Amgen takes out big stake in BeiGene for $2.7B in strategic partnership

Under the deal, BeiGene will help Amgen commercialize its oncology drugs in China, while Amgen will acquire slightly more than one-fifth of the Beijing-based firm. BeiGene will also participate in R&D efforts on 20 drugs in Amgen's oncology portfolio.

Biotech company Amgen will acquire more than one-fifth of an up-and-coming Chinese biotech company as part of a deal to expand its oncology presence in China.

The Thousand Oaks, California-based company said Thursday it would acquire a 20.5 percent stake in Beijing-based BeiGene for $2.7 billion as part of the deal, which would involve the latter company commercializing Amgen’s Blincyto (blinatumomab), Kyprolis (carfilzomib) and Xgeva (denosumab) in China.

Shares of BeiGene were up 30 percent on the Nasdaq Friday morning following the announcement. Shares of Amgen were up slightly more than 1 percent.

The aforementioned drugs are respectively used to treat acute lymphoblastic leukemia, multiple myeloma and bone diseases and events related to cancers. Amgen said the deal would enable it to significantly accelerate its oncology presence in China and would involve both companies advancing its pipeline there. Amgen already has Xgeva approved in China, along with the cholesterol drug Repatha (evolocumab).

The deal will also include 20 drugs in Amgen’s oncology pipeline, with BeiGene contributing up to $1.25 billion to advance them in China and globally. Amgen will pay BeiGene royalties on sales of those products outside of China, except for its KRAS G12C inhibitor, AMG 510.

BeiGene previously had a partnership with Celgene, prior to the January decision by Bristol-Myers Squibb to acquire that company, for $74 billion. They had been developing BeiGene’s PD-1 checkpoint inhibitor for cancers, tislelizumab, but the Chinese company regained global rights to the drug from Celgene, given that BMS already has its own approved PD-1 inhibitor, Opdivo (nivolumab).

The news also comes two months after the Food and Drug Administration accepted and gave priority review to BeiGene’s new drug application for zanubrutinib, for treating relapsed and refractory mantle cell lymphoma, with a decision expected by February 2020. The company will release data from the Phase III ASPEN study comparing zanubrutinib with AbbVie and Johnson & Johnson’s Imbruvica (ibrutinib) in Waldenstrom’s macroglobulinemia, for which Imbruvica is the only approved drug, likely in December.

In a note to investors, Cowen analyst Yaron Werber wrote it is understandable that investors may question the wisdom of the deal given that the imminence of the ASPEN data – which could lower BeiGene’s stock if they’re disappointing. But he wrote, stock prices are rarely a factor in strategic partnerships. Moreover, the 20.5 percent ownership stake Amgen took in BeiGene is a “big sign of confidence” in the company – indeed, Amgen could have kept its stake at 19.9 percent, as is more common.

“In our view this deal is highly strategic to Amgen as it affords entry into the lucrative Chinese market with a company that is culturally similar and is equally versed in Western business practices while being locally scaled in China,” Werber wrote.

Photo: manop1984, Getty Images