BeOne Medicines - Earnings Call - Q1 2025
May 7, 2025
Transcript
Aaron Rosenberg (CFO)
Good day, everyone. Welcome to BeOne Medicines Caspar Coppetti's Q1 2025 earnings call webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. At this time, I would like to turn the call over to the company.
Daniel Maller (Head of Investor Relations)
Hello and welcome. Thanks for joining us today. I'm Dan Maller, Head of Investor Relations at BeOne Medicines. Before we begin, please note that you can find additional materials, including a replay of today's webcast and presentation, on the Investor Relations section of our website, ir.beonemedicines.com. I would like to remind all participants that during this call, we may make forward-looking statements regarding, among other things, the company's future prospects and business strategy. Actual results may differ materially from those indicated in the forward-looking statements as a result of various factors, including those risks discussed in our most recent periodic report filed with the SEC. Please also carefully review the forward-looking statements displayed in the slide deck that accompanies this presentation.
Reconciliations between GAAP and non-GAAP financial measures discussed on this call are provided in the appendix to our presentation, which is posted to our Investor Relations website along with our earnings release. All information in this presentation is as of the date of the presentation, and we undertake no duty to update such information unless required by law. Now, turning to today's call, as outlined on slide three, John Oyler, our Co-Founder, Chairman, and CEO, will provide a business update. Xiaobin Wu, our President and Chief Operating Officer, will provide an update on our global commercial progress. Matt Shaulis, our General Manager of North America, will provide an update on the U.S. commercial performance of Brukinsa. Lai Wang, our Global Head of R&D, will discuss our R&D and pipeline progress. Aaron Rosenberg, our CFO, will review the first-quarter financial results and financial guidance. We will then open the call to your questions. I'll pass the call over to John. John?
John Oyler (CEO)
Thank you, Dan, and welcome everyone to our Q1 earnings call. Last quarter's call, I spoke about three priorities for 2025. The first was solidifying and deepening our hematology franchise leadership. The second was advancing our prolific pipeline of internally developed assets. The third was driving superior financial performance. I'm excited to share with you how we delivered on these priorities through the first quarter. BeOne is the only company with an internally discovered and wholly owned portfolio of potentially best-in-class molecules across all three foundational mechanisms in CLL. We believe our relentless focus on serial innovation in CLL uniquely positions us to address the full scope of unmet patient need across all lines of therapy in subpopulations. Brukinsa is the best-in-class BTK inhibitor that serves as the backbone of our franchise.
In the U.S., Brukinsa is the leader in new patient starts for both frontline and relapse refractory CLL and across all of its approved indications. Brukinsa possesses the broadest label of any BTKI. For the first time, Brukinsa has surpassed both ibrutinib and acalabrutinib in overall U.S. quarterly revenue and continues to outpace its BTKI competitors in year-over-year growth. This leadership follows the science and the data and reflects Brukinsa's clear clinical differentiation. Brukinsa is the only BTKI to exhibit complete and sustained inhibition, and it is the only BTKI to demonstrate superior efficacy and safety in a head-to-head trial against ibrutinib. Anchored by its best-in-class clinical data, Brukinsa has now treated over 200,000 patients globally. Sonro, our potentially best-in-class BCL2 inhibitor, continues to advance rapidly through late-stage clinical development.
We've completed enrollment in our phase III CELESTIAL trial of Sonrotoclax plus zanubrutinib in treatment-naive CLL, and we've progressed two additional phase III trials, as Lai will review. Importantly, we've reached our first registrational milestone for Sonrotoclax, with a regulatory filing submitted in China, and we plan to submit our first global filing in the second half of this year. These filings mark the beginning of Sonrotoclax's evolution in a potential game-changing therapy across multiple B-cell malignancies. We're the leading next generation of innovation in CLL with our first-in-class BTK CDAC program, which has now dosed over 600 patients and continues to progress rapidly. We've reached an agreement with the FDA on a phase III dose, and we've already initiated our first phase III trial with plans to initiate another phase III trial against pirtobrutinib in the second half of the year.
We continue to expect data from our potentially pivotal phase II trial next year and, pending positive results, intend to complete global regulatory submissions. Outside of HEME, we continue to advance one of the broadest solid tumor pipelines in the industry. Our CDK4 inhibitor continues to advance rapidly, with over 300 patients enrolled, including over 100 in just the past two months. Our B7-H4 program, a key area of enthusiasm, has completed seven monotherapy cohorts with promising signs of clinical activity. We enrolled the first patients in both of our Clotting VI CD3 bispecific program for gynecological and other solid tumors and our second-generation BCL2 for metastatic breast cancer. Our PRMT5 inhibitor also entered the clinic in early Q1, marking another milestone in our targeted lung cancer therapy portfolio.
This year, we anticipate more than 10 proof-of-concept readouts across our solid tumor pipeline, each representing a potential near-term value inflection point. These assets feature differentiated, potentially first and/or best-in-class profiles and have the potential to deliver transformational impact for both patients and shareholders. Our internal clinical development team of 3,700+ continues to demonstrate time, cost, and quality advantages that are driving higher ROI for each R&D dollar spent. We are routinely seeing proof of these advantages and programs in competitive settings like our BTK, CDAC, our BCL2, and our CDK4 inhibitor, just to name a few. Moving to financial performance, we achieved a major milestone in Q1: GAAP profitability for the first time. Aaron will provide more detail later in the call, but these strong quarterly results pace us on solid footing to deliver on our full-year financial guidance.
