At one point on the morning of July 7, 2017, biopharma company BeiGene Ltd.’s shares (NASDAQ:$BGNE) went up as high as 31%. The rise in prices came shortly after the company announced a partnership with biotech giant Celgene Corp. (NASDAQ:$CELG). Celgene has acquired the global rights — excluding Asia — to BeiGene’s pipeline candidate drug PD-1 inhibitor BGB-A317. The drug was created with the goal to treat tumors using immuno-oncology applications.
Much to the surprise of investors, BeiGene has also acquired something from Celgene through their new partnership: the entirety of Celgene’s Chinese commercial operations, as well as an exclusive right to sell Celgene’s drugs — Abraxane, Revlimid, and Vidaza — in China.
As of 2:05 P.M. EDT on July 6, BeiGene’s stock has settled down to a 26.3% rise.
The Details
BeiGene will be receiving $263 million in upfront payments as well as a $150 million equity from Celgene. The payments will help double the cash position Beigene held at the end of March. For a company that is still in its pre-revenue stage, a dollar amount like this is incredibly encouraging for both BioGene and its shareholders. As previously mentioned, Beigene will be keeping its rights to the candidate drug BGB-A317 in Asia (Japan excluded).
With global commercial rights, Celgene is planning to begin studying solid tumors and using BGB-A317 as a treatment in the United States in 2018. With a record of safety and effectiveness on the solid tumors it has treated more than 500 patients to date — quite a number for a drug that is currently in its early-stage trials — the BGB-A317 shows a great amount of potential for getting on the market compared to other pipeline drug candidates.
In Conclusion
The partnership between BeiGene and Celgene is good news in the short term as well as the long-term for both companies. BeiGene will be gaining revenue now that it has retained exclusive rights to sell three of Celgene’s drugs in China and has taken its BGB-A317 one step closer to being available in markets worldwide. Meanwhile, Celgene is in the standing to gain quite a lot if BGB-A317 becomes successful and makes it into the market.
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