On July 12th, according to the financial news website Street Insider, Legendary Biotech (LEGN. NASDAQ) received a merger offer and hired investment bank Centerview Partners to review and evaluate the offer and other options for the board of directors. The identity of the acquirer is currently unclear. There has been no public response from Legendary Biology regarding this matter.
Industry insiders have told Blue Whale Finance that based on Johnson&Johnson's sales expectations for the legendary CAR-T product CARVYKTI, the peak sales of CARVYKTI are expected to reach $5 billion, which has the potential to become a "heavyweight bomb" and has rapidly increased in volume since last year, slightly exceeding market expectations. For many large pharmaceutical companies in the patent cliff period, CARVYKTI may be a good supplement to their pipeline.
Legendary Biotech has developed the first domestically produced CAR-T cell therapy CARVYKTI& approved by the US Food and Drug Administration (FDA); reg; Known for Cilta cel, also known as Xidachialun Sai.
In 2017, Legendary Biotech signed a global exclusive license and cooperation agreement with Janssen to develop and commercialize CARVYKTI. According to the agreement between the two parties, the cost and profit sharing ratio between Legend Biotech and Yangsen Company is 50/50 in global markets outside of Greater China, and 70/30 in Greater China.
According to the information on the official website of Legendary Biotech, its first product, Xidakuolunsai, was approved for market by the US Food and Drug Administration (FDA) and the Japanese Ministry of Health, Labour and Welfare (MHLW) in 2022, and obtained conditional marketing authorization from the European Commission (EC). At the end of 2022, the National Medical Products Administration officially accepted the New Drug Administration (NDA) application for Xidaqiolon and included it in the priority review process in January 2023.
After going public, Xidaqiolon Sai achieved rapid volume growth.
In its annual performance report as of December 31, 2023, Legendary Biotech announced that in the fourth quarter of 2023, CARVYKTI achieved global sales of $159 million, a year-on-year increase of 194%. This sales performance drove the annual sales to exceed 500 million US dollars, a year-on-year increase of 276%, fully in line with market expectations.
Legendary Biotech CEO Huang Ying stated in a press release that CARVYKTI achieved this result in its first year of commercialization, consolidating its leading position in the treatment of relapsed and refractory multiple myeloma patients.
Regarding the rapid increase in volume of CARVYKTI, Liu Zihan, Manager of CIC Insight Consulting, pointed out that the key to the success of CAR-T products mainly lies in two aspects. Firstly, they have outstanding advantages in effectiveness and safety; Secondly, there are innovative breakthroughs in product design.
Since being approved by the FDA for marketing in February 2022, CARVYKTI has rapidly increased in volume due to its excellent response rate and high safety, "said Liu Zihan.
At present, a total of 8 CAR-T cell therapy products have been approved for market worldwide, including 2 BCMA CAR-T therapies, one CARVYKTI from Legendary Biotech, and the other Abecma from BMS. Carvykti is the world's second CAR-T product for treating relapsed or refractory multiple myeloma, with the first product Abecma approved by the FDA in March 2021.
In terms of product relief rate, Carvykti's overall relief rate (ORR) is as high as 98%, compared to Abecma's ORR of 72%, which is lower than Carvykti's product relief rate. In terms of safety, Carvykti has a 5% incidence of grade 3 cytokine syndrome (CRS) and a 26% incidence of neurotoxicity, while Abecma has a 9% incidence of grade 3 CRS and a 28% incidence of neurotoxicity. Therefore, Carvykti has better product safety.
The industry insiders mentioned above pointed out to Blue Whale Finance that when acquiring in the pharmaceutical industry, it is common to value at 6-8 times peak sales. For example, in 2015, AbbVie defeated Johnson&Johnson in acquiring Pharmacyclics, a US biopharmaceutical company that develops cancer drugs, at a price of $261.25 per share for a total of $21 billion. Pharmacyclics only has one product, Imbruvica, and sold half of its equity to Johnson&Johnson early on.
Imbruvica is an oral Bruton tyrosine kinase (BTK) inhibitor that exerts anti-cancer effects by inhibiting the BTK required for tumor cell replication and metastasis. At that time, the market predicted that Imbruvica's annual sales were expected to exceed $7 billion. However, the sales of this product in the year before the acquisition were only $540 million, which is increasingly similar to Carvykti's situation.
Among BTK inhibitors, Imbruvica holds an absolute dominant position with sales of $9.78 billion in 2021, accounting for 87% of the overall market. However, due to competition from similar competitors in the market, its growth rate has slowed down and will drop to $8.3 billion in 2022. Nevertheless, Imbruvica has continued to perform exceptionally well in the market since its listing.
Based on this, it is worth looking forward to whether the billion dollar acquisition of Chinese biotech can be born. After the news came out, Legendary Biology surged by over 12% on July 12th, with a total market value approaching $10 billion. The major shareholder of Legendary Biology is Kingsray Biotechnology (01548. HK), with a shareholding ratio of 47.96%.
Kingsray Biotechnology told Blue Whale Finance that if there is any official news of the invitation, the legendary company, which is independently listed in the United States, will officially disclose it to the public.