I'd like to close by sharing a few reflections on the external landscape as our industry continues to navigate in an increasingly challenging and complex global environment. I believe our unique model positions us exceptionally well to succeed in spite of today's challenges. Over the past 15 years, we've built an organization from scratch that is technology-enabled, time and cost-advantaged, and now vertically integrated. It was built not only to survive but to thrive in a world with pricing pressure. In today's macro environment, a global manufacturing footprint and regional resilient supply chain are essential to ensuring product availability and operational continuity. This has been a foundational principle of our operations across the U.S., Europe, China, and other key markets. We've realized this vision with action, including most recently an $800 million investment in our Hopewell, New Jersey manufacturing facility, which opened in 2024.
With the landscape around trade policies and tariffs will continue to evolve, our commitment to regional manufacturing helps us mitigate potential risks and maintain reliable supply. Finally, I'm pleased to announce that the shareholders have approved our redomiciling to Switzerland from the Cayman Islands, as well as our name change to BeOne Medicines, reflecting our continued evolution into a globally diversified oncology leader and our deepening ties to the world-class Swiss biotech ecosystem. I'll pass it over to Xiaobin to provide a global commercial update.
Xiaobin Wu (President and COO)
Thank you, John. Our global development strategy and broad trial design have resulted in the broadest label and a widespread coverage for Brukinsa and Tevimbra. We have achieved a significant global reach in a short period of time and have now treated over 1.7 million cancer patients with our therapies. These foundational assets are well-positioned to deliver meaningful benefit to patients worldwide. We have built the commercial infrastructure to successfully launch and scale across more than 80 markets. This strong foundation also positions us to fully leverage our global network to support internal clinical development and drive the successful commercialization of our pipeline. In the first quarter, global sales were $1.1 billion, growing 49% from Q1 2024. The U.S., our largest market, grew 60% on strong Brukinsa demand growth, as Matt will discuss later. In addition, Tevimbra was approved for frontline ESCC in the U.S. during the quarter.
China sales grew by 26% compared to the prior year period, with Tevimbra and Brukinsa sustaining their market leadership positions. Tevimbra expanded NIDA coverage in frontline gastric and frontline small cell lung cancer, and imaging collaboration products also continued their strong momentum in the first quarter. Europe experienced a 75% growth as we continue our launch for Brukinsa and Tevimbra. We received reimbursement for Tevimbra in Spain, and early this week, Europe/EU approval for Tevimbra in frontline extensive stage small cell lung cancer. We're encouraged by the growth perspective of the region for 2025. Rest of the world sales totaled $32 million in the first quarter, growing 146% compared to the prior year. This was primarily driven by expansion and new launches in ASHIPEC, LATAM, MENA regions, including notable progress in South Korea, Japan, Mexico, and Brazil.
While we're still in the early stage of commercialization in our rest of the world market, we expect them to be a strong, consistent contributor of future revenue growth and help us realize our mission to reach many more patients with improved access and affordability. I will now pass the presentation over to Matt to provide the U.S. commercial update.
Matt Shaulis (General Manager of North America)
Thanks, Dr. Wu. Moving to Brukinsa's U.S. performance. Q1 U.S. Brukinsa sales reached $563 million, representing growth of 60% versus the prior year and establishing Brukinsa as the market leader by revenue in the large and growing U.S. BTK market, which grew 11% year-over-year. This is an important milestone that was reached just two years after our CLL launch. While this strong performance underscores Brukinsa's continued momentum, the Q1 revenue reflects the typical seasonality seen across all products in the BTK class, as previously discussed on the Q4 update. Brukinsa's Q1 net revenue and net revenue growth was driven primarily by strong underlying demand, as you can see on this slide. Year-over-year demand growth was 54% when compared to the first quarter of 2024 and 6% sequentially when compared to the fourth quarter.
This steady trend of demand growth reflects our leadership in terms of new patient starts, where we are the lead across all lines of therapy and indications, including both frontline and relapsed refractory CLL. This momentum, combined with the growing base of existing patients, underscores a solid foundation for ongoing growth. We're confident in the underlying business fundamentals and well-positioned for strong performance in the second quarter and the rest of 2025. Significant growth opportunities remain within the frontline CLL market, where treatment success requires deep responses, impressive and sustained PFS, and a strong safety profile, all areas in which Brukinsa has consistently demonstrated proven advantages. Nearly half of all newly diagnosed CLL patients have one or more high-risk features, including unmutated IgHV, deletion 11q, and TP53, deletion 17p, and even more have high-risk comorbidities such as AFib.
In this population, other BTK inhibitors and current fixed duration treatments are associated with poorer outcomes. In the ALPINE trial, Brukinsa became the only BTK to demonstrate superiority over ibrutinib in a head-to-head trial. In the high-risk TP53, deletion 17p population subset of ALPINE, Brukinsa's PFS at 42.5 months median follow-up was 59% versus ibrutinib's PFS of 32%, an impressive 27% higher. Brukinsa is the best-in-class option for all patients, regardless of mutation or significant comorbidities. Given the challenges with current fixed duration regimens and Brukinsa's best-in-class profile, we see additional opportunity for Brukinsa monotherapy to continue to take market share from these treatment options. Beyond expansion of BTK monotherapy, we believe that Brukinsa plus sonrotoclax has the opportunity to deliver on the promise of fixed duration and expand its role in the treatment paradigm.
Similarly, our BTK-CDAC has the potential to surpass the other existing treatment options and fulfill the unmet needs of patients with CLL. On that note, now over to you, Lai.
