Amgen to acquire a 20.5% stake in BeiGene for $2.7 Billion

Amgen has announced it will enter into a strategic collaboration with BeiGene to significantly advance it’s oncology pipeline in China.

The oncology-focused biotechnology research company BeiGene, already has a highly experienced team in China, including 700 commercial personnel and 600 clinical development experts.

As part of the agreement, Amgen will acquire a 20.5% stake in BeiGene for approximately $2.7 billion in cash. This represents a purchase price of $174.85 per BeiGene American Depositary Share on NASDAQ, a 36% premium to BeiGene’s 30-day volume average share price as of 30th October 2019.  Amgen plans to buy its equity stake in BeiGene with available cash and expects to keep its investment grade credit rating.

Robert A. Bradway, Amgen’s chairman and CEO said:

“This strategic collaboration with BeiGene will enable Amgen to serve significantly more patients by expanding our presence in the world’s most populous country”.

He further pointed to the fact that cancer is a leading cause of death in China and a growing issue as Chinese population ages, adding that,

“…with its extensive commercial and clinical capabilities within China and a commitment to global quality standards, BeiGene is the ideal strategic collaborator as we seek to make a meaningful difference in the lives of millions of cancer patients in China and around the world.”

As part of the collaboration, the parties will share profits and losses equally, whilst BeiGene commercialise XGEVA® (denosumab), KYPROLIS® (carfilzomib) and BLINCYTO® (blinatumomab) in China, the second-largest pharmaceutical market in the world. Two of these products, which will be manufactured at Amgen’s existing facilities, will revert to Amgen, after five years and seven years respectively. BeiGene will be able to retain one of the products after the commercialisation period, and will also be entitled to receive royalties on the sales in China for an additional five years on the products which are not retained. Back in September 2019 XGEVA was launched in China, whilst KYPROLIS and BLINCYTO are on Phase 3 trials in the Middle Kingdom.

Under the agreement, twenty medicines from Amgen’s global oncology pipeline will be advanced through the collaboration, where BeiGene will share R&D costs and contribute up to $1.25 billion for the development of the medicines. BeiGene will be paid royalties for these products on sales outside China, with the exception of AMG 510, Amgen’s first-in-class KRASG12C inhibitor, which is currently studied as a potential treatment for solid tumors. 

After the launch of the approved oncology medicines in China, BeiGene will assume commercial rights in China for seven years, including for the AMG 510. BeiGene will be able to retain rights for up to six of these products in China, excluding AMG 510, whilst the rights on remaining products revert to Amgen. 

Amgen also puts emphasis on planning to continue to commercialise its non-oncology product portfolio in China. Amgen launched their first-ever product in China, earlier in 2019, Repatha® (evolocumab), an LDL cholesterol-lowering treatment proven to reduce the risk of heart attacks and stroke. Amgen expects to launch a number of other non-oncology medicines in the country, including Prolia® (denosumab), which reduces the risk of fracture in postmenopausal women with osteoporosis. Amgen has expanded its geographical footprint from approximately fifty to one hundred countries, over the last eight years. David W. Meline, Executive VP and CFO at Amgen, said that the company will continue to grow its business

“…through internal investment and business development, while providing attractive returns to our shareholders through a growing dividend and continued share repurchases.”

Subject to the BeiGene shareholder approval, the applicable antitrust laws, and satisfaction of customary closing conditions, the transaction is expected to close in the first part of 2020.

References:

Amgen – Amgen Enters Into Strategic Collaboration With BeiGene To Expand Oncology Presence In China