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BeiGene Shares Up 35% on Amgen's $2.7 Billion Investment and China Partnership

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Shares of BeiGene Ltd. traded 35% higher today to a new a 52-week intraday high after announcing a commercialization agreement for of XGEVA (denosumab), KYPROLIS (carfilzomib), and BLINCYTO (blinatumomab) with Amgen Inc. in China. As part of the partnership, Amgen will invest $2.7 billion in BeiGene for 20.5% equity ownership.

Late yesterday afternoon Chinese biotechnology firm BeiGene Ltd. (BGNE:NASDAQ; 06160:HKEX) and Amgen Inc. (AMGN:NASDAQ) announced a "global strategic oncology collaboration for the commercialization and development in China of Amgen's XGEVA (denosumab), KYPROLIS (carfilzomib), and BLINCYTO (blinatumomab), and the joint global development of 20 oncology assets in Amgen's pipeline, with BeiGene responsible for development and commercialization in China. In connection with the collaboration, Amgen will purchase a 20.5% stake in BeiGene for approximately $2.7 billion in cash at $174.85 per American Depositary Share (ADS)."

The price represents a 36% premium to BeiGene's 30-day volume-weighted average share price as of October 30, 2019. Amgen will receive one seat on BeiGene's Board of Directors as part of the terms of the agreement.

The report advised that the transactions have been approved by the boards of directors of both companies and are expected to close in Q1/20, subject to BeiGene's shareholder majority approval and Hong Kong Stock Exchange and regulatory requirements and other customary closing conditions. BeiGene claims it has already received commitments from shareholders holding approximately 40% of its outstanding shares to vote in favor of the transactions.

John V. Oyler, Co-Founder, CEO, and Chairman of BeiGene commented, "Through this collaboration, Amgen, a true biotech pioneer and leader in our industry, has recognized the transformative potential of BeiGene's unique clinical development capabilities to accelerate global drug development. We are thrilled to join forces with Amgen to realize the development and commercialization of this broad oncology pipeline with the aim of benefitting patients around the world...In addition, this alliance expands the portfolio available to our market-leading China commercial team, led by Dr. Xiaobin Wu, with the potential to bring as many as eight internally discovered and in-licensed innovative treatments to cancer patients by the end of 2020."

Amgen's Chairman and CEO Robert A. Bradway added, "This strategic collaboration with BeiGene will enable Amgen to serve significantly more patients by expanding our reach in the world's most populous country. We've chosen an innovative strategic collaborator that can offer commercial and clinical reach with global quality standards...Cancer is a leading cause of death in China and will only become a more pressing public health issue as the Chinese population ages. We look forward to working with BeiGene to make a meaningful difference in the lives of millions of cancer patients in China and around the world."

The report outlined that under the agreement, BeiGene will commercialize XGEVA, KYPROLIS and BLINCYTO in China for five or seven years, during which time the parties will equally share profits and losses. Following the commercialization period, BeiGene will have the right to retain one product and will be entitled to receive royalties on sales in China for an additional five years on the products not retained.

The release further indicated that BeiGene has agreed to jointly develop 20 Amgen oncology pipeline assets globally, which include targeted small-molecule agents such as AMG 510, a first-in-class investigational KRAS G12C inhibitor, as well as BiTE (Bispecific T cell Engager) antibodies, for solid and hematologic malignancies. The agreement further stipulates that for each pipeline asset that is approved in China, BeiGene will receive commercial rights for seven years from approval, during which time the parties will share equally in profits and losses.

BeiGene was established in Beijing, China in 2010. The company employs 3,000 people in China, the U.S., Australia and Europe and also has corporate offices in the Cayman Islands. The firm describes its business as a "global, commercial-stage, research-based biotechnology company focused on molecularly-targeted and immuno-oncology cancer therapeutics that is advancing a pipeline consisting of novel oral small molecules and monoclonal antibodies for cancer." The Company's main products include Zanubrutinib (BGB-3111), Tislelizumab (BGB-A317) and Pamiparib (BGB-290). The firm also markets several pharmaceutical products in China licensed from Celgene Corp. including ABRAXANE, REVLIMID and VIDAZA.

Amgen is headquartered in Thousand Oaks, Calif. and is one of the world's largest biotechnology firms with a market cap of around $126.6 billion. The company states that it is committed to unlocking the potential of biology for patients suffering from serious illnesses by discovering, developing, manufacturing and delivering innovative human therapeutics. The firm claims that it uses tools like advanced human genetics to unravel the complexities of disease and understand the fundamentals of human biology. Some of the firms largest patented medicines include Enbrel, Prolia, XGEVA, Neulasta and Aranesp.

BeiGene started the day with a market capitalization of approximately $8.3 billion with about 60.35 million ADR shares outstanding. The stock has a 52-week price range of $108.00-187.56. BGNE shares opened much higher today at $170.00 (+$31.66, +22.89%) over yesterday's $138.34 closing price. The stock set a new 52-week high intraday price in early morning trading and has traded today between $170.00 to $187.56/share. At present, BGNE's shares are trading at $187.27 (+$48.93, +35.37%).

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