BeiGene (BGNE) reports key differences in financial info under PRC GAAP vs. U.S. GAAP.

By Tamara Parker • Thursday, August 29 15:16 • Permanent Link

BeiGene, Ltd. recently filed its 2024 Interim Report for the six months ended June 30, 2024, containing financial information prepared in accordance with the China Accounting Standards for Business Enterprises – Basic Standard (PRC GAAP). The report highlights key differences between the financial information prepared in accordance with PRC GAAP and those prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for the reporting period.

One significant variation is in the recognition of share-based compensation expenses. Under U.S. GAAP, the company recognizes share-based compensation expenses using the straight-line method for all employee equity awards granted with graded vesting based on service conditions, while under PRC GAAP, the accelerated method is used for all employee equity awards granted with graded vesting.

Moreover, in terms of income taxes in the interim period, U.S. GAAP requires the use of one overall estimated annual effective tax rate to determine the interim period tax expense or benefit, whereas PRC GAAP mandates the determination of a separate estimated average annual effective income tax rate for each taxing jurisdiction and its application to the interim period pre-tax income of each jurisdiction.

Another area of difference is in lease accounting, where U.S. GAAP recognizes a lease liability based on the present value of the total remaining lease payments, while PRC GAAP requires lessees to present interest expenses on the lease liability and depreciation on the right-of-use assets separately in the statements of operations.

The report also presents financial information regarding the research and development (R&D) expenses allocated by key products, which was prepared in accordance with PRC GAAP. A comparison of the R&D expenses for the six months ended June 30, 2024, and June 30, 2023, under U.S. GAAP and PRC GAAP reveals the following:

Zanubrutinib: $62,897 in 2024 compared to $81,056 in 2023
Tislelizumab: $34,457 in 2024 compared to $46,979 in 2023
Pamiparib: $1,616 in 2024 compared to $4,378 in 2023
Ociperlimab (BGB-A1217): $31,627 in 2024 compared to $38,777 in 2023
Bcl-2 (BGB-11417): $38,612 in 2024 compared to $17,544 in 2023
OX40 (BGB-A445): $5,395 in 2024 compared to $8,852 in 2023
CDAC (BGB-16673): $5,731 in 2024 compared to $1,063 in 2023
CDK4 (BGB-43395): $1,715 in 2024 compared to $983 in 2023
Other R&D projects: $65,583 in 2024 compared to $58,587 in 2023
R&D collaboration projects: $82,494 in 2024 compared to $23,274 in 2023
Subtotal of external R&D expenses: $330,127 in 2024 compared to $281,493 in 2023
Internal R&D expenses: $584,977 in 2024 compared to $549,855 in 2023
Total R&D expenses: $915,104 in 2024 compared to $831,348 in 2023 The market has reacted to these announcements by moving the company's shares 0.6% to a price of $199.31. Check out the company's full 8-K submission here.

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