(Reuters) - Celgene Corp said it would buy a stake in BeiGene Ltd to help develop and commercialize the China-based cancer immunotherapy developer's treatment for solid tumor cancers, expanding its position in the field of immuno-oncology.
BeiGene's shares rose as much as 31.4 percent to an all-time high of $68.67 in afternoon trading on Thursday. Celgene's shares were marginally down.
The deal announced on Wednesday will complement Celgene's partnership with AstraZeneca Plc to develop durvalumab as a treatment for hematological malignancies and expand the drug developer's presence in China's untapped cancer market.
BeiGene's advanced tumor cancer therapy, BGB-A317, is a type of antibody that belongs to a new class of drugs called PD-1 or PD-L1 inhibitors that block a mechanism tumors use to evade detection from cancer-fighting cells.
The treatment has been tested in more than 500 patients, with initial data suggesting that it is well-tolerated and exhibits anti-tumor activity across a range of solid tumor types, the companies said.
"We believe Celgene's ability to combine approved therapies in-house with either durvalumab or BGB-A317 provides the company flexibility during development and commercialization," William Blair analyst Andy Hsieh said in a client note.
BeiGene will get $263 million in upfront license fees and $150 million in equity investment. The company will also be eligible to receive up to $980 million in development, regulatory and sales milestone payments.
This is a "shockingly good" deal for BeiGene as it monetizes a market that is virtually impenetrable to all but the largest pharma players in the cancer space, Baird analyst Brian Skorney said.
Last month, Hutchison China MediTech , the Shanghai-based drugmaker listed in London and commonly known as Chi-Med, filed a marketing application for its cancer drug fruquintinib with the China Food and Drug Administration.
Chi-Med is developing the treatment for advanced colorectal cancer in collaboration with U.S. drug developer Eli Lilly and Co .
BeiGene will acquire Celgene's operations in China and also license and assume commercial responsibility for Celgene's approved therapies - Abraxane, Revlimid and Vidaza - in the region.
Celgene will acquire 32.7 million of BeiGene's ordinary shares at $4.58, or $59.55 per BeiGene's American Depositary Shares (ADS), the companies said.
Up to Wednesday's close of $52.27, BeiGene's shares had gained about 72 percent this year.
(Reporting by Divya Grover and Bhanu Pratap in Bengaluru; Editing by Amrutha Gayathri and Martina D'Couto)