BeiGene (BGNE) Should Be Up, Not Down - Maxim Group

Maxim Group analyst Jason McCarthy weighed in on BeiGene, Ltd. (NASDAQ: BGNE), with shares down sharply following Bristol-Myers Squibb's acquisition of Celgene. The pressure on the stock is due to the questions around the CELG/BGNE partnership for PD1, tislelizumab.

McCarthy thinks the stock should be up, not down.

He notes there are two scenarios they see that can play out for BGNE, assuming the transaction closes:

1. BMY ends the partnership with BGNE: Most likely, in our view as BMY has Opdivo which generates ~$5B globally (and has its first approval in China). BMY can take back Revlimid in China, also likely. The positives for BGNE:
   • BGNE regains global rights to tislelizumab which is now in 10 ongoing pivotal trials, is closer to approval(s) and positions the company to get an even better deal than it got with CELG.
   • BGNE is already running 9/10 of the trials and CELG is funding 3, with the majority of CELG funding expected by the time the BMY deal closes in 3Q19. CELG is operating one trial which has yet to enroll patients.
   • BGNE keeps Abraxane and Vidaza, as well as the commercial infrastructure it got in the CELG deal.
2. BMY maintains the BGNE partnership: We believe this is less likely as Opdivo is a competing product. BMY could potentially want a second PD1 in its checkpoint portfolio to target indications not addressed by Opdivo. Tislelizumab is a differentiated PD1 with an engineered Fc region which may be attractive to BMY.

He concluded, "While the potential acquisition of CELG by BMY has pressured BGNE shares, there are positive aspects for BGNE. The company also has over $2B in cash and is well funded to continue developing tislelizumab globally while it explores other potential partnerships. The next partnership could come with even better terms than with CELG. As such, we see the negativity in the stock on today's news as a buying opportunity."

The analyst reiterated a Buy rating and price target of $170.00

For an analyst ratings summary and ratings history on BeiGene, Ltd. click here. For more ratings news on BeiGene, Ltd. click here.

Shares of BeiGene, Ltd. closed at $136.03 yesterday.

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