Legend Biotech Acquisition Rumors Spark Sector-Wide M&A Activity in CAR-T Space
Legend Biotech
Tumor Cell Immunotherapy Developer
IASO Biotechnology
Cancer Treatment New Drug Developer
Innovent
High-end Biologics Developer
Recently, there were reports that Legend Biotech received a buyout offer. Affected by the news, Legend Biotech's stock price surged over 12% at the close of trading on the U.S. stock market that day. However, regarding the authenticity of the aforementioned report, Legend Biotech responded to reporters from the "National Business Daily," stating they have not received more related information.
Recently, innovative pharmaceutical companies in China that focus on CAR-T research, development, and production have been making frequent moves in commercial collaborations and equity acquisitions.
On July 5, IASO Bio announced that it had signed a series of cooperation agreements with Innovent Bio, involving IASO Bio's purchase of the revenue rights and intellectual property license of the合作产品伊基奥仑赛 from Innovent Bio, as well as Innovent Bio's investment in IASO Bio.
IASO Bio responded to reporters: "Our decision to update the cooperation model is based on an in-depth analysis of the current market environment and future development trends. CAR-T cell therapy, as a cutting-edge technology in the biopharmaceutical field, has tremendous development potential and market demand."
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Legend Biotech Responds to M&A Rumors: No Further Information
CAR-T is considered one of the most promising fields in China's innovative drug industry and one of the few areas where research and development are at the forefront internationally. According to statistics, since the first CAR-T product was launched in 2017, there are currently 11 CAR-T products on the global market, six of which come from Chinese companies, with five launched in China. Industry data also shows that China’s CGT (Cell and Gene Therapy) market demonstrates tremendous vitality, with over 647 CGT pipelines under development. Most projects are in Phase I/II clinical trials, primarily focusing on CAR-T technology. Meanwhile, China ranks second globally in the number of patent applications, just behind the United States.
From the perspective of commercially available products, the FDA has currently approved six CAR-T drugs for marketing, including Novartis' Kymriah, Gilead/Kite’s Yescarta and Tecartus, BMS’ Breyanzi, BMS/Bluebird Bio’s Abecma, and Johnson & Johnson/Legend Biotech’s Carvykti. In China, the National Medical Products Administration (NMPA) has approved five CAR-T drugs for marketing, namely Fosun Kite's Axicabtagene Ciloleucel, WuXi Jumo's Relmacabtagene Autoleucel, IASO Bio's Equecabtagene Autoleucel, Hekin Bio's Nacibcabtagene Autoleucel, and CARsgen Therapeutics' Zevorcabtagene Autoleucel.
According to Frost & Sullivan's forecast, based on sales value,The global CAR-T market size has increased from US$0.1 billion in 2017 to US$1.1 billion in 2020. It is expected that the market sales value of global CAR-T cell therapy will reach US$21.8 billion by 2030, with a compound annual growth rate of 34.8% from 2021 to 2030.The market size of CAR-T therapy in China was 200 million yuan in 2021, and it is expected to increase to 28.9 billion yuan by 2030, with a compound annual growth rate of 64.4% from 2021 to 2030.
In terms of market conditions, since 2017, as the first CAR-T therapy approved by the FDA, Gilead's Yescarta has achieved considerable market returns by seizing the early market opportunity. Financial reports show that in 2023, Yescarta topped the CAR-T therapy field with $1.5 billion in sales, becoming the only CAR-T therapy to surpass $1 billion in sales so far.
Previously, Legend Biotech was considered the "top student" of CAR-T therapy in China. Unlike its domestic peers, Legend Biotech reached a strategic cooperation with the well-known multinational pharmaceutical company Johnson & Johnson early in the clinical stage — a global cooperation agreement for Carvykti was reached in 2017. In addition, Legend Biotech also received an upfront payment of $350 million and milestone payments paid in stages.
The direct result of the collaboration was that Carvykti rapidly advanced clinical trials in multiple global markets and received FDA approval for marketing in 2022. Its commercial progress significantly increased Legend Biotech's market value, bringing substantial revenue and profit growth to the company. Meanwhile, Legend Biotech also expanded its international influence by leveraging Johnson & Johnson’s global network and resources.
Financial report data shows that Carvykti's sales in 2022 were $134 million; in 2023, sales reached $500 million, a year-on-year increase of 273%; and in the first quarter of 2024, sales amounted to $157 million. Currently, this sales volume ranks second among disclosed CAR-T products, only behind Gilead’s Yescarta, while its growth rate ranks first. Johnson & Johnson also predicts that Carvykti’s sales this year are expected to exceed $1 billion.
Therefore,It is widely speculated in the industry that Johnson & Johnson, as the partner of Legend Biotech's core product Carvykti, is the most likely counterparty in this acquisition offer. However, this speculation has not been responded to by Legend Biotech.
On the morning of July 15, Legend Biotech's parent company, Genscript Biotech, issued a voluntary announcement stating, "After conducting reasonable inquiries related to the Company under the relevant circumstances, the Board confirms that, as of the date of this announcement, it is not aware of any reasons for such fluctuations in share price or trading volume, or any insider information that is required to be disclosed under the Securities and Futures Ordinance."
