On July 12th, the US stock market analysis website Seeking Alpha reported that according to Street Insider, domestic biotech company Legendary Biotech 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 news was quoted from an unnamed source, and the identity of the acquirer is also unknown. On that day, the stock price of Legend Biotech surged by over 12%, with a market value approaching $10 billion.
Legendary Biotech was incubated by Kingsray Biotech, a provider of life science research and production services. Founded in 2014, it focuses on developing CAR-T therapies and was listed on the NASDAQ in June 2020. Kingsray Biotech holds a 47.96% stake. Industry insiders predict that if the transaction proceeds smoothly, the price may exceed $10 billion and set a record for the largest merger and acquisition of a domestic innovative pharmaceutical company.
On July 15th, Kingsray Biotech opened high, with a price of HKD 12.700 per share as of press time, up 27%, and a current market value of HKD 27 billion. On the same day, Interface News inquired about the merger news with Kingsray Biotechnology and Legendary Biotechnology, both of whom stated that they have not responded to it at present.
The first shining moment of the legendary creature occurred three years after its establishment. At the American Society of Clinical Oncology Annual Meeting (ASCO) in June 2017, the company presented clinical data on the CAR-T drug Cilta cel, which targets BCAM. With a total response rate of 100% in 35 patients with relapsed or drug-resistant multiple myeloma, this data amazed four people at the time, and in December of the same year, we teamed up with Johnson&Johnson's subsidiary, Janssen, to jointly promote the clinical development and commercialization of the drug.
According to the agreement, in Greater China, Legend and Johnson&Johnson will jointly bear the development costs and share profits of the product in a 7:3 ratio; In other regions around the world, the agreed ratio is 5:5. The transaction price offered by Johnson&Johnson includes a down payment of $350 million and subsequent milestone payments. At that time, the transaction set a record for the largest down payment amount and optimal cooperation conditions for Chinese pharmaceutical companies in foreign patent authorization.
In February 2022, Xidaqiolon Sai was approved by the US Food and Drug Administration (FDA) for use in the first-line treatment of recurrent/refractory multiple myeloma (r/r MM) patients, becoming the first domestically produced CAR-T product (trade name: Carvykti) to successfully go global.
In 2023, Carvykti's annual sales were $500 million, a year-on-year increase of over 270%, surpassing its earlier approved same target and same indication therapy Abecma. The latter belongs to BMS and was approved in the United States in March 2021, with sales of $472 million in 2023, a year-on-year increase of 21.65%.
At the same time, the aforementioned companies are pushing their products to the forefront of treatment in order 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 used for second-line treatment of MM.
Prior to this, Legend/Johnson had already been expanding production capacity. According to the legendary annual report, Carvykti's production capacity has expanded by 100% since the beginning of 2023, and it is expected to achieve its annual production capacity of 10000 doses by the end of 2025. The industry predicts that Carvykti's peak sales will exceed $5 billion.
In addition to Carvykti, Legendary Biotech also has several autologous and allogeneic CAR-T therapies currently in Phase I clinical trials, with indications covering solid tumors and hematological malignancies.
For the acquirer, the market often speculates that it is the legendary partner Johnson&Johnson. In addition, multinational pharmaceutical companies (MNCs) that have laid out in the CAR-T field include pioneers Novartis, Gilead, BMS, and later companies such as Roche and AstraZeneca.
Previously, Legend and Novartis announced in November 2023 that they had signed an exclusive global licensing agreement for Legend's specific DLL3 targeted CAR-T therapy, including Legend's autologous CAR-T cell therapy candidate drug LB2102 (NCT05680922). Subsequently, Legend/Johnson also signed an expansion agreement with Novartis for Carvykti.
In addition, AstraZeneca announced the acquisition of domestic CAR-T company Genki Biologics in December 2023, strengthening its presence in the field of hematological malignancies. Genxi has also become the first Chinese innovative drug company to be acquired by MNC.
Regarding the merger news, Bao Jun, Chief Business Officer of Pumis Biotech, analyzed to Interface News that even if the acquirer is not Johnson&Johnson, Johnson&Johnson will still participate in the competition and strive to fully acquire Carvykti; If the offer is indeed made by Johnson&Johnson, it can be understood that Legend and Johnson&Johnson are adopting a cooperative model, rather than MNC buying out product rights. Therefore, when Legend is not profitable, both parties cooperate to promote product development and commercialization, and after profitability, it can be acquired.
As of the end of the first quarter of 2024, Legendary Bio's cash and its equivalents, deposits, and short-term investments amounted to $1.3 billion. The company believes that these funds will provide it with financial reserves until 2026, and is expected to achieve profitability by 2026. In 2023, Legendary Biology incurred a loss of 518 million US dollars.
In addition, it is worth noting that the investment bank Centerview Partners mentioned in the aforementioned report is also the matchmaker for AstraZeneca's acquisition of Genshin Impact, and has participated in numerous large-scale mergers and acquisitions in the biopharmaceutical field.