Celgene wants a shot at a bigger slice of the global cancer drug market, and the company is turning to China to do it. Summit, NJ-based Celgene has reached a deal with BeiGene, based in Beijing, for rights to a cancer immunotherapy still in clinical trials.
The deal announced late Wednesday calls for Celgene (NASDAQ: CELG) to pay $263 million up front in licensing fees for global rights to BeiGene’s lead cancer drug in solid tumors. BeiGene (NASDAQ: BGNE) keeps the right to develop and commercialize the drug in Asia, except for Japan, whose rights go to Celgene. If Celgene succeeds in developing the drug and commercializing it, the company could owe BeiGene as much as $980 million in milestone payments.
The transaction also includes equity. While Celgene has agreed to pay $150 million for a 5.9 percent ownership stake in its partner, BeiGene will take over Celgene’s China operations. The deal also grants BeiGene rights to manage the sales and marketing of three Celgene cancer drugs that are already approved in China.
The centerpiece of the deal is BeiGene’s lead compound, BGB-A317. The antibody drug is in a class of cancer treatments called checkpoint inhibitors. These drugs block the PD-1 protein, which some cancers can use to avoid detection by the body’s immune system. BeiGene developed its drug for targeting solid tumors as well as blood-borne cancers.
A number of PD-1 antibody drugs have already reached the market, such as pembrolizumab (Keytruda) from Kenilworth, NJ-based Merck (NYSE: MRK). But BeiGene claims that its drug is different from other PD-1 drugs because it is engineered in a way that minimizes interactions with other immune cells that could diminish the body’s immune response to cancer.
BeiGene has taken BGB-A317 into two late-stage clinical trials in China. The company says the drug has shown the ability to work on a range of solid tumor types. Global clinical studies for the drug are planned for next year. Under the collaboration agreement, Celgene and BeiGene will work together in global clinical trials for the drug. Besides allowing BeiGene to retain rights to the drug in Asia, the deal with Celgene also allows BeiGene to keep the rights to develop the compound in blood disorders and in combination with other drugs in its portfolio.
The boards of directors of both Celgene and BeiGene have approved the deal. The companies expect to complete the transaction during the third quarter, subject to the review and approval of regulatory authorities.