BeiGene Plans $2B Direct Offering; Analyst Sees Further Upside Ahead

Chinese biotech BeiGene (BGNE) has announced the pricing of a registered direct offering of 145,838,979 ordinary shares, par value $0.0001 per share to certain existing investors.

Each ordinary share is being sold for a purchase price of $14.2308 per share (equivalent to a price of $185 per American Depositary Share (“ADS”)), resulting in gross proceeds of approximately $2.08 billion and net proceeds, after estimated offering expenses, of $2.07 billion.

Shares are currently trading on Nasdaq at $196.03.

The offering is being made without an underwriter or a placement agent, BGNE states, which means it will not have to pay any underwriting discounts in connection with the offering.

According to the statement, the offering is expected to close on or about July 15, 2020, subject to customary closing conditions. BeiGene says it intends to use the proceeds for working capital and other general corporate purposes.

Shares in BeiGene have surged 18% year-to-date, and analysts have a bullish Strong Buy consensus on the stock’s outlook. That’s alongside an average analyst price target of $217 (11% upside potential). Beigene currently markets two key oncology products: BTK inhibitor zanubrutinib in the United States, and anti-PD-1 antibody tislelizumab in China.

“We expect further upside as Brukinsa (zanubrutinib) and tislelizumab (‘tisle’) continue to gain approvals, particularly in larger indications such as non-small cell lung cancer (NSCLC) for tisle, for instance” commented Maxim Group analyst Naureen Quibria on July 10.

Recent approvals for zanubrutinib and tislelizumab in multiple indications (MCL, CLL/SLL and cHL, mUCC, respectively) in China further de-risk these agents, says Quibria.

“Given the robust early-stage pipeline that appears to be rapidly advancing in the clinic, in addition to the ongoing late-stage clinical programs, we reiterate our Buy rating and raise our PT to $250, from $190” she added. From current levels this indicates upside potential of 28%. (See BGNE stock analysis on TipRanks).

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