Amgen'S $2 Billion 700 Million Stake In Baiji Shenzhou: The Temptation Of China'S Innovative Pharmaceutical Companies Under The Policy Of Dongfeng

Local innovative pharmaceutical companies ushered in another highlight in November 1st.

In November 1st, Amgen, a biopharmaceutical company in the United States, announced that it would buy $2 billion 700 million in cash for the 20.5% stake in China Bio innovation company, Hongkong, China (NASDAQ Code: BGNE; and the stock exchange of the Hong Kong Stock Exchange: 06160).

Amgen has agreed to pay a ADS premium of $174.85 per share, compared with the 30 day trading average weighted average price of Baiji Shenzhou stock market in October 30, 2019 as compared to that of 36%, and bought about $2 billion 700 million worth of Baiji Shenzhou common stock. Amgen will get a seat on the board of directors of the baiji Shenzhou. The transaction is expected to be completed in the first quarter of 2020.

If the transaction is successfully completed, it will create the largest transaction volume between Chinese and foreign Biopharmaceutical Enterprises.

Considering the fact that over the past year, the transaction has been dramatic in the wake of the double listing in the Hong Kong stock exchange, the delayed approval of heavy drugs, the termination of cooperation with the new base, the short selling and the opening of new factories.

At a press conference in the afternoon of November 1st, Wu Xiaobin, general manager and CEO of China, said that the acquisition process was initiated by the founder, Aurejo, including the twenty-first Century economic report.

As the founder, chairman and chief executive of Baiji, Lei Qiang's explanation for the "big hand" motive of Amgen is, "I must believe that this company is worth investing so much money." It is also because we have spent a lot of strength in commercializing and clinical research in China, and have established a clinical research team of over 1000 people worldwide, of whom more than 600 are in China.

Clinical, commercial capabilities and "in China" are probably the main attractions of this cooperation.

In November 1st, Amgen, a biopharmaceutical company in the United States, announced a $2 billion 700 million acquisition of 20.5% of China's biological innovation company, Baiji Shenzhou. - Song Wenhui diagram

"Windfall"

According to the semi annual report of multinational pharmaceutical companies this year, Amgen's revenue is 11 billion 428 million US dollars, ranking tenth in the global pharmaceutical companies' revenues. Lei Qiang told reporters at the press conference that "Amgen is the world's sixth largest biopharmaceutical company."

Amgen is a giant in the global biopharmaceutical industry.

In 2010, Baiji Shenzhou was founded in Beijing as a research and development company. Lei Qiang, one of the founders, has accumulated experience from McKinsey to a number of pharmaceutical companies. Another founder, Wang Xiaodong, is a double member of the National Academy of Sciences and the Chinese Academy of Sciences.

In 2016, in the absence of product launch, Baiji Shenzhou in the NASDAQ IPO, completed $182 million financing.

In 2017, Baiji Shenzhou began working with another American biotech giant, New Zealand, to jointly develop and commercialize the PD-1 inhibitor tyrezumab for the treatment of solid tumors. Baiji Shenzhou has also taken over the operation of new base in China. It has three new authorized products, including ABRAXANE Paclitaxel For Injection (albumin bound), Rui Mei (lenalidomide) and VIDAZA injection azartidine. Baiji has opened up a commercialization process for a bio pharmaceutical enterprise.

At the same time, Wu Xiaobin, who was in charge of Pfizer's China business, joined Baiji Shenzhou as the general manager of China and President of Baiji Shenzhou.

In July 2018, IPO became the first Chinese biopharmaceutical company to list shares in the US and Hong Kong stocks.

The accident first came from the merger of two other big companies. In 2019, new year's day, BMS announced that it would buy Celgene for $74 billion. If it is completed successfully, it will be the four largest M & a transaction in biopharmaceutical Shi Shangdi. Since the acquisition and acquired company often have many cooperative R & D and mutual authorization transactions, the partners are also facing the subsequent impact of mergers and acquisitions.

Because BMS itself has a listing of competing PD-1 Opdivo, the foundation is good, and the market worries that it is difficult for PD-1 to find a good location in the new home. The cooperation between Baiji and new base ended unexpectedly. In June this year, the two sides announced the termination of global cooperation for reezumab. Before the acquisition of new base was completed by BMS, new base agreed to pay $150 million for cooperation termination.

