Most NASDAQ-listed stocks making big moves on Thursday, such as Cerecor Inc. (NASDAQ: CERC) and Kitov Pharmaceuticals (NASDAQ: KTOV) are low-dollar plays doing so with no news catalyst. That certainly doesn’t include BeiGene Ltd. (NASDAQ: BGNE), whose stock has soared to an all-time high on news that Celgene (NASDAQ: CELG) is paying up to get control of Beigene’s BGB-A317, a PD-1 inhibitor in development for treating solid tumors.
PD-1 inhibitors, such as Merck’s (NYSE: MRK) Keytruda and Bristol-Myers Squibb’s Opdivo, and PD-L1 inhibitors like Roche’s (OTC: RHHBY) Tecentriq have been a hot topic in the cancer space in recent years, earning blockbuster status and setting the trend for others to chase. These drugs act by blocking specific interactions used by tumors to protect themselves from an immune response, allowing the body to attack tumors, the basis of the science of immuno-oncology.
In its efforts to make up some ground on rivals, Celgene agreed to pony up $263 million upfront for global rights outside Asia to BGB-A317. Celgene is also on the hook for another $150-million investment in Beigene and nearly $1 billion in milestone payments if the drug can perform like it thinks it can.
While giving Celgene BGB-A317 for solid tumors, Beigene, whose clinical development office is in Beijing, is keeping the rights to the drug candidate in Asia for solid tumors and everywhere else for treating blood cancers. Celgene already has invested in immuno-oncology for liquid tumors, buying the rights to Imfinzi from AstraZeneca (NYSE: AZN) in 2015.
Celgene was also working with Merck on hematological cancers. In fact, the Beigene news comes only a day after the U.S. Food and Drug Administration placed a clinical hold on three Keytruda studies testing the drug in combination with Celgene drugs for multiple myeloma, citing deaths in patients treated with the combination therapy.
The cash and commitment is not all that Beigene gets in the deal. Celgene is also giving its new Chinese partner its operations in the country, along with rights to the popular approved cancer drugs Abraxane and Revlimid and the approved myelodysplastic syndrome drug Vidaza, along with the experimental pleiotropic pathway modulator CC-122 for Chinese markets.
In short, Beigene gets a stack of cash, a new drug candidate, a heavyweight partner and instantly becomes a commercial stage company upon execution of the agreement.
Ahead of the public announcement, shares of BGNE shot ahead from around $46 per share to about $54 per share. The press release catapult the stock to as high as $68.67 during Thursday’s action before closing at $66.43 for a gain of 27.1% on the day and 47.6% on the week so far.
