Our Strategy

Our mission is to become a global leader in the discovery,  development and developmentcommercialization of innovative, molecularly targeted and immuno-oncology drugs for the treatment of cancer. We believeTo achieve our mission, over the next generation of cancer treatment will utilize therapeutics both as monotherapies and in combination to attack multiple underlying mechanisms of cancer cell growth and survival. We further believe that discovery of next-generation cancer therapies requires new research tools. To that end,last several years we have developed broad internal capabilities from research to global clinical development, manufacturing and commercialization platforms in China. We have a proprietaryportfolio of cancer biology platform that addresses the importancetherapeutics consisting of tumor-immune system interactionsthree marketed products in China, as well as five development-stage and the value of primary biopsies in developing new models to support our drug discovery effort.

        Our strategy is to develop a pipeline of drug candidates with the potential to be best-in-class monotherapies and also important components of multiple-agent combination regimens. Over the last six years, using our cancer biology platform, we have developed clinical-stagetwo development-stage-ready drug candidates, that inhibit the important oncology targets Bruton's tyrosine kinase, or BTK, RAF dimer protein complex and PARP family of proteins, and an immuno-oncology agent that inhibits the immune checkpoint protein receptor PD-1. For each of our molecularly targeted drug candidates, we have achieved proof-of-concept by observing objective responses in defined patient populations. Our BTK inhibitor is currently in pivotal studies in North America, Europe, Australia, New Zealand, and China. Our PD-1, PARP and RAF dimer inhibitors are currently in the dose-expansion phases of their respective clinical trials. As of March 20, 2017, trials of our four clinical-stage drug candidates, as monotherapies and in combination, have enrolled a total of over 980 patients. We have Investigational New Drug, or IND, Applications in effect for our BTK, PD-1 and PARP inhibitors with the U.S. Food and Drug Administration, or FDA. All four of our drug candidates are in the clinic in China, including our BTK drug candidate being in two pivotal studies. We believe that each of our clinical-stage drug candidates is the first in their respective classes being developed in China under the Category 1.1 domestic regulatory pathwayplan to enter into human testing andcontinue to present clinical data.

        Our research operations are in China, which we believe confers several advantages including access to a deep scientific talent pool and proximity to extensive preclinical study and clinical trial resourcesexpand through collaborations with leading cancer hospitals in China. Beyond the substantial market opportunities we expect to have globally, we believe our location in China provides us the opportunity to bring best-in-class and/or first-in-class monotherapies and combination therapeutics to our home market where many global standard-of-care therapies are not currently approved or available. We have assembled a team of 348 individuals in China, the United States, and Australia with deep scientific talent and extensive global pharmaceutical experience who are deeply committed to advancing our mission to become a global leader in next-generation cancer therapies.

        We believe that oncology treatment has entered an era of revolutionary change in which cancer drugs will be used both as monotherapy and in combination to attack multiple underlying mechanisms of cancer cell growth and survival. Due to breakthroughs in gene sequencing and methods of tumor characterization, cancer is rapidly being redefined from a paradigm of classification based on tissue of origin to molecular characteristics. As a result, this ability to better classify cancers has enabled the development of molecularly targeted drugs that address specific cancer subpopulations and provide high response rates in tumors with particular mutations. In addition, the development of immuno-oncology agents such as antibodies targeting the CTLA-4 and PD-1 protein receptors and the PD-L1 protein has demonstrated the importance of the human immune system in cancer therapy and the potential for

        We believe that the industry-standard for cancer biology models has not evolved along with current oncologyinternal research and drug discovery and thus is an insufficient framework from which to developbusiness development efforts.  In the next generationnear term, we are focused on pursuing three significant opportunities:

Next-Generation Cancer Biology Platform

        Fundamental changes in cancer research led us early in our history to develop a cancer biology platform that incorporates improved models and processes better suited to drug discovery in the new world of immuno-oncology combinations and addresses the importance of tumor-immune system interactions and the value of primary biopsies. Conventional models for oncology drug discovery have used cultured cell lines that are often decades old and have characteristics that are not representative of the tumors in actual cancer patients. In addition, tumors from these cell lines have been transplanted in immune-compromised hosts in commonly-used xenograft tumor models. Therefore, animal models utilizing these cell lines have limited predictive value for new therapies. While animal models derived from surgical samples, such as patient-derived xenograft models, or PDX models, are an improvement over the old cell lines, a surgical sample is unlikely to represent the state of the cancer at the time of intended treatment. Because conventional models, including PDX models, require the use of immune-deficient animals, they cannot mimic interactions between the tumor and the host immune system.

        The cancer biology platform we developed enables us to test a large panel of tumor models for sensitivity to the drug candidates we generated, identify drug-resistance mechanisms in many cancers, explore combination strategies and regimens, and improve our understanding of the contributions of tumor micro- and macro-environments in cancer treatments.

        Scientific Approach.    Our platform brings together the following:

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Access to a broad array of primary patient biopsies and tissue samples, enabled by our proximity to and partnerships with leading China-based oncology centers, allows us to build novelin vivo,ex vivo andin vitro models that we believe more accurately represent patients' cancer disease states at the time of treatment.



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Methods for better approximating the interactions between a tumor and a patient's immune system, including:



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Introduction of elements of the human immune system into ourin vivo,ex vivo andin vitro models;



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Creation of a variety of novel assays to investigate the effects of drug combinations and study their impacts on the human immune system and the tumor microenvironment; and



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An effective screening cascade for oncology drug development that incorporates all of these elements.

        Sustainable Leadership Position.We believe that our early recognitionexperience in China as a domestic company committed to global standards of the importance of tumor-immune system interactionsinnovation and the value of primary biopsiesquality, our global development team and strategy, and our research, development, manufacturing and commercial capabilities in developing new models for future cancer research has allowedChina, all uniquely position us to develop a proprietary cancer biology platform that provides significant competitive advantages in developing the next generation of cancer therapeutics.capitalize on these opportunities.

        We believe that several of these advantages are sustainable:

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Our close relationships with cliniciansPipeline and our proximity to major oncology centers in China provide us convenient and difficult-to-replicate access to primary tissue samples that greatly enhance the effectiveness of our oncology models.



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Our time and effort in developing and validating new models and processes, through the commitment and focus of our large scientific team, has allowed us to advance our capabilities meaningfully ahead of many current cancer drug development approaches. Over the last six years, our team of over 80 biologists has been focused on the continued development of our cancer biology platform.



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Our non-hierarchical structure and highly cooperative organizational culture allows us to access the cross-functional capabilities needed to develop, maintain and continually improve our new generation cancer biology platform.

        Our robust preclinical and clinical pipeline demonstrates our significant commitment and ability to devote the necessary time, energy and resources required to build, validate and continue to advance our cancer biology platform. Our platform has enabled us to advance four candidates to the clinic and to execute our combination strategy. We believe we are one of only two companies today to wholly own both a clinical-stage BTK inhibitor for cancer treatment and PD-1 inhibitor and one of the few companies to have discovered, and advanced to the clinical stage, a PARP inhibitor and PD-1 inhibitor or a BRAF inhibitor and PD-1 inhibitor for use as combination therapies. We believe that our cancer biology platform is critical to developing rational combinations that enable us to become a leader in next-generation cancer therapies.

Our Clinical-Stage Drug CandidatesCommercial Products

        We have used our cancer biology platform to develop four clinical-stage drug candidates that we believe have the potential to be best-in-class or first-in-class. In addition, we believe that each has the potential to be an important component of a drug combination addressing major unmet medical needs.

        Moreover, we believe that compounds in our clinical and preclinical pipeline have the potential to be first-in-class therapeutics in China, and, as locally developed compounds, to qualify for a separate, and potentially accelerated, regulatory path.

        Over time, we intend to strengthen our position with additional drug combinations utilizing our own drugs and in some cases third-party drugs to compete globally as first-in-combination and best-in-combination cancer therapies.

        The following table summarizes our clinical pipeline:

(1)

Limited collaboration with Merck KGaA, Darmstadt Germany.

The following table summarizes the status of our clinical pipeline in China:and commercial products as of February 28, 2018:

        The following table summarizes ourAbbreviations: Dose Esc = dose escalation; Dose Exp = dose expansion; WM = Waldenstrom’s macroglobulinemia; 1L = first line; CLL = chronic lymphocytic leukemia; SLL = small lymphocytic lymphoma; R/R = relapsed / refractory; FL = follicular lymphoma; 2L = second line; NSCLC = non-small cell lung cancer; HCC = hepatocellular carcinoma; ESCC = esophageal squamous cell carcinoma; HL = Hodgkin’s lymphoma; UC = urothelial carcinoma; gBRCA = germline BRCA; TMZ = temozolomide; RT = radiotherapy; IMiD = immunomodulatory drugs; MM = multiple Myeloma; ND = newly diagnosed; NHL = non-Hodgkin’s lymphoma; MDS = myelodysplastic syndrome; AML = acute myeloid leukemia; CMMoL = chronic myelomonocytic leukemia; DLBCL = diffuse large B-cell lymphoma;

*Some indications will not require a non-pivotal Phase 2 clinical trial prior to beginning pivotal Phase 2 or 3 clinical trials.

**Confirmatory clinical trials post-approval are required for accelerated approvals.

***REVLIMID® approved as a combination therapy pipeline:

with dexamethasone.

BGB-3111, Bruton's1  Celgene has the right to develop and commercialize tislelizumab in solid tumors in the United States, Europe, Japan and the rest-of-world outside of Asia.

2Limited collaboration with Merck KGaA.

Our Clinical-Stage Drug Candidates

Zanubrutinib (BGB-3111), a Bruton’s Tyrosine Kinase Inhibitor

BGB-3111Zanubrutinib is a potent and highly selectivean investigational small molecule inhibitor of BTK inhibitor. We arethat is currently developing BGB-3111being evaluated in a broad pivotal clinical program globally and in China as a monotherapy and in combination with other therapies for the treatment of a variety ofto treat various lymphomas. BGB-3111Zanubrutinib has demonstrated higher selectivity against BTK than ibrutinib, the only IMBRUVICA® (ibrutinib) an approved

BTK inhibitor, currently approved by the FDA and the European Medicines Agency, or EMA, based on biochemical assays, and higher exposure than ibrutinib based on their respective Phase 1 experience.

        In addition, we believe BGB-3111 is the only BTK inhibitor that has demonstratedexperience in separate studies, and sustained target inhibition in disease-relevant tissues. Our preclinical data show that target inhibition by ibrutinib at disease relevant tissues, such as the lymph node, bone marrow, and spleen, in mice and rats was not sustained over a 24-hour period. Published clinical data on ibrutinib show that ibrutinib's target inhibition in the blood is borderline at the approved dose of 420 mg once a day, with BTK occupancy in a significant portion of patients below 80%.both the peripheral blood and lymph node compartments.

Target Inhibition by Ibrutinib Is Incomplete

Note: PBMC = Peripheral Blood Mononuclear Cell. Source: BeiGene data on file and Byrd et al, NEJM, 2013.

        As of March 20, 2017, we have enrolled over 340 patients in monotherapy and combination trials of BGB-3111. In January 2017, we initiated a global, multi-center randomized Phase 3 trial in Waldenström's Macroglobulinemia, or WM that will enroll approximately 170 patients at clinical sites in North America, Europe, Australia, and New Zealand. Subsequently, in March 2017, we initiated two single-arm, open-label, multi-center, pivotal studies in China in relapsed or refractory chronic lymphocytic leukemia, or CLL, or small lymphocytic lymphoma, or SLL, and in relapsed or refractory mantle cell lymphoma, or MCL, respectively. In addition, we have completed the dose-escalation phase of our Phase 1 trial in Australia, and we are continuing the dose-expansion phase in patients with select lymphoid malignancies including CLL, diffuse large B-cell lymphoma, or DLBCL, follicular lymphoma, or FL, MCL, marginal zone lymphoma, or MZL, WM, hairy cell lymphoma, or HCL. In the completed dose-escalation phase of our clinical trial, no protocol-defined dose-limiting toxicities were observed. BGB-3111 achieved several-fold higher exposure levels compared to that seen for the approved doses of ibrutinib. Proof-of-concept has been established for BGB-3111 with clinical data indicating that BGB-3111 is a potent BTK inhibitor with anti-tumor activity observed in multiple types of lymphomas starting at the lowest dose tested, 40 mg once daily, or QD. We have also initiated a combination study in Australia and the United States with obinutuzumab, an anti-CD20 monoclonal antibody approved for CLL.

Mechanism of Action

BTK is a key component of the B-cell receptor, or BCR, signaling pathway and is an important regulator of cell proliferation and cell survival in various lymphomas. BTK inhibitors block BCR-induced BTK activation and its downstream signaling, leading to growth inhibition and cell death in certain malignant white blood cells called B-cells. BGB-3111Zanubrutinib is an orally active inhibitor of BTK that covalently binds to the cysteine Cys-481 of BTK, resulting in irreversible inactivation of the kinase. It has also been shown that BTK inhibitors can inhibit solid tumor growth by regulating the tumor microenvironment in preclinical animal models.enzyme.

Market Opportunity and Competition

Lymphomas are a group of blood-borne cancers involving lymphatic cells of the immune system. They can be broadly categorized into non-Hodgkin'snon-Hodgkin’s lymphomas, chronic B-cell leukemias, predominantly CLL,or NHL, and acute B-cell leukemias.HL. Depending on the origin of the cancer cells, lymphomas are also characterized as B-cell or T-cell lymphomas. B-cell lymphomas make up approximately 85% of non-Hodgkin's lymphomasNHLs and comprise a variety of specific diseases involving B-cells at differing stages of maturation or differentiation. Preliminary dataAccording to the statistics from animal models involving BGB-3111the Surveillance, Epidemiology and third-party BTK inhibitors also suggest potential applicationsEnd Results, or SEER, program of the U.S. National Cancer Institute, there were 72,240 new NHL cases and 20,140 deaths, and 20,110 new CLL cases and 4,660 deaths in solid tumors2017 in the United States. According to a published study (Chen et al., Cancer Statistics in China, 2015, CA Cancer J. Clin. 2016; 66(2):115-32), which we refer to as Chen et al. 2016, and inflammatory diseases, which could substantially expand our market opportunity.GLOBOCAN 2012 analyses on cancer statistics in China, there are an estimated 42,000 to 88,000 new lymphoma cases and 26,000 to 53,000 deaths in China each year. 

Current Therapies and Limitations

Conventional methods of treatment oftreating lymphomas vary according to the specific disease or histology, but generally include chemotherapy, antibodies directed at CD20, and, less frequently, radiation. Recently, significant progress has been made in the development of new therapies for lymphomas, including BCR signalingBTK inhibitors, primarily with the BTK inhibitor ibrutinib and the PI3K delta inhibitor, idelalisib.idelalisib, and the Bcl-2 inhibitor, venetoclax. In addition, there are other inhibitors of BCR signaling pathways in development, such astargeting PI3K delta/gamma, IRAK4 and SYK.SYK, for example.

The BTK inhibitor ibrutinib was first approved by the U.S. Food and Drug Administration, or the FDA, in 2013 for the treatment of patients with MCL who have received at least one prior therapy. Since 2013, ibrutinib has received supplemental FDA approvals for the treatment of patients with CLL, CLL patients with 17p deletion, patients with WM, andpatients with marginal zone lymphoma, or MZL, patients who have received at least one prior anti-CD20-based therapy, and patients with chronic graft versus host disease after failure of one or more lines of systemic therapy. Ibrutinib is also approved by the European Medicines Agency, or the EMA, for treatment of patients with MCL, CLL, or WM. Ibrutinib has subsequently been approved in over 40 countries, but not China.and it was approved and launched in China at the end of 2017. Reported global sales of ibrutinib were approximately $2$3.2 billion in 2016.

        Despite2017. Another BTK inhibitor, CALQUENCE® (acalabrutinib) was approved by the clinical and commercial successFDA in 2017 under accelerated approval for the treatment of ibrutinib, we believe based on its product profile that meaningful differentiation is possible inpatients with MCL who have received at least the following aspects:

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Safety and tolerability.  Although ibrutinib has shown a favorable safety profile compared to traditional chemotherapies, it is associated with adverse reactions that can limit its tolerability as a chronic treatment and in some cases can be treatment-limiting or life-threatening. These adverse reactions—including diarrhea, thrombocytopenia, or low blood platelet count, bleeding and AF—are believed to be due to ibrutinib's broad inhibition of kinases other than BTK, including EGFR, JAK3 and TEC.



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Sustainable target inhibition in disease originating tissue.  Although ibrutinib induced sustained BTK inhibition when measured in the plasma of patients, our preclinical studies of ibrutinib show that target inhibition in disease-relevant tissues, such as the lymph node, bone marrow and spleen, in mice and rats was not sustained over a 24-hour period.



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Oral bioavailability.  Ibrutinib has shown 7–23% oral bioavailability in preclinical studies, as evidenced by the daily dose of 420 mg or 560 mg required in the clinic.

Forty-five patients with CLL/SLL (20 TN and 25 R/R) and 21 patients with R/R FL were evaluable for efficacy. In TN CLL/SLL patients, after a median follow-up of 11.4 months (6.0–17.3 months), the ORR was 95%, with CRs in 35% and PRs in 60% of patients. In R/R CLL/SLL patients, at a median follow-up time of 12.7 months (7.9–19.5 months), the ORR was 92%, with CRs in 20% and PRs in 72% of patients. In R/R FL patients, at a median follow-up time of 12.1 months (0.8–19.7 months), the ORR was 76%, with CRs in 38% and PRs in 38% of patients.

Combination with Tislelizumab

We are also evaluating zanubrutinib in combination with our investigational anti-PD1 antibody tislelizumab. The open-label, multi-center Phase 1b trial is being conducted in Australia and is currently in itsa dose-escalation phase to be followed by a dose-expansion phase.

On December 11, 2017, we presented initial data from the ongoing Phase 1b trial at the 59BGB-3111 Combination Potential: Differentiated Activityth ASH Annual Meeting in Combination with CD20 Antibody Relative to Ibrutinib*

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Note: * All preclinical studies. Source: Kohrt et al, Blood, 2014; BeiGeneAtlanta, GA. The initial dose-escalation data on file

        We also exploredsuggested that the combination of BGB-3111zanubrutinib and our PD-1 antibody, BGB-A317tislelizumab was generally well-tolerated and exhibited anti-tumor activity in twopatients with B-cell malignancies. As of September 15, 2017, 25 patients had been enrolled. There were 13 patients with indolent lymphoma, including CLL, FL, MZL, and WM, and 12 patients with aggressive lymphoma, including DLBCL, primary tumor models. In both models, BGB-3111 showed weak monotherapy activity. When usedMCL, and transformed lymphoma. The median follow-up time was 5.1 months (0.4–14.1 months). Two cases of autoimmune hemolysis occurred in patients with WM in the dose 2 cohort, and one qualified as a monotherapy BGB-A317 was only activedose-limiting toxicity, or DLT. These events were not associated with a positive direct antiglobulin test and resolved with immunosuppressive therapy, but resulted in the PD-L1 positive tumor. However,decision to exclude further enrollment of WM patients in the combinationtrial. As of BGB-3111the data cutoff date, this autoimmune hemolysis is the only DLT case that was observed.

