Breaking down Beigene’s latest deal with the west

It’s easy to hail yesterday’s deal between Amgen and Beigene as another example of the great strides companies are taking to internationalise via complex licensing arrangements. But the truth might be rather more prosaic.

Though the tie-up involves certain distinct elements it can best be summarised as a simple way for Amgen to access the Chinese market by buying into Beigene, a player that already has a strong local presence. And, though the headline $2.7bn number sounds impressive, Amgen is not handing over any cash for Beigene’s assets.

In return for Amgen’s $2.7bn Beigene has had to issue new shares, meaning that the money is not an unencumbered up-front fee. That said, the premium of 26% to Beigene’s close yesterday will rightly be taken as a strong endorsement of the Chinese group, which had recently come under pressure from a short seller called J Capital.

For Beigene this is not a clean fund-raising exercise, since the company has committed to provide up to $1.25bn to the development of 20 Amgen oncology projects. Amgen states that thanks to Beigene it will make a bigger impact on China than it could have done on its own.

Innovent read-across

But no Beigene projects will change hands, so the deal is arguably less groundbreaking than the 2015 tie-up between Innovent and Lilly, which could be seen as an asset swap that marked a way for the two companies to access each other’s expertise in their own territories.

Of course, Beigene already has a US listing on Nasdaq, and under a separate deal with Celgene it sells the Celgene drugs Abraxane, Vidaza and Revlimid.

To these three it will soon be able to add Amgen’s Xgeva, Kyprolis and Blincyto. These, plus the 20 projects from Amgen’s oncology pipeline, will be sold by Beigene in China under a profit share; Beigene will also get an unexpected bonus, in the form of a single-digit royalty on Amgen’s sale of the 20 R&D assets – except the high-profile Kras inhibitor AMG 510 – in the west.

Beyond AMG 510 the 20 pipeline assets have not been disclosed, but a look at Amgen’s most recent pipeline reveals the likeliest candidates (below). Many of these are antibodies and bispecifics, some targeting the same antigen, but using subtly different approaches.

It seems that the Amgen deal could turn Beigene further away from its small-molecule comfort zone, and give it an economic interest in the global cancer market. However, its most important immediate aspect will be to resuscitate Beigene’s valuation.

This story has been amended to correct the terms of the Celgene deal.