Lai Wang (Global Head of Research and Development)
Thanks, Matt. I would like to take a few minutes to highlight key aspects of our portfolio, starting with our hematology franchise. Our CLL franchise is evolving quickly. We're relentlessly pursuing the best-in-class treatment options from frontline to late lines, including both continuous and fixed duration treatments. We believe that to advance the standard care, the fundamental question of whether a potential medicine is better than the existing best-in-treatment options must be answered. The clinical trial needs to be designed accordingly. You can see this in our past trials, including ALPINE and our current phase III trials for sonrotoclax and our BTK-CDAC, which I will review today. Brukinsa was designed from inception to provide 24/7 inhibition of BTK in all disease-relevant compartments and to address efficacy challenges of ibrutinib. This led to a phase III victory over ibrutinib in a direct comparison in relapsed refractory CLL.
Furthermore, its enhanced selectivity has resulted in improved tolerability in clinical settings. Similarly, sonrotoclax exhibits higher potency and selectivity compared to another class, offering potential advantages in efficacy and safety as supported by clinical data. With a short half-life and no drug accumulation, sonrotoclax may allow for more patient-friendly TLS monitoring, which would serve as a key differentiator for finance cracks. We believe that the vast majority of CLL patients will require only one single hospital visit for sonrotoclax ramp-up after Sanyu LIDI. Our BTK-CDAC is the most advanced BTK degrader to contain the clinic, with preclinical properties indicating safety and efficacy benefits for patients. Its novel mechanism of action offers distinct advantages over traditional inhibitors by overcoming and preventing emerging resistant mutations and disrupting scaffold functions. Next, I would like to discuss the fixed duration treatment landscape and its significance in enhancing our leadership in CLL.
To establish a compelling fixed duration therapy, it must achieve higher efficacy and safety standards. In terms of efficacy, it must deliver extended PFS, allowing patients to experience a general drug holiday. This requires deep responses, enabling doctors to feel confident that the risk of relapse is minimum when discontinuing therapy, which is measured by undetectable MRD. Furthermore, it should not present any additional clinical meaning for safety concerns during the treatment period. Our potential best-in-class fixed duration combination of Brukinsa with sonrotoclax has demonstrated deep MRD rates, impressive and sustained PFS, and acceptable safety profiles. We're progressing rapidly with the development of this fixed duration combination therapy. In line with our standard practice, the CELESTIAL trial was designed to demonstrate the PFS superiority of ACE plus Brukinsa over the current best-standard care in fixed duration treatment VO in treatment naive CLL.
This trial completed enrollment in February within just 14 months, marking a significant milestone for the sonrotoclax program and showcasing strong interest from patients and clinicians and our clinical execution capabilities. In addition to treatment naive CLL, we're also advancing the development of sonrotoclax for relapsed refractory CLL patients through our CELESTIAL phase III study, which combines sonrotoclax with CD20. This is a true head-to-head trial designed to demonstrate the superiority of sonrotoclax over venetoclax. For mantle cell lymphoma, a phase III trial has been initiated to evaluate the treatment effect of two years of sonrotoclax combined with continuous zanubrutinib in relapsed refractory setting.
This trial will also serve as a confirmatory trial for CELESTIAL 202, a single-arm phase II study of sonrotoclax monotherapy in relapsed refractory mantle cell lymphoma post-BTK inhibitor, which we plan to file globally for accelerated approval in the second half of this year if the results are positive. Moving on to our BTK-CDAC, we presented compelling early efficacy and safety data in a heavily pretreated population that, as you can see here on this slide, the evolution of our data, together with strong KOL feedback, gave us confidence to initiate a head-to-head trial phase III study against pirtobrutinib. The detail of the trial design is shown in this slide. The first patient is expected to be enrolled in the second half of this year. We have met with FDA and obtained agreement on our dose for phase III in CLL.
I'm very excited to announce that our first phase III study for the BTK-CDAC, Cadence Serial 2 versus physician's choice in relapsed refractory CLL patients, had the first patient in this week. We have also started a multi-cohort platform study to combine BTK-CDAC with internal and external assets like sonrotoclax, zanubrutinib, and the CD20 bispecifics. These combinations have the potential to expand the treatment options for patients with BCL2 malignancies. Our solid tumor portfolio has evolved over the last two years with 19 new molecules in the clinic across three major tumor types: lung, breast, gynecological cancers, and GI cancers. We have refined our portfolio to focus on targeted therapy utilizing various modalities, including ADCs, degraders, and the multispecifics, to deliver highly efficacious treatments for our patients. Our commitment to industry leading speed is evidenced by our fast-to-pop strategy, which continues to drive the rapid development of these molecules.
I'd like to highlight several key pipeline value inflection points. During the presentation, I addressed some of our significant late-stage milestones. In addition, we had a successful phase II readout for sonrotoclax in relapsed refractory CLL and achieved the expedited NDA submission in China, completing the process in an impressive 11 weeks from the data cutoff to the NDA acceptance. We anticipate our global filing in relapsed refractory mantle cell lymphoma in the second half of this year. Additional phase III pivotal trials for both sonrotoclax and our BTK-CDAC will be initiated later this year. Turning to our early-stage pipeline, we have several POC catalysts expected throughout the year. We'll provide more details regarding our innovative scientific advancements and the portfolio progression during our R&D Day on June 26th. With that, I'd like to pass it over to Aaron.