The second accident came from being "short". At the beginning of September, the short selling agency J. Capital Research released a report accusing the company of forged 60% sales, related transactions, the founder's "cash in hand" and the Guangzhou company's main body and business "shell". At the end of September, Baiji Shenzhou announced that its Guangzhou biological medicine production base phase I project was formally completed, and its self-developed PD-1 antibody for ralezumab will be produced here.

At this time node, the "windfall" of Amgen is rather "fixed".

Liang Heng, chief financial officer and chief strategy officer of Baiji Shenzhou, said at the above press conference, "Amgen has made a lot of investment. We can imagine that their due diligence is very detailed and will consider various factors. Finally, cooperation is also a self-evident answer to this short report."

Chinese Market

The four words of "China market" are "SEDUCTION" to transnational pharmaceutical companies in the context of reviewing and approving favorable policies and increasing demand for oncology drugs. In October 29th, Mercedes announced its third quarter results in 2019. China's market supply of vaccines was in short supply, making it the best performing country in the international market, with sales of US $898 million, an increase of 84% over the same period last year, mainly due to the contribution of HPV vaccines and Oncology drugs.

But how to make products sell on the market more quickly, and finding a partner who understands local, policy, team and know how to enter health insurance is a more cost-effective choice.

Lei Qiang said, "now is a very special period for the biopharmaceutical industry. The Chinese government is encouraging the reimbursement of innovative drugs and vigorously promoting clinical trials. We also hope to take this opportunity to further develop into the world's bigger biopharmaceutical company."

According to IQVIA data, global cancer drug expenditure was nearly $150 billion in 2018, an increase of 12.9% over the previous year, and a two digit increase in 5 years. This growth is driven entirely by the rise in the cost of treatment drugs. In 2018, the scale of China's Oncology market reached US $9 billion, an annual growth of 11.1%. Because the price of some drugs in the Chinese market is far lower than that in other markets, the proportion of global cancer treatment fees is 85%, and China's data is 70%.

In terms of market performance, drug penetration into the national health insurance is obvious. In the second quarter of 2019, the sales volume of multinational enterprises reached 59 billion 200 million yuan, an increase of 17.5% over the same period last year. If, thanks to Herceptin's access to health insurance and continuous volume through negotiation, Roche's sales growth from the third quarter of 2018 to the second quarter of 2019 was as high as 41.1%.

In 2018, about 35 new drugs were approved quickly, because 14 of them were anticancer drugs. This figure was basically similar to that of developed markets, and 8 of the 14 were innovative drugs developed locally.

The cooperation between Baiji Shenzhou and Amgen is all about the development and advancement of tumor drugs. Including the development and commercialization of Amgen in China, three drugs approved by the world have been approved: dhmab, giant cell tumor of bone, injection of bastamib (multiple myeloma) and double dose of double dose of rilinomer (relapsed or refractory adult acute lymphoblastic leukemia). In 2018, the global sales of three drugs were $1 billion 786 million, $968 million and $230 million respectively. And to develop 20 kinds of oncology antitumor pipeline drugs worldwide.

Amgen and Baiji Shenzhou will share the cost of development worldwide, of which, during the period of cooperation, Baiji Shenzhou will contribute 1 billion 250 million dollars, including development services and cash. The company has the right to obtain royalties from every product (excluding AMG 510) outside China.

Two days ago, he announced the third quarter of 2019. Total revenue fell by 3% to $5 billion 700 million, reflecting the impact of competition between biosimilars and generic drugs on key products compared with the third quarter of 2018. Generate $3 billion 200 million free cash flow; total revenue in 2019 was revised to $22 billion 800 million to $23 billion.

How the 23 drugs affect the future funding, R & D, clinical and commercial resources of both sides is a matter of concern to the industry.

"Three products have been approved, one has been declared, and one is about to declare." 20 products, part of the data have been published. Treatment includes non-small cell lung cancer and other solid tumors and blood tumors. "I don't think there will be any conflict with our own R & D pipelines," said Wang Lai, senior vice president of Baiji, in an interview with the twenty-first Century economic report. Many cancer patients are hard to cure and relapse, so there are many different ways to treat the same tumor. Many drugs and Baiji Shenzhou pipeline can be combined treatment.

Wu Xiaobin said, "we now have more than 700 cancer business teams, which belong to the first tier in international companies. With the addition of Amgen products and the listing of several products in the future, this team may continue to expand, which is one of the reasons for Amgen and our cooperation. "

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