On October 31, 2019 Amgen (NASDAQ:AMGN) reported that it has entered into a strategic collaboration with BeiGene that will significantly accelerate Amgen’s plans to expand its oncology presence in China, the world’s second-largest pharmaceutical market (Press release, Amgen, OCT 31, 2019, View Source [SID1234550153]). BeiGene is a research-based, oncology-focused biotechnology company with an established and highly experienced team in China, including a 700-person commercial organization and a 600-person clinical development organization.

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"This strategic collaboration with BeiGene will enable Amgen to serve significantly more patients by expanding our presence in the world’s most populous country," said Robert A. Bradway, Amgen’s chairman and chief executive officer. "Cancer is a leading cause of death in China and will only become a more pressing public health issue as the Chinese population ages. With its extensive commercial and clinical capabilities within China and a commitment to global quality standards, BeiGene is the ideal strategic collaborator as we seek to make a meaningful difference in the lives of millions of cancer patients in China and around the world."

As part of the collaboration:

Amgen will acquire a 20.5% stake in BeiGene for approximately $2.7 billion in cash. This represents a purchase price of $174.85 per BeiGene American Depositary Share on NASDAQ, a 36% premium to BeiGene’s 30-day volume-weighted average share price as of Oct. 30, 2019. Amgen will nominate one person to serve on BeiGene’s Board of Directors.
Under the agreement, BeiGene will commercialize XGEVA (denosumab), KYPROLIS (carfilzomib) and BLINCYTO (blinatumomab) in China during which time the parties will equally share profits and losses. Two of these products will revert to Amgen, one after five years and one after seven years. Following the commercialization period, BeiGene will have the right to retain one product and will be entitled to receive royalties on sales in China for an additional five years on the products not retained. XGEVA was launched in China in September of this year; KYPROLIS and BLINCYTO are both in Phase 3 trials in China.
Amgen and BeiGene will collaborate to advance 20 medicines from Amgen’s innovative oncology pipeline in China and globally. BeiGene will share global research and development costs and contribute up to $1.25 billion to advance these medicines. Amgen will pay royalties to BeiGene on the sales of these products outside of China, with the exception of AMG 510, Amgen’s first-in-class KRASG12C inhibitor that is being studied as a potential treatment for solid tumors. Amgen anticipates utilizing data from clinical trials conducted in China to advance the development of its oncology portfolio globally.
Of the 20 oncology medicines in development, BeiGene will assume commercial rights in China for seven years after launch for those that receive approval in China, including AMG 510. After this time, BeiGene will retain rights to up to six of these products in China, excluding AMG 510, while rights on remaining products revert to Amgen. Amgen and BeiGene will share profits in China equally on these products until the rights revert to Amgen, after which Amgen will pay royalties to BeiGene on sales in China for a period of five years after reversion.
Amgen will continue to commercialize its non-oncology product portfolio in China. Earlier this year, Amgen launched its first-ever product in China, Repatha (evolocumab), an LDL cholesterol-lowering treatment proven to reduce the risk of heart attacks and stroke. Amgen expects to launch a number of other non-oncology medicines in China over the next several years, including Prolia (denosumab), which reduces the risk of fracture in postmenopausal women with osteoporosis.
XGEVA, KYPROLIS and BLINCYTO, as well as the medicines in Amgen’s oncology pipeline, will be manufactured at Amgen’s existing facilities.
Since 2011, Amgen has expanded its geographic presence from approximately 50 to 100 countries, enabling the company to play a growing role in serving the rapidly increasing demand for better healthcare around the world. The pharmaceutical market in China is expected to grow briskly as access to new medicines continues to improve. With approximately four million people diagnosed with cancer annually and 2.3 million deaths from the disease each year, the need for new oncology treatments in China is particularly acute and the oncology market is one of the fastest-growing segments of the overall pharmaceutical market there.

Amgen will purchase its equity stake in BeiGene with available cash and expects to retain its investment grade credit rating.

"Amgen’s capital allocation priorities remain unchanged," said David W. Meline, executive vice president and chief financial officer at Amgen. "We will continue to grow our business through internal investment and business development, while providing attractive returns to our shareholders through a growing dividend and continued share repurchases."

The transaction is expected to close in early 2020 subject to BeiGene shareholder approval, the expiration or termination of waiting periods under all applicable antitrust laws, and satisfaction of other customary closing conditions.

Goldman Sachs & Co. LLC is acting as exclusive financial advisor, and Latham & Watkins LLP is serving as legal advisor to Amgen.

Webcast Details
Amgen will host a webcast call today at 2 p.m. PT. where members of Amgen’s executive management team will discuss the Company’s strategic collaboration with BeiGene.  

Live audio webcast of the investor call will be broadcast over the internet simultaneously and will be available to members of the news media, investors and the general public.  

The webcast, as with other selected presentations regarding developments in Amgen’s business given at certain investor and medical conferences, can be accessed on Amgen’s website, www.amgen.com, under Investors. Information regarding presentation times, webcast availability and webcast links are noted on Amgen’s Investor Relations Events Calendar. The webcast will be archived and available for replay for at least 90 days after the event.   

For more information about Amgen’s products, including important safety information, please visit www.xgeva.com, www.kyprolis.com, www.blincyto.com, www.repatha.com, and www.prolia.com.