BeiGene (BGNE -1.20%), is a Chinese biopharmaceutical company with offices in Cambridge, Massachusetts; Basel, Switzerland; and Beijing. It focuses on unique therapies to treat cancer, specializing in B-cell malignancies and solid tumors in lung and gastrointestinal cancers.

Amid delisting concerns, a lot of Chinese stocks have fallen this year. BeiGene is one example with its shares down more than 36% so far in 2022. Lately, however, the company's stock has risen thanks to two potential blockbuster drugs it has in late-stage trials.

About those delisting concerns

Several companies in China face losing their positions on U.S. stock exchanges for refusing to open their books to U.S. auditors, which was disallowed by Chinese law. The need for better auditing of Chinese companies was made clear in 2020 when an accounting scandal broke at Luckin Coffee, and the U.S. Securities and Exchange Commission charged the China-based company with defrauding investors by fabricating revenue and other figures to show rapid growth.

In August, the two countries reached a preliminary deal that should allow American officials to audit Chinese businesses that trade on U.S. exchanges. The issue is a matter of trust, and that's in short supply between the two nations right now.

BeiGene has taken a big step on its own to lower the risk of being delisted over auditing concerns. In April, it moved from its Chinese Ernst & Young auditor to a Boston-based Ernst & Young auditor to comply with U.S. market requirements.

Delisting is a serious concern for BeiGene. Although it's listed on exchanges in Shanghai and Hong Kong, being delisted from the Nasdaq Stock Market would reduce the biotech's ability to raise capital for operations.

A promising pipeline

BeiGene has nearly 100 programs in its pipeline, including more than 50 pre-clinical programs, more than 30 at the clinical stage, and more than 10 at the commercial stage.

Its first marketed therapy is Brukinsa (zanubrutinib), which was first approved in 2019 by the U.S. Food and Drug Administration (FDA) to treat mantle cell lymphoma in adults who had received a prior therapy for the disease. The drug is in the BTK inhibitor class. It works by inhibiting a protein, Bruton's tyrosine kinase, that is present in various B-cell tumors.

The oncology drug has since racked up label additions and approvals in more than 55 countries. In the United States, it is approved to treat mantle cell lymphoma, Waldenström's macroglobulinemia (a type of bone marrow cancer), and marginal zone lymphoma -- and it's expected to add indications.

In the most recent study for Brukinsa, a phase 3 trial found it to be more effective than Imbruvica (ibrutinib), a cancer workhorse marketed by AbbVie and Johnson & Johnson to treat chronic lymphocytic leukemia. Imbruvica brought in $5.4 billion in sales last year for AbbVie and $4.4 billion for Johnson & Johnson.

BeiGene's other potential blockbuster therapy is tiselizumab, an anti-PD-1 monoclonal antibody that aids the body's response to certain solid-tumor and blood cancers. It has been approved in China for nine different cancer indications, but is awaiting approval from the FDA in the U.S. It's in several late-stage trials, both as a monotherapy and as a combination therapy.

Its most recent win was in a phase 3 trial to treat hepatocellular cancer, the most common form of liver cancer. In that trial -- the eighth positive phase 3 trial for the therapy across several different cancer types -- it showed superior efficacy versus Nexavar (sorafenib), marketed by Bayer as a first-line treatment for hepatocellular cancer, the sixth most common type of cancer worldwide.

BeiGene also just entered into a strategic partnership with Ontada, a subsidiary of McKesson, which uses real-world evidence to help develop oncology therapies. This move is intended to help BeiGene with its own drug development, using Ontada's large base of patient data.

Growing revenue but no profit so far

In the second quarter, BeiGene reported revenue of $341.6 million, up 127% year over year. However, the company lost $571.4 million compared to a loss of $480.3 million in the same period of 2021.

While the losses are a big concern, the potential for Brukinsa (which is just starting to take off in the U.S.) and tiselizumab could definitely flip the script. Even with limited indications, Brukinsa did $128.7 million in second-quarter sales, up 203% year over year.

Tiselizumab did $104.9 million in second-quarter sales, and that was just in China. More approvals will undoubtedly open the way for additional revenue.

A solid, long-term selection

BeiGene's shares have climbed more than 20% the past month, but the biotech stock is still underappreciated by investors given the company's potential.

The worry about delisting has lessened, but the fragile state of U.S. relations with China poses a risk for any Chinese stock. The company's change of auditors certainly lowers the likelihood of delisting in the short-term. However, U.S.-Chinese tensions are a real concern for long-term investors. I see great potential for the stock, but investors need to consider the looming risk as well.

However, the company's finances should improve as its lead drugs rack up more indications, and if tiselizumab is approved by the FDA. Beyond that, the company has a huge pipeline and the ability, with its manufacturing in China, to keep costs down as it grows.