In an eye-catching transpacific collaboration last year, Amgen poured out $2.7 billion to tap into BeiGene’s commercial and R&D expertise in China. But what if an additional equity raise diluted its stake?
For Amgen, the solution was simple: buy more shares to maintain its ownership percentage.
On Sunday, BeiGene said it planned to raise $2.1 billion in a direct offering of 145.8 million shares. Then, Amgen unveiled it would contribute $421 million to keep its stake in the Chinese biotech at 20.3%, on par with its previous 20.5% in shares it acquired last year.
“This additional investment reflects Amgen’s confidence in the progress the companies are making in their ongoing oncology collaboration in China, the world’s second-largest pharmaceutical market,” the California company said in a statement.
BeiGene intends to use the money to fund its R&D programs, potential licensing deals to expand its portfolio, and its commercial activities in China and the U.S., it said in a securities filing.
The company recently lost a major source of revenue after Chinese regulators suspended the importation, sales and use of cancer drug Abraxane—which BeiGene in-licenses from Bristol Myers Squibb’s Celgene—due to manufacturing breaches. Even though BeiGene is working to restore supply from a different site, the regulatory setback has cost it a bulk procurement contract with the Chinese government.
BeiGene became a local oncology marketing powerhouse by building upon Celgene’s Chinese commercial team it acquired in 2017, a status Amgen hopes to leverage. The first milestone of that collaboration came to fruition just this month, as BeiGene began selling Amgen’s bone treatment Xgeva in China. Kyprolis and Blincyto, the other two commercial products included in the deal, are in phase 3 trials in the country.
BeiGene also needs resources for its internal assets, recently FDA-approved BTK inhibitor Brukinsa and PD-1 blocker tislelizumab. As BeiGene’s first drug outside of its home country, Brukinsa is going up against Johnson & Johnson hotshot Imbruvica and AstraZeneca’s Calquence. Tislelizumab, meanwhile, is fighting for a place in China’s crowded PD-1/L1 market, currently with go-aheads in third-line classical Hodgkin lymphoma and previously treated urothelial carcinoma. And BeiGene is eyeing the all-important front-line non-small cell lung cancer market with two recent phase 3 clinical wins.
In addition to those marketed drugs, BeiGene’s touting several internal clinical programs, SVB Leerink analyst Andrew Berens noted after attending the company’s R&D event last week. These include anti-TIGIT antibody BGB-A1217 and Bcl-2 inhibitor BGB-11417, which Porges said has the potential to be more potent and selective than AbbVie and Roche’s Venclexta.
Overall, Porges said he’s optimistic about potential new partnership opportunities “given the strategic positioning of BeiGene in the rapidly growing Chinese pharmaceutical market and validation from Amgen’s strategic collaboration.”