Legend Biotech Reportedly Receives $10B+ Buyout Offer; Johnson & Johnson Expected to Join Bidding

Interface News reporter | Chen Yang

Interface News Editor | Xie Xin

On July 12, Seeking Alpha, an American stock market analysis website, reported that according to Street Insider, Legend Biotech, a biotech company in China, received a takeover offer and hired the investment bank Centerview Partners to assist the board in reviewing and evaluating the offer as well as other options. The news was attributed to an unnamed source, and the identity of the acquirer remains unknown. On the same day, Legend Biotech's stock price surged over 12%, with its market value approaching $100 billion.

Legend Biotech, incubated by GenScript Biotech, a provider of life science R&D and production services, was established in 2014 and focuses on developing CAR-T therapies. It went public on the US Nasdaq in June 2020. GenScript Biotech holds a 47.96% stake. Industry insiders predict that if the transaction proceeds smoothly, the price may exceed $10 billion, setting a record for the largest acquisition of an innovative drug company in China.

On July 15, Genscript Biotech opened with a surge, reaching HKD 12.700 per share as of press time, up 27%, with a current market value of HKD 27 billion. On the same day, Interface News inquired about the acquisition news from Genscript Biotech and Legend Biotech, both parties stated that they currently have no response.

Legend Biotech's first highlight came three years after its establishment. At the 2017 American Society of Clinical Oncology (ASCO) Annual Meeting in June, the company presented clinical data for its BCMA-targeting CAR-T drug, Cilta-cel. With "35 patients with relapsed or refractory multiple myeloma showing a 100% overall response rate," the data stunned the audience. By December of the same year, Legend Biotech had partnered with Janssen, a subsidiary of Johnson & Johnson, to jointly advance the drug’s clinical development and commercialization.

According to the agreement, in Greater China, Legend Biotech and Johnson & Johnson will share the development costs and profits of the product in a 7:3 ratio; in other regions globally, the agreed ratio is 5:5. The transaction price provided by Johnson & Johnson includes a $350 million upfront payment and subsequent multiple milestone payments. At that time, this deal set a record for the largest upfront payment in a patent licensing agreement by a Chinese pharmaceutical company and offered the best cooperation terms.

In February 2022, Cilta-cel (brand name: Carvykti) was approved by the U.S. Food and Drug Administration (FDA) for the treatment of patients with relapsed/refractory multiple myeloma (r/r MM) who have received at least four prior lines of therapy, becoming the first China-produced CAR-T product to successfully enter the overseas market.

In 2023, Carvykti's total annual sales reached 500 million US dollars, increasing by over 270% year-on-year, surpassing Abecma, another therapy with the same target and indication that was approved earlier. Abecma, which belongs to BMS, was approved in the US in March 2021, and its sales in 2023 amounted to 472 million US dollars, marking a year-on-year growth of 21.65%.

At the same time, the aforementioned companies are pushing their products to the front-line treatment to gain a larger market. In April 2024, Carvykti's second-line indication was approved by the FDA, becoming the world's first and only CAR-T therapy for second-line treatment of MM.

Prior to this, Legend Biotech/Johnson & Johnson had already been expanding its production capacity. According to Legend's annual report, since early 2023, the production capacity of Carvykti has increased by 100%, with an expected annual capacity of 10,000 doses by the end of 2025. Industry forecasts predict that Carvykti’s peak sales will exceed $5 billion.

In addition to Carvykti, Legend Biotech has several autologous and allogeneic CAR-T therapies in Phase I clinical trials, with indications covering both solid tumors and hematologic malignancies.

For the acquirer, the market mostly speculates it to be Legend Biotech's partner, Johnson & Johnson. Additionally, multinational pharmaceutical companies (MNCs) that have laid out plans in the CAR-T field include pioneers like Novartis, Gilead, and BMS, as well as later entrants such as Roche and AstraZeneca.

Previously, Legend Biotech and Novartis announced in November 2023 that they had entered into an exclusive global licensing agreement for Legend’s CAR-T therapy specifically targeting DLL3, including Legend's autologous CAR-T cell therapy candidate LB2102 (NCT05680922). Subsequently, Legend/Johnson & Johnson also signed a production expansion agreement with Novartis for Carvykti.

In addition, AstraZeneca announced in December 2023 the acquisition of Gracell Biotechnologies, a China-based CAR-T company, to strengthen its presence in hematological oncology. Gracell has also become the first Chinese innovative drug company to be acquired by an MNC.

Regarding the news of this acquisition, Bao Jun, Chief Business Officer of Promab Biotechnologies, analyzed to The Paper that even if the acquirer were not Johnson & Johnson, Johnson & Johnson would still participate in the competition to fully acquire Carvykti. If the bidder is indeed Johnson & Johnson, it can be understood that Legend Biotech and Johnson & Johnson are adopting a cooperation model rather than an MNC buyout of product rights. Therefore, Legend Biotech did not...Profitable TimesBoth parties collaborate to advance product development and commercialization, and once profitable, it can be acquired.

As of the end of the first quarter of 2024, Legend Biotech's cash and equivalents, deposits, and short-term investments amounted to $1.3 billion. The company believes these funds will provide financial reserves until 2026, with profitability expected by 2026. In 2023, Legend Biotech reported a loss of $518 million.

Notably, Centerview Partners, the investment bank mentioned in the aforementioned report, is also the facilitator of AstraZeneca's acquisition of Gracell Biotechnologies and has participated in numerous large-scale M&A deals in the biopharmaceutical field.

Editor: Zhang Qian