JP Morgan's Bullish View On This Chinese Biotech, Says Pullback Creates Entry Point

JP Morgan assumed coverage on BeiGene Ltd BGNE, highlighting the potential upside and emphasizing that the recent pullback in BeiGene’s valuation presents an opportune moment for investors.

The Chinese biotech’s approved products provide substantial valuation support.

The analyst sees the recent market downturn, which resulted in a 45% decrease in BeiGene shares compared to the Nasdaq Biotechnology Index (+1%), as a chance for investors to engage in potential upside. 

The optimism stems from the promising outlook of BeiGene’s pipeline and the strong performance of its flagship blood cancer drug, Brukinsa, which may exceed expectations.

JP Morgan has moved from a Not Rated designation to an Overweight rating, with a price target of $185.

JP Morgan writes that recognized as a best-in-class Bruton’s kinase inhibitor (BTKi), Brukinsa received approval in Chronic Lymphocytic Lymphoma (CLL) in January 2023.

The approval is deemed a significant opportunity, projecting approximately 150% year-over-year growth in the U.S. Brukinsa sales in 3Q23, with expectations for the product to reach nearly $5 billion over time.

BeiGene’s PD-1 inhibitor, Tevimbra (tislelizumab), approved for multiple indications in China, has gained attention. Following the recent regaining of commercial rights in the U.S., EU, and other regions from Novartis AG NVS, Tevimbra presents a potential incremental opportunity for BeiGene. 

While not expected to disrupt prevailing market shares significantly, even a modest share of the PD-1/PD-L1 market in the U.S. and Europe could contribute positively. 

BeiGene strategically positions Tevimbra, leveraging it as a backbone therapy for combinations with other pipeline assets.

Price Action: BGNE shares are up 8.88% at $154.40 on the last check Tuesday.

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