When the time was right to make a powerful Western biotech welcome in China, Beigene Ltd. was ready when Amgen Inc. came calling. Its massive $2.7 billion cash equity investment in Beigene buys Amgen an oncology footprint in China.
An area that has consistently underperformed the West's pharmaceutical innovations is taking a giant step forward as the two companies will share the profits and losses equally. In all, 23 drug candidates are in play as Beigene, one of China's few elite biotechs, will commercialize three of Amgen's approved products in China and jointly develop 20 drug candidates globally. Eight are in phase I for hematologic tumors, six in phase I for solid tumors and six are in preclinical development. Amgen's first-in-class KRAS inhibitor, AMG-510, is included. Beigene will also step up with $1.25 billion for R&D.
"We're helping them with their global development, not just the China development, and as a result, will also gain royalties on their sales outside of China," Beigene's founder and CEO, John Oyler, said. The Pittsburgh native, along with Beigene's scientific advisory board chairman, Wang Xiaodong, launched the company in 2010. (See BioWorld, Nov. 22, 2013.)
The deal is oncology based as Amgen's Xgeva (denosumab), Kyprolis (carfilzomib) and Blincyto (blinatumomab) will be commercialized and developed in China by Beigene over the next five to seven years, in addition to the joint worldwide development of 20 oncology assets in Amgen's pipeline. After the initial commercialization time has passed, Beigene has the option to retain one of the products and receive royalties on China sales for another five years on the products that aren't retained.
Some of those oncology products will target Asia-specific indications in the region's vast number of potential patients.
"That applies to indications highly prevalent in China," said Eric Hedrick, Beigene's chief advisor, during Beigene's investor conference call that followed the deal's announcement. "We'll contribute to the KRAS inhibitor program and gastric cancer targets. Even cancers that are relatively rare in China could easily outpace those in the U.S. and Western Europe."
Hedrick referred to AMG-510, a KRAS G12C inhibitor. Also included are Bite (Bispecific T-cell engager) antibodies for solid and hematologic malignancies.
"The fact that we're working with Amgen in this collaboration clinically is a strong example of the sixth largest biopharmaceutical company in the world recognizing the importance of China as a clinical science center and also Beigene as a unique company with capabilities in that area," said Beigene's chief financial officer, Howard Liang.
Liang wouldn't give any guidance on the sales expected for Amgen products in China other than noting that Amgen has "done well outside China. We'll take over the commercialization and launch these products."
Beigene's stock (NASDAQ:BGNE) rocketed 37% upward Friday to close at $189.56, while Amgen's shares (NASDAQ:AMGN) closed a more modest 2.2% higher at $217.95.
Amgen currently commercializes Repatha in China and plans to launch other non-oncology products in the future on its own. It is also in other Asian markets, such as Japan in the collaboration with Astellas Pharma Inc. it cut in 2013. But the firm has clearly been looking to expand its Asia presence.
"Management repeatedly highlighted the opportunity in China on this week's 3Q earnings call (not so surprising in hindsight), and we acknowledge the potential this geography holds if/when the market ultimately opens up," they noted. "While this move makes strategic sense as a means to access greater traction in this non-traditional market and may look shrewd down the line, it's likely going to take quite some time for this to make a tangible difference (if it ever does)."
SVB Leerink analysts were much more positive about the deal, which is expected to close in the first quarter of 2020, calling it an "unalloyed triumph."
The Asia Pacific region, which China shares with Japan, South Korea and Japan, has consistently underperformed the West when it comes to biotech. Yet plenty of opportunities exist, like this multibillion-dollar deal. There is also a healthy dose of uncertainty, according to the first Pharmaceutical Innovation in the APAC region report, published by Clarivate Analytics plc.
Tense trade negotiations between the U.S. and China didn't stop the Amgen-Beigene deal from surging forward even though biopharma investments have been curbed in recent months. (See BioWorld, Sept. 5, 2019.)
China has finally written all its drug-related reforms into law, as it passed the amendment of its drug administration law in late August, the amendment to take effect on Dec. 1. Those moves carry one goal, which echoes in the Amgen-Beigene deal: bring more and better drugs into the Chinese market as quickly as possible. (See BioWorld, Sept. 10, 2019.)
For a copy of Clarivate Analytics' Pharmaceutical Innovation in the APAC region report, visit: http://discover.clarivate.com/APAC_PharmaRanking