Aaron Rosenberg (CFO)
Thanks, Lai. We had a strong start to the year with first quarter 2025 revenue of $1.1 billion compared to $752 million in Q1 2024. Revenue growth was 49%, with meaningful contributions across all of our key brands. These top-line results are consistent with our communicated guidance expectations and set us up well for the balance of 2025. This quarter demonstrates our dual mandate in action, as we are driving significant top-line growth with material operating leverage to support long-term business sustainability. As a result of this focus, we delivered positive GAAP operating profit and net income for the quarter. You can see the year-over-year improvement in GAAP and non-GAAP operating profit measures of $272 million and $286 million, respectively. As a result of our value-focused investment philosophy, we achieved a third consecutive quarter of positive operating cash flow.
This is notable as the first quarter has a seasonally high use of working capital. When looking at our operating cash generation performance compared to Q1 2024, we improved by $353 million. Sales of Brukinsa totaled $792 million in Q1, representing 62% growth as compared to Q1 2024. Growth continues to be primarily driven by demand from our leading new patient share in the U.S., coupled with year-over-year increased volume following a full year of use from patients who began treatment in 2024. This is layered on top of the stable base of patients who remain on therapy from prior years, given Brukinsa's long duration of therapy. Growth contributions were seen across all geographies, including Europe, China, and the rest of world markets. Tevimbra sales of $171 million resulted in 18% revenue growth when compared to Q1 2024, driven primarily by our leading market position in China.
We're in the early stages of our commercial expansion in other markets. Amgen in-licensed products were key contributors to performance, coming in at $114 million and grew 58% year-over-year. Finally, we are also seeing year-over-year growth contribution from collaboration revenue, given our global royalties for Imdelltra. Now moving to the GAAP income statement. Product gross margin increased nearly two percentage points to 85% this quarter compared to 83% in Q1 2024. This was largely due to favorable mix and cost of sales productivity for both Tevimbra and Brukinsa. Operating expenses totaled $941 million, representing growth of 6% as compared to Q1 2024. Growth was seen in both SG&A and R&D as we continue to invest with discipline to support our commercial businesses and our robust pipeline. Note that Q1 2024 included $35 million of business development expenses, which should be considered when interpreting the period-over-period change.
Taken together, our focus on top-line growth with meaningful operating leverage led to our achievement of GAAP profitability for the quarter. Our non-GAAP P&L includes adjustments for typical items, with a full reconciliation provided in the appendix. Focusing on the bottom line, non-GAAP net income totaled $136 million in Q1 2025, an increase of $282 million versus prior year. This equates to non-GAAP earnings of $1.22 per ADS. Switching to guidance, our full year 2025 guidance remains unchanged. We project revenue to be between $4.9 billion-$5.3 billion. Movement in exchange rates, while volatile at the start of 2025, have largely offset, and current rates are contemplated in this affirmed range. Our GAAP gross margin percentage is projected to be in the mid-80% range, benefiting from mix and production efficiencies. Operating expenses on a GAAP basis are anticipated to be between $4.1 billion-$4.4 billion.
Non-GAAP operating expenses are expected to track with our GAAP guidance, with reconciling items remaining unchanged from existing practice. As we have demonstrated in the first quarter of 2025, we are committed to achieving full-year GAAP operating income break-even and generating positive cash flow from operations for the full year. Recognizing uncertainty remains, our guidance includes our estimates of the impacts of announced tariffs to our 2025 results. We do not expect a tariff impact associated with our partnered products. Our exposure has been mitigated by our significant investments and partnerships to build a truly global production network, including our commitment to manufacturing in the U.S. for U.S. supply of Brukinsa, Tevimbra, and the commercialization of our pipeline assets. This includes our 42-acre Hopewell, New Jersey campus, which is currently being qualified for biologics production and could be expanded to other modalities as needed to support our advancing pipeline.
We will continue to take action to build supply chain resiliency to ensure patients around the world have uninterrupted access to our critically important lifesaving medicines. With that, I will turn the call back to Dan. Thanks, Aaron. We are now ready for Q&A. I ask participants to limit themselves to one or two questions to ensure we have time to hear from as many attendees as possible. Operator, we are ready for the first question.
Operator (participant)
Thank you. If you would like to ask a question, please use the raised hand icon, which can be found at the bottom of the webinar application. When you are called on, please unmute your line and ask your question. We will now take a minute for the queue to assemble. Our first question comes from Andrew Berens at Leerink Partners. Please unmute your line and ask your question.
Andrew Berens (Analyst)
Hi, thanks, and congrats on all the progress. I've got a question on the CDK4 program. Can you just remind us how 43395 differs from Pfizer's Ibrance? I know it's early, but where do you see the CDK4 agents being used in HR-positive breast cancer in terms of lines of therapy and potential combination partners? Maybe another question on Brukinsa. Just wondering if you have any appetite to develop the drug beyond oncology. Do you think there's a potential role in autoimmune diseases, and is this something that you would consider doing yourself or with a partner potentially?
Xiaobin Wu (President and COO)
Yeah, sensible question. For the CDK4, our molecule was designed benchmarking against Pfizer's palbociclib to be more potent as well as more selective. Right now, we're still in the process of dose escalation. We're actually moving this program very aggressively. Even in just the last one month or so, we have enrolled, the last couple of months, we have enrolled 100 patients. We still plan to move this forward into the phase III trials aggressively. The current thinking around this molecule is to initiate a phase III trial in the second-line settings in combination with Cert. That's the plan. In addition to that, we're also contemplating the play in the earlier lines.
As for your question related to the Brukinsa outside of oncology, we have a phase III ongoing, which is in membranous nephropathy, which is the fourth point you mentioned about in the II indication.