Among patients with indolent lymphoma, the most common AEs (occurring in ≥ 20% of patients) of any attribution were petechiae/purpura/contusion (31%) and BGB-A317thrombocytopenia (23%). Grade 3 and 4 AEs of any attribution reported in at least two patients included thrombocytopenia, anemia, and hemolysis (15% each).  In addition to the two cases of autoimmune hemolysis, there was highly active, better than either monotherapy,one more immune-related event, a grade 4 autoimmune encephalitis. The patient was treated with aggressive immunosuppressive therapy and inducedgradually improved over time.

Among patients with aggressive lymphoma, the most common AEs (occurring in ≥ 20% of patients) of any attribution were diarrhea, fatigue, pyrexia, upper respiratory tract infection (33% each), cough (25%), and nausea (25%). Grade 3 and 4 AEs of any attribution reported in at least two patients included pyrexia (17%). There was one patient with multiple occurrences of grade 2 and 3 pneumonitis. 

At the time of data cutoff, the efficacy-evaluable population consisted of 25 patients. Objective responses were observed in 10 patients (40%). By tumor regressiontype, two PRs were observed out of five patients with CLL, one CR and one PR were observed out of five patients with FL, one VGPR and one minor response were observed out of two patients with WM, one CR was observed out of five patients with DLBCL, and three PRs were observed out of five patients with transformed lymphoma. 

Clinical Development Plan

Based on the clinical data to date, we believe that zanubrutinib has a potentially best-in-class profile, and we are running a broad global pivotal program in both PD-L1 positive and PD-L1 negative models. A combination clinical trial of BGB-3111 with BGB-A317 was initiated in June 2016 and is in its dose-escalation phase.multiple indications.

Globally, we have an ongoing monotherapy head-to-head Phase 3 trial versus ibrutinib in WM, which is expected to complete enrollment by the end of the third quarter of 2018; an ongoing Phase 3 trial compared to bendamustine and rituximab in patients with TN CLL/SLL; and an ongoing Phase 2 trial in combination with GAZYVABGB-3111 Combination Potential: Strong Rationale to Combine Our BTK® (obinutuzumab) in patients with FL, which is a pivotal trial for accelerated or conditional approval and PD-1 Inhibitors
will require a confirmatory study. We are also planning a Phase 3 trial for head-to-head comparison versus ibrutinib in patients with R/R CLL/SLL.

In China, we have initiated twoare conducting three separate pivotal studies for BGB-3111. In March 2017, we initiated single-arm, open-label, multi-center pivotal clinicalPhase 2 trials of BGB-3111zanubrutinib as monotherapy in China in

patients with relapsed or refractoryR/R MCL, R/R CLL/SLL, and WM, respectively. We have completed enrollment in the R/R MCL and in patients relapsed and refractory CLL or R/R CLL/SLL respectively. The primary endpoint in eachpivotal trials. Subject to successful completion of these trials is the objective response rate, and secondary endpoints include progression free survival, duration of response, time to response, safety, and tolerability. We believe BGB-3111 is the first BTK inhibitor being developed in China under the Category 1.1 domestic regulatory pathway to enter into human testing and to present clinical data.

        We plan to expand our registration program for BGB-3111. In addition,trial, we plan to present data from the combination studiessubmit a new drug application, or NDA, in China for patients with MCL in 2018.

Tislelizumab (BGB-A317), a PD-1 Antibody

BGB-A317, PD-1 Antibody

BGB-A317Tislelizumab is an investigational humanized monoclonal antibody against the immune checkpoint receptor PD-1. We are developing BGB-A317PD-1 that is currently being evaluated in pivotal clinical trials globally and in China, and for which we plan to commence additional pivotal trials, as a monotherapy and as ain combination agent forwith standard of care to treat various solid-organsolid and blood-bornehematological cancers. Tislelizumab is designed to bind to and block downstream activity of PD-1, is a cell surface receptor that plays an important role in down-regulatingdownregulating the immune system by preventing the activation of certain types of white blood cells called T-cells. PD-1 inhibitors remove the blockade of immune activation by cancer cells. We believe BGB-A317 may beTislelizumab has high affinity and specificity for PD-1. It is differentiated from the currently approved PD-1 antibodies with the ability to bindby an engineered Fc gamma receptor I specifically engineered out, andregion, which we believe this couldmay minimize potentially resultnegative interactions with other immune cells based on preclinical data. We have a global strategic collaboration with Celgene for tislelizumab for solid tumors outside of Asia (other than Japan) as further described in improved activities. In addition, BGB-A317 has a unique binding signature to PD-1 with high affinity and superior target specificity.“—Collaboration Agreements—Celgene”.

        We are evaluating BGB-A317 in the ongoing dose-escalation phase of our clinical trial in relapsed or refractory solid tumor patients and combination trials with our PARP inhibitor, BGB-290 and with our BTK inhibitor, BGB-3111 respectively, in Australia. As of March 20, 2017, we have dosed over 400 patients with BGB-A317 in monotherapy and combination trials. BGB-A317 is the first drug candidate produced from our immuno-oncology biologic programs, and we believe it could serve as one of the cornerstones for our immuno-oncology combination platform.

Mechanism of Action

Cells called cytotoxic T-cellsT-lymphocytes, or CTLs, provide humans an important self-defense mechanism against cancer, patrolling the body, recognizing cancer cells due to immunogenic features that differ from normal cells, and killing cancer cells by injecting poisonous proteins into them. T-cellsT-lymphocytes have various mechanisms built into them that prevent them from damaging normal cells, among which is a protein called PD-1 receptor, which is expressed on the surface of T-cells. The mostT-lymphocytes. PD-L1 is an important signaling protein that couldcan engage PD-1 is calledPD-1. PD-L1 which binds thebinding to PD-1 receptor and sends an inhibitory signal inside the T-cell, stopping it from making more poisonous proteinsT-lymphocyte and killing the cells sending the signal via PD-L1 and other cells nearby.abrogates its cytotoxic effects. Many types of cancer cells have hijacked the PD-L1 expression system that normally exists in healthy cells. By expressing PD-L1, cancer cells protect themselves from being killed by cytotoxic T-cells. BGB-A317CTLs. Tislelizumab is a monoclonal antibody designed to specifically bind to PD-1, without activating the receptor, thereby preventing PD-L1 from engaging PD-1. Therefore, we believe BGB-A317tislelizumab has the potential to restore the cytotoxic T-cell's ability of CTLs to kill cancer cells.

Market Opportunity and Competition

Market OpportunityA number of PD-1 or PD-L1 antibody drugs have been approved by the FDA. These include Merck’s  KEYTRUDA

        Forecasts® (pembrolizumab), Bristol-Myers Squibb’s OPDIVO® (nivolumab), Roche’s TECENTRIQ® (atezolizumab), AstraZeneca’s IMFINZI® (durvalumab), and Pfizer’s BAVENCIO® (avelumab). Several PD-1 or PD-L1 antibody agents are in clinical development, such as Regeneron’s cemiplimab, Novartis’ PDR-001, Tesaro's TSR042, and Pfizer’s PF-06801591. In 2017, global sales of the marketPD-1 class exceeded $9 billion according to company reports, which make some of these therapies among the best-selling and fastest launches in history for monotherapy PD-1 and PD-L1 antibodies have increased as new tumor types responding to these antibodies have been identified and data has accumulated regarding their potential efficacy. It is estimated that these inhibitors will have sales in excess of $36 billion by 2023 across 10 tumors that areoncology drugs, confirming the focus of current immune-oncology studies (i.e., melanoma, renal cell cancer, lung cancer, gastric cancer, bladder cancer, HNSCC, triple-negative breast cancer, Hodgkin's lymphoma, Merkel cell carcinoma, and liver cancer).

2017. Merck submitted an NDA for pembrolizumab in February 2018. Besides us, several domestic China companies also have drug candidates provides us with additional shots on goal. Based on our preclinical data, we believe a strong rationale exists for combining BGB-A317 with our drug candidates BGB-290, BGB-3111,in late-stage clinical development, including Hengrui’s SHR-1210, Innovent’s IBI308, and BGB-283. In addition, we are developing several immuno-oncology candidates that we intend to combine with BGB-A317.Junshi’s JS001.

Summary of Clinical TrialsResults

As of March 20, 2017,February 2, 2018, we have dosed over 400enrolled approximately 1,000 patients with BGB-A317and healthy adults in either monotherapy orclinical trials of tislelizumab, including combination trials. In April 2016, we completed the enrollment for the ongoing dose-escalation phase, and in May 2016, we initiated the dose-expansion phase ofPreliminary data from our monotherapy Phase 1 clinicaltrials suggested that tislelizumab was generally well-tolerated and exhibited anti-tumor activity in a variety of tumor types.

A multi-center, open-label Phase 1 trial of tislelizumab as monotherapy in relapsed or refractoryadvanced solid tumor patientstumors is being conducted in Australia, New Zealand, the United States, Taiwan, and South Korea and Taiwan.

        On November 11, 2016,consists of dose escalation, schedule-expansion, fixed-dose expansion, and indication expansion in disease-specific cohorts. From 2017 to date, we have presented updatedpreliminary data from multiple disease-specific subgroups in the dose escalation phase of our ongoing Phase 1 trial of tislelizumab in advanced solid tumors, including patients with hepatocellular carcinoma, or HCC, gastric cancer, or GC, esophageal cancer, or EC, head and neck squamous cell carcinoma, or HNSCC, ovarian cancer, or OC, and urothelial cancer, or UC.

Hepatocellular (Liver) Cancer

The data presented on HCC are from 40 patients treated with tislelizumab at a dose of 5 mg/kg every three weeks, or Q3W. The majority of the enrolled patients (34/40 patients) had a hepatitis B virus infection. At the time of the data cutoff on April 28, 2017, the median treatment duration was 64 days (range of 1 to 471 days).

AEs assessed by the investigator to be treatment-related occurred in 21 patients (53%). Of those, rash (20%), pruritus (13%), increased aspartate aminotransferase, or AST (8%), fatigue (5%), hypothyroidism (5%), and decreased appetite (5%) were reported in more than one patient. All of the treatment-related AEs were grades 1 or 2, with the exception of one grade 5 event of acute hepatitis assessed by the investigator to be related to tislelizumab. This patient had widely metastatic disease and died five weeks after receiving his first and only dose of tislelizumab and subsequently developing evidence of disease progression.

At the time of the data cutoff, the efficacy evaluation was early, and 27 patients were evaluable for response, defined as having measurable disease at baseline and at least one post-baseline tumor assessment, or progression or death. Twelve of the evaluable patients remained on treatment and the majority (seven) of these had only one tumor assessment at the time of the data cutoff. Confirmed and unconfirmed PRs were observed in three patients, all with hepatitis-B-positive HCC. One PR was confirmed before the cutoff date, one was confirmed one day following the cutoff date, and one was unconfirmed and the patient remained on therapy. Nine patients achieved SD, some of whom also had significant reductions in alpha-fetoprotein levels.

Gastric and Esophageal Cancers

The data presented on GC and EC were from 83 patients, 46 with advanced or metastatic GC and 37 with EC, treated with tislelizumab at 2 mg/kg or 5 mg/kg every two weeks, or Q2W, or Q3W. At the time of the data cutoff on June 8, 2017, median treatment duration was 45 days (range 4–457 days) for patients with GC and 50 days (range 1–246 days) for patients with EC.

AEs assessed by the investigator to be treatment-related occurred in 15 patients with GC (33%). Of those, abdominal pain (9%), decreased appetite (9%), fatigue (7%), nausea (7%), and pruritus (4%) were reported in more than one patient, and all of these cases were grades 1 or 2. AEs assessed to be treatment-related occurred in 15 patients with EC (41%). Of those, fatigue (16%), nausea (8%), decreased appetite (5%), infusion-related reaction (5%), and myalgia (5%) occurred in more than one patient, and all of these cases were grades 1 or 2. Only one patient in each cohort reported a treatment-related AE of grade 3 or higher: grade 3 proteinuria in one patient with GC and grade 3 dermatitis in one patient with EC. SAEs considered treatment-related included one case of diarrhea and one case of pyrexia, each occurring in patients with GC. Eight patients (two with GC, six with EC) had a treatment-emergent AE with a fatal outcome; none of which were assessed as treatment-related.

The efficacy-evaluable population included 34 GC patients and 31 EC patients. Despite the short median follow-up time, four achieved confirmed PRs and three achieved SD among GC patients. Among EC patients, two achieved a confirmed PR and nine achieved SD. Three of the nine patients with EC who achieved SD also achieved an unconfirmed PR, including one who awaits response confirmation. At the time of the data cutoff, 27 patients remained on treatment.

Head and Neck Squamous Cell Cancer

The HNSCC data presented were from 18 patients treated with tislelizumab at 5 mg/kg Q3W. At the time of the data cutoff on June 8, 2017, median treatment duration was 104 days (range 30–339 days).

AEs assessed by the investigator to be treatment-related occurred in seven patients (39%). Of those, only fatigue (11%, all grade 1 or 2) was reported in more than one patient. One case of grade 3 nausea was the only treatment-related AE of grade 3 or higher in severity. No patient discontinued treatment due to a treatment-related AE, and of the nine deaths reported, none were considered to be treatment-related.

The efficacy-evaluable population included 17 HNSCC patients. Despite short median follow-up time, three achieved a confirmed PR and six achieved SD. At the time of the data cutoff, three patients remained on treatment.

Ovarian Cancer

The OC dataset included 51 patients treated with tislelizumab at different dose levels (0.5 to 10 mg/kg Q2W in dose escalation, 2 or 5 mg/kg Q2W or Q3W or 200 mg Q3W in dose expansion, or 5 mg/kg Q3W in indication expansion). At the time of the data cutoff on June 8, 2017, median treatment duration was 71 days (range 29–540 days).

AEs assessed by the investigator to be treatment-related occurred in 28 patients (55%). Of those, fatigue (18%), pruritus (10%), rash (10%), diarrhea (10%), lethargy (6%), nausea (6%), abdominal pain (4%), dry eye (4%), dry skin (4%), onychoclasis (4%), and maculo-papular rash (4%) were reported in more than one patient, and all, except one case of grade 3 diarrhea, were grades 1 or 2. Two additional treatment-related AEs of grade 3 or higher included one case each of grade 3 pyrexia and stomatitis. SAEs considered to be treatment-related occurred in three patients and included one case each of pyrexia, colitis, and mucosal inflammation.

The efficacy-evaluable population included 50 OC patients. Two achieved a confirmed PR and 20 achieved SD. At the time of the data cutoff, six patients remained on treatment.

Urothelial Cancer

The UC dataset included 16 patients. Of these, 12 had one or more prior systemic anticancer treatment for metastatic disease and the remaining four had progressed after receiving platinum-based regimen in the neoadjuvant or adjuvant setting. In addition, five patients had prior radiotherapy. At the time of the data cutoff on August 28, 2017, median treatment duration was 4.3 months (range of 0.7 to 18.3 months). A total of 103six patients remained on treatment.

AEs assessed by the investigator to be treatment-related occurred in 14 patients (88%). Of those, fatigue (31%), rash (19%), infusion-related reactions (13%), nausea (13%), pain in extremity (13%), and proteinuria (13%) occurred in more than one patient. All of the treatment-related AEs were grade 1 or 2 except one case each of fatigue, hyperglycemia, and diabetes mellitus. One AE of muscle weakness, which was associated with disease progression and occurred more than one month after the last dose of tislelizumab, had a fatal outcome. This event was considered by the investigator to not be treatment-related.

The efficacy-evaluable population included 15 UC patients. One patient had a confirmed CR, four achieved a confirmed PR, and three achieved SD. Nine evaluable patients had PD-L1 status determined. There was one CR, two PR and one SD among six PD-L1 high patients, and one PR among three PD-L1 low or negative patients.

Combination with Pamiparib

On June 5, 2017, we presented initial data from the dose-escalation portion of the Phase 1 trial of tislelizumab in combination with our investigation PARP inhibitor, pamiparib, in patients with advanced solid tumors at the 2017 American Society for Immunotherapy of Cancer,Clinical Oncology, or SITC, 31^stASCO, Annual meeting.Meeting. We presented an updated dataset on January 25, 2018 at the 2018 ASCO-SITC Clinical Immuno-Oncology Symposium. The preliminary clinical data suggested that the combination of tislelizumab and pamiparib was generally well-tolerated and showed that BGB-A317anti-tumor activity in multiple solid tumor types.

At the data cutoff of July 31, 2017, 49 patients were enrolled in the dose-escalation portion of the trial. Cohorts of six to 13 patients each received treatments at five planned dose levels, or DLs. Tislelizumab was well-toleratedadministered at 2 mg/kg Q3W with AEspamiparib at 20, 40, or 60 mg twice daily, or BID, in keepingDLs 1, 2, and 3, respectively. Tislelizumab was also administered at a fixed dose of 200 mg Q3W with the class effect. Among 103pamiparib at 40 or 60 mg twice daily in DLs 4 and 5, respectively. Duration of treatment was greater than 200 days for 10 patients, evaluable for safety at the timeand a total of seven patients remained on treatment as of the data cutoff fordate. 

Dose-limiting toxicities occurred in four patients; these included one patient with grade 2 nausea, one patient with grade 3 rash at DL 4, one patient with grade 2 nausea or vomiting and one patient with grade 4 autoimmune hepatitis at DL 5. The trial identified the current safety analysis on August 15, 2016,recommended Phase 2 dose to be tislelizumab at 200 mg fixed dose Q3W and pamiparib at 40 mg BID.

Grade 3 or 4 non-immune AEs assessed by the most common treatment-related AEs (³ 5%) were fatigue (19%), diarrhea (13%), rash (11%), pruritus (11%investigator to be related to the treatment regimen and reported in more than one patient included anemia (12%), nausea (8%(4%), hypothyroidism (7%), and infusion related reaction (6%fatigue (4%). Treatment-related SAEsImmune-related AEs of any grade regardless of causality occurred in 23 patients (47%); those reported in at least two patients included four cases of colitis, two cases of hypotension, and one case each of diarrhea, diabetes mellitus, diabetic ketoacidosis, dyspnea, hypoxia, infusion-related reaction, and pneumonitis. Among these, grade 3 treatment-related SAEs included the two cases of hypotension and one case each of colitis, diabetes mellitus, diabetic ketoacidosis, dyspnea, hypoxia, and pneumonitis. Other treatment-related grade 3 AEs included two cases each of fatigue and hyperglycemia, and one case each of back pain, elevated alanine aminotransferase, andor ALT, elevated AST, hypothyroidism, auto-immune hepatitis / hepatitis, diarrhea, elevated gamma-glutamyl transferase. The table below summarizes the AE events.

        Additional tumor types enrolled in the study include endometrial, esophageal, gallbladder, breast, and thyroid cancers, cholangiocarcinoma, sarcoma, glioblastoma, hepatocellular, anal squamous cell, cutaneous squamous cell, adrenocorticoid, and adenoid cystic carcinomas, adenocarcinoma of mandible, and undifferentiated adenocarcinoma from teratoma, with one to five patients each.

        To date,In China, we have two internal combination clinicaladditional China-specific pivotal trials ongoing. In February 2016, we initiated a Phase 1 clinicalongoing, in patients with R/R HL and in patients with PD-L1 positive urothelial cancer. The trial of BGB-290 in combination with BGB-A317. The dose escalation portionHL has completed enrollment. Subject to successful completion of the studytrial, we plan to submit a NDA in China for patients with HL in 2018.

