Chinese biotech company BeiGene rocketed late Thursday after it announced a $2.7-billion deal with Amgen (AMGN) that will give the latter a $13.5- billion share.
Amgen (AMGN) would charge BeiGene (BGNE) investors $174.85 per stock under the all-cash deal, a 25 percent boost on Wednesday to the closing price for BeiGene on the Nasdaq.
BeiGene stock jumped 7 percent in Thursday's after-hours trading. About a percent of Amgen's stock is down.
BeiGene is going to market some of Amgen's cancer drugs for distribution on the Chinese market, the firms said in a report.
Amgen will also partner in China and elsewhere with BeiGene to produce 20 new drugs from its cancer pipeline.
The transaction, which is expected to close in early 2020, would expand Amgen's presence in the fast-growing drug industry in China.
"We have had the company building the market internationally as one of our main priorities for several years," Amgen Chief Financial Officer David Meline told CNBC. "This is an important piece that remains for us, and we hope it will complete the chessboard if you like."
BeiGene produces directed genetic and immuno-oncology drugs to treat cancer. Of nearly 4 million patients diagnosed with cancer every year, Amgen claims since 2011 it has increased its global footprint to about 50 to 100 nations.
The deal also comes amid China's ongoing US trade burden. Recently, President Donald Trump pressured US firms to restrict Chinese entities' financial investments.
Meline said Amgen was "fully mindful of the current discussion between the governments," adding that they don't "anticipate any justification that there would be a political pushback because it's pretty straightforward, to be frank," he said.
John Oyler, BeiGene's chairman and chief executive officer, also touched on trade talks, saying the company was "just focused on fighting cancer." "We're doing this all the time, but cancer is a common enemy," said Oyler.
"It has no limits, so our business has no boundaries. BeiGene is a global business; in China, we have a lot of strength, but we fight everywhere we can. We think this is a regional challenge, Oyler pointed out.
Goldman Sachs acts as Amgen's financial advisor, and Latham & Watkins serves as legal advisor. Morgan Stanley serves as BeiGene's primary financial advisor.
BeiGene would budget the development program as much as $1.25 billion. Except KRAS drug AMG 510, Amgen will pay BeiGene royalties on sales of these products outside China.
