Celgene to Take Stake in Chinese Biotech Peer BeiGene

(Beijing) — U.S. biopharmaceutical company Celgene Corp. plans to acquire an equity stake in Chinese peer BeiGene Ltd. to help commercialize BeiGene’s solid-tumor cancer treatment in markets outside Asia.

Celgene plans to hold a 5.9% share in BeiGene for nearly $150 million and pay upfront licensing fees totaling $263 million. The Chinese biotechnology developer will be eligible to receive up to $980 million in development, regulatory and sales milestone payments, the companies said in a joint statement on Wednesday.

Shares of Nasdaq-listed BeiGene jumped to 26.8% to $66.28 on Thursday, while those of Celgene slipped 0.94% to $131.95 on the same bourse.

The deal is expected to be completed in the third quarter of the year, allowing both sides to collaborate in the global development of BGB-A317, an anti-programmed cell death protein 1 (PD-1) inhibitor for patients with solid-tumor cancers. The cancer treatment is currently undergoing two pivotal trials in China, and global pivotal studies are planned to begin in 2018.

Celgene will handle developing and commercializing the drug in Japan and the world outside Asia. The move will largely minimize BeiGene’s risks and costs at the clinical stage, said Zhang Jinghan, pharmaceutical analyst at CEBM Group, a subsidiary of Caixin Insight Group.

The collaboration takes place in a fast-growing industry, as the global cancer therapy market is estimated by Mordor Intelligence to increase 17.6% a year to reach $52.2 billion by 2021. In addition, Celgene’s offer will help BeiGene enter the developed markets of America and Europe, where spending on cancer treatments amounts to 65% of global sales.

As world economics change, major pharmaceutical companies are also focusing on marketing their products in emerging markets such as China, India and Brazil, according to Mordor Intelligence. BeiGene has also acquired Celgene’s commercial operations and exclusive licenses for three cancer treatment products in China.

“China is an important market for Celgene, and our collaboration with BeiGene positions us exceptionally well to optimize research, manufacturing, and the long-term commercial potential of our portfolio in China,” Celgene CEO Mark J. Alles said.

It is not uncommon for foreign companies to become involved in the development and commercialization of their Chinese counterparts’ drug products. Hutchison China MediTech Ltd., or Chi-Med, partnered with U.S. drug developer Eli Lilly and Co. to develop treatment for advanced colorectal cancer. U.S. pharmaceuticals giant Sandoz, a division of the Novartis Group, has helped with the marketing and sales of a type of anesthetic produced by China’s Jiangsu Hengrui Medicine Co.

Contact reporter Coco Feng (renkefeng@caixin.com)