Pamiparib (BGB-290), a PARP Inhibitor

Pamiparib is currently enrolling subjects with TNBC, ovarian cancer, fallopian tube cancer, peritoneal cancer, SCLC,an investigational small molecule inhibitor of PARP1 and tumors likely to have DNA damage repair deficiencies susceptible to PARP inhibition or likely to respond toPARP2 that is being evaluated as a PD-1 blockade. In June 2016, we initiated a Phase 1 clinical trial with BGB-3111potential monotherapy and in combination with BGB-A317combinations for the treatment of various B-cell malignancies.

        We have also initiated a Phase 1 open-label, multi-center trial with BGB-A317 in China in December 2016. The Phase 1 open-label, multi-center study of BGB-A317 is designed to investigate the safety, tolerability, pharmacokinetics, and preliminary antitumor activity of BGB-A317 in Chinese patients with advanced solid tumors.

        We plan to advance BGB-A317 into late-stage development. In addition, we plan to present the data from the dose-expansion phase of our clinical trial at a medical conference in 2017. We also plan to present data from our combination trials in 2017.

BGB-290, PARP Inhibitor

BGB-290 is a molecularly targeted, orally available, potent and highly selective inhibitor of PARP1 and PARP2. We are currently developing BGB-290 as a monotherapy and in combination with other therapies for the treatment of homologous recombination deficient cancers, which are cancers that contain abnormalities in their DNA molecule repair mechanisms, making these cancers particularly sensitive to PARP inhibitors. We believe BGB-290pamiparib has the potential to be differentiated from other PARP inhibitors in termsbecause of its potential brain penetration, greater selectivity, strong DNA-trapping activity, and good oral bioavailability. Pamiparib has demonstrated pharmacological properties such as brain penetration and PARP–DNA complex trapping in preclinical models.

        We have completed the dose-escalation phase of our clinical trial in Australia and are conducting the dose-expansion phase of our clinical trial. We have dosed over 110 patients with BGB-290 in monotherapy and combination trials as of March 20, 2017. Initial analysis of data from this trial has shown BGB-290 to be well-tolerated. Proof-of-concept has also been established, with anti-tumor activity seen starting at the lowest tested dose and data suggestive of a wide therapeutic window.

Mechanism of Action

PARP family members PARP1 and PARP2 are involved in DNA replication and transcriptional regulation and play essential roles in cell survival in response to DNA damage. PARP1 and PARP2 are key base-excision-repair proteins that function as DNA damage sensors by binding rapidly to the site of damaged DNA and modulating a variety of proteins in DNA repair processes. Inhibition of PARPs prevents the repair of common single-strand DNA breaks which leads to formation of double-strand breaks during DNA replication. Double-strand DNA breaks in normal cells are repaired by homologous recombination, and normal cells are relatively tolerant of PARP inhibition. On the other hand, cancer cells with mutations in breast cancer susceptibility gene, or BRCA1/2 genes, which are key players in homologous recombination, are highly sensitive to PARP inhibition, ainhibition. This phenomenon is called "synthetic lethality" that“synthetic lethality” and is the foundation of the therapeutic utility of PARP inhibitors as a monotherapy for BRCA mutant cancers. In addition to hereditary BRCA1/2 mutations, the synthetic lethallethality concept has been broadened to include sporadic tumors that display homologous recombination deficiency, or HRD, a gene expression profile that resembles that of a BRCA deficient tumor. HRD can stem from somatic mutation of BRCA1/2, epigenetic silencing of BRCA genes or genetic or epigenetic loss of function of other genes in homologous recombination DNA damage repair pathways. Recent third-partyThird-party clinical studies have published results demonstrating that sensitivity to platinum-based chemotherapies confers sensitivity to

submitted an NDA for olaparib. In addition, Zai Lab obtained the development and commercial rights for niraparib in China, and is currently running a Phase 1 pharmacokinetics study and a Phase 3 pivotal trial as a potential maintenance treatment after two lines of platinum therapy in patients withBRCA mutations. In ovarian cancer and other cancers, there is growing understanding and increasing clinical data indicating that multiple DNA repair defects or HRD, other thanBRCA mutations could render the tumor cell to be susceptible to PARP inhibition. Collectively, we believe the addressable patient population for OC. There are also some PARP inhibitors is fast expanding.being developed by domestic Chinese companies, including fluzoparib from Hengrui / Hansoh. 

Potential Advantages of BGB-290

        BGB-290 is a highly potent and selective PARP inhibitor with favorable oral bioavailability. We believe BGB-290 has the potential to be differentiated from other PARP inhibitors, in terms of brain penetration, selectivity, DNA-trapping activity, and oral bioavailability.

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Brain penetration.  BGB-290 has shown significant brain penetration in preclinical models. The brain/plasma ratio in mice after oral dosing of 10 mg/kg BGB-290 was approximately 18%. We believe the only other PARP inhibitor currently in development that has shown significant brain penetration is veliparib, which appears to be significantly less potent compared to other PARP inhibitors and has minimal DNA-trapping activity. BGB-290 has demonstrated strong synergistic anti-tumor effects with temozolomide in treating intracranially implanted glioblastoma multiforme, consistent with its ability to cross the blood-brain barrier.



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Greater selectivity potentially leading to improved safety and tolerability.  BGB-290 is a highly active and selective PARP1 and PARP2 inhibitor in biochemical and cellular assays. Enhanced selectivity could potentially translate into a better safety and tolerability profile over existing PARP inhibitors. We believe a favorable safety and tolerability profile could be particularly advantageous for the combined use of BGB-290 with immune checkpoint inhibitors or chemotherapeutic agents.



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Strong DNA-trapping activity.  PARP inhibitors are reported to trap PARP protein at damaged DNA sites, creating more cytotoxic DNA lesions. The potency of DNA-trapping for PARP inhibitors is shown to be better correlated with tumor cell growth-inhibition than inhibition of PARP enzyme activity. BGB-290 has demonstrated potent activity across multiple assays: DNA-trapping, enzymatic and cellular inhibition of PARP and tumor cell growth inhibition.



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Good oral bioavailability.  In preclinical animal models, BGB-290 demonstrated bioavailability of 71–76% in animal studies. In the ongoing dose-escalation phase of our clinical trial, we observed a linear and dose-dependent pharmacokinetic profile for BGB-290 with approximately two-fold accumulation at steady state.

pathway is a chainconsists of proteins in the cell that communicatestransmit a signal from a receptor on the surface of the cell to the DNA in the nucleus of the cell. This pathway plays an essential role in regulating cell proliferation and survival. We intend to develop BGB-283 to treatbelieve that lifirafenib as monotherapy or in combination with other agents may have a potential for treating various malignancies, such as melanoma, NSCLC, and endometrial cancer.

Roche’s ZELBORAF® (vemurafenib) and Novartis’ TAFINLAR® (dabrafenib) are two of the currently approved BRAF inhibitors for treating late-stage BRAF V600E/K mutant melanoma. In addition, the combination of dabrafenib and GSK’s MEKINIST® (trametinib), an MEK inhibitor, as well vemurafenib and COTELLIC® (cobimeditinib), another MEK inhibitor, are approved in patients with BRAF V600E/K mutation-positive metastatic melanoma. We are aware of several other BRAF inhibitors in clinical development targeting BRAF V600E/K mutated cancers including melanoma, colorectal cancer, NSCLC, endometrial cancer, ovarian cancer, pancreatic cancerhairy cell leukemia and papillary thyroid carcinoma. cancer. These BRAF inhibitors include Array Biopharma's encorafenib, currently in Phase 3 trials, and Takeda's MLN-2480 (BIIB-024) and TAK-580, Daiichi Sankyo's PLX-8394, Roche's RG-6185, Genentech’s HM95573, and Novartis’ LXH254 in Phase 1 trials.

Currently approved first-generation BRAF inhibitors, vemurafenib and dabrafenib, are only active against the BRAF monomer. BGB-283 inhibits not onlyBecause lifirafenib is designed to inhibit both the monomer but also theand dimer forms of BRAF. WeRAF, we believe BGB-283lifirafenib has the potential to be a first-in-class RAF dimer inhibitor globally.

        As of March 20, 2017, we have dosed over 170 patients with BGB-283. In June 2015, we completed the dose-escalation phase of our multi-center,inhibitor. Lifirafenib was evaluated in a multicenter, open-label Phase 1 clinical trial in Australia and New Zealand. We are currently conducting the multi-arm dose-expansion phase of the Phase 1 clinical trialconducted in Australia and New Zealand comprised of two parts — dose escalation and in April 2016 completed the enrollment for the dose-expansion phase of our clinical trial for the treatment of solid tumors with BRAF mutations and/or aberrations in the MAPK pathway, including melanoma, thyroid cancer, colorectal cancer, NSCLC and other non-V600E BRAF mutated cancers, and KRAS/NRAS mutated endometrial cancer, colorectal cancer, NSCLC and other KRAS/NRAS mutated cancers.

Mechanism of Action

        The MAPK pathway is a chain of proteins that communicates a signal from a receptor on the surface of a cell to the DNA in the nucleus of the cell. The pathway includes a small G protein (RAS) and three protein kinases (RAF, MEK, and ERK). A kinase is an enzyme that catalyzes the transfer of a phosphate group from a donor molecule to an acceptor. This process often acts as an "on" or "off" switch to regulate cellular signaling. The MAPK pathway plays an essential role in regulating cell proliferation and survival. Activation of the RAS-RAF-MEK-ERK kinase cascade by external stimuli transduces signals from the plasma membrane into the cell nucleus to control gene expression and determine cell fate. Aberrant activation of the MAPK signal transduction pathway is frequently found in different types of cancers, contributing to increased cell division, suppressed apoptosis, and enhanced cell motility and invasion. In many cancers, a defect in the MAPK pathway leads to uncontrolled tumor growth. The two key components of the MAPK pathway, BRAF and RAS, are two of the most frequently mutated genes in human cancers. BRAF is one of the three kinases that belong to the RAF kinase family. There are three members: ARAF, BRAF and CRAF. BRAF is the most frequently mutated oncogene in this kinase superfamily. Mutated BRAF and RAS lead to activation of the MAPK pathway and promote tumor development and growth. Functions of BRAF in the MAPK pathway are key to cell proliferation and survival. Mutations that lead to activation of BRAF promote cell transformation and proliferation and thus positively correlate with tumor development and growth. The most frequent BRAF mutation, BRAF V600E, causes constitutive activation of the kinase as well as insensitivity to negative feedback mechanisms. The mutated BRAF signals as a monomer, independent of upstream growth stimuli. It has been found that RAF kinases can homo- and heterodimerize and form homodimer or heterodimer of RAF proteins. Dimerization has been reported to be one of the key mechanisms of resistance to first-generation BRAF inhibitors, such as vemurafenib and dabrafenib. The three most common molecular mechanisms of acquired resistance of BRAF V600E melanomas to RAF inhibitors—NRAS mutation, splicing of BRAF V600E that produce a truncated BRAF kinase, and BRAF V600E overexpression due to gene amplification—all result in dimerization of BRAF V600E. First-generation BRAF inhibitors only inhibit the BRAF V600E monomer form at physiologically meaningful concentrations. In contrast, BGB-283 has been shown to inhibit both BRAF V600E monomer and RAF dimer in BRAF inhibitor sensitive and resistant melanoma cell

BGB-A333, a PD-L1 Inhibitor

BGB-A333 is an investigational humanized IgG1-variant monoclonal antibody against PD-L1, the ligand of PD-1. We intend to develop BGB-A333 either as a monotherapy or in combination with other cancer therapies, such as tislelizumab, to treat various cancers and potentially other indications. BGB-A333 is currently being evaluated in a Phase 1 clinical trial in Australia to test the safety and anti-tumor effect of BGB-A333 alone and in combination with tislelizumab in patients with advanced solid tumors.

Sitravatinib (MGCD-0516), a Multi-Kinase Inhibitor

In January 2018, we regained the worldwide rights to BGB-283 after Merck KGaA, Darmstadt Germany informed us that it will not exercise the Continuation Option in its formerentered into an exclusive license agreement with Mirati Therapeutics, Inc., or Mirati, for the development, manufacturing and commercialization of Mirati’s sitravatinib in Asia (excluding Japan and certain other countries), Australia, and New Zealand. Sitravatinib is an investigational spectrum-selective kinase inhibitor which potently inhibits receptor tyrosine kinases, including RET, TAM family receptors (TYRO3, Axl, MER), and split family receptors (VEGFR2, KIT). Sitravatinib is being evaluated by Mirati as a single agent in a dose-expansion trial in patients whose tumors harbor specific genetic alterations in NSCLC and other tumor types. Sitravatinib has shown encouraging interim results in an ongoing Phase 2 trial in combination with nivolumab in NSCLC patients who have progressed after prior treatment with a checkpoint inhibitor. We plan to commercializeinvestigate sitravatinib in combination with tislelizumab in China and manufacture BGB-283the licensed territory.

Under the license agreement, Mirati retains exclusive rights for the development, manufacturing and commercialization of sitravatinib outside of the licensed territory. We made an upfront cash payment of $10 million to Mirati and agreed to pay up to $123 million based upon the achievement of certain development, regulatory and sales milestones, as well as royalties at tiered percentage rates ranging from mid-single digits to twenty percent on annual net sales of sitravatinib in the licensed territory, subject to reduction under specified circumstances.

CC-122, a Cereblon Modulator

CC-122 is an investigational next-generation Cereblon modulator currently in clinical development by Celgene. It is in multiple Phase 1 and Phase 1/2 clinical trials, both as a single agent and in combination, for hematological and solid tumor cancers outside of China. TheCC-122 has been differentiated from previous compounds (such as thalidomide, lenalidomide and pomalidomide) and has been developed based on the scientific understanding of Cereblon-mediated protein homeostasis.

In August 2017, we entered into a license and supply agreement with Merck KGaA, Darmstadt GermanyCelgene, pursuant to which we were granted a license to develop and commercialize CC-122 in China. See “—Collaboration Agreements—Celgene.”

Our Commercial Products

We commercialize the following cancer drugs in China under an exclusive license from Celgene.

ABRAXANE®

ABRAXANE®  (paclitaxel albumin-bound particles for injectable suspension) is further detaileda solvent-free chemotherapy product which was developed using Celgene’s proprietary nab® technology platform. This protein-bound chemotherapy agent combines paclitaxel with albumin. Globally, ABRAXANE® is approved for uses in "—Collaborationbreast cancer, non-small cell lung cancer, pancreatic cancer and GC with Merck KGaA, Darmstadt Germany."geographic differences in labeling. In China, ABRAXANE® is approved for metastatic breast cancer after failure of combination chemotherapy for metastatic disease or relapse within six months of adjuvant chemotherapy. Prior therapy should have included an anthracycline unless clinically contraindicated.

According to Chen et al. 2016, there were approximately 4.3 million new cancer cases and 2.8 million cancer deaths in China in 2015, with breast cancer as the most common tumor type in Chinese women. It is estimated that in 2015 breast cancer affected 268,600 women and resulted in 69,500 deaths. Targeted therapy, hormone therapy and chemotherapy are three main strategies to treat different types of breast cancer.

Taxane is the backbone chemotherapy to treat triple negative breast cancer, Her2+ or aggressive estrogen-receptor-positive and/or progesterone-receptor-positive breast cancer patients. ABRAXANE® is the only currently approved taxane that does not need pre-medication of dexamethasone to prevent hypersensitivity reactions, and several Phase 3 trials have demonstrated its efficacy and safety compared to solvent-based taxanes in both metastatic breast cancer and neo-adjuvant settings. Unlike other taxanes, ABRAXANE® has demonstrated unique and strong efficacy in pancreatic cancer and has become the backbone of first line standard of care for metastatic pancreatic cancer globally.

The taxanes marketed in China include two branded solvent-based paclitaxel (TAXOL® and ANZATAX), one branded docetaxel (TAXOTERE®), one lipsome-paclitaxel (LIPUSU), one albumin-bound paclitaxel (ABRAXANE®) and dozens of generic taxanes. LIPUSU is currently the market leader with approximately one-third of the value share. 

In 2017, ABRAXANE® held an estimated 5.4% value share in the taxane market in China. In February 2018, a generic albumin-bound paclitaxel from CSPC Pharmaceutical Group was approved by the CFDA. Another generic form of albumin-bound paclitaxel from Hengrui is under review by the CFDA. 

In 2018, we plan to seek to differentiate and defend ABRAXANE® against generic competition in China, expand our sales force footprint and hospital coverage, and improve patient access through critical illness insurance negotiations and provincial reimbursement listings. 

REVLIMID®

REVLIMID®  (lenalidomide) is an oral immunomodulatory drug that was approved by the CFDA in China in 2013 for the treatment of multiple myeloma, or MM, in combination with dexamethasone in adult patients who have received at least one prior therapy. On February 2, 2018, REVLIMID® received CFDA approval of a new indication for the treatment of MM in combination with dexamethasone in adult patients with previously untreated MM who are not eligible for transplant. Chinese guidelines recommend lenalidomide as a standard of care for the treatment of R/R and newly diagnosed MM as well as in the maintenance setting. 

MM is a malignant plasma cell disease whose tumor cells originate in plasma cells in the bone marrow, which are cells in which B-lymphocytes develop to the final functional phase. The current World Health Organization classifies it as a B-cell lymphoma, also known as plasma cell myeloma / plasmacytoma. MM is characterized by abnormal proliferation of bone marrow plasma cells accompanied by overproduction of monoclonal immunoglobulin, or M protein. MM is often accompanied by multiple osteolytic lesions, hypercalcemia, anemia, and kidney damage. Due to the inhibition of normal immunoglobulin production, patients are prone to a variety of bacterial infections.

At present, MM is one of the most common malignant tumors in the blood system and occurs frequently in the elderly. The actual incidence increases with age, peaking from 60 to 70 years of age. Men suffer slightly more than women. Globally, the incidence was estimated at 2 to 3 per 100,000, with a male-to-female ratio of 1.6:1, and most patients are over 40 years old, according to Siegel et al., 2011 and IMS analysis. It is estimated that the incidence rate of MM is approximately 1-2 per 100,000 people in China, or approximately 18,000 new patients in 2017, out of which 10,000 are in urban populations, according to Lu et al., 2014, IMS analysis, and local market research. With a growing aging population and improving diagnosis, China has seen a steady increase in MM incidence.

Although MM cannot be cured, the progression of the disease can be controlled. The purpose of treatment is to extend patients’ survival and improve quality of life. The main treatments for MM in China include VELCADE®, which is a proteasome inhibitor marketed by Johnson and Johnson in China since 2006, generic thalidomide and REVLIMID®. VELCADE® currently dominates the market in first-line MM treatment in China, while VELCADE® and REVLIMID® share the market in thesecond line. The first lenalidomide generic and first bortezomib generic in China were approved in November 2017. Another new agent for R/R MM, ixazomib, an oral proteasome inhibitor developed by Takeda, is currently under regulatory review in China.

In 2017, the patient share for REVLIMID® in second-line MM in the top 30 hospitals in China rose from an estimated 36% to 47%. REVLIMID® achieved national reimbursement drug listing, or NRDL, through a successful price negotiation with the Ministry of Human Resources and Social Security in June 2017. 

VIDAZA®

VIDAZA® (azacitidine for injection)is a pyrimidine nucleoside analog that has been shown to reverse the effects of DNA hypermethylation and promote subsequent gene re-expression. VIDAZA was approved in China in April 2017 for the treatment of intermediate-2 and high-risk myelodysplastic syndromes, or MDS, chronic myelomonocyte leukemia, or CMML, and acute myeloid leukemia, or AML, with 20% to 30% blasts and multi-lineage dysplasia. In January 2018, VIDAZA®, became commercially available in China.

