations of basic and diluted loss per share:

For the three and six months ended June 30, 2024 and 2023, the computation of basic loss per share using the two-class method was not applicable as the Company was in a net loss position, and the effects of all share options, restricted shares, restricted share units and ESPP shares were excluded from the calculation of diluted loss per share, as their effect would have been anti-dilutive.

13. Share-Based Compensation Expense

2016 Share Option and Incentive Plan

In January 2016, in connection with the Company’s initial public offering (“IPO”) on the Nasdaq Stock Market, the board of directors and shareholders of the Company approved the 2016 Share Option and Incentive Plan (the “2016 Plan”), which became effective in February 2016. The Company initially reserved 65,029,595 ordinary shares for the issuance of awards under the 2016 Plan, plus any shares available under the 2011 Option Plan (the “2011 Plan”), and not subject to any outstanding options as of the effective date of the 2016 Plan, along with underlying share awards under the 2011 Plan that are cancelled or forfeited without issuance of ordinary shares. In December 2018, the shareholders approved a second amended and restated 2016 Plan to increase the number of shares authorized for issuance by 38,553,159 ordinary shares, as well as amend the cap on annual compensation to independent directors and make other changes. In June 2020, the shareholders approved an amendment to the 2016 Plan to increase the number of shares authorized for issuance by 57,200,000 ordinary shares and to extend the term of the plan through April 13, 2030. The number of shares available for issuance under the 2016 Plan is subject to adjustment in the event of a share split, share dividend or other change in the Company’s capitalization.

In order to continue to provide incentive opportunities under the 2016 Plan, the Board of Directors and shareholders of the Company approved another amendment to the 2016 Plan (the “Amendment No. 2”), which became effective as of June 22, 2022, to increase the number of authorized shares available for issuance under the 2016 Plan by 66,300,000 ordinary shares. In June 2024, the shareholders of the Company approved a third amended and restated 2016 Plan (the “Amended 2016 Plan”) to comply with certain amendments of Chapter 17 of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the “HK Listing Rules”) and to increase the number of shares available for issuance thereunder by 92,820,000 ordinary shares.

As of June 30, 2024, ordinary shares cancelled or forfeited under the 2011 Plan that were carried over to the Amended 2016 Plan totaled 5,166,848. During the six months ended June 30, 2024, the Company granted options for 8,394,737 ordinary shares, restricted share units for 42,514,355 ordinary shares, and performance share units for 2,287,402 ordinary shares under the Amended 2016 Plan. As of June 30, 2024, options, restricted share units, and performance share units for ordinary shares outstanding under the Amended 2016 Plan totaled 67,378,462,87,422,244, and 2,287,402, respectively. As of June 30, 2024, share-based awards to acquire 82,059,496 ordinary shares were available for future grant under the Amended 2016 Plan.

2018 Employee Share Purchase Plan

In June 2018, the shareholders of the Company approved the 2018 Employee Share Purchase Plan (the “ESPP”). Initially,3,500,000 ordinary shares of the Company were reserved for issuance under the ESPP. In August 2018, in connection with the Company’s listing on the Hong Kong Stock Exchange, the board of directors approved an amended and restated ESPP to remove an “evergreen” share replenishment provision originally included in the plan and implemented other changes required by the HK Listing Rules. In December 2018, the shareholders of the Company approved a second amended and restated ESPP to increase the number of shares authorized for issuance by 3,855,315 ordinary shares to 7,355,315 ordinary shares. In June 2019, the board of directors adopted an amendment to revise the eligibility criteria for enrollment in the plan. In June 2021, the board of directors of the Company adopted the third amended and restated ESPP to include certain technical amendments under U.S. tax rules and to consolidate the changes in the prior amendment, effective on September 1, 2021. In June 2024, the shareholders approved a fourth amended and restated ESPP (the “Amended ESPP”) to comply with certain amendments of Chapter 17 of the HK Listing Rules and to increase the number of shares available for sale thereunder by 5,070,000 shares. The Amended ESPP allows eligible employees to purchase the Company’s ordinary shares (including in the form of ADSs) at the end of each offering period, which will generally besix months, at a 15% discount to the market price of the Company’s ADSs at the beginning or the end of each offering period, whichever is lower, using funds deducted from their payroll during the offering period. Eligible employees are able to authorize payroll deductions of up to 10% of their eligible earnings, subject to applicable limitations.

As of June 30, 2024,5,989,678 ordinary shares were available for future issuance under the Amended ESPP.

The following tables summarizes the shares issued under the ESPP:

1 The market price is the lower of the closing price on the Nasdaq Stock Market on the issuance date or the offering date, in accordance with the terms of the ESPP.

2 The purchase price is the price which was discounted from the applicable market price, in accordance with the terms of the ESPP.