Andrew Berens (Analyst)
Okay, thank you. Do you have an oral Cert in your portfolio that has been disclosed?
Xiaobin Wu (President and COO)
We do not have an oral cert.
Andrew Berens (Analyst)
Okay, thank you.
Operator (participant)
Our next question comes from Yaron Werber at Cowen & Company. Please unmute your line and ask your question.
Yaron Werber (Analyst)
Great. Thanks so much, and congrats on a lot of pipeline progress. Maybe from Matt or Aaron, can you give us a sense of Brukinsa in Q1? Any sense how much was the weakness in the class related to the Part D redesign? For Tevimbra, is there any way you can split out sales in the U.S., Europe, sort of rest of the world, and China? Thank you.
Matt Shaulis (General Manager of North America)
Do you want to go ahead and start?
Aaron Rosenberg (CFO)
Sure, sure. This is Aaron. Thanks for the question, Yarren. I mean, I would start, you know, without speaking to the broader industry. Obviously, Part D redesign has some impact as it relates to pricing. You know, we've talked about a relatively stable net pricing environment for our company. You know, this is coming from a couple of factors. Of course, with the redesign, you know, as we look at our business, we do see some Q1 favorability driven by the redesign, in part as a result of the elimination of the manufacturer liability for the coverage gap. As you know, that would largely be experienced earlier in the year as patients work through the donut hole, and then obviously manufacturers had the liability associated with that coverage gap.
You know, for us, you know, with the redesign, we do benefit, as we've spoken about, from the specified small manufacturer designation, which layers in our manufacturing liability over a five-year period. On balance, you know, as you think about Q1, you get a little bit of favorability given the lapping of the pricing in the base from 2024, and that's offset to a degree by the manufacturer liability on the Part D redesign for us, which will be consistent over the balance of this year. Other than that, Matt, anything you had?
Matt Shaulis (General Manager of North America)
Maybe I'll just add a little bit of commentary about Q1 related to seasonality. I think that kind of goes hand in hand with the Medicare Part D piece. I will gladly, you know, address the U.S. Tevimbra component of the question as well. You know, we talked about some things back in the fourth quarter related to what we anticipated in Q1 on seasonality. There is a typical, you know, customer inventory build in the fourth quarter with a drawdown that we then see in the first quarter. We disclosed about a $30 million buy-in. We also have noted, you know, one less shipping week in the fourth quarter of this year than, you know, than for other, you know, other typical quarters. You know, really in the first quarter, we typically see a slight drop in new starts due to changes in patient's insurance and out-of-pocket resets and other factors. This first quarter was really no different than that. On the Tevimbra U.S. piece, we do not report, you know, separate breakouts for that, but we are very encouraged with the progress that has been made on Tevimbra in the U.S.
We were very pleased to receive our frontline esophageal approval. That was our third approval in the U.S. within a year coming after second-line esophageal and frontline gastric. Of course, we were also very pleased to see listing in the NCCN guidelines. More recently, our alternative dosing Q2W and Q4W came in line as well. What we now see is initial experiences, patient starts, all in line with launch expectations. We will see the second quarter really be the starting point for Tevimbra in the U.S. now that all those other factors have come into line.
Lai Wang (Global Head of Research and Development)
If I could just maybe just follow up on Brukinsa, the [audio distortion] approval now in EMA for EMA from Switzerland is a big deal. How much inventory can they do? Can they supply the U.S. market as well, or is there a chance that they'll have capacity to, or it sounds like you're talking to another manufacturer for the U.S.? Any update there?
Aaron Rosenberg (CFO)
Yeah, thanks for the question. We are pleased with our approval for our second source of API from our Swiss supplier, as you mentioned. We are working to continue to broaden out our supply chain resiliency with securing sourcing from another supplier in Spain. That is a portion of our API usage. We have taken assertive action to ensure we have significant stockpiles, both for regular run demand, but as well to have additional security as it relates to our API stockpile. We are confident in our position in that regard.
Operator (participant)
Thank you. Our next question comes from Jessica Fye at JPMorgan. Please unmute your line and ask your question.
Jessica Fye (Analyst)
Hey, guys, good morning. Thanks for taking my question. On the CDK4 program, just to confirm, is it fair to think that FSC data could come during your R&D day in late June? Can you maybe, you know, set the stage a little bit for what kind of data you'll share, i.e., is there going to be enough follow-up to get a look at, you know, durability here, or should we mainly be expecting, you know, more safety and response rates? Also related to that program, can you just remind us where you are in terms of starting or enrolling a CDK4/6 naive cohort with that molecule?
Xiaobin Wu (President and COO)
Jessica, thanks for the question. In terms for the data disclosure at R&D day, we'll be mainly focused on the dose escalation cohorts. We're certainly including the efficacy data in addition to the safety PK. However, as you noticed, this program moved very quickly. Actually, just in the last two months, we enrolled over 100 patients. The durability side of it, as you can imagine, it will be limited. In terms for, you know, this molecule's, the second part of your question was about CDK4/6 treatment. CDK4/6 naive treatment settings. We actually have enrolled patients already in that setting. We began to accumulate data in that setting. We're eagerly waiting for that data to help us to make the decision in the front line.
Jessica Fye (Analyst)
Will we see any of that at R&D Day?
Xiaobin Wu (President and COO)
That's too early to be disclosed at R&D Day.
Jessica Fye (Analyst)
Okay, thank you.
Operator (participant)
Our next question comes from Reni Benjamin at Citizens. Please unmute your line and ask your question.
Reni Benjamin (Analyst)
Hey, good morning, everyone. Thanks for taking the questions and congratulations on all the progress. As you look at the 10 proof of concept readouts this year, can you maybe highlight maybe the top ones that you think could, you know, really drive your excitement as you move forward? Separately, the MANGROVE trial you mentioned has an interim analysis of the phase III trial. Can you just provide an overview and just what your expectations are from that interim analysis? Thanks.
Xiaobin Wu (President and COO)
Yeah, sensible question. I got this question a lot. Where do I start? There's so many really exciting programs. We, you know, we're very good at progress. We actually anticipate most molecules entered the clinic last year. We should expect the data this year. I want to say which one is my favorite. I actually like them all. In terms for the MANGROVE study, it's an event-driven study. We, you know, we're eagerly waiting for the events to happen. We hope that's what happened in the second half of this year.
Operator (participant)
Thank you. Our next question comes from Michael Schmidt at Guggenheim Partners. Please unmute your line and ask your question.
Michael Schmidt (Analyst)
Hey, good morning. Thanks for taking our questions. I just had a follow-up on the first-line mantle cell lymphoma opportunity for Brukinsa based on MANGROVE. Could you just help us understand the size of that opportunity and do you plan on submitting regulatory filings based on this interim data here in the second half? A question just longer term on the CLL market. You know, what is your view on how Brukinsa is positioned longer term with the pirtobrutinib first-line data reading out here later this year from Lilly? You know, what gives you confidence in Brukinsa as a, you know, best-in-class market position long-term in CLL? Thanks so much.
Xiaobin Wu (President and COO)
Yeah, I will probably start asking Matt to comment on the commercial side of it. In terms for the first-line MANGROVE study, I just want to remind everybody about the study design. This is we're using a chemo-free regimen, which is a rituximab plus zanubrutinib. The control arm is BR. This is a little bit different from the ACO study, which is adding the acal on top of BR. We do believe this is providing a really probably a preferred option ultimately if the trial is successful to the patients, which is chemo-free. One thing worth to highlight is in the frontline therapies, the treatment duration will be very long. If it's successful, it can further expand our marketing in mantle cell, but later on, I'll ask Matt to comment how big the market is.
Moving on to your question around Purdue side of it, the Purdue study in the front line is against the BR. That's the first study. The second study was enrolling about 1/3 of patients, which is in the treatment naive, but it's a mixed population also with the second line and the later line. The competitor there is ibrutinib. We do not believe this presents a significant threat to our Brukinsa because the competitor is not Brukinsa.
Matt Shaulis (General Manager of North America)
Yeah. I'll just briefly comment on mantle cell and then move over to the Purdue-related element of the question. We, you know, clearly see a reasonable size opportunity in mantle cell. In fact, you know, continue to see opportunities for the BTK class, you know, in that segment and also continue to have strong share position there. With regard to Purdue and the future outlook, you know, for the class and for Brukinsa, we fully expect to continue to maintain and expand market share with our BTK therapy. Based on the Purdue readouts recently, we think it's really unlikely to see significant shifts to earlier lines of therapy. We think that we've heard, you know, the competitor make similar remarks, you know, regarding sequencing. You know, really believe that continuous BTK therapy is going to continue to be the best option in those earlier lines of therapy. We also see that utilization is in line with that and that Brukinsa is really being utilized in those later lines of therapy.
Operator (participant)
Thank you. Our next question comes from Ziyi Chen at Goldman Sachs. Please unmute your line and ask your question.
Ziyi Chen (Analyst)
Hey, good morning and thank you for taking my questions. Two questions. One on IRA and the other one on expenses. How do you see the potential impact of CalPLANS getting into IRA negotiation this year and with the new price going to be effective in 2027? Also, for your Brukinsa's IRA, what is going to be your base case scenario? In terms of expenses, we actually see, you know, with a major wave of the proof of concept data coming from the solid tumor pipeline, we believe there are going to be a lot more trials being initiated and a lot more potentially pivotal studies being initiated. How should we see the trend of the R&D spending?
In the first quarter, it's down a little bit, quarter to quarter, but do you still have the flexibility in spending given you have the target of, you know, profit-making in this year around potentially beyond 2025? Thank you.
Xiaobin Wu (President and COO)
Yeah, I guess I'll just start out with IRA and your question related to CalPLANS. We won't see CalPLANS IRA implications until 2026. We may see some indirect marketplace tied impact regardless of that price negotiation status. We think that that's going to be manageable. Obviously, with respect to Imbruvica, we don't see it as a credible substitute for Brukinsa due to safety and efficacy, particularly given our ALPINE trial, you know, showing head-to-head superiority and also the known cardiac toxicity profile for Imbruvica. We see substantial, you know, differentiation there. Of course, you know, later with CalPLANS, we see less cardiac issues than Imbruvica, but also questionable efficacy across multiple studies. Clearly, you know, I'd best see that as a poor substitute for Brukinsa.
Aaron Rosenberg (CFO)
We continue to be pleased with our leadership position in new starts and relapsed and refractory and in front line and are the most prescribed across the B cell malignancies. We think that, you know, continued strong market performance will be critical as we head into that IRA timeframe.
Great. Thank you. With respect to our R&D investment, as you see in our 2025 guidance, we are investing significantly to rapidly advance our pipeline. You know, you did reference our dual mandate of driving, you know, being a growth company, but doing it in a sustainable way. You see that in our operating results, not just this quarter, but in the preceding quarters as well. We will continue to operate against that dual mandate of growth with margin expansion. We're committed to developing the pipeline.
I think what we've talked about historically is, you know, having a strong top line with disciplined investment still allows us to invest with growth against that emerging pipeline. And we always speak to the fact that, you know, we have a significant investment already and we have a pipeline that has had a portfolio of late-stage investments. You think about Tevimbra, you think about Brukinsa, you think about our TIGIT program. Those were significant investments. Those are rolling over. As we, and they're being replaced by our investments in our current late-stage pipeline and great opportunities in front of us with sonrotoclax, with sonrotoclax and the degrader. That provides opportunity also with respect to our early-stage program. But we have talked about how BD is in our DNA. You know, we're fortunate to have such a robust pipeline. Lai talked about how many favorites we do have.
That provides a lot of optionality for us. These are all fully owned assets. You know, we're obviously, there's no shortage of interest in our pipeline. We're open to the optionality that affords. Given our strong balance sheet and our capital discipline, you know, we're not obligated to do anything. We're really in a strong position as it relates to advancing the pipeline and creating the maximizing value for our shareholders.
Operator (participant)
Thank you. Our next question comes from Kelly Xi at Jefferies. Please unmute your line and ask your question.
Clara (Dong)
Hi, good morning. This is Clara Allen for Kelly. Thanks for taking our question and congrats on the progress for the quarter. For the phase II data readout for sonrotoclax in refractory mantle cell lymphoma in the second half of the year and the BTK degrader phase II data in 2026, just wanted to clarify, what are the endpoints you and the regulatory agency are looking at to potentially support the registration? Also, for the filing of sonrotoclax in China, walk us through what kind of the typical review timeline is there. Thank you.
Xiaobin Wu (President and COO)
Yeah, okay. Sensible question. For both Sonrotoclax as well as BTKCDAC, those are typical single monotherapy phase II studies. The primary endpoint are ORR and the DOR. This was supposed to potentially accelerate approval. In terms of for the Sonrotoclax, the following, we have already received the policy review from the CDE that's listed on the CDE website. We're anticipating potential approval probably in the first half of next year.
Jessica Fye (Analyst)
Thank you.
Operator (participant)
Our next question comes from Gregory Renza at RBC Capital. Please unmute your line and ask your question.
Gregory Renza (Analyst)
Great. Hey, hey, good morning, John and team. Congrats on the progress and thanks for taking my questions. Maybe just on the Quest for Serial Innovation and just around CLL and on the BTKCDAC, I'm just curious if you could comment on that relative positioning of the CDAC to routine BTKs in the longer term. One, what gives you confidence that 16673 may have the ability to beat Purdue in a head-to-head study? Secondly, certainly with discussion around maybe some risks about using degraders earlier in treatment lines, in treatment settings, just curious about potential mechanism resistance, how that could preclude other treatment options. Just curious on your view with respect to that sequencing. Thanks so much.
Xiaobin Wu (President and COO)
Yeah, sensible question relates to, you know, our confidence, our BTK degrader. I can tell you that's increasing by day. With more data coming, this really gives us assurance this drug is doing what it's supposed to do to truly fully complete the degrades BTK protein and providing the patient sustained clinical benefits. With the additional data, you know, coming in and also our feedback from the KOLs really giving us confidence to start this head-to-head trial versus Brukinsa and this trial will be initiated in the second half of this year. In terms of utilizing the BTK degrader in the earlier line, I think that's your second question. We're getting data on that. We're opening a cohort in the BTKI-naive patient population to test it out. This is definitely a different MOA versus the traditional BTK inhibitor.
It's very early to say, you know, which one is better and what's the right sequence. We are going to do the scientific experiment to test it out, but it's great to have the option of both traditional BTK inhibitor as well as a BTK degrader. In addition to that, I just want to highlight with the also potentially best-in-class BCL2, that gives us a lot of different options to play in the space, which we think is very important. We really want to provide the best option for patients, not just in the front line, but also in the later lines.
Ziyi Chen (Analyst)
That's great. Thank you very much. If I may, I know earlier question on BTK and PNMN, I'm just curious how you're thinking about the INI portfolio, certainly with the IRAC4. Is that an area that you want to expand upon as you think about internal and even external development? Thanks again, guys.
Xiaobin Wu (President and COO)
Yeah, sensible question. I didn't spend time to discuss our INI portfolio during the call. This is actually a very exciting portfolio for BeOne Medicines. We actually have a dozen of the perkinsein program, which we're developing in the INI space. Again, we're utilizing our, you know, variety of different modalities trying to create the best in-class molecules as well as potentially first-in-class molecules. Related to the IRAK4 inhibitor, IRAK4 degrader, we're super excited about this molecule. So far, the early data we have seen with this molecule, again, suggesting it has the best-in-class potential with its PK, with its level of the degradation. We believe we can achieve a complete target degradation at a very low dose level. We also is eagerly anticipating our data in the tissue PD, which should come in the second half of this year.
As I mentioned, we also have other INI portfolio, which we are really beginning to develop and hopefully you will see molecules coming from our pipeline in the next couple of years.
Operator (participant)
Thank you. Our next question comes from Sean Laaman at Morgan Stanley. Please unmute your line and ask your question.
Sean Laaman (Analyst)
Good morning, everyone. I hope you're all well. A simple benchmarking question to start. If you look at the revenue reported by Van Clexter, how would you size the opportunity for surrounded clots against that, you know, given potential better safety issues, you know, broadening, improving efficacy, and what other combination opportunities there might be?