MDS are a group of cancers in which immature blood cells in the bone marrow do not mature and therefore do not become healthy blood cells. Approximately seven per 100,000 people are affected with approximately four per 100,000 people newly acquiring the condition each year globally according to Germing et al., 2013. The typical age of onset is 70 years. The higher-risk MDS (intermediate-2 and high-risk MDS) is fatal because the median overall survival rate is only 0.4-1.1 years and nearly 30% of these patients progress to AML,according to the U.S. National Comprehensive Cancer network, or NCCN, MDS guideline 2013 and MDS Foundation. DNA methylation is an important mechanism of epigenetic gene regulation, but aberrant DNA hypermethylation can result in gene silencing. Silencing of tumor suppressor genes promotes cancer development and progression. MDS patients display aberrant DNA methylation of thousands of genes, which increases with advanced disease and is a poor prognostic factor.

In China, the main treatments for intermediate-2 and high-risk MDS are conventional care regimen, or CCR (best supportive care, low-dose cytarabine and intensive chemotherapy), and hypomethylating agents, or HMAs. DACOGEN® (decitabine) marketed by Johnson and Johnson was the first HMA agent approved in China in 2009. In the past several years, at least six decitabine generics have become available. In 2017, decitabine was listed in the NRDL. Nevertheless, there are still over 50% of higher-risk MDS patients treated by CCR and the unmet need remains large.

VIDAZA® is the only approved HMA shown to prolong survival for patients with MDS. Besides reversing the effects of DNA hypermethylation, VIDAZA® inhibits protein synthesis via RNA incorporation. VIDAZA® is a Category 1 recommended treatment for patients with intermediate-2 and high-risk MDS, according to the U.S. NCCN guideline. It is also a first-line recommended treatment for patients with intermediate-2 and high-risk MDS, according to the Chinese MDS treatment guidelines.

Our Preclinical Programs

        OurWe have a proprietary cancer biology platform that has also allowed us to develop our clinical-stage drug candidates and several additional preclinical-stage drug candidates in potentially important targeted areas. These currently consist of targeted therapies and immuno-oncology agents, including a PD-L1 monoclonal antibody, an additional RAF dimer inhibitor, a TIM-3 cell surface protein monoclonal antibody, and a BTK inhibitor for non-oncology indications. We anticipate advancing one or more of our preclinical assets into the clinic in the next 12 months. We believe we have the opportunity to combine our PD-1 monoclonal antibodytislelizumab with other clinical-stage andour preclinical candidates in our pipeline portfolio to target multiple points in the cancer immunity cycle. We also may seek to develop companion diagnostics that will help identify patients thatwho are most likely to benefit from the use of our drug candidates.

Collaboration with Merck KGaA, Darmstadt GermanyManufacturing and Supply

We have an approximately 11,000 square meter manufacturing facility in Suzhou, China, where we produce small molecule and biologics drug candidates for clinical supply and which we plan to use for commercial supply of our small molecule drug candidates, if approved. This facility consists of one oral-solid-dosage production line for small molecule drug products and one pilot plant for monoclonal antibody drug substances. In January 2018, the facility received a manufacturing license from the provincial FDA, which is required for the commercial manufacturing of zanubrutinib in China following NDA approval.

BGB-283In addition, we have formed a joint venture with Guangzhou Development District and its affiliate, Guangzhou GET Technology Development Co., Ltd., to build a 24,000-liter commercial-scale biologics manufacturing facility in Guangzhou, China. Over $300 million in funding will be provided for construction of the 100,000 square meter manufacturing site and for research and development of biologic drug candidates in China. We have contracted with

General Electric for the purchase of its state-of-the-art KuBio™ prefabricated biomanufacturing equipment and commenced construction in 2017. We expect the first phase of the facility to be completed and operational in 2019.

        On May 24, 2013,We also have an approximately 140 square meter manufacturing facility at our research and development facilities in Beijing, China, which produces preclinical and clinical trial materials for some of our small molecule drug candidates.

We outsource to a limited number of external contract manufacturers the production of some drug substances and drug products, and we expect to continue to do so to meet the preclinical, clinical, and potential commercial requirements of our drugs and drug candidates. We have framework agreements with most of our external service providers, under which they generally provide services to us on a short-term and project-by-project basis. For example, we have an agreement with a contract manufacturer for clinical supply of zanubrutinib and expect to enter into a commercial supply agreement for zanubrutinib in the future. In addition, in January 2018, we entered into license agreementsa commercial supply agreement with Merck KGaA, Darmstadt Germany,Boehringer Ingelheim Biopharmaceuticals (China) Ltd., or Boehringer Ingelheim, for our investigational anti-PD-1 antibody therapy, tislelizumab, which will be manufactured at Boehringer Ingelheim’s facility in Shanghai, China as part of a marketing authorization holder, or MAH, trial project pioneered by us and Boehringer Ingelheim. Under the terms of the commercial supply agreement, Boehringer Ingelheim will manufacture tislelizumab in China under an exclusive multi-year arrangement, with contract extension possible. In addition, we also obtained certain preferred rights for future capacity expansion by Boehringer Ingelheim in China. For our commercial products licensed from Celgene, we rely on Celgene and its contract manufacturers outside of China for the supply of these drugs.

Currently, we obtain raw materials for our manufacturing activities from multiple suppliers who we believe have sufficient capacity to meet our demands. In addition, we believe that adequate alternative sources for such supplies exist. However, a risk exists that an interruption supplies would materially harm our business. We typically order raw materials and services on a purchase order basis and do not enter into long-term dedicated capacity or minimum supply arrangements.

Manufacturing is subject to extensive regulations that impose various procedural and documentation requirements governing recordkeeping, manufacturing processes and controls, personnel, quality control and quality assurance, among others. Our manufacturing facilities and the contract manufacturing organizations we use to manufacture our drugs and drug candidates operate under current good manufacturing practices, or cGMP, conditions. cGMP are regulatory requirements for the production of pharmaceuticals that will be used in humans.

Collaboration Agreements

Celgene Corporation

Exclusive License and Collaboration Agreement

On July 5, 2017, we entered into an Exclusive License and Collaboration Agreement with Celgene and its wholly-owned subsidiary, Celgene Switzerland LLC, or Celgene Switzerland, which became effective on August 31, 2017, pursuant to which we amended and restated on December 10, 2013 and which we refer to respectively asgranted the Ex-PRC BRAF Agreement and PRC BRAF Agreement. On October 1, 2015 and December 3, 2015, we further amended the Ex-PRC BRAF Agreement. Pursuant to the Ex-PRC BRAF Agreement and PRC BRAF Agreement (a) we granted to Merck KGaA, Darmstadt GermanyCelgene parties an exclusive license under certain of our intellectual property rightsright to develop and manufacture, and, if Merck KGaA, Darmstadt Germany exercised its Continuation Option (described below), to commercialize and manufacture our compound BGB-283, and any other compound covered by the same existing patent rights with primary activity to inhibit wildtype or certain mutant BRAF, or the Licensed BRAF Inhibitors,tislelizumab in all countriesfields of treatment, other than hematology, in the United States, Europe, Japan and the rest of world excluding The People's Republic of China,other than Asia, which we refer to as the Ex-PRC Territory,PD-1 License Agreement.

Pursuant to the terms of the PD-1 License Agreement, the Celgene parties made upfront payments of $263 million to us. We may also receive up to $980 million in potential development, regulatory and (b) Merck KGaA, Darmstadt Germany granted us an exclusive license under certainsales milestone payments and tiered royalties based on percentages of its intellectual property rightsannual net sales, depending on specified terms, in the low double digit to mid twenties, with customary reductions in specified circumstances. Royalties are payable on a licensed product-by-product and country-by-country basis until the latest of the expiration of the last valid patent claim, the expiration of regulatory exclusivity, or 12 years after the first commercial sale of such licensed product in the country of sale.

Each party has the right to develop manufacture and commercialize tislelizumab in its respective field and territory, and has also agreed to collaborate through a joint steering committee comprised of an equal number of representatives from each party on, among other things, the Licensed BRAF Inhibitorsconduct of up to eight global pivotal clinical trials, or the Basket Studies. Each Basket

Study will be conducted and funded by either us or Celgene in accordance with a mutually agreed development plan and study design. For any Basket Studies conducted and funded by us, Celgene has the right to opt into such program, at which time it will reimburse us for agreed upon development costs based on a multiple of such costs that varies according to the stage of development at which Celgene opts into the program. Celgene has committed to use commercially reasonable efforts to develop at least one licensed product, to seek specified regulatory approvals and to spend at least $100 million on development for the Basket Studies led by Celgene, subject to specified conditions. In addition, we retain the right to develop tislelizumab in combination therapies with our portfolio compounds, and Celgene has a right of first negotiation for tislelizumab in the hematology field and in our territory, subject to specified conditions.

The People's RepublicPD-1 License Agreement contains customary representations, warranties and covenants by us and Celgene. Unless earlier terminated, the agreement will expire on a licensed product-by-product and country-by-country basis upon the expiration of the royalty term in such country for such licensed product. The agreement may be terminated by Celgene upon 30 days’ prior written notice, or by either party upon the other party’s bankruptcy or uncured material breach.

Celgene China Agreements

On July 5, 2017, we and a wholly-owned subsidiary of Celgene, Celgene Logistics Sàrl, or Celgene Logistics, entered into a License and Supply Agreement, which we refer to as the PRC Territory, subjectChina License Agreement and which became effective on August 31, 2017, pursuant to which we were granted the non-compete restrictions discussed below.

        Under the Ex-PRC BRAF Agreement, Merck KGaA, Darmstadt Germany had the optionright to continue such agreementexclusively distribute and obtain the exclusive commercialization rights described abovepromote Celgene’s approved cancer therapies, ABRAXANE®, REVLIMID®, and VIDAZA®, and its investigational agent CC-122 in clinical development in China, excluding Hong Kong, Macau and Taiwan. In addition, if Celgene decides to commercialize a new oncology product through a third-party in the Ex-PRC Territory, which we refer to aslicensed territory during the Continuation Option, by notifying us of that election within 60 days following its receiptfirst five years of the final reports for the last of certain pre-specified Phase 1 clinical trials thatterm, we retained the responsibility to perform. In March 2017, Merck KGaA, Darmstadt Germany informed us that it will not exercise the Continuation Option, and thus the Ex-PRC BRAF Agreement has terminated in its entirety except for certain provisions that will survive the termination.

        Further, pursuant to the PRC BRAF Agreement, Merck KGaA, Darmstadt Germany has an exclusivehave a right of first negotiation to acquire exclusive commercialization rights underobtain the BGB-283 BRAF program inright to commercialize the PRC Territory on termsproduct, subject to be mutually agreed in the event we seek to license our intellectual property rights to a third party therein.certain conditions.

        Under the Ex-PRC and PRC BRAF Agreements, in December 2013, we received $13 million in non-refundable payments. As of December 31, 2016, we have received $9 million in milestone payments. We are eligible to receive additional $14 million in payments upon the successful achievement of pre-specified clinical milestones in the PRC Territory.

        We are required to pay Merck KGaA, Darmstadt Germany a high single-digit royalty on aggregate net sales of Licensed BRAF Inhibitors in the PRC Territory.

The term of the PRC BRAFChina License Agreement continues unlessis 10 years and may be terminated as permitted by either party. Underparty upon written notice in the PRC BRAF Agreement, Merck KGaAevent of uncured material breach or bankruptcy of the other party, or if the underlying regulatory approvals for the covered products are revoked. Celgene Logistics also has the right to terminate duethe agreement with respect to REVLIMID® at any time upon written notice to the Company.

The China License Agreement contains customary representations and warranties and confidentiality and mutual indemnification provisions.

On August 31, 2017, our uncured breachwholly owned subsidiary, BeiGene (Hong Kong) Co., Ltd., acquired 100% of the equity interests of Celgene Pharmaceutical (Shanghai) Co., Ltd., or voluntarily upon prior written notice. We haveCelgene Shanghai, a wholly-owned subsidiary of Celgene Holdings East Corporation established under the rightlaws of China. This company, which we subsequently renamed BeiGene Pharmaceutical (Shanghai) Co., Ltd., is in the business of, among other things, providing marketing and promotional services for the pharmaceutical products that we license from Celgene. Prior to terminateclosing, Celgene separated out certain business functions, including regulatory and drug safety, that continue to support the PRC BRAF Agreement due to business acquired by us.

Merck KGaA's uncured breach or for any challenge brought against our licensed patent rights.KGaA, Darmstadt Germany

Pamiparib

BGB-290

On October 28, 2013, we entered into license agreements with Merck KGaA, Darmstadt Germany, which we refer to respectively as the Ex-PRC PARP Agreement and the PRC PARP Agreement, pursuant to which (a) we granted to Merck KGaA, Darmstadt Germany an exclusive license under certain of our intellectual property rights to develop and manufacture, and, if Merck KGaA, Darmstadt Germany exercised a continuation option, to commercialize and manufacture our compound BGB-290pamiparib and any other compound covered by the same existing patent rights with primary activity to inhibit PARP 1, 2 or 3 enzymes, or the Licensed PARP Inhibitors, in the Ex-PRC Territory, and (b) Merck KGaA, Darmstadt Germany granted us an exclusive license under certain of its intellectual property rights to develop, manufacture and commercialize the Licensed PARP Inhibitors in the People’s Republic of China, or the PRC, which we refer to as the PRC Territory.

On October 1, 2015, pursuant to a purchase of rights agreement, we repurchased all of Merck KGaA, Darmstadt Germany's rights under the Ex-PRC PARP Agreement, in consideration for, among other things, a one-time payment of $10 million and reduction of future milestone payments we were eligible for under the PRC PARP Agreement. In connection with that repurchase, we also agreed to provide Merck KGaA, Darmstadt Germany with global access to our clinical PARP supplies, including BGB-290,pamiparib, for its combination trials, during the option period. The Ex-PRC PARP Agreement was terminated, except for certain provisions therein that are needed to effectuate the continuation of the PRC PARP Agreement, including those provisions that were required in the event that Merck KGaA, Darmstadt Germany exercised its PRC Commercialization Option (described below).

Pursuant to the PRC PARP Agreement, if we failfailed to achieve national priority project status in the PRC Territory under its 12th or 13th five-year plan with respect to our BGB-290 PARP pamiparib program in the PRC Territory by July 28, 2017, Merck KGaA, Darmstadt Germany can exercise itshas an option to acquire exclusive commercialization rights under the BGB-290 PARP pamiparib program in the PRC Territory, which we refer to as the PRC Commercialization Option. If, however, we do achieveachieved national priority by July 28, 2017, Merck KGaA, Darmstadt Germany only has a right of first negotiation to acquire exclusive commercialization rights under the BGB-290 PARP pamiparib program in the PRC Territory in the event we seek to license our intellectual property rights to a third party therein.party. We applied for national priority project status for pamiparib to be effective from the beginning of 2017, and our application is in process and we believe that it will be approved.  However, there have been unanticipated governmental delays that have impacted the 2017 applicant pool for national project priority status and we expect that we will now receive formal notification in 2018.  As such, we intend to discuss with Merck KGaA, Darmstadt Germany the impact of this delay on the PRC Commercialization Option. 

Under the Ex-PRC and PRC PARP Agreements, in November 2013agreements, we received $6 million in non-refundable payments and in 2014 $9 million in milestone payments. We are eligible to receive up to $7 million and $2.5 million, respectively, in payments upon the successful achievement of pre-specified clinical and regulatory milestones in the PRC Territory. In addition, if Merck KGaA, Darmstadt Germany exercises the PRC Commercialization Option, Merck KGaA, Darmstadt Germanyit is required to pay us a $50 million non-refundable payment upon such exercise, and we are eligible for a $12.5 million milestone payment upon the successful achievement of a certain additional regulatory event in the PRC Territory.

        Under the PRC PARP Agreement, Also, in consideration for the licenses granted to us, we are required to pay Merck KGaA, Darmstadt Germany a high single-digit royalty on aggregate net sales of Licensed PARP Inhibitors in the PRC Territory.

The PRC PARP Agreement continues unless terminated as permitted by either party. Merck KGaA, Darmstadt Germany has the right to terminate due to our uncured breach or for convenience upon prior written notice. We have the right to terminate these agreements due to Merck KGaA, Darmstadt Germany's uncured breach or for any challenge brought against our licensed patent rights.

Regulatory Framework and Structural Advantages of Being a China-Based Research and Development OrganizationLifirafenib

        We believe that basing our research and development effort in China offers important regulatory advantages that differentiate us from most multinational biopharmaceutical and biotechnology companies. These advantages include the following:

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Potential for more rapid approval in the world's second largest commercial market, China, due to a separate regulatory framework for locally developed drug candidates. This pathway to approval creates the potential for our drug candidates to be first-in-class locally and to obtain approval in China prior to ex-China developed candidates. By developing our compounds preclinically and manufacturing them in China,On May 24, 2013, we have the ability to seek product approval from the CFDA as a domestic Category 1 drug. This domestic Category 1 designation allows us to use a distinct route for bringing our products to market compared to the Category 5 regulatory process available to multinational companies with drugs approved for marketing by major foreign drug regulatory authorities, such as the FDA or EMA. We believe the Category 1 regulatory pathway will allow us to provide patients in China more rapid access to safe and effective cancer therapies.

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The opportunity to supplement and accelerate global clinical development by accessing the Category 1 China local regulatory path for locally developed drug candidates to enable more rapid clinical trial enrollment from a pool of approximately 20—25% of the world's cancer patients. The prevalence rates for some cancers, such as lung, gastric, hepatic and esophageal are higher in China, and for others, such as breast and cervical, are lower.



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Currently, many global standard-of-care therapies are not approved or available in China, resulting in a significant need for innovative therapeutics with strong efficacy and safety profiles. As a result, we believe there is a higher likelihood that drug candidates that have demonstrated proof-of-concept in the clinic and become qualified for the Category 1 regulatory pathway will receive regulatory approval in China.

        We believe our strategy and approach is aligned with the Chinese government's policies, and we intend to continue to work with local authorities to bring innovative therapeutics to patients in China as quickly as possible.

        In August 2015, the Chinese State Council, issued a statement,Opinions on reforming the review and approval process for pharmaceutical products and medical devices that contained several potential policy changes that could benefit the pharmaceutical industry:

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A plan to accelerate innovative drug approval with a special review and approval process, with a focus on areas of high unmet medical needs, including drugs for HIV, cancer, serious infectious diseases, orphan diseases and drugs on national priority lists.



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A plan to adopt a policy which would allow companies to act as the marketing authorization holder and to hire contract manufacturing organizations to produce drug products.



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A plan to improve the review and approval of clinical trials, and to allow companies to conduct clinical trials at the same time as they are in other countries and encourage local clinical trial organizations to participate in international multi-center clinical trials.

        In November 2015, the CFDA releasedCircular Concerning Several Policies on Drug Registration Review and Approval, or the No. 230 Circular, which further clarified the following policies potentially simplifying and accelerating the approval process of clinical trials:

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A one-time umbrella approval procedure allowing approval of all phases of a new drug's clinical trials at once, rather than the current phase-by-phase approval procedure, will be adopted for new drugs' clinical trial application.