Share-Based Compensation Expense

The following table summarizes total share-based compensation expense recognized for the three and six months ended June 30, 2024 and 2023:

14. Accumulated Other Comprehensive Loss

The movement of accumulated other comprehensive loss was as follows:

15. Shareholders’ Equity

BMS Settlement

On August 1, 2023, the Company entered into a Settlement and Termination Agreement (the “Settlement Agreement”) with BMS-Celgene and certain of its affiliates relating to the termination of the parties’ ongoing contractual relationships, the previously-disclosed ongoing arbitration proceeding concerning ABRAXANE® (the “Arbitration”), the License and Supply Agreement (“LSA”), the Amended and Restated Quality Agreement (the “QA”), and the Share Subscription Agreement (the “SSA”), entered into by the parties in 2017 and 2018. Pursuant to the Settlement Agreement, the parties agreed to mutually dismiss the Arbitration and BMS-Celgene and its affiliates agreed to transfer 23,273,108 ordinary shares of the Company originally purchased in 2017, in each case subject to and in accordance with the terms and conditions of the Settlement Agreement. In consideration for the shares being returned, the Company agreed to drop its claims pursuant to the Settlement Agreement. Furthermore, the parties agreed to terminate the LSA and QA on December 31, 2023, subject to the Company’s right to continue selling all inventory of REVLIMID and VIDAZA until sold out or December 31, 2024, whichever is earlier. The Settlement Agreement provides for a settlement and release by each party of claims arising from or relating to the Arbitration, the LSA, the QA and the SSA, as well as other disputes and potential disputes between the parties, in each case subject to and in accordance with the terms and conditions of the Agreement. The receipt of the shares occurred on August 15, 2023. The Company recorded a noncash gain upon receipt of $362,917, which represents the fair value on the day the shares were received. The gain was recorded within other expense, net in the consolidated statements of operations. The shares were constructively retired as of December 31, 2023. The Company recorded the amount of the cancelled shares in excess of par to additional paid-in capital.

16. Restricted Net Assets

The Company’s ability to pay dividends may depend on the Company receiving distributions of funds from its PRC subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by the Company’s PRC subsidiaries only out of the subsidiary’s retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the condensed consolidated financial statements prepared in accordance with GAAP differ from those reflected in the statutory financial statements of the Company’s PRC subsidiaries.

In accordance with the company law of the PRC, a domestic enterprise is required to provide statutory reserves of at least 10% of its annual after-tax profit until such reserve has reached 50% of its respective registered capital based on the enterprise’s PRC statutory accounts. A domestic enterprise is also required to provide discretionary surplus reserve, at the discretion of the board of directors, from the profits determined in accordance with the enterprise’s PRC statutory accounts. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. The Company’s PRC subsidiaries were established as domestic enterprises and therefore are subject to the above-mentioned restrictions on distributable profits.

As a result of these PRC laws and regulations, including the requirement to make annual appropriations of at least 10% of after-tax income and set aside as general reserve fund prior to payment of dividends, the Company’s PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to the Company.

Foreign exchange and other regulations in the PRC may further restrict the Company’s PRC subsidiaries from transferring funds to the Company in the form of dividends, loans and advances. As of June 30, 2024 and December 31, 2023, the net cash of the Company’s PRC subsidiaries amounted to $1,378,872 and $1,837,790, respectively.

17. Commitments and Contingencies

Purchase Commitments

As of June 30, 2024, the Company had non-cancellable purchase commitments amounting to $120,366, of which $28,822 related to minimum purchase requirements for supply purchased from contract manufacturing organizations and $91,544 related to binding purchase obligations of inventory from Amgen. The Company does not have any minimum purchase requirements for inventory from Amgen.

Capital Commitments

The Company had capital commitments amounting to $62,576 for the acquisition of property, plant and equipment as of June 30, 2024, related to various facilities across the globe, including the manufacturing and clinical R&D campus in Hopewell, New Jersey.

Co-Development Funding Commitment

Under the Amgen Collaboration Agreement, the Company is responsible for co-funding global development costs for the Amgen oncology pipeline assets up to a total cap of $1,250,000. The Company is funding its portion of the co-development costs by contributing cash and development services. As of June 30, 2024, the Company’s remaining co-development funding commitment was $412,647.

Funding Commitment

The Company had committed capital related totwo equity-method investments in the amount of $15,054. As of June 30, 2024, the remaining capital commitment was $8,154 and is expected to be paid from time to time over the investment period.

18. Segment and Geographic Information

The Company operates inone segment: pharmaceutical products. Its chief operating decision maker is the Chief Executive Officer, who makes operating decisions, assesses performance and allocates resources on a consolidated basis.

The Company’s long-lived assets are primarily located in the U.S. and the PRC.

Net product revenues by geographic area are based upon the location of the customer, and net collaboration revenue is recorded in the jurisdiction in which the related income is expected to be sourced from.

Total revenues by geographic area are presented as follows: