Hall of Shame

Health Care

BeiGene Ltd (BGNE US)

Year: 2019

BeiGene, Ltd. operates as a commercial stage biopharmaceutical company. The Company focuses on discovery, development, and commercialization of molecularly targeted and immuno-oncology drugs for the treatment of cancer. BeiGene serves patients worldwide.  Beigene has its research operations in China; it also expects to market its products in the US, Europe, and Japan. Beigene went public in February 2016.  

In October 2015, the company listed on the NASDAQ and raised USD182.16 million in its initial public offering.  In subsequent additional offerings BeiGene raised USD1.28B  (Nov. 2016 - $227.20M, Sept.2017 - $201.27M,  Jan.2018 - $800.01M).  In July 2018, BeiGene (HK), 6160.hk, had a secondary listing on the Hong Kong Exchange and raised HKD 7.08B.

On September 5, 2019, J-Capital Research (J-Cap) published a report, "No Cure - BeiGene May Be Faking 60% of Sales". In the report, J-Cap  raised the following issues :-

  • the company is faking sales to persuade investors that it can develop a successful sales platform in China for pharmaceuticals,
  • suspect management may also be skimming R&D and capital budgets,
  • telling investors they have a once-in-a-lifetime opportunity to invest in a native Chinese biotech company whilst Top management has sold or registered to sell $322 mln in stock, the founder accounting for $189 mln of that.
  • owns three manufacturing facilities, racking up $157 mln in net fixed assets since 2016, with another roughly $300 mln committed, and has paid $25 mln toward a fourth despite having no drugs to manufacture,
  • that BeiGene has invented over $154 mln in revenues since Q4 2017, when it took over sales of Celgene drugs in China, an overstatement of 133%.
  • staff costs within China are about $65 mln higher than we believe is feasible given staff compensation standards. R&D expenditure overall is eight times higher than the direct competition,
  • A BeiGene subsidiary, with no address or operations and which has not been audited, shows $69.8 mln in “costs.” We think that money was used to roundtrip sales.
  • made a nonsensical decision to purchase a building on which it already had a 10-year lease for R&D in Beijing, spending $38 mln. Based on local comparisons, that price seems to be at least $10 mln too much. There appears to have been zero commercial rationale, and the seller looks suspiciously like a related party. 

On September 8, 2019, GMT Research, in its review of the J-Cap report concluded :-
"While the financials have some traits that support the allegations, it does not seem to be to the extent that J-Capital claims. As for the remaining allegations, we have no way of knowing for sure. BeiGene’s response so far has been pitiful, especially for a company that is reliant on capital markets. In order to restore confidence, management needs to release a detailed rebuttal and employ an independent accountant to investigate the allegations. The most prudent course of action is to sell any company accused of fraud, especially considering such a pitiful response. Failing that, push for an independent review of the accusations."

Also on the September 8th, BeiGene responded to the report, in a public conference call, refuting the allegations.  September 11th, J-Cap issued a second report,"Digging a Deeper Hole",  with new allegations.  September 12th, BeiGene issued a report responding to the new allegations.


J-Capital: BeiGene - No Cure, 5 Sep 2019
J-Capital: BeiGene - Digging a Deeper Hole, 11 Sep 2019
Fierce Pharma: Wild Speculations: BeiGene hits back at short sellers accusations of 60% sales inflation,  9 Sep 2019
GMT Research: Beigene : J-Capital Research takes a swipe, 8 Sep 2019
BeiGene : BeiGene Response to Errors and Misrepresentations in Short Seller Report, 12 Sep 2019
BeiGene : Annual Report 2018
BeiGene : Annual Report 2017


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