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A fast track drug registration or clinical trial approval pathway will be available for the following applications: (1) registration of innovative new drugs treating HIV, cancer, serious infectious diseases and orphan diseases; (2) registration of pediatric drugs; (3) registration of geriatric drugs and drugs treating China-prevalent diseases; (4) registration of drugs sponsored by national science and technology grants; (5) registration of innovative drugs using advanced technology, using innovative treatment methods, or having distinctive clinical benefits; (6) registration of foreign innovative drugs to be manufactured locally in China; (7) concurrent applications for new drug clinical trials which are already approved in the United States or European Union or concurrent drug registration applications for drugs which have applied for marketing authorization and passed onsite inspections in the United States or European Union and are manufactured using the same production line in China; and (8) clinical trial applications for drugs with urgent clinical need and patent expiry within three years, and marketing authorization applications for drugs with urgent clinical need and patent expiry within one year.

        In February 2016, the CFDA released theOpinions on Priority Review and Approval for Resolving Drug Registration Applications Backlog, which further clarified the following policies potentially accelerating the approval process of certain clinical trials or drug registrations which may benefit us:

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A fast track drug registration or clinical trial approval pathway will be available for the following drug registration applications with distinctive clinical benefits: (1) registration of innovative drugs not sold within or outside China; (2) registration of innovative drug transferred to be manufactured in China; (3) registration of drugs using advanced technology, using innovative treatment methods, or having distinctive treatment advantages; (4) clinical trial applications for drugs with patent expiry within three years, and marketing authorization applications for drugs with patent expiry within one year; (5) concurrent applications for new drug clinical trials which are already approved in the United States or European Union, or concurrent drug registration applications for drugs which have applied for marketing authorization and passed onsite inspections in the United States or European Union and are manufactured using the same production line in China; (6) traditional Chinese medicines (including ethnic medicines) with clear position in prevention and treatment of serious diseases; and (7) registration of new drugs sponsored by national key technology projects or national key development projects.



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A fast track drug registration approval pathway will be available for the following drugs registration application with distinctive clinical benefits for prevention and treatment of HIV, phthisis, virus hepatitis, orphan diseases, cancer, children's diseases, and geriatrics.

        In March 2016, the CFDA released a circular,CFDA Announcement on Reforms of Pharmaceutical Registration Classification, which outlined the re-classifications of drug applications. Under the new categorization, innovative drugs that have not been approved either in or outside China remain Category 1, while drugs approved outside China seeking marketing approval in China are now Category 5.

        The CFDA is soliciting public opinions on detailed policies regarding fast track clinical trial approval and drug registration pathway, and we expect that the CFDA review and approval process will improve over time.

Regulatory Framework for Novel Drugs in China

        The CFDA categorizes domestically-manufactured innovative drug applications as Category 1 and imported innovative drug applications as Category 3, until a recent CFDA announcement issued on March 4, 2016 which reclassifies imported drug applicationsentered into Category 5.

        Most Chinese companies' applications for innovative drugs are filed in Category 1 if the drug has not already been approved by the FDA or EMA. Most multinational pharmaceutical companies' drug registration applications are filed in Category 5.

        Under the current regulations, these two categories have distinct approval pathways as discussed below.

Domestic Innovative Drug Registration Process

        For domestically manufactured innovative drug applications, companies are required to obtain approval of a Clinical Trial Application before conducting Phase 1 clinical trials in China. The domestic innovative drug registration pathway has a fast track review and approval mechanism if the drug candidate is on a national priority list.

Imported Innovative Drug Registration Process

        For a drug that has received marketing approval in other countries, but is not yet approved in China, in order to market an imported drug in China, companies must apply for an Import Drug

License, or IDL, after the drug has received marketing approval and a Certificate of Pharmaceutical Product, or CPP, from a major foreign drug regulatory authority, such as the FDA or EMA. Compared with the domestic innovative registration process, the imported innovative drug registration process is more complex.

        The first step in the process after receipt of a CPP is to obtain approval of a Clinical Trial Application to conduct registration studies. A pharmacokinetic study in Chinese subjects is also required. Once this study is completed, the applicant must submit the clinical data package to the CFDA along with other required information for the issuance of an IDL. The IDL registration process together with clinical trials have typically taken more than five years from the receipt of foreign marketing approval.

        Currently, the most common strategy for multinational companies is using multi-regional clinical trial, or MRCT, data to support IDL approval. Companies can apply to conduct these MRCTs prior to receiving global regulatory approval, with China as a subset within a broader MRCT. However, these MRCTs are often not designed in a way that accounts for the unique characteristics of the Chinese patient population and local standards of care. If the MRCT data does not meet the CFDA's registration requirements, the company may be required to conduct additional local clinical trials that can potentially delay market access in China for imported drugs by an additional three to four years.

        The Chinese State Council and the CFDA have recently issued several statements and circulars aimed at improving and accelerating the new drug approval process in general. These include the August 2015 statement issued by the Chinese State Council,Opinions on reforming the review and approval process for pharmaceutical products and medical devices ; the November 2015 CFDA No. 230 Circular,Circular Concerning Several Policies on Drug Registration Review and Approval ; February 2016 CFDA Circular,Opinions on Priority Review and Approval for Resolving Drug Registration Applications Backlog ; and the March 2016 CFDA No. 51 Circular,Announcement on Reforms of Pharmaceutical Registration Classification issued by the CFDA on March 4, 2016. In the March 4, 2016 CFDA announcement, the drugs approved outside China seeking marketing approval in China are now called Category 5. We believe these new regulatory initiatives will likely accelerate the approval process for new drugs, including those marketed in other countries but not yet in China. However, how and when this approval process will be changed is still subject to further policies to be issued by the CFDA and is currently uncertain.

Commercial Opportunities in China

        In addition to the structural and clinical advantages afforded to us by basing our research and development operations in China, we see an attractive and growing commercial oncology opportunity in our home market. We continue to retain commercial rights in China for all four of our clinical programs and all preclinical programs.

China's Pharmaceutical Market

        China's pharmaceutical market has grown robustly and replaced Japan as the second largest pharmaceutical market in 2013, according to IMS Health. According to the IMS Market Prognosis published in March 2015, the Chinese pharmaceutical market was $109 billion in 2014, as compared to a $373 billion U.S. pharmaceutical market in 2014, and is expected to grow at a compound annual growth rate, or CAGR, of 9.3% over the next five years reaching $171 billion by 2019. The growth of the Chinese pharmaceutical market is attributable, in particular to:

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An aging population, modern diet, lack of exercise and environmental issues that are increasing the prevalence of chronic diseases.



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Increases in disease awareness, diagnostics and treatment rates.



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The continuous and rapid increase of personal disposable income and the establishment of basic national health insurance coverage; making health care accessible to more patients.

        China provides an opportunity to access largely untapped clinical trial pools and develop drugs for a population for whom global standard of care therapies are not available. China has nearly a quarter of the world's cancer patient population and one third to half of cancer patients in certain tumor types are in China, such as lung, gastric, liver and esophageal cancers.

Note: * New cancer incidences estimated to increase to 19 and 25 million in 2025 and 2035, respectively. Source: Data from World Health Organization (2012)

        The oncology market in China is estimated to have grown at a CAGR of 24% in the last decade through 2014. In recent years, sales of targeted therapy drugs in retail channels have increased rapidly. Although expensive targeted therapy drugs are not included in basic national healthcare insurance and have historically had very little coverage by provincial insurance plans, the targeted therapy drug market has continued to grow rapidly despite being an out-of-pocket market. This growth is attributable to patients' needs, newly launched drugs and patient's ability to pay for drugs not covered by insurance.

Source: CFDA Southern Medicine Economic Research Institute

Introduction of Reimbursement

        The Chinese State Council requires central and provincial authorities across the PRC to promote a medical insurance program for major illnesses. By the end by 2015, all urban and rural residents covered by basic medical insurance programs are required to be covered by the insurance program for major illnesses, according to a Chinese State Council policy issued on July 28, 2015. As a complement to basic insurance programs, this program is required to cover at least 50% of the medical cost incurred in connection with treating major illnesses and is supplemental to basic insurance programs. The Chinese State Council now requires provincial authorities to increase reimbursement rates over the next three years.

        According to the PRC Central Government's guidance issued in March 2015, each province will decide which drugs to include in its provincial major illness reimbursement lists and the percentage of reimbursement, based on local funding. For example, Zhejiang province, located in the Yangtze river delta area with a population of 55 million, announced its provincial major illness drug reimbursement list in early 2015. The list includes 31 high-priced drugs, 15 of which are targeted therapy agents for cancer, including Glivec, Ireesa, Erbitux, Herceptin, and Rituxan. Although it will take three years to establish comprehensive national coverage, the affordability of the high-priced, novel cancer agents to Chinese patients could improve significantly.

        On February 23, 2017, the Ministry of Human Resources and Social Security released the long-expected new version of the national reimbursement drug list, or NRDL. The NRDL has been expanded by 16.7%, with covered drugs increased from 2,172 in the 2009 version to 2,535, including 1,297 chemical / biological drugs (51.1% of total, vs. 1,140 in 2009) and 1,238 traditional Chinese medicines / ethnic drugs (48.9% of total, vs. 1,032 in 2009). Several targeted oncology drugs are on the list, including icotinib, dasatinib, gefitinib, and imatinib. NRDL inclusion could be a significant opportunity over the long term an improve the market penetration for the drugs being newly included.

Our Mission and Strategy

        Our mission is to become a global leader in the discovery and development of innovative, molecularly targeted and immuno-oncology drugs for the treatment of cancer. To achieve our mission, we intend to pursue the following strategies:

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Rapidly advance our pipeline programs through global development.  In the next 12 months, we plan to make significant advances within our clinical-stage pipeline. We have initiated global and China pivotal trials with BGB-3111, and moved our three other clinical-stage drug candidates into the clinic in China and into the dose-expansion phases of their respective clinical trials in other parts of the world. We will continue to enroll multiple expansion cohorts and significantly increase the number of sites globally participating in these trials. We plan to present data from these trials at medical conferences in 2017. We also have a robust pipeline of preclinical programs and are planning to advance one or more of these programs into the clinic in the next 12 months.



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Pursue global development of combination therapies.  We believe our ownership of both molecularly targeted and immuno-oncology drugs puts us in an advantageous position to develop potentially best-in-combination or first-in-combination therapies that could produce high rates of more durable responses in patients. We have four clinical-stage, independently discovered drug candidates in important and combinable molecularly targeted and immuno-oncology drug classes including BTK inhibitor, PD-1 inhibitor, PARP inhibitor and RAF dimer inhibitor. We believe that we are one of only two companies today to wholly own both a clinical-stage BTK inhibitor for cancer treatment and PD-1 inhibitor and one of the few companies to have discovered, and advanced to clinical stage, a PARP inhibitor and PD-1 inhibitor or a BRAF inhibitor and PD-1 inhibitor for use as combination therapies. In addition to monotherapy trials, we have initiated and are planning combination trials using our wholly-owned drug candidates as well as third-party agents. For BGB-3111, in January 2016 we initiated a combination clinical trial with the anti-CD20 antibody, obinutuzumab, and the trial is currently in the dose-expansion phase. In June 2016, we initiated a combination clinical trial with BGB-A317 for the treatment of various B-cell malignancies. For BGB-290, in February 2016, we initiated a combination clinical trial with BGB-A317. We plan to present data from these combination trials at medical conferences in 2017.



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Continue to use our cancer biology platform to discover additional candidates with best-in-class characteristics and potential for use in rational combinations. We plan to use our cancer biology platform to discover additional drug candidates with the potential to be best-in-class monotherapies and also important components of multiple-agent combination regimens. In the last six years, we have been successful in discovering four clinical stage and several promising preclinical drug candidates. By further investing in and improving our cancer biology platform, we expect that the platform will continue to help us select relevant drug targets, identify potential best-in-class drug candidates and develop regimens for rational drug combinations.



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Bring transformative oncology therapeutics to our home market in China.  We are committed to addressing the needs of cancer patients in our home market. China is one of the largest and

fastest growing markets for cancer drugs worldwide, representing approximately 20–25% of the world's cancer population and an even greater proportion in lung, liver, and gastric cancers. Because many global standard-of-care therapies are not currently approved and available in China, there is a significant unmet need for innovative cancer drugs for patients who are naive to such treatments. In addition, focusing on cancer types of high prevalence in China will aid our global development efforts in these indications. We have initiated clinical trials in China for each of our four clinical-stage drug candidates to develop them through the locally developed, Category 1 registration pathway. We plan to pursue accelerated development, single-arm registration studies and brief dose-escalation studies in China. We also strive to have our drug candidates selected and listed as national priorities. The ability to launch our cancer drugs in our home market, which has a large patient population, will help us establish broad safety and efficacy profiles for each drug, enabling us to build a full portfolio for future drug combinations.

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Maintain our culture as we grow our business globally.  We believe our science-driven, cooperative and non-hierarchical culture is a key strength of our organization and will continue to be instrumental to our success. As an innovative biotechnology company with research facilities in China, we have been able to attract an internationally trained research team. Many members of our team moved back to China from other countries to join us because they share our goals of advancing the discovery and development of drugs in China and of working with Chinese clinicians to treat their patients with innovative and effective drugs not currently available to them. We intend to maintain our patient-focused and research-driven culture as we discover and develop new drugs for China and the rest of the world.



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Retain the value of our pipeline in our core focus area of oncology.  We currently retain all worldwide development and commercial rights for our BTK, PD-1 and preclinical therapeutics. In addition, we have limited collaborationslicense agreements with Merck KGaA, Darmstadt Germany for lifirafenib, which were amended in 2013 and 2015 and which we refer to respectively as the Ex-PRC BRAF Agreement and PRC BRAF Agreement. In March 2017, Merck KGaA, Darmstadt Germany informed us that it would not exercise a continuation option in the ex-PRC territory, and thus, the ex-PRC BRAF Agreement terminated in its entirety, except for certain provisions that survive termination. Under the PRC BRAF Agreement, Merck KGaA, Darmstadt Germany granted us an exclusive license under certain of its intellectual property rights to develop, manufacture and commercialize the RAF dimer inhibitor in the PRC, which we refer to as the PRC Territory, subject to certain non-compete restrictions. Further, pursuant to the PRC BRAF Agreement, Merck KGaA, Darmstadt Germany has an exclusive right of first negotiation to acquire exclusive commercialization rights under the lifirafenib BRAF program in the PRC Territory on terms to be mutually agreed in the event we seek to license our BGB-290 and BGB-283 programs.intellectual property rights to a third party in the territory.

Under these agreements, in December 2013, we received $13 million in non-refundable payments. As of December 31, 2017, we have received $9 million in milestone payments. We intendare eligible to protectreceive an additional $14 million in payments upon the successful achievement of pre-specified clinical milestones in the PRC Territory. We are required to pay Merck KGaA, Darmstadt Germany a high single-digit royalty on aggregate net sales of the licensed compounds in the PRC Territory. 

The term of the PRC BRAF Agreement continues unless terminated as permitted by either party. Under the PRC BRAF Agreement, Merck KGaA has the right to terminate due to our abilityuncured breach or voluntarily upon prior written notice. We have the right to direct global preclinical studies and clinical trialsterminate the PRC BRAF Agreement due to Merck KGaA’s uncured breach or for any challenge brought against our drug candidates as monotherapies and combination therapies and to maintain exclusive rights in our home market. However, we may opportunistically evaluate additional collaboration opportunities that could increase the value of our programs by accessing the expertise or infrastructure of strategic collaborators or by developing drug candidates with potential applications outside of our strategic focus on cancer.licensed patent rights.

Intellectual Property

The proprietary nature of, and protection for, our drug candidates and their methods of use are an important part of our strategy to develop and commercialize novel medicines, as described in more detail below. We have obtained a U.S. patentpatents and filed patent applications in the United States and other countries relating to certain of our drug candidates, and are pursuing additional patent protection for them and for other of our drug candidates and technologies. We also rely on trade secrets to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection including our manufacturing processes.

        Our success will depend significantly on our ability to obtain and maintain patent and other proprietary protection for our product candidates and other commercially important products, technologies, inventions and know-how, as well as on our ability to defend and enforce our patents including any patent that we have or may issue from our patent applications, preserve the confidentiality of our trade secrets and operate without infringing the valid and enforceable patents and proprietary rights of other parties. We also rely on know-how, continuing technological innovation and in-licensing opportunities to develop, strengthen and support our development programs.

As of March 21, 2017,February 19, 2018, we own eight14 issued U.S. patents, and eightnine pending U.S. patent applications, as well asprovisional applications, and corresponding patents and patent applications internationally. In addition, we own 13

10 pending international patent applications under the Patent Cooperation Treaty, or PCT, which we plan to file nationally in the United States and other jurisdictions.jurisdictions, as well as additional priority PCT applications. With respect to any issued patents in the United States and Europe, we may be entitled to obtain a patent term extension to extend the patent expiration date provided we meet the applicable requirements for obtaining such patent term extensions. For example, in the United States, we can apply for a patent term extension of up to five years for one of the patents covering a product once the product is approved by the FDA. The exact duration of the extension depends on the time we spend in clinical studies as well as getting a new drug application, oran NDA approval from the FDA. The patent portfolios for our four leading product candidates as of March 21, 2017February 19, 2018 are summarized below:

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BGB-3111.Zanubrutinib.  We own one issued U.S. patent, one pending U.S. patent application, two PCT applications, and corresponding patent applications in other jurisdictions directed to BGB-3111,zanubrutinib, a small molecule BTK inhibitor, combinations of zanubrutinib with other therapeutic agents, and its use for the treatment of hematological malignancies. The expected expiration for the issued U.S. patent is 2034, excluding any additional term for patent term extensions. Any patents that may issue from the currently pending U.S. patent applicationsapplication would be expected to expire in 2034, not including any patent term adjustments. If a U.S. application is filed based on the pending PCT applications, a patent issuing from these applications, if any, would be expected to expire in 2037. We intend to pursue marketing exclusivity periods that are available under regulatory provisions in certain countriescountries.





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BGB-A317.Tislelizumab.  We are the owner of onetwo issued U.S. patent,patents, one pending U.S. application, onetwo pending PCT application,applications, and corresponding pending patent applications in other jurisdictions directed to BGB-A317,tislelizumab, a humanized monoclonal antibody against PD-1, and its use for the treatment of cancer. The expected expiration for the issued U.S. patentpatents is 2033, excluding any additional term for patent term extensions. Any patent that may issue from the currently pending U.S. patent application would be expected to expire in 2033, not including any patent term adjustments. If a U.S. application is filed based on the pending PCT application, aapplications, any patent issuing from the application,applications, if any, would be expected to expire in 2037.2038. We intend to pursue marketing exclusivity periods that are available under regulatory provisions in certain countries.





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BGB-290.Pamiparib.  We own onetwo issued U.S. patent,patents, one pending U.S. patent application, and two pending PCT applications directed to BGB-290,pamiparib, a small molecule PARP1/2 inhibitor, and its use for the treatment of cancer, including glioblastomas and breast cancer. We also own the corresponding pending patent applications in other jurisdictions. The expected expiration for the issued U.S. patentpatents is 2031, excluding any additional term for patent term extensions. Any patent that may issue from the currently pending U.S. patent application would be expected to expire in 2031, not including any patent term adjustments. If a U.S. application is filed based on the pending PCT applications, a patentpatents issuing from these applications, if any, would be expected to expire in 2036 and 2037. We intend to pursue marketing exclusivity periods that are available under regulatory provisions in certain countries.