Xiaobin Wu (President and COO)
Yeah, sensible question. You know, unlike the BTK inhibitor field, there's tons of competition. In the BCL2 field, truly there's really two molecules. One is venetoclax, one is. We actually are very excited about the profile of our sonrotoclax. It's much more potent and also more selective. Right now, we are seeing that in the different indication with the response rate, with duration response. This is why it gives us the confidence to start more than just one head-to-head trial. The first trial we mentioned, which was our selective serial one, we're already finished enrollment. This is CS regimen versus VO. We are very excited about the second trial as well, which is in the relapsed refractory CLL setting testing sonrotoclax versus venetoclax in the CD20 combination setting. This is truly head-to-head trial.
We believe with those two trials can really establish sonrotoclax as potentially the best-in-class BCL2. This is critical. In addition to that, I just want to mention we're also exploring the indications which venetoclax haven't really had a success. That's including multiple myeloma. We cannot talk about that trial for a while now, but that trial is moving along very nicely. We're anticipating reporting more data later this year. Now I'll hand over to Matt.
Matt Shaulis (General Manager of North America)
Yeah, I can just offer some commentary on the, you know, the market opportunity. And, you know, we currently see the opportunity for a BCL2 and a CD20 to be about a quarter of that front line opportunity in CLL. And we've said a number of times that we think that there's, you know, really three necessary components for success. In particular, with fixed duration, that's deep response and undetectable MRD, long PFS, and strong safety. More recently, we've seen some of the fixed duration regimens fail to meet that high bar. For some of the reasons that Lai's outlined, you know, we're very confident that there'll be opportunities with Xano and Sonro to meet that high bar and then ultimately lead to some expansion of the use of the BCL2s and CD20s in, you know, in that setting. You know, that's a possibility. Clearly we see Xano and sonrotoclax as being the real driver for expansion in, you know, in that setting.
Gregory Renza (Analyst)
Thank you. And one more quick one, if I may, more on the commercial side. You know, historically, when you do benchmarking against Brukinsa revenue against peers across Europe, you seem sort of underweight, if you like. I'm just wondering if you, there's good momentum it appears in this quarter. Do you think you've got the investment about right in terms of salespeople to really grow that European revenue? Could you just sort of map that out for me a little bit would be awesome.
Xiaobin Wu (President and COO)
Yeah, European business is growing nicely. You have seen that we grow also 75% on the Brukinsa side. We also increasingly have more new patients to share for Brukinsa. In terms of Tevimbra, we get new product launched in Germany, Austria, Spain, and also some other countries like Switzerland and Norway. We also got a reimbursement, and reimbursement countries can be increasing, and the launch activity is on track. In the rest of the world, you can say our Brukinsa business grows 146%. Remarkable. We have also launched Brukinsa in Japan. Also recently, we got approval of Tevimbra in multiple countries in Brazil, in South Korea, reimbursement, Australia reimbursement. This is also, we see significant progress in Tevimbra.
Operator (participant)
Thank you. Thank you. Our final question comes from Yigal Nochomovitz from Citigroup. Please unmute your line and ask your question.
Yigal Nochomovitz (Analyst)
Hi, great. Thank you very much. I had a few questions. First on Sonro plus Xanu pricing. I know it's early, but I'd like to get your early thoughts if you're expecting that to be price neutral with Brukinsa, with the idea to take more share with a better profile or possibly a premium. You talked a lot about supply chain resiliency, and you mentioned the sourcing of API in Switzerland and Spain. Obviously, you have the film finish in the U.S. I'm wondering if there's some long-range plans to additionally introduce an API supply within the U.S. Finally, John, you talked a lot about resiliency. I'm curious about geographic resiliency, specifically with respect to R&D. With the re-domicile in Switzerland, do you expect to move more of the core R&D outside of China to Switzerland as well as the U.S.? Thank you very much.
Aaron Rosenberg (CFO)
Thank you for the question, Yigal. I'll take the first couple and then hand it over to John. You know, it's way too early to talk pricing with respect to our pipeline assets. All I'll say is we're really confident in the profiles that these assets have in front of them, and we'll price them accordingly relative to the value that they're creating for patients. With respect to supply chain resiliency, yes, we're very enthused by the efforts we've taken in the past to ensure that we have supply and resilience for patients all around the world. Obviously, we are monitoring all the activity that's happening in the environment, and we'll be sure that we take measures to proactively ensure that supply for U.S. patients, but really importantly, patients everywhere around the world.
John Oyler (CEO)
Yeah, we're, as you mentioned, we're excited about things from a global perspective. I think the organization is always in this global expansion mode. Last quarter, I think you heard us talk about, you know, opening operations in South Africa, for example. You know, today, the management team is sitting here in our San Carlos, you know, office and R&D center and, you know, excited to be, you know, interviewing and recruiting people here for the R&D perspective too. I just think it's an inevitable expansion, you know, process as we try to work globally with everyone and, you know, from a research, from a clinical, and getting great medicines to patients for some people. Thank you.
Yigal Nochomovitz (Analyst)
Thanks.
Operator (participant)
There are no further questions. I will turn the call over to John Oyler for closing remarks.
John Oyler (CEO)
Thanks so much. I think our first quarter execution across the key priorities really sets a strong foundation for 2025. I'm really looking forward to sharing more updates and milestones with all of you throughout the year. Thanks so much for joining us today and taking your time and energy and for the very thoughtful process. Have a wonderful day.