Amgen pays $2.7B to enlist BeiGene as Chinese R&D partner

Amgen is paying $2.7 billion for a 20.5% stake in BeiGene. The investment will put BeiGene at the heart of Amgen’s efforts to develop oncology drugs for the Chinese market. 

BeiGene has grown into a significant player in the Chinese biotech field, raising $903 million through a Hong Kong listing last year and building a 600-person clinical development group. The fundraising and spending has equipped BeiGene to serve as a bridge for Western companies that want to access the Chinese cancer market, which is potentially very lucrative but poses challenges for outsiders.

Amgen is tapping into BeiGene’s capabilities by buying a big stake in the Chinese biotech at a 25% premium to its price Thursday. Under the terms of the deal, BeiGene will help develop 20 cancer drugs from Amgen’s pipeline for the Chinese market.

BeiGene will contribute up to $1.25 billion to the R&D programs. In return for the outlay, BeiGene will get the commercial rights to the drugs in China for seven years. Beyond seven years, BeiGene will retain the Chinese rights to up to six assets, although Amgen’s KRAS-G12C inhibitor AMG 510 is excluded from the list of drugs it can keep hold of long-term.

Amgen and BeiGene will split Chinese profits from the drugs during the first seven years. Once the rights revert to Amgen, BeiGene will receive royalties for another five years. BeiGene will also receive royalties on ex-China sales of all the cancer drugs it helps develop, except AMG 510, reflecting the expectation that Amgen will use clinical data from the collaboration to support global filings. 

The deal also covers several drugs that are on or nearing the Chinese market. BeiGene will sell Xgeva in China. Amgen won approval for the treatment of giant cell tumor of bones in China earlier this year. BeiGene will also sell two Amgen assets that are in late-phase development in China, namely Kyprolis and Blincyto.

BeiGene will initially split the profits from all three drugs with Amgen. The rights for two of the drugs will revert to Amgen after five and seven years, beyond which BeiGene will receive royalties for five years. BeiGene will get to keep one of the three drugs permanently.

Analysts at Jefferies framed the deal as a smart move by Amgen.

“The [BeiGene] partnership and investment is a positive as there is clear, good rationale to get exposure to this rapidly-growing geography. Early investment and infrastructure should return an estimated $1B+ in revenues in the long-term,” Michael Yee and his colleagues wrote in a note to investors. 

BeiGene’s stock jumped 25% in after-hours trading on the Nasdaq. In Hong Kong, where BeiGene took a secondary listing last year, news of the Amgen deal sent the Chinese biotech’s stock above its initial offering price for the first time.