The term of individual patents may vary based on the countries in which they are obtained. In most countries in which we file, including the United States and China, the term of an issued patent is generally 20 years from the earliest claimed filing date of a non-provisional patent application in the applicable country. In the United States, a patent'spatent’s term may be lengthened in some cases by a patent term adjustment, which extends the term of a patent to account for administrative delays by the U.S.United States Patent and Trademark Office, or USPTO, in excess of a patent applicant'sapplicant’s own delays during the prosecution process, or may be shortened if a patent is terminally disclaimed over a commonly owned patent having an earlier expiration date. In addition, in certain instances, a patent term can be extended to recapture a portion of the term effectively lost as a result of the FDA regulatory review period. However, the restoration period cannot be longer than five years and the total patent term including the restoration period must not exceed 14 years following FDA approval.

In certain foreign jurisdictions similar extensions as compensation for regulatory delays are also available. The actual protection afforded by a patent varies on a claim by claim and country by country basis and depends upon many factors, including the type of patent, the scope of its coverage, the availability of any patent term extensions or adjustments, the availability of legal remedies in a particular country and the validity and enforceability of the patent.

        Furthermore, the patent positions of biotechnology and pharmaceutical products and processes like those we intend to develop and commercialize are generally uncertain and involve complex legal and factual questions. No consistent policy regarding the breadth of claims allowed in such patents has emerged to date in the United States. The scope of patent protection outside the United States is even more uncertain. Changes in the patent laws or in interpretations of patent laws in the United States and other countries may diminish our ability to protect our inventions, and enforce our intellectual property rights and more generally, could affect the value of intellectual property.

        Additionally, we cannot predict the breadth of claims that may be allowed or enforced in our patents or in patents owned by others. Substantial scientific and commercial research has been conducted for many years in the areas in which we have focused our development efforts, which has resulted in other parties having a number of issued patents and pending patent applications relating to such areas. Patent applications in the United States and elsewhere are generally published only after 18 months from the priority date, and the publication of discoveries in the scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries were made. Therefore, patents and patent applications relating to drugs similar to our current drug candidates and any future drugs, discoveries or technologies we might develop may have already issued or been filed, which could prohibit us from commercializing our product candidates. Specifically, we are aware of certain U.S. patents owned by Ono Pharmaceutical Co. and licensed to Bristol-Myers Squibb Co. that are relevant to our BGB-A317 drug candidate. We are also aware of a U.S. patent owned by Pharmacyclics, Inc., which was acquired by AbbVie Inc., that is relevant to our BGB-3111 drug candidate, and certain U.S. patents owned or licensed by KuDOS Pharmaceuticals, Ltd., which was acquired by AstraZeneca PLC, that are relevant to our BGB-290 drug candidate. For more information, see "Item 1A—Risk Factors—Risks Related to Our Intellectual Property."

        The biotechnology and pharmaceutical industries are characterized by extensive litigation regarding patents and other intellectual property rights. Our ability to maintain and solidify our proprietary position for our drug candidates and technology will depend on our success in obtaining effective claims and enforcing those claims once granted. We do not know whether any of the patent applications that we may file or license from others will result in the issuance of any patents. The issued patents that we own or may receive in the future, may be challenged, invalidated or circumvented, and the rights granted under any issued patents may not provide us with proprietary protection or competitive advantages against competitors with similar technology. Furthermore, our competitors may be able to independently develop and commercialize similar drugs or duplicate our technology, business model or strategy without infringing our patents. Because of the extensive time

required for clinical development and regulatory review of a drug we may develop, it is possible that, before any of our drug candidates can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any advantage of any such patent.

We may rely, in some circumstances, on trade secrets and unpatented know-how to protect aspects of our technology. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with consultants, scientific advisors and contractors and invention assignment agreements with our employees. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems, agreements or security measures may be breached and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our consultants, contractors or collaborators use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.

        Our commercial success will also depend in part on not infringing the proprietary rights

        For more information on these and other risks related to intellectual property, see "Item 1A—Risk Factors—Risks Related to Our Intellectual Property."

Additionally, we currently useown a number of unregisteredregistered trademarks and pending trademark applications. We currently have registered trademarks for BeiGene and our corporate logo in China, the European Union and other jurisdictions and are seeking trademark protection in jurisdictions where available and appropriate. We currently have applications pending in China for BeiGene and our corporate logo.

Competition

        Our industry is highly competitive and subject to rapid and significant change. While we believe that our development and commercialization experience, scientific knowledge and industry relationships provide us with competitive advantages, we face competition from pharmaceutical, medical device and biotechnology companies, including specialty pharmaceutical companies, and generic drug companies, academic institutions, government agencies and research institutions.

BGB-3111 Competition

        We are developing BGB-3111, a highly selective small molecule covalent BTK inhibitor, for a variety of B-cell malignancies, either as a monotherapy or in combination with other therapies.

        Janssen/AbbVie's ibrutinib (IMBRUVICA) is one of the currently approved drugs used for the treatment of B-cell malignancies, including patients with MCL who have received at least one prior therapy, patients with CLL, CLL patients with 17p deletion, and WM. It has also recently been approved by the FDA for the treatment of patients with relapsed/refractory MZL who require systemic therapy and have received at least one prior anti-CD20-based therapy.

        Multiple ongoing Phase 3 trials are currently being conducted for ibrutinib as a monotherapy or in combination with chemotherapeutics or target therapeutics in various B-cell malignancies, including CLL, MCL, WM, FL, DLBCL and MZL. In addition, we are aware of other BTK inhibitors in clinical development for oncology indications, including AstraZeneca's acalabrutinib (ACP-196) currently in Phase 3, Ono/Gilead's tirabrutinib in Phase 2, Sunesis' SNS-062 in Phase 1b/2, Merck KGaA, Darmstadt Germany's M7583 in Phase 1, and Zhejiang Daoming BioPharma's DTRMWXHS-12 in Phase 1.

BGB-A317 Competition

        Three anti-PD-1 or PDL1 monoclonal antibody drugs, Merck's pembrolizumab (Keytruda), Bristol-Myers Squibb's nivolumab (Opdivo), and Roche's atezolizumab (Tecentriq) have been approved by the FDA.

        A number of companies are currently conducting ongoing clinical trials involving an anti-PD-1 or anti-PD-L1. Three anti-PD-L1 antibody drugs, AstraZeneca/Celgene's durvalumab and Pfizer/Merck KGaA, Darmstadt Germany's avelumab, together with anti-PD-1 antibodies, Merck's pembrolizumab, Bristol-Myers Squibb's nivolumab and Regeneron's REGN2810, are currently engaged in a number of Phase 2/3 trials, for treatment of multiple cancers, such as NSCLC, HNSCC, bladder cancer, triple-negative breast cancer, non-Hodgkin's lymphoma and melanoma, advanced cutaneous squamous cell carcinoma. Several new anti-PD-1 antibodies have started Phase 1/2 trials, including AstraZeneca's MEDI0680, and Novartis' PDR001, Tesaro's TSR042 and Incyte / Hengrui's SHR-1210. In China, anti-PD-1 antibody SHR-1210 from Jiangsu Hengrui is in Phase 2/3 monotherapy trial in hepatocellular carcinoma and several Phase 1/2 studies in solid tumors such as melanoma as well as ongoing Phase 1/2 combination trial with apatinib for hepatocellular carcinoma and gastric cancer. Other anti-PD-1 antibodies in clinical development by a domestic company include Junshi's JS001 and Innovent Bio's IBI308 and are undergoing multiple Phase 1 studies in solid tumors in China.

        Many of our competitors have significantly greater financial, technical and human resources than we have. Mergers and acquisitionslogo in the pharmaceutical, medical device and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Our commercial opportunity could be reduced or eliminated if our competitors develop or market products or other novel therapies that are more effective, safer or less costly than our current or future drug candidates, or obtain regulatory approval for their products more rapidly than we may obtain approval for our drug candidates. Our success will be based in part on our ability to identify, develop and manage a portfolio of drug candidates that are safer and more effective than competing products.

BGB-290 Competition

        AstraZeneca's olaparib (LYNPARZA) is approved by the FDA for treating patients with deleterious or suspected deleterious germline BRCA mutated, or gBRCAm advanced ovarian cancer who have been treated with three or more prior lines of chemotherapy or a combination of chemotherapies. It is approved by the EMA as a maintenance treatment for patients with platinum-sensitive relapsed BRCA-mutated, germline and/or somatic, high grade serous epithelial ovarian, fallopian tube, or primary peritoneal cancer who are in CR or PR to platinum-based chemotherapy. In addition, the FDA recently approved Clovis' rucaparib (RUBRACA) for treatment of patients with

deleterious BRCA mutation, germline and/or somatic, associated advanced ovarian cancer who have been treated with two or more chemotherapies.

        There are a number of companies with ongoing clinical trials, including AstraZeneca, Abbott, Tesaro and Pfizer. AstraZeneca's olaparib has been approved in gBRCAm ovarian cancer and is currently in Phase 3 trials for treatment of gBRCAm breast cancer, gastric cancer, gBRCAm pancreatic cancerUnited States and other cancers with sBRCAm or homologous recombinant repair associated genetic mutations. Clovis Oncology's rucaparib is currently in Phase 3 trials as a maintenance treatment in patients with platinum-sensitive, high-grade serous or endometrioid epithelial ovarian, primary peritoneal or fallopian tube cancercountries where available and as a second line treatment in patients with metastatic castration-resistant prostate cancer and homologous recombination gene deficiency. In November 2016, Tesaro submitted a NDA to the FDA for niraparib as a second-line maintenance therapy in patients with ovarian cancer. Niraparib also is currently in Phase 3 trials as a first-line maintenance treatment in patients with ovarian cancer with homologous recombination gene deficiency following response on front-line platinum-based chemotherapy and gBRCAm breast cancer. Pfizer's talazoparib is currently in Phase 3 trials for BRCAm breast cancer. Abbott's veliparib, in combination with other compound(s), is currently in Phase 3 trials for treatment of non-small-cell lung cancer, breast, ovarian cancers and glioblastoma multiforme. In China, PARP inhibitors in Phase 1 trials by domestic companies include Jiangsu Hansoh's fluzoparib and Jiangxi Qingfeng's SC10914.appropriate.

BGB-283 Competition

        We are developing BGB-283 as either a monotherapy or in combination with other cancer therapies for the treatment of cancers with aberrations in the MAPK pathway including BRAF mutations and KRAS/NRAS mutations.

        Roche's vemurafenib (Zelboraf) and Novartis' dabrafenib (Tafinlar) are two of the currently approved BRAF inhibitors for treating late-stage BRAF V600E/K mutant melanoma. In addition, the combination of dabrafenib and GSK's trametinib (Mekinist), an MEK inhibitor, is approved in patients with BRAF V600E/K mutation-positive metastatic melanoma. We are aware of several other BRAF inhibitors in clinical development targeting BRAF V600E/K mutated cancers including melanoma, NSCLC, HCL and thyroid cancer. These BRAF inhibitors include Array Biopharma's encorafenib (LGX818), currently in Phase 3 trials, and Takeda's MLN-2480 (BIIB-024), Daiichi Sankyo's PLX-8394, and Roche's RG-6185, all in Phase 1 trials.

Government Regulation

Government authorities in the United States at the federal, state and local level and in other countries extensively regulate, among other things, the research and clinical development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing, pricing and export and import of drug products,drugs such as those we are developing.developing and commercializing. Generally, before a new drug can be marketed, considerable data demonstrating its quality, safety and efficacy must be obtained, organized into a format specific to each regulatory authority, submitted for review and approved by the regulatory authority.

        Drugs are also subject to other federal, state and local statutes and regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure to comply with the applicable regulatory requirements at any time during the product development process, approval process or after approval, may subject an applicant to administrative or judicial sanctions. These sanctions could include, among other actions, the regulatory authority's refusal to approve pending applications, withdrawal of an approval, clinical holds, untitled or warning letters,

voluntary product recalls or withdrawals from the market, product seizures, total or partial suspension of production or distribution injunctions, debarment, fines, refusals of government contracts, restitution, disgorgement, or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on us.

U.S. Regulation

U.S. Government Regulation and Product Approval

        Government authorities in the United States at the federal, state and local level extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, marketing, export and import of drug and biological products such as those we are developing. In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FDCA, and its implementing regulations, and biologics under the FDCA, its implementing regulations, and the Public Health Service Act, or PHSA, and its implementing regulations.

Cancer therapies are sometimes characterized as first line, second line or third line, and the FDA often approves new therapies initially only for third line use. When cancer is detected early enough, first line therapy is sometimes adequate to cure the cancer or prolong life without a cure. Whenever first line therapy, usually chemotherapy, hormone therapy, surgery or a combination of these, proves unsuccessful, second line therapy may be administered. Second line therapies often consist of more chemotherapy, radiation, antibody drugs, tumor targeted small molecule drugs or a combination of these. Third line therapies can include bone marrow transplantation, antibody and small molecule targeted therapies, more invasive forms of surgery and new technologies.

U.S. Drug Development Process

        The process of obtaining regulatory approvals and compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process, or after approval, may subject an applicant to administrative or judicial sanctions. These sanctions could include the FDA's refusal to approve pending applications, withdrawal of an approval, a clinical hold, untitled or warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties. The process required by the FDA before a drug or biologic may be marketed in the United States generally involves the following:

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completion of preclinical laboratory tests, animal studies and formulation studies according to Good Laboratory Practices, or GLP, regulations;

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submission to the FDA of an investigational new drug, or IND, application, which must become effective before human clinical trials may begin;

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performance of adequate and well-controlled human clinical trials according to Good Clinical Practice, or GCP, to establish the safety and efficacy of the proposed drug or safety, purity, and potency of the proposed biologic for the intended use;

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preparation and submission to the FDA of an NDA for a drug or a BLA for a biologic;

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a determination by the FDA within 60 days of its receipt of an NDA or BLA to file the application for review;

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satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with cGMP;

        The testing and approval process requires substantial time, effort and financial resources and we cannot be certain that any approvals for our drug candidates will be granted on a timely basis, if at all.

Once a pharmaceutical product drugcandidate is identified for development, it enters the preclinical testing stage. Preclinical tests include laboratory evaluations of product chemistry, toxicity, formulation and stability, as well as animal studies. An IND sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data and any available clinical data or literature, to the FDA as part of the IND. The sponsor must also include a protocol detailing, among other things, the objectives of the initial clinical trial, dosing procedures, subject selection and exclusion criteria, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated if the initial clinical trial lends itself to an efficacy evaluation. Some preclinical testing may continue even after the IND is submitted. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA raises concerns or questions related to athe proposed clinical trial and places the trial on a clinical hold within that 30-day time period. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Clinical holds also may be imposed by the FDA at any time before or during clinical trials due to safety concerns or noncompliance, and may be imposed on all products within a certain class of products. The FDA also can impose partial clinical holds, for example, prohibiting the initiation of clinical trials of a certain duration or for a certain dose.

All clinical trials must be conducted under the supervision of one or more qualified investigators in accordance with GCP regulations. These regulations include the requirement that all research subjects provide informed consent in writing before their participation in any clinical trial. Further, an Institutional Review Board, or IRB, must review and approve the plan for any clinical trial before it commences at any institution, and the IRB must conduct continuing review and reapprove the study at least annually. An IRB considers, among other things, whether the risks to individuals participating in the clinical trial are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the information regarding the clinical trial and the consent form that must be provided to each clinical trial subject or his or her legal representative and must monitor the clinical trial until completed.

Each new clinical protocol and any amendments to the protocol must be filed with the FDA as an IND amendment, and to the IRBs for approval. Protocols detail, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subject safety.

Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:

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Phase 1.  The product is initially introduced into a small number of healthy human subjects or patients and tested for safety, dosage tolerance, absorption, metabolism, distribution and excretion and, if possible, to gain early evidence on effectiveness. In the case of some products for severe or life-threatening diseases, especially when the product is suspected or known to be unavoidably toxic, the initial human testing may be conducted in patients.



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Phase 2.  Involves clinical trials in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage and schedule.



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Phase 3.  Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population at geographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk/benefit relationship of the product and provide an adequate basis for product labelling.

We refer to our Phase 1 programprograms as dose-escalation and dose-expansion trials.   In addition, we refer to some of our Phase 2 programs as pivotal or registrational programs, where the results can be used to support regulatory approval without the need to conduct a Phase 3 trial.

Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and safety reports must be submitted to the FDA and the investigators for serious and unexpected suspected AEs, any clinically important increase in the rate of a serious suspected adverse

exposed to the product drug. Phase 1, Phase 2 and Phase 3 studies may not be completed successfully within any specified period, if at all. The FDA or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB'sIRB’s requirements or if the product has been associated with unexpected serious harm to subjects.

Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the product and finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the product drug and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final product. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product drug does not undergo unacceptable deterioration over its shelf life.

U.S. Review and Approval Processes

The results of product development, preclinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the product, proposed labeling and other relevant information, are submitted to the FDA as part of an NDA for a new drug or a BLA for a biologic, requesting approval to market the product. The submission of an NDA or BLA is subject to the payment of a substantial user fee; although a waiver of such fee may be obtained under certain limited circumstances. For example, the agency will waive the application fee for the first human drug application that a small business or its affiliate submits for review. The sponsor of an approved NDA or BLA is also subject to an annual prescription drug product and establishment user fees.program fee.

The FDA reviews all NDAs and BLAs submitted to ensure that they are sufficiently complete for substantive review before it accepts them for filing. The FDA may request additional information rather than accept an NDA or BLA for filing. In this event, the NDA or BLA must be re-submitted with the additional information. The re-submitted application also is subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review. The FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use, and a BLA to determine whether the biologic is safe, pure, and potent for its intended use. The FDA also evaluates whether the product'sproduct’s manufacturing is cGMP-compliant to assure the product'sproduct’s identity, strength, quality and purity. Before approving an NDA or BLA, the FDA typically will inspect the facility or facilities where the product is or will be manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. The FDA may refer the NDA or BLA to an advisory committee for review, evaluation and recommendation as to whether the application should be approved and under what conditions. An advisory committee is a panel of experts, including clinicians and other scientific experts, who provide advice and recommendations when requested by the FDA. The FDA is not bound by the recommendation of an advisory committee, but it considers such recommendations when making decisions.

The approval process is lengthy and difficult and the FDA may refuse to approve an NDA or BLA if the applicable regulatory criteria are not satisfied or may require additional clinical data or other data and information. Even if such data and information are submitted, the FDA may ultimately decide that the NDA or BLA does not satisfy the criteria for approval. Data obtained from clinical trials are not always conclusive, and the FDA may interpret data differently than we interpret the same data. The

FDA will issue a complete response letter if the agency decides not to approve the NDA or BLA in its present form. The complete response letter usually describes all of the specific deficiencies that the FDA identified in the NDA or BLA that must be satisfactorily addressed before it can be approved. The deficiencies identified may be minor, for example, requiring labeling changes, or major, for example, requiring additional clinical trials. Additionally, the complete response letter may include recommended actions that the applicant might take to place the application in a condition for approval. If a complete response letter is issued, the applicant may either resubmit the NDA or BLA, addressing all of the deficiencies identified in the letter, or withdraw the application or request an opportunity for a hearing.

