Celgene Investments in Acceleron, BeiGene

Sept. 29, 2017 5:50 a.m. ET


Celgene



CELG -0.14688396167028048%



Celgene Corp.


U.S.: Nasdaq


USD142.76


-0.21
-0.14688396167028048%



/Date(1506632400361-0500)/


Volume (Delayed 15m)
:
2040395



AFTER HOURS



USD142.76



%


Volume (Delayed 15m)
:
51065




P/E Ratio
44.47352024922118

Market Cap
111852725309.877


Dividend Yield
N/A

Rev. per Employee
1676010









More quote details and news »


doesn’t let a partner down.

The biotech on Monday bought 750,000 more shares of


Acceleron



XLRN 1.445578231292517%



Acceleron Pharma Inc.


U.S.: Nasdaq


USD35.79


0.51
1.445578231292517%



/Date(1506632400288-0500)/


Volume (Delayed 15m)
:
434934



AFTER HOURS



USD35.79



%


Volume (Delayed 15m)
:
2085




P/E Ratio
N/A

Market Cap
1553801699.77783


Dividend Yield
N/A

Rev. per Employee
108562









More quote details and news »


(ticker: XLRN) for $28 million in a public stock offering. Celgene (CELG) remains Acceleron’s largest holder and is a partner for the latter’s lead program, Luspatercept, and for sotatercept.

Luspatercept is designed to promote red-blood cell production through a novel mechanism, and is being developed to treat chronic anemia and associated complications in myelodysplastic syndromes, or MDS, beta-thalassemia, and myelofibrosis.

Celgene is currently conducting or about to begin clinical trials with luspatercept for several indications. Acceleron sees a total sales opportunity of more than $2 billion if luspatercept were to receive regulatory approval for each of the indications in the U.S. and Europe.

Celgene recently granted back to Acceleron the rights to fund, develop, and lead the global commercialization of sotatercept in pulmonary arterial hypertension, or PAH. Acceleron expects to initiate a Phase 2 clinical trial for PAH in the first half of 2018.

Celgene is paying for all the development costs for all clinical trials for luspatercept and sotatercept, outside of PAH. Acceleron would receive a royalty on net sales in the low-to-mid 20% range if the therapeutic candidates are commercialized.

There’s no time frame on approvals, although investor interest is high for luspatercept. We noted that the failure of Acceleron’s kidney-cancer drug in June didn’t make a dent in the stock because there weren’t many hopes pinned on that particular candidate.

Acceleron’s public stock offering of up to 6.2 million shares (including a 30-day option for 810,810 additional shares) could raise as much as $216 million. Celgene did its part by raising holdings to 6.16 million shares from 5.41 million as of January 2016, but due to share dilution from the offering, the company’s percentage stake in Acceleron slipped to 13.9% from 14.6%.

That’s not the only thing that’s down. Acceleron announced the pricing of the public offering at $37 on the evening of Sept. 20–below that day’s close of $37.73. The next day saw Acceleron shares tumble wider than 7.1% on heavy trading. They haven’t topped $37 since.

In any case, another investment Celgene made recently has already paid off on paper.

On Sept. 1, subsidiary Celgene Switzerland LLC disclosed holdings of 32.7 million ordinary shares of


BeiGene



BGNE -2.608956417433027%



BeiGene Ltd. ADR


U.S.: Nasdaq


USD97.43


-2.61
-2.608956417433027%



/Date(1506632400416-0500)/


Volume (Delayed 15m)
:
353250




P/E Ratio
N/A

Market Cap
3993153189.92533


Dividend Yield
N/A

Rev. per Employee
N/A









More quote details and news »


(BGNE), a stake of 5.6%. BeiGene, a biotech focused molecularly targeted and immuno-oncology cancer therapeutics, had reached a pact in July that gave Celgene the exclusive right to develop and commercialize the investigational PD-1 inhibitor, BGB-A317, in patients with solid tumor cancers in the U.S., Europe, Japan and the rest of world outside Asia.

Celgene agreed to pay $263 million in upfront license fees and to buy the BeiGene shares for $150 million, or $4.58 a share. Each BeiGene American depositary share (ADS), traded on Nasdaq, represents 13 ordinary shares, so the purchase price represents $59.55 per ADS. The stock sale apparently closed Aug. 31.

News of the Celgene pact surprised at least one analyst who covers BeiGene. Maxim Group’s Gabrielle Zhou raised her target price on the ADS to $77 from $73. “Our model previously had not assumed any revenues of BGB-A317 outside of China,” Zhou wrote in a report earlier this month.

Zhou’s calculation has already been left in the dust. BeiGene ADSs closed Thursday at $97.43, meaning that Celgene’s ordinary shares have already surged more than 63% for a gain of over $95 million.

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