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Celgene (CELG), BeiGene Team Up For PD-1 Inhibitor in China

Celgene Corporation CELG recently entered into a strategic collaboration with China based-BeiGene, Ltd. BGNE. Per the deal, Celgene will develop and commercialize BeiGene’s investigational anti-programmed cell death protein 1 (PD-1) inhibitor BGB-A317.The candidate will be used to treat patients with solid tumor cancers in the United States, Europe, Japan and rest of world outside Asia.

Per the terms of the agreement, BeiGene will retain exclusive rights for the development and commercialization of BGB-A317 for hematological malignancies globally and for solid tumors in Asia (with the exception of Japan). In exchange, BeiGene will acquire Celgene’s commercial operations in China and gain an exclusive license to commercialize the company’s approved therapies– Abraxane, Revlimid and Vidaza – in China.

BGB-A317, an advanced clinical-stage investigational PD-1 inhibitor, has been dosed in over 500 patients. Initial clinical data suggest that BGB-A317 is well tolerated and exhibits anti-tumor activity across a range of solid tumor types. We note that the candidate is being developed as a monotherapy and in combination with other therapies for the treatment of solid tumor cancers. The candidate is currently being evaluated in two pivotal trials in China while global pivotal studies of BGB-A317 are expected to initiate in 2018.

The acquisition of BGB-A317 significantly accelerates and expands Celgene’s opportunity to develop and deliver novel T-cell checkpoint inhibitor-based therapies in solid tumor cancers to patients worldwide and adds to its ongoing PD-L1 FUSION program in hematological malignancies. It also transforms BeiGene into a commercial-stage company.

BeiGene will acquire Celgene’s operations in China. BeiGene has obtained licensing rights in China for CC-122, under the same terms and conditions as the approved commercial products. The candidate is currently under development for lymphoma and hepatocellular carcinoma.

Meanwhile, BeiGene plans to expand manufacturing and commercial operations in China in preparation for the potential approvals of BGB-A317 and future innovative therapies.

While BeiGene will receive upfront licensing fees totaling $263 million, Celgene will acquire an equity stake in BeiGene by purchasing 32.7 million, or 5.9% of BeiGene’s ordinary shares at $4.58 per share. In addition, BeiGene will receive up to $980 million in development, regulatory and sales milestone payments and royalties on future sales of BGB-A317.

Celgene has been executing strategic acquisitions and inking deals to bolster its pipeline.  Celgene has an agreement with Agios Pharmaceuticals AGIO for Idhifa. The company submitted a new drug application to the FDA for enasidenib, in relapsed refractory AML in 2016. The NDA for Idhifa was granted Priority Review with a Prescription Drug User Fee Act (PDUFA) action date of Aug 30, 2017.

 

Shares of Celgene have outperformed the Zacks classified Medical-Biomedical and Genetics industry year to date. Specifically, the stock has rallied 15.1% during this period, compared with a gain of 8.1% for the industry.

Celgene’s key growth driver, Revlimid is an oral immunomodulatory drug and is currently approved for several indications including multiple myeloma (MM), myelodysplastic syndromes (MDS) and mantle cell lymphoma (MCL).

Zacks Rank & Stock to Consider

Celgene currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in healthcare sector is Bayer AG BAYRY, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bayer’s earnings per share estimates have inched up from $8.85 to $8.93 for 2017 and from $9.53 to $9.61 for 2018, over the last 30 days. The company has delivered positive earnings surprises in three of the trailing four quarters with an average beat of 10.25%.

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