If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product. Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling. In addition, the FDA may require post-approval studies, including Phase 4 clinical trials, to further assess a product'sproduct’s safety and effectiveness after NDA or BLA approval and may require testing and surveillance programs to monitor the safety

of approved products that have been commercialized. The FDA could also approve the NDA or BLA with a Risk Evaluation and Mitigation Strategy plan to mitigate risks, which could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.

Regulation of Combination Products in the United States

Certain products may be comprised of components that would normally be regulated under different types of regulatory authorities, and frequently by different centers at the FDA. These products are known as combination products. Specifically, under regulations issued by the FDA, a combination product may be:

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a product comprised of two or more regulated components that are physically, chemically, or otherwise combined or mixed and produced as a single entity;



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two or more separate products packaged together in a single package or as a unit and comprised of drug and device products, device and biological products, or biological and drug products;



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a drug, device, or biological product packaged separately that according to its investigational plan or proposed labeling is intended for use only with an approved individually specified drug, device, or biological product where both are required to achieve the intended use, indication, or effect and where upon approval of the proposed product the labeling of the approved product would need to be changed, e.g., to reflect a change in intended use, dosage form, strength, route of administration, or significant change in dose; or



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any investigational drug, device, or biological product packaged separately that according to its proposed labeling is for use only with another individually specified investigational drug, device, or biological product where both are required to achieve the intended use, indication, or effect.

Under the FDCA, the FDA is charged with assigning a center with primary jurisdiction, or a lead center, for review of a combination product. That determination is based on the "primary“primary mode of action"action” of the combination product. Thus, if the primary mode of action of a device-drug combination product is attributable to the drug product, the FDA center responsible for premarket review of the drug product would have primary jurisdiction for the combination product. The FDA has also established an Office of Combination Products to address issues surroundingWe are developing combination products using our own drug candidates and provide more certainty to the regulatory review process. That office serves as a focal point for combination product issues for agency reviewers and industry. It is also responsible for developing guidance and regulations to clarify the regulation of combination products, and for assignment of the

FDA center that has primary jurisdiction for review of combination products where the jurisdiction is unclear or in dispute.third-party drugs. 

Expedited Programs

Fast Track Designation

The FDA has a Fast Track program that is intended to expedite or facilitate the process for reviewing new drugs, including biologics that meet certain criteria. Specifically, new drugs are eligible for Fast Track designation if they are intended to treat a serious or life-threatening disease or condition for which there is no effective treatment and demonstrate the potential to address unmet medical needs for the condition. Fast Track designation applies to the combination of the product and the specific indication for which it is being studied. The sponsor of a new drug may request the FDA to designate the drug as a Fast Track product concurrently with, or at any time after, submission of an IND, and the FDA must determine if the drug candidate qualifies for fast track designation within 60 days of receipt of the sponsor'ssponsor’s request.

In addition to other benefits, such as the ability to engage in more frequent interactions with the FDA, the FDA may initiate review of sections of a Fast Track drug'sdrug’s NDA or BLA before the application is complete. This rolling review is available if the applicant provides, and the FDA approves, a schedule for the submission of each portion of the NDA or BLA and the applicant pays the applicable user fees.fee. However, the FDA'sFDA’s time period goal for reviewing an application does not begin until the last section of the NDA or BLA is submitted. Additionally, the Fast Track designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process.

Accelerated Approval

Under FDA'sFDA’s accelerated approval regulations, the FDA may approve a drug, including a biologic, for a serious or life-threatening illness that provides meaningful therapeutic benefit to patients over existing treatments based upon a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. In clinical trials, a surrogate endpoint is a marker, such as a laboratory measurement of laboratory or clinical signs of a disease or condition that is thought to predict clinical benefit, but is not itself a measure of clinical benefit. Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints. A drug candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of post-approval clinical trials sometimes referred to as Phase 4 trials to confirm the effect on the clinical endpoint. Failure to conduct required post-approval studies, or to confirm a clinical benefit during post-marketing studies, will allow the FDA to withdraw the drug from the market on an expedited basis. All promotional materials for drug candidates approved under accelerated regulations are subject to prior review by the FDA.

Breakthrough Designation

        The Food and Drug Administration Safety and Innovation Act, or FDASIA, amended the FDCA to require the FDABreakthrough therapy designation is intended to expedite the development and review of a breakthrough therapy. A drug or biologic product can be designated as a breakthrough therapy if it is intended to treat a serious or life-threatening

disease or condition and preliminary clinical evidence indicates that it may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints. A sponsor may request that a product be designated as a breakthrough therapy concurrently with, or at

any time after, the submission of an IND, and the FDA must determine if the candidate qualifies for breakthrough therapy designation within 60 days of receipt of the sponsor'ssponsor’s request. If so designated, the FDA shall act to expedite the development and review of the product'sproduct’s marketing application, including by meeting with the sponsor throughout the product'sproduct’s development, providing timely advice to the sponsor to ensure that the development program to gather preclinical and clinical data is as efficient as practicable, involving senior managers and experienced review staff in a cross-disciplinary review, and assigning a cross-disciplinary project lead for the FDA review team to facilitate an efficient review of the development program and to serve as a scientific liaison between the review team and the sponsor, and taking steps to ensure that the design of the clinical trials is as efficient as practicable.sponsor.

Priority Review

        Based on results of the Phase 3 clinical trial(s) submitted in an NDA or BLA, upon the request of an applicant, theThe FDA may grant thean NDA for a new molecular entity or BLA a priority review designation, which sets the target date for FDA action on the application at six months after the FDA accepts the application for filing. Priority review is granted where there is evidence that the proposed product would be a significant improvement in the safety or effectiveness of the treatment, diagnosis, or prevention of a serious condition. If criteria are not met for priority review, the application is subject to the standard FDA review period of ten months after FDA accepts the application for filing. Priority review designation does not change the scientific/medical standard for approval or the quality of evidence necessary to support approval.

Post-Approval Requirements

Any products for which we receive FDA approval are subject to continuing regulation by the FDA, including, among other things, record-keeping requirements, reporting of adverse experiences with the product, providing the FDA with updated safety and efficacy information, product sampling and distribution requirements, complying with certain electronic records and signature requirements and complying with FDA promotion and advertising requirements. Moreover, each component of a combination product retains their regulatory status (as a drug or biologic, for example) and is subject to the requirements established by the FDA for that type of component. The FDA strictly regulates labeling, advertising, promotion and other types of information on products that are placed on the market. Products may be promoted only for the approved indications and in accordance with the provisions of the approved label. Further, manufacturers must continue to comply with cGMP requirements, which are extensive and require considerable time, resources and ongoing investment to ensure compliance. In addition, changes to the manufacturing process generally require prior FDA approval before being implemented and other types of changes to the approved product, such as adding new indications and additional labeling claims, are also subject to further FDA review and approval.

Manufacturers and other entities involved in the manufacturing and distribution of approved products are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP and other laws. The cGMP requirements apply to all stages of the manufacturing process, including the production, processing, sterilization, packaging, labeling, storage and shipment of the product. Manufacturers must establish validated systems to ensure that products meet specifications and regulatory requirements, and test each product batch or lot prior to its release. We rely, and expect to continue to rely, on third parties for the production of clinical quantities of our drug candidates. Future FDA and state inspections may identify compliance issues at the facilities of our contract manufacturers that may disrupt production or distribution or may require substantial resources to correct.

The FDA may withdraw a product approval or revoke a biologics license if compliance with regulatory requirements is not maintained or if problems occur after the product reaches the market.

Later discovery of previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product from the market. Further, the failure to maintain compliance with regulatory requirements may result in administrative or judicial actions, such as fines, untitled or warning letters, holds on clinical trials, product recalls or seizures, product detention or refusal to permit the import or export of products, refusal to approve pending applications or supplements, restrictions on marketing or manufacturing, injunctions or civil or criminal penalties. We may undertake or be required to undertake a product recall.

        From time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory provisions governing the approval, manufacturing and marketing

Patent Term Restoration and Marketing Exclusivity

Depending upon the timing, duration and specifics of FDA approval of the use of our drug candidates, some of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product'sproduct’s approval date. The patent term restoration period is generally one-half the time between the effective date of an IND and the submission date of an NDA or BLA plus the time between the submission date of an NDA or BLA and the approval of that application, except that this review period is reduced by any time during which the applicant failed to exercise due diligence. Only one patent applicable to an approved product is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent. The USPTO, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration. In the future, if available, we intend to apply for restorations of patent term for some of our currently owned patents beyond their current expiration dates, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant NDA or BLA; however, there can be no assurance that any such extension will be granted to us.

Market exclusivity provisions under the FDCA can also delay the submission or the approval of certain applications. The FDCA provides a five-year period of non-patent marketing exclusivity within the United States to the first applicant to gain approval of an NDA for a new chemical entity. A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance. During the exclusivity period, the FDA may not accept for review an abbreviated new drug application,NDA, or ANDA, or a 505(b)(2) NDA submitted by another company for another version of such drug where the applicant does not own or have a legal right of reference to all the data required for approval. However, such an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement. The FDCA also provides three years of marketing exclusivity for an NDA, 505(b)(2) NDA or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example, for new indications, dosages or strengths of an existing drug. This three-year exclusivity covers only the conditions of use associated with the new clinical investigations and does not prohibit the FDA from approving ANDAs for drugs containing the original active agent. Five-year and three-year exclusivity will not delay the submission or approval of a full NDA. However, an applicant submitting a full NDA would be required to conduct or obtain a right

of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.

Pediatric exclusivity is another type of exclusivity in the United States. Pediatric exclusivity, if granted, provides an additional six months of exclusivity, which runs from the end of other exclusivity or patent period. Pediatric exclusivity may be granted based on the voluntary completion of a pediatric clinical trial in accordance with an FDA-issued "Written Request" for such a clinical trial.periods.

Biosimilars and Exclusivity

The Patient Protection and Affordable Care Act, or ACA signed into law on March 23, 2010,PHSA includes a subtitle called the Biologics Price Competition and Innovation Act of 2009 which created an abbreviated approval pathway for biological products shown to be similar to, or interchangeable with, an FDA-licensed reference biological product. This amendment to the PHSA attempts to minimize duplicative testing. Biosimilarity, which requires that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, can be shown through analytical studies, animal studies, and a clinical trial or trials. Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results as the reference product and, for products administered multiple times, the biologic and the reference biologic may be switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic.

A reference biologic is granted twelve years of exclusivity from the time of first licensure of the reference product. The first biologic product submitted under the abbreviated approval pathway that is determined to be interchangeable with the reference product has exclusivity against other biologics submitting under the abbreviated approval pathway for the lesser of (i) one year after the first commercial marketing, (ii) 18 months after approval if there is no legal challenge, (iii) 18 months after the resolution in the applicant'sapplicant’s favor of a lawsuit challenging the biologic'sbiologic’s patents if an

application has been submitted, or (iv) 42 months after the application has been approved if a lawsuit is ongoing within the 42-month period.

Orphan Drugs

Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs, including biologics, intended to treat a rare disease or condition—generally a disease or condition that affects fewer than 200,000 individuals in the United States or that affects more than 200,000 individuals in the United States and for which there is no reasonable expectation that costs of research and development of the product for the indication can be recovered by sales of the product in the United States. Orphan drug designation must be requested before submitting an NDA or BLA.

After the FDA grants orphan drug designation, the generic identity of the drug or biologic and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. The first NDA or BLA applicant to receive FDA approval for a particular active ingredient to treat a particular disease or condition with FDA orphan drug designation is entitled to a seven-year exclusive marketing period in the United States for that product, for that indication. Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the NDA or BLA application user fee.

During the exclusivity period, the FDA may not approve any other applications to market the same drug for the same disease or condition, except in limited circumstances, such as if the second applicant demonstrates the clinical superiority of its product to the product with orphan drug exclusivity through a demonstration of superior safety, superior efficacy, or a major contribution to patient care. "Same drug"“Same drug” means a drug that contains the same active moiety if it is a drug composed of small

required to obtain regulatory approvals. Our drug candidates may not be considered medically necessary or cost-effective. If third-party payors do not consider a product to be cost-effective or medically-necessary compared to other available therapies, they may not cover the product after approval as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow a company to sell its products at a profit.

The U.S. government and state legislatures have shown significant interest in implementing cost containment programs to limit the growth of government-paid health care costs, including price controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs. For example, the ACA, as amended by the HealthAffordable Care and Education Reconciliation Act, of 2010, collectively, theor ACA, contains provisions that may reduce the profitability of drug products, including, for example, increased rebates for drugs reimbursed by Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain Medicare Part D beneficiaries and annual fees based on pharmaceutical companies'companies’ share of sales to federal health care programs. Adoption of government controls and measures, and tightening of restrictive policies in jurisdictions with existing controls and measures, could limit payments for pharmaceuticals.

        The marketability of any products for which we receive regulatory approval for commercial sale may suffer if the government and third-party payors fail to provide adequate coverage and reimbursement. In addition, an increasing emphasis on cost containment measures in the United States has increased and we expect will continue to increase the pressure on pharmaceutical pricing. Coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

Other U.S. Healthcare Laws and Compliance Requirements

If we obtain regulatory approval of our products,product candidates, we may be subject to various federal and state laws targeting fraud and abuse in the healthcare industry. These laws may impact, among other things, our proposed sales, marketing and education programs. In addition, we may be subject to patient privacy regulation by both the federal government and the states in which we conduct our business. The laws that may affect our ability to operate include:

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the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce, or reward, or in return for, either the referral of an individual, or the purchase, lease, order or recommendation of any good, facility, item or service for which payment may be made, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs;

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federal civil and criminal false claims and civil monetary penalty laws, such as the federal False Claims Act, which impose criminal and civil penalties and authorize civil whistleblower or qui tam actions, against individuals or entities for, among other things: knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent; making a false statement or record material to a false or fraudulent claim or obligation to pay or transmit money or property to the federal government; or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay money to the federal government. In addition, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false of fraudulent claim for purposes of the False Claims Act;

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the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which prohibits knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters;

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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and their respective implementing regulations, which impose requirements on certain covered healthcare providers, health plans, and healthcare clearinghouses as well as their respective business associates who perform services for them that involve the use, or disclosure of, individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information;

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the federal false statements statute, which prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services;

advantages under this and other recent reforms encourage drug manufacturers to seek market approval in China first, manufacture domestically, and develop drugs in high priority disease areas, such as oncology.

To implement the regulatory reform introduced by the Innovation Opinion, the CFDA is currently revising the fundamental law, regulations, and rules regulating pharmaceutical products and the industry, which includes the framework law known as the PRC Drug Administration Law, or DAL.  The DAL is also generally implemented by a set of regulations issued by the State Council referred to as the DAL Implementing Regulation. The CFDA has its owns set of regulations implementing the DAL; the primary one governing clinical trial applications, marketing approval, and license renewal and amendment is known as the Drug Registration Regulation. However, as of January 2018 the implementing regulations for many of the reforms in the Innovation Opinion had not been announced, and therefore, the details in the implementation of the regulatory changes remained uncertain in some respects.

Regulatory Authorities

In the PRC, the CFDA monitorsis the primary regulator for pharmaceutical products and supervisesbusinesses.  It regulates almost all of the administrationkey stages of the life-cycle of pharmaceutical products, as well as medical devicesincluding nonclinical studies, clinical trials, marketing approvals, manufacturing, advertising and equipment.promotion, distribution, and pharmacovigilance (i.e., post-marketing safety reporting obligations).  The CFDA's primary responsibility includes evaluating, registeringCenter for Drug Evaluation, or CDE, which is under the CFDA, conducts the technical evaluation of each drug and approving new drugs, generic drugs,biologic application for safety and effectiveness.  Since 2015, the CFDA has more than doubled the staff of reviewers at the CDE to increase efficiency, and delegated authority to the CDE to issue final approvals of CTAs, supplemental applications to existing drug registrations, and renewals of licenses of imported drugs and traditional Chinese medicines; approving and issuing permits fordrugs.  Before, final approval was the manufacture, export and import of pharmaceutical products and medical appliances; approvingCFDA’s responsibility.

The CFDA’s local counterparts (particularly the establishment of enterprises for pharmaceutical manufacture and distribution; formulating administrative rules and policies concerning the supervision and administration of food, cosmetics and pharmaceuticals; and handling significant accidents involving these products. The local provincial drug administrative authoritiesprovincial-level FDAs, or PFDAs) are responsible for supervisionissuing and administrationrenewing relevant licenses for drug manufacturing and distribution businesses, conducting inspections of drugsmanufacturing and distribution businesses, and other post-marketing matters within their respective administrative regions.regions (e.g., recall of pharmaceutical products). 

The PRC Drug Administration Law promulgated by the Standing Committee of the National People's Congress in 1984Health and the Implementing Measures of the PRC Drug Administration Law promulgated byFamily Planning Commission, or NHFPC, formerly known as the Ministry of Health or MOH, is China’s chief healthcare regulator.  It is primarily responsible for overseeing the MOH, in 1989 set forth the legal framework for the administration of pharmaceutical products, including the research, development and manufacturing of drugs.

        The PRC Drug Administration Law was revised in December 2001, April 2015, and most recently in January 2017. The purpose of the revisions in 2015 was to strengthen the supervision and administration of pharmaceutical products and to ensure the quality and safety of those products for

respectively, and rare diseases, etc., and have obvious advantages in clinic treatment;Category 5 refers to originator or

        The Special Examination and Approval Provisions provide that the applicant may file for special examination and approval at the stage of Clinical Trial Application if the drug candidate falls within item (1). The provisions provide that for drug candidates that fall within items (2) or (3), the application for special examination and approval must be made when filing for production.

        We believe that BGB-3111, BGB-A317, BGB 290 and BGB-283 fall within items (1) and (2) above. Therefore, we may file an application for special examination and approval at the Clinical Trial Application stage, which may enable us to pursue a more expedited path to approval in China and bring therapies to patients more quickly.

The Advantages of Category 1 New Drugs over Imported Drugs

        Imported drugs are drugs manufactured outside China. Drugs which have already been marketed abroad by multinational companies, but are not yet approved in China are required to(i.e., many imported drugs). 

Therapeutic biologics follow the process applicable to imported drugs in registration. Compareda similar categorization, with the application for imported drugs, the application for Category 1 domesticbeing new to the world, but with fifteen product-specific categories.  Like with small molecule drugs, has a more straight-forward registration pathway. AccordingCategory 1 for biologics is also for innovative biologics that have not been approved inside or outside of China.  A clear regulatory pathway for biosimilars does not yet exist, but the CFDA may soon develop one in its revision of implementing rules pursuant to Provisionsthe Innovation Opinion. Each of zanubrutinib, tislelizumab, pamiparib and lifirafenib have obtained approval for Drug Registration, where a special examination and approval treatment is granted, the application for clinical trial and manufacturing will be handled with priority and with enhanced communication with the Center for Drug Evaluation of the CFDA, orfrom the CDE and have been admitted to Category 1, which will establishis a working mechanismfavored category for communicating with the applicants. If it becomes necessaryCTA and marketing approval.

Expedited Programs

Priority Evaluation and Approval Programs to revise the clinical trial scheme or make other major alterations during the clinical trial, the applicant may file an applicationEncourage Innovation

The CFDA has adopted several expedited review and approval mechanisms since 2009 and created additional expedited programs in recent years that are intended to encourage innovation.  Applications for communication. According to theAdministrative Measures on Communications for Drug Development and Technical Evaluation issued by CFDA in June 2016, when an application for communication is approved, the CDE will arrange the communication with the applicant within 30 to 60 days, depending on the subject matter of such communication.

