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Here's Why BeiGene Lost 11.6% in the First Half of 2019

By Maxx Chatsko - Jul 12, 2019 at 12:33PM

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China's biopharma gem drifted lower in the first half of 2019, but there's no identifiable explanation or cause for concern.

What happened

Shares of BeiGene ( BGNE -6.55% ) lost over 11% in the first six months of the year, according to data provided by S&P Global Market Intelligence. That was a sharp difference from the 17% increase in the S&P 500 in that time, although there doesn't appear to be any specific cause for alarm for shareholders. The stock has gained 315% in the last three years.

The Chinese-based biopharma has issued a slew of updates from its deep pipeline of drug candidates, announced new partnerships, completed an important biologics manufacturing facility in China, reported strong first-quarter 2019 results for its in-licensed portfolio of global blockbuster drug products, and expects several regulatory approvals and milestones to be achieved in the second half of the year. 

A finger pointing to a declining stock chart on a touchscreen.

Image source: Getty Images.

So what

BeiGene expects to remain busy in 2019. The lead drug candidate, BGB-3111, is expected to receive regulatory approvals in China for several cancers affecting white blood cells. The company expects to submit its first new drug application (NDA) for the drug candidate with the U.S. Food and Drug Administration (FDA) in late 2019 or early 2020. The FDA granted the drug candidate Breakthrough Therapy Designation in mantle cell lymphoma earlier this year.

Meanwhile, BGB-A317 recently initiated a phase 3 trial in China for a certain type of throat cancer, while BGB-290 should have results from a phase 2 trial in ovarian cancer later this year or by early 2020. 

BeiGene reported $1.64 billion in cash at the end of March and delivered $57.4 million in Q1 2019 revenue for Abraxane, Revlimid, and Vidaza, which marked a 147% increase from the year-ago period. Growth from the portfolio will help to offset operating losses from ambitious research and development activities over time, although Q1 2019 operating loss swelled to $173 million. That makes marketing approvals and the company's cash position all the more important for investors.

Now what

Despite the ho-hum stock performance in the first half of 2019, BeiGene sports a market valuation of $7.7 billion. The company may be able to reverse its sliding stock price if Chinese regulators grant marketing approvals as expected, although Wall Street will surely want to see how quickly sales can ramp up in the quarters immediately following approval. After all, access to China's massive population is a not-so-subtle factor in bullish arguments for the biopharma stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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