“This strategic collaboration with BeiGene will enable Amgen to serve significantly more patients by expanding our presence in the world’s most populous country,” said Robert A. Bradway, Amgen’s chairman and chief executive officer.
Thousand Oaks, California-based Amgen significantly expanded its presence in China by taking a 20.5% stake in China-based BeiGene Co.
Under the terms of the strategic collaboration, Amgen is paying about $2.7 billion in cash, or $174.85 per BeiGene American Depositary Share on the Nasdaq, which is a 36% premium to BeiGene’s average share price over the last 30 days as of October 30. Amgen will nominate a person to BeiGene’s board of directors.
Under the deal, BeiGene will commercialize Xgeva (denosumab), Kyprolis (carfilzomib) and Blincyto (blinatumomab) in China. The two companies will split profits and losses evenly. Two of them will revert to Amgen, one after five years, the other after seven years. After that commercialization period ends, BeiGene will be able to retain one product and receive royalties on China sales for another five years on the product rights it returns to Amgen.
Xgeva is used to treat bone metastases from solid tumors and multiple myeloma and launched in China in September. Kyprolis and Blincyto are currently in Phase III trials in China. Kyprolis is used to treat multiple myeloma. Blincyto is used to treat acute lymphoblastic leukemia (ALL).
The two companies will also collaborate on 20 drugs from Amgen’s oncology pipeline in China and globally. BeiGene will invest up to $1.25 billion in research and development costs. Amgen will pay royalties to BeiGene on sales of any of these drugs outside of China except for AMG 510, which is being developed for solid tumors.
Amgen plans to continue to market its non-cancer drugs in China. For example, earlier this year it launched Repatha for cholesterol in China. It plans to launch several more outside of cancer in China over the next few years, including Prolia for osteoporosis.
“This strategic collaboration with BeiGene will enable Amgen to serve significantly more patients by expanding our presence in the world’s most populous country,” said Robert A. Bradway, Amgen’s chairman and chief executive officer. “Cancer is a leading cause of death in China and will only become a more pressing public health issue as the Chinese population ages. 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.”
Amgen has been developing internationally. Since 2011 it has grown its presence from about 50 to 100 countries.
“For a number of years, we’ve had as one of our key focuses for the company building out the business globally,” David Meline, Amgen’s chief financial officer, told CNBC. “This is an important piece that was remaining for us, and we think that will fill out that chessboard, if you will.”
It was noted that the deal comes amidst the Trump administration’s ongoing trade war with China, and that President Trump has pressured U.S. companies to restrict investments in Chinese companies.
Meline told CNBC that Amgen is “very conscious of the dialogue that’s going on between the governments. We don’t expect that there will be any reasons why there would be political pushback, because it’s pretty straightforward, to be honest.”
John Oyler, chairman and chief executive officer of BeiGene agreed, telling CNBC that BeiGene is “just focused on trying to fight cancer. We say this all the time, but cancer is a common enemy. It doesn’t have any borders, and our company doesn’t have any borders.”