        In comparison, according to Provisions for Drug Registration, the registration pathway for imported drugs is complicated and evolving. Imported drug applications may onlythese expedited programs can be submitted after a company obtains an NDA approval and receive the CPP grantedCTA is admitted for review by a major regulatory authority, such as the FDA or the EMA. Multinational companies may need to apply for conducting MRCTs, which means that companies do not have the flexibility to design the clinical trials to fit the Chinese patients and standard-of-care. Imported drug candidates under Category 5 cannot qualify for the national priority list to benefit from fast track reviews. Moreover, a requirement to further conduct local clinical trials can potentially delay market access by several years from its international NDA approval.

        Our drug candidates are all new therapeutic agents and the registration applications for all fourCDE.  Some of them are filed under Category 1. The CFDA has approved our Clinical Trial Applications for all four of our drug candidates, i.e. BGB-3111, BGB-A317, BGB-283, and BGB-290, including all phases of their clinical trials.

priority status will be applied to various stages of the approval process, including testing, manufacturing site inspection, technical review, and clinical site inspection.

Clinical Trials

Upon completion of pre-clinical studies, a sponsor typically needs to conduct clinical trials in China for registering a new drug in China.  The materials required for this application and the data requirements are determined by the registration category.  The CFDA has taken a number of steps to increase efficiency for approving CTAs, and it has also significantly increased monitoring and enforcement of GCP to ensure data integrity.

Trial Approval

All clinical trials conducted in China must be approved and conducted at hospitals accredited by the CFDA.  For imported drugs, proof of foreign approval is required prior to the trial, unless the drug has never been approved anywhere in the world.  In addition to a standalone China trial to support development, imported drug applicants may establish a site in China that is part of an international multicenter trial, or IMCT, at the outset of the global trial.  Domestically manufactured drugs are not subject to foreign approval requirements, and in contrast to prior practice, the CFDA has recently indicated its intent to permit those drugs to conduct development via an IMCT as well. 

In 2015, the CFDA began to issue an umbrella approval for all phases (typically three) of a new drug clinical trial, instead of issuing approval phase by phase.  For certain types of new drug candidates, clinical trial applications may be prioritized over other applications, and put in a separate expedited queue for approval.  Category 1 drugs are new drug trials which would qualify for this expedited umbrella approval status.  Other trials that are not part of these expedited lines could still wait up to a year for approval to conduct the trial.

The Innovation Opinion introduced other new measures to further expedite the clinical development process. Specifically, it requires that applicants for new drug trials conduct a meeting with urgent clinical need and patent expiry within three years, and marketing authorization applications for drugs with urgent clinical need and patent expiry within one year.

        In February 2016, the CFDA releasedCDE prior to submitting theOpinions on Priority Review and Approval for Resolving Drug Registration Applications Backlog, which further clarified the following policies potentially accelerating the approval process of certain clinical trials or drug registrations which may benefit us:

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A fast track drug registration or clinical trial approval pathway will be available for the following drug registration applications with distinctive clinical benefits: (1) registration of innovative drugs not sold within or outside China; (2) registration of innovative drug transferred to be manufactured in China; (3) registration of drugs using advanced technology, using innovative treatment methods, or having distinctive treatment advantages; (4) clinical trial applications for drugs patent expiry within three years, and marketing authorization applications for drugs with patent expiry within one year; (5) concurrent applications CTA.  The Innovation Opinion also effectively introduces a notification system for new drug clinical trial approval.  In other words, trials can proceed if after certain fixed period of time (possibly 60 days), the applicant has not received any objections from the CDE, as opposed to the lengthier current clinical trial pre-approval process in which are already approvedthe applicant must wait for affirmative approval.  The Innovation Opinion also promises to expand the number of trial sites by truncating the timeline for accreditation by converting it from a pre-approval procedure into a notification procedure.  These reforms will require implementing law and regulations in the United States or European Union, or concurrent drug registration applications for drugs which have applied for marketing authorization and passed onsite inspectionsorder to proceed in the United States or European Union and are manufactured using the same production line in China; (6) traditional Chinese medicines (including ethnic medicines) with clear position in prevention and treatment of serious diseases; and (7) registration of new drugs sponsored by national key technology projects or national key development projects.

China receive ethics committee approval prior to approval of the CTA and comply with GCP.  The CFDA conducts inspections to assess GCP compliance and will cancel the CTA if it finds substantial issues. 

The CFDA may reduce requirements for trials and data, depending on the drug and the existing data.  The CFDA has granted waivers for all or part of trials, but it is now planning to take a more official position on the acceptance of foreign data to support an application.  The foreign data must meet the CFDA’s requirements, including, for drugs that have never been approved before in China, having sufficient Chinese ethnic data. The precise requirements are not yet clear.

Unlike innovative drugs, generic small molecule drugs are required to conduct a bioequivalence trial to demonstrate therapeutic equivalence to an originator drug marketed either in China or abroad or an internationally accepted generic drug.  The CFDA has released catalogues of reference products, and it released a first installment of a “marketed drug list” (China’s “Orange Book”) with information about drugs that may serve as reference products. 

China does not have a well-developed biosimilar pathway, but the CFDA will permit marketing of biosimilars after a comparative evaluation with an innovative biologic.  Currently follow-on comparative and bioequivalence studies could be permitted prior to the expiration of the innovative patent under an exemption for drug development in China’s Patent Law.

New Drug Application (NDA) and Approval

Upon completion of clinical trials, a sponsor may submit clinical trial data to support marketing approval for the drug.  For imported drugs, this means issuance of an import license.  Again, the applicant must submit evidence of foreign approval, unless it is an innovative drug that has never been approved anywhere in the world. 

Domestically manufactured drugs must similarly submit data in support of a drug approval number.  Under the current regime, upon approval of the registration application, the CFDA will first issue a new drug certificate to the applicant.  Only when the applicant is equipped with relevant manufacturing capability will the CFDA issue a Drug Manufacturing Approval Serial Number, which is effectively the marketing approval allowing the holder to market/commercialize the drug in China. 

Domestically established research institutions (including domestic companies) can apply through an MAH pilot program if they are established in one of 10 designated provinces (including Beijing and Shanghai) in China. The MAH pilot program permits research institutions and individuals to develop and hold the marketing approvals for drugs without holding a drug manufacturing license. The MAHs may engage contract manufacturers and distributors. 

The MAH pilot program is set to run until November 2018. The Innovation Opinion indicates that China will strive to implement the MAH system nationally as soon as possible by amending the DAL. The CFDA has proposed revisions to accomplish this purpose, but the timeline to finalize these proposals is still unclear.   

New Drug Monitoring Period

Currently, new varieties of domestically produced drugs approved under Categories 1 or 2 in China may be placed under a monitoring period for three to five years.  Category 1 innovative drugs will be monitored for five years.  During the monitoring period, the CFDA will not approve another CTA from another applicant for the same type of drug, except if another sponsor has an approved CTA at the time that the monitoring period is initiated it may proceed with its trial and become part of the period.  Therefore, by blocking other CTAs, the monitoring period can act as a type of market exclusivity.  Under the Innovation Opinion, it is not clear whether the monitoring period will remain in force. However, no documents have emerged to officially cancel it.

Manufacturing and Distribution

As noted above, China requires that all facilities that make drugs in China receive a drug manufacturing license with an appropriate “scope of manufacturing” from the local PFDA. This license must be renewed every five years.  A

separate certification of compliance with China’s drug Good Manufacturing Practice, or GMP, is also required, but this requirement may be eliminated as the Innovation Opinion is implemented.

Similarly, to conduct sales, importation, shipping and storage (“distribution activities”) a company must obtain a Drug Distribution License from the local PFDA, subject to renewal every five years. Like with GMPs, a separate certification of compliance with CFDA’s drug good supply practice, or GSP, is required.  These separate certifications for GMP and GSP compliance of the manufacturing and distribution facilities may be removed pursuant to the implementation of the Innovation Opinion.

Another critical reform in 2017 limits distribution chains to prevent corruption but presents challenges for procurement.  This policy, referred to as the “Two-Invoice System,” generally requires that at most two invoices may be issued throughout the distribution chain, with one from the manufacturer to a new drug's post-marketing studydistributor and another from the distributor to assess therapeutic effectivenessthe end-user hospital. This excludes the sale of products invoiced from the manufacturer to its wholly owned or controlled distributors, or for imported drugs, to their exclusive distributor, or from a distributor to its wholly owned or controlled subsidiary (or between the wholly owned or controlled subsidiaries).  However, the system still significantly limits the options for companies to use multiple distributors to reach a larger geographic area in China. Compliance with the Two-Invoice System will become a prerequisite for pharmaceutical companies to participate in procurement processes with public hospitals, which provide most of China’s healthcare. Manufacturers and distributors that fail to implement the Two-Invoice System may lose their qualifications to participate in the bidding process. Non-compliant manufacturers may also be blacklisted from engaging in drug sales to public hospitals in a locality.

The Two-Invoice System was first implemented in 11 provinces that are involved in pilot comprehensive medical reforms. The objective is nationwide implementation by no later than 2018. Almost all the provinces and many cities have already adopted implementing rules for the Two-Invoice System.

Post-Marketing Surveillance

The manufacturer or marketing authorization holder of marketing approval is primarily responsible for pharmacovigilance, including quality assurance, adverse reaction reporting and monitoring, and product recalls. Distributors and user entities (e.g., hospitals) are also required to report, in their respective roles, adverse reactions of the products they sell or use, and assist with the manufacturer of the product recall.  A drug that is currently under the new drug monitoring period has to report all adverse drug reactions (as opposed to just serious adverse reactions) for that period.

The Innovation Opinion further clarifies that the MAH shall assume all legal responsibilities for the drug-related pre-clinical studies, clinical trials, production and manufacturing, marketing and distribution, adverse effect reporting, continuous studies, risk assessment and other relevant matters.

Advertising and Promotion of Pharmaceutical Products

China has a strict regime for the advertising of approved medicines.  No unapproved medicines may be advertised.  The definition of an advertisement is very broad, and does not exclude scientific exchange.  It can be any media that directly or indirectly introduces the product to end users.  There is no clear line between advertising and any other type of promotion.

Pursuant to the DAL and the Advertisement Law, prescription medicines may only be advertised to healthcare professionals in approved journals.  The individual advertisements themselves must also be approved by a local level PFDA.  In addition, advertisements are subject to strict content restrictions, which prohibit recommendations by doctors and hospitals and guarantees of effectiveness.  Advertising that includes content that is outside of the drug’s approval documentation (“off-label content”) is strictly prohibited.  False advertising can result in civil suits from end users and administrative liability, including fines   In addition to advertisements, websites that convey information about a drug must also be approved by a PFDA. 

The CFDA has also recently proposed to implement a separation between sales representatives and medical affairs representatives.  Medical affairs representatives will be in charge of academic promotion of the drugs and technical consulting with health care professionals, but they may not be involved in sales.  Lists of company medical affairs representatives may have to be registered with CFDA in the future.

Regulatory Intellectual Property Reforms

The Innovation Opinion also includes several intellectual property related reforms.  First, it sets forth the basic elements of a patent linkage system to protect innovators, in which a follow-on applicant will be required to specify patents that are relevant to its application and notify relevant patent holders (including, innovators) within a specified period after filing its application, permitting them to sue to protect their rights.  The system will require that the CFDA continue to review the potentially infringing follow-on application during any lawsuit by the innovator.  However, the CFDA may not approve the follow-on application pending resolution of the patent litigation in favor of the follow-on application or for a specified period of time, whichever is shorter.  This reform will require implementing regulations.  To date, the CFDA has not issued a proposal. 

The Innovation Opinion also lays the foundation for the establishment of a system for regulatory data protection to protect innovators. Under this reform, when submitting an application for drug registration, an applicant may also submit an application for the drug is widely used,protection of its clinical trial data. Such protection will be available to evaluate overall benefit-risk relationshipsthe undisclosed clinical trial data of drugs falling into the following categories: innovative drugs, innovative therapeutic biologics, drugs that treat orphan diseases, pediatric drugs, and drugs for which there has been a successful patent challenge. During the data protection period (the length has not yet been determined), marketing applications for the same type of drugs submitted by any other applicant will not be approved, unless such applicant generates the data by itself or obtains the consent the holder of the data.

In addition, the Innovation Opinion introduces a patent term extension pilot program. The patent term extension system will provide appropriate compensation of patent life when marketing of the drug when used among general populationhas been delayed due to delays related to clinical trials and review and approval procedures.  To date, there has been no proposal for implementing regulations related to regulatory data protection or specific groups,patent term extension.

Reimbursement, Pricing and to adjustProcurement

While most Chinese healthcare costs were historically borne by patients themselves, in recent years the administration dose, etc.number of people covered by government and private insurance plans has significantly increased. There is state insurance covering urban employees, urban residents, and rural residents, as well as a growing private commercial insurance market. By the end of 2016, over 1.3 billion residents in China were enrolled in the national basic medical insurance program, and over 1 billion residents in China were enrolled in the critical disease insurance program.

New Drug ApplicationReimbursement under the national medical insurance program

        When Phases 1, 2 and 3Under the current program, participants of the clinical trials have been completed, the applicant must applynational medical insurance program and their employers, if any, are required to contribute to the CFDApayment of insurance premiums on a monthly basis. Program participants are eligible for approvalfull or partial reimbursement of the cost of medicines included in the National Reimbursement Drug List, or NRDL. A pharmaceutical product listed in the NRDL must be clinically needed, safe, effective, reasonably priced, easy to use, available in sufficient quantity, and must meet the following additional requirements:

Factors that affect the inclusion of a NDA. The CFDA then determinespharmaceutical product in the NRDL include whether to approve the application according to the comprehensive evaluation opinion provided by the CDE of the CFDA. We have obtained approval of our Clinical Trial Applicationsproduct is consumed in large volumes and commonly prescribed for BGB-283, BGB-3111, BGB-290 and BGB-A317clinical use in the PRC and whether it is considered to be important in

meeting the basic healthcare needs of the general public. Since 2016, special consideration has been given to, among others, innovative drugs with high clinical trials have been initiated. We must obtain approval of a NDA before ourvalue and drugs can be manufactured and sold infor serious diseases.  In addition, the PRC market.Ministry of Human Resources and Social Security has also been negotiating with manufacturers of expensive drugs with high clinical demands and proved effectiveness for price cuts in exchange for inclusion into the NRDL. The 2017 NRDL covers 2,535 drugs in total, including 339 new additions, with an emphasis on innovative drugs and drugs that treat cancer and other serious diseases.

Good Manufacturing PracticeGovernment price controls

        All facilitiesIn June 2015, the Chinese government abolished the 15-year-old government-led pricing system for drugs, and techniques used inlifted the manufacturemaximum retail price requirement for most drugs, including drugs reimbursed by government medical insurance funds, patented drugs, and some other drugs. The government regulates prices mainly by establishing a consolidated procurement mechanism, restructuring medical insurance reimbursement standards and strengthening regulation of products for clinical use or for sale in the PRC must be operated in conformity with cGMP guidelinesmedical and pricing practices as establisheddiscussed below.

Centralized procurement and tenders

Under current regulations, public medical institutions owned by the CFDA. Failuregovernment or owned by state-owned or controlled enterprises are required to purchase pharmaceutical products through centralized online procurement processes. There are exceptions for drugs on the National List of Essential Drugs, which must comply with applicable requirements could result in the termination of manufacturingtheir own procurement rules, and significant fines.

Animal Test Permits

        According to Regulations for the Administration of Affairs Concerning Experimental Animals promulgated by the State Science and Technology Commission in November 1988 and Administrative Measures on the Certificate for Animal Experimentation promulgated by the State Science and Technology Commission and other regulatory authorities in January 2001, performing experimentation on animals requires a Certificate for Use of Laboratory Animals. Applicants must satisfy the following conditions:

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Laboratory animals must be qualified and sourced from institutions that have Certificates for Production of Laboratory Animals;



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The environment and facilities for the animals' living and propagating must meet state requirements;



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The animals' feed and water must meet state requirements;



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The animals' feeding and experimentation must be conducted by professionals, specialized and skilled workers, or other trained personnel;



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The management systems must be effective and efficient; and



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The applicable entity must follow other requirements as stipulated by the PRC laws and regulations.

        We obtained a Certificate for Use of Laboratory Animals in 2012 regarding the scope of rats and mice.

Catalogue effective in 2017, or the 2017 Catalogue, industries are divided into two categories: encouraged industries and the industries within the catalogue of special management measures, or the Negative List. The Negative List is further divided into two sub-categories: restricted industries and prohibited industries. Establishment of wholly foreign-owned enterprises is generally allowed in industries outside of China, nor has anythe Negative List. For the restricted industries within the Negative List, some are limited to equity or contractual joint ventures, while in some cases Chinese partners are required to hold the majority interests in such joint ventures. In addition, restricted category projects are subject to government approvals and certain special requirements. Foreign investors are not allowed to invest in industries in the prohibited category. Industries not listed in the Catalogue are generally open to foreign investment unless specifically restricted by other person filedPRC regulations. Pursuant to the 2017 Catalogue, the manufacture of pharmaceutical products falls in the encouraged industries for foreign investment.

Under PRC law, the establishment of a wholly foreign invested enterprise is subject to the approval of, or the requirement for record filing with, the patent authority an application that describes an identical inventionMOFCOM or utility modelits local counterparts and is published after the filing date. Patents in the PRC are filedforeign invested enterprise must register with the State Intellectual Property Office, or SIPO. Normally,competent administrative bureau of industry and commerce. In addition, the SIPO publishes an application for a pharmaceutical invention 18 months after the application is filed, which may be shortened upon request by the applicant. The applicant must apply to the SIPO for a substantive examination within three years from the date the application is filed.

        Article 20establishment and change of the Patent Law of the PRC provides that, for an invention or utility model completed in China, any applicant, not just Chinese companies and individuals, before filing a patent application outside of China, must first submit it to the SIPO for a confidential examination. Failure to comply with this requirement will result in the denial of any Chinese patent for the subject invention. This added requirement of confidential examination by the SIPO has raised concerns by foreign companies who conduct research and development activities in the PRC or outsource research and development activities to service providers in the PRC. Currently we have three invention patents published by SIPO and one invention patent under the application process.

Patent Enforcement

        Unauthorized use of patents without consent from owners of patents, forgery of the patents belonging to other persons, or engagement in other infringement acts against patent rights, will subject the infringers to tortious liabilities. Serious offences may beforeign-invested enterprises are subject to criminal penalties.

        When a dispute arises as a resultrecord-filing procedures, instead of infringement of the patent owner's patent right, PRC law requiresprior approval requirements, provided that the parties first attempt to settle the dispute through consultation between them. However, if the dispute cannot be settled through consultation, the patent owner,establishment or an interested party who believes the patent is being infringed, may either file a civil legal suit or file anchange does not involve special entry administrative complaint with the relevant patent administration authority under the SIPO. A PRC court may issue a preliminary injunction upon the patent owner's or an interested party's request before instituting any legal proceedings or during the proceedings. Damages for infringement are calculated as either the loss suffered by the patent holder arising from the infringement or the benefit gained by the infringer from the infringement. If it is difficult to ascertain damages in this manner, damages may be determined by