Amgen, Inc. (NASDAQ:AMGN) invested $2.7 billion, equating to as 20.5 % stake in Beigene Ltd (NASDAQ:BGNE), a Chinese Biotech company. This deal between Amgen and BeiGene, all-cash, led to BeiGene’s valuation of $174.85 per American depository share. This valuation is a 25% premium to the company’s share closing price on Nasdaq on Wednesday.
Following this deal, BeiGene, the drug developer, will develop and commercialize Amgen’s approximately two dozen experimental and on-market cancer drugs in China.
Amgen will buy Cambridge, Massachusetts, and Beijing-based BeiGene’s shares. Also, Amgen has taken on the BeiGene Board. According to the agreement, the two companies are set to split the profits and losses equally.
To see the deal through, Latham & Watkins are Amgen’s legal advisor and Goldman Sachs, their financial advisor. On the other hand, BeiGene’s financial advisor is Morgan Stanley.
The Amgen executive vice president of global commercial operations, Murdo Gordon, stated that “We’ve been working to expand our strategy geographically over the last four or five years. We’re largely complete in that, and this is the missing piece of the puzzle.”
The three cancer drugs that BeiGene will commercialize include; Xgeva, Blincyto, and Kyprolis. Of these drugs, Kyprolis and Blincyto are undergoing the approval process, while the Xgeva is already in the market.
With approximately 4 million people suffering from cancer annually, Amgen has expanded its operation since 2011 from 50 to 100 countries. The BeiGene immune-oncology drugs are molecularly targeted to treat cancer. This is deemed to help more cancer patients across the globe.
Wu Xiaobin, China President of BeiGene, said that “This deal wouldn’t have happened if it wasn’t for these regulatory reforms in China that have led to a boom in the domestic biotech space.”
Notably, the great deal came through amid the U.S. – China trade war, whereby President, Donald Trump., pressurized the U.S. companies to limit their financial investments with Chinese firms.
Meline stated, “Amgen is very conscious of the dialogue that’s going on between the governments. We don’t expect that there will be many reasons why there would be political pushback, because it’s pretty straightforward, to be honest.”