Bristol Myers, BeiGene end legacy Celgene deal with settlement years after China ban

Back in 2020, a surprise manufacturing shortfall led to an import ban of Bristol Myers Squibb’s Abraxane, sold by BeiGene, in China. Legal finger-pointing ensued, and, now, the companies have decided to scrap their three-drug partnership altogether.

BMS and BeiGene on Tuesday agreed to end a China licensing deal that BeiGene signed with Celgene back in 2017 before its acquisition by Bristol, a securities filing shows. In the original deal, Celgene essentially sold its China business, including local rights to cancer drugs Revlimid, Abraxane and Vidaza.

Now, to end the deal, BMS will return nearly 23.3 million ordinary shares of BeiGene that Celgene had previously purchased. BeiGene won’t pay anything for those shares.

As of Tuesday, BeiGene’s American depositary shares on Nasdaq, each of which represents 13 ordinary shares, were worth more than $200 apiece. The price dropped to below $190 Wednesday amid a marketwide retreat in the U.S. Using that measurement, the total settlement was worth about $340 million.

Cracks started to form in the relationship in March 2020. At that time, Chinese authorities put Abraxane on an import and sale ban after spotting manufacturing problems at BMS' contractor Fresenius Kabi’s facility in Phoenix. Because of the quality misstep, BeiGene was disqualified from a national procurement program and banned from participating for two years. BeiGene has recorded no Abraxane sales since then.

Hurt by the sanction, BeiGene brought an arbitration case against BMS at the International Chamber of Commerce, accusing the U.S. company of a breach of contract. BMS responded by delivering BeiGene a notice in October 2021 to end the Abraxane collaboration.  

Now, the two sides have decided to settle the feud by ending the entire legacy Celgene deal, effective at the end of 2023. BeiGene is also allowed to sell all inventory of Revlimid and Vidaza in China until the end of 2024.

BeiGene has already shifted its attention from those drugs, which helped catapult the company to the commercial stage in 2017. BeiGene’s BTK inhibitor Brukinsa and PD-1 inhibitor tislelizumab have served as the company’s growth drivers lately.

Thanks to a U.S. approval in chronic lymphocytic leukemia, Brukinsa pulled in $308 million sales in the second quarter, up from $211 million in the first quarter. Sales of tislelizumab, which is so far only available in China, came in at $150 million in the second quarter, compared with $115 million in the first quarter.

By comparison, Revlimid brought BeiGene $21.8 million in sales and Vidaza $3.9 million during the three months that ended in June.

The termination comes as BeiGene and its partner Novartis are about to face off against BMS in the U.S. PD-1 inhibitor market. BeiGene and Novartis are awaiting a long-overdue FDA decision on tislelizumab, which might eventually compete with BMS’ Opdivo. The FDA recently completed a much-delayed manufacturing inspection in China, but the agency hasn’t communicated a new target decision date, according to BeiGene.

Meanwhile, BeiGene has been busy bolstering its own manufacturing capabilities. These include a $700 million-plus flagship manufacturing and R&D facility the company is building in Hopewell, New Jersey, which it says will be ready next year. BeiGene is also expanding its biologics facility in Guangzhou, China, and is constructing a new small-molecule campus in Suzhou, China.