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High costs and high treatment fees hinder market promotion
Accessibility has always been a major factor inhibiting the expansion of the CAR-T market in China. The high research and development costs and complex production processes, due to its personalized treatment approach, have kept prices high, hindering large-scale market promotion and adoption.
From the currently disclosed prices, the treatment costs of CAR-T can easily reach millions of yuan, far exceeding the financial affordability of most patients. However, China's medical insurance system has yet to fully cover such high-priced innovative drugs, leaving patients under tremendous pressure in terms of payment.
Reporters noticed that, in order to solve this problem, most CAR-T companies currently choose to cooperate with commercial health insurance companies to find another important payment method outside of medical insurance. Taking Fosun Kite's Axicabtagene Ciloleucel as an example, by April this year, Fosun Kite had established more than 160 high-standard treatment centers for Axicabtagene Ciloleucel across 26 provinces, municipalities, and autonomous regions in China, and promoted its inclusion in over 100 city惠民insurance programs and more than 75 commercial health insurance programs.
In addition, production and supply chain management also pose significant challenges. The production of CAR-T products requires highly specialized facilities and stringent quality control, areas in which many companies in China still lack mature capabilities. This not only increases production costs but also limits capacity expansion, further impacting market supply.
Recently, Li Lei, President of Cytiva China, said in an exclusive interview with the "Every Day Economic News" reporter that taking CAR-T and other cell therapy drugs as examples, the biggest challenge in their production process comes from the development, optimization, and production of cell processes. Successful cell production depends on the optimization ability of the overall process, including process simplification, capacity planning, production compliance, and scalability.
Li Lei believes that in the face of complex sample sources from different tumor patients and the current treatment costs, how to reduce cell production costs with high efficiency, standardization, and large-scale production is the key to breaking the deadlock. Cost reduction and efficiency improvement at the enterprise level are crucial for promoting accessibility, which includes the selection of processes, production equipment, and consumables. As market demand expands in the future, if production remains reliant on manual operations, it will pose a challenge to capacity while requiring a very high level of technical proficiency, and it will also not be conducive to reducing production costs. Therefore, the use of automated closed production systems has become a trend in the industry. Additionally, establishing a stable and scalable production platform and collaborating with leading equipment and consumables suppliers will help accelerate the research and development as well as the industrialization process of cell and gene therapy drugs.
Looking ahead to the development of cell and gene therapies such as CAR-T, Li Lei stated: "With the advancement of technology, all new drugs will see a gradual reduction in cost and price as they move from their initial emergence to widespread adoption. For instance, vaccines and antibody drugs have undergone a transition from being expensive to becoming affordable for the general public. I believe that cell and gene therapies will follow the same trend. In the coming decades, we are highly optimistic about the popularization of drugs like CAR-T."
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Recent collaborations in the CAR-T field have become increasingly close.
To address the issue of sustainable commercial operation, CAR-T research and development as well as manufacturing companies in China generally adopt a strategy of collaborating with powerful biopharmaceutical companies (Biopharma), or they are originally established by such large pharmaceutical enterprises.
For example, Axicabtagene Ciloleucel, as the first CAR-T cell therapy product approved in China, was introduced by Fosun Pharma through strategic investment. In 2017, Fosun Pharma established a joint venture with Kite Pharma to bring CAR-T technology to China; JW Therapeutics was initially founded by WuXi AppTec, a leading pharmaceutical outsourcing company in China, in collaboration with Juno Therapeutics.
Regarding the sales and promotion of Zevor-cel by CARsgen Therapeutics in China, CARsgen Therapeutics has partnered with Huadong Medicine in January 2023. On the same day Zevor-cel was approved in China, Huadong Medicine announced that its subsidiary, Huadong Medicine (Hangzhou), signed an exclusive commercialization agreement with CARsgen Therapeutics' wholly-owned subsidiary, Carsgen LifeTech (Shanghai) Co., Ltd. Huadong Medicine (Hangzhou) holds the exclusive commercial rights for Zevor-cel in China.
IASO Bio and Innovent Bio: According to the specific agreement terms signed on July 5, IASO Bio will purchase the relevant rights owned by Innovent Bio under the original BCMA CAR-T cooperation agreement at the agreed price. Meanwhile, Innovent Bio will acquire shares in IASO Bio at the same price, holding 18% of IASO Bio’s shares after the investment. Under the new strategic cooperation framework, both parties will achieve a high level of resource integration in the field of cellular immunotherapy. IASO Bio will obtain global market commercialization rights, intellectual property licenses, and other rights for Equecabtagene Autoleucel (Eliaocel), independently overseeing and making decisions on product development, production, and sales. At the same time, Innovent Bio becomes a strategic shareholder of IASO Bio.
IASO Bio told reporters: "In order to better seize the development opportunities of CAR-T cell therapy, we believe it is necessary to improve overall operational efficiency through closer cooperation and more effective integration of resources from both parties. IASO Bio will exclusively take charge of the commercialization of Equecabtagene Autoleucel, which can more effectively promote the commercial rollout of Equecabtagene Autoleucel across China, maximize its commercial value, and quickly expand globally. Based on years of trust and recognition from collaboration, Innovent Bio will continue to support IASO Bio as a shareholder."
E.N.D
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