Legend Biotech, J&J’s CAR-T Partner, Gets Buyout Offer

Legend Biotech, a prominent CAR-T therapy specialist, has reportedly received a takeover bid and enlisted Centerview Partners to assess its options, according to information from StreetInsider. This news has had a significant impact on stock prices; Legend Biotech's shares jumped by approximately 12% on the Nasdaq exchange, while its former parent company and major shareholder, GenScript, saw its stock price soar by about 25% in Hong Kong. As of the end of 2023, GenScript holds a 48% stake in Legend.

In a filing made on Monday, GenScript claimed to be unaware of any specific reason for the substantial stock movement and stated that it had no inside information to disclose in compliance with Hong Kong securities laws. Legend Biotech opted not to comment on the market rumors surrounding the takeover bid.

Legend Biotech gained significant attention in the biotech field through its 2017 collaboration with Johnson & Johnson (J&J) on the BCMA CAR-T therapy Carvykti. This cell therapy has shown remarkable efficacy in treating multiple myeloma, prompting J&J to project its peak sales potential to exceed $5 billion. The partnership structure indicated Legend's ambition to establish itself as an independent biopharma entity. Rather than transferring all responsibilities to J&J, Legend is co-developing and co-commercializing Carvykti, sharing both the costs and profits equally with J&J outside of China.

Given their existing collaboration, there is speculation that J&J might be interested in acquiring Legend Biotech. However, J&J has not yet responded to requests for comments on this matter.

The biotech industry has seen several examples of major pharmaceutical companies acquiring their partners in recent years. For instance, Sanofi acquired its diabetes partner Provention Bio for $2.9 billion last year. Similarly, in 2022, Pfizer spent $11.6 billion to acquire Biohaven Pharma’s CGRP inhibitor portfolio, just months after they had formed a collaboration on Biohaven's migraine drug.

The takeover report emerges amid heightened scrutiny of Chinese biopharma service providers under the proposed BIOSECURE Act. In May, two House lawmakers requested an intelligence briefing from the U.S. government on GenScript and three of its related business branches, including Legend Biotech. Currently, there is no indication that GenScript or Legend will be included in the BIOSECURE Act’s list of target companies, which could face restrictions from contracting with the U.S. government and be effectively pushed out of the U.S. market. Nonetheless, it would make strategic sense for J&J to mitigate potential risks by acquiring Legend and severing Chinese ties.

Besides J&J, Novartis is another potential suitor for Legend. In November, Novartis agreed to pay Legend $100 million upfront for a selection of DLL3-directed CAR-T candidates, planning to apply its T-Charge technology to these programs. Novartis is also involved in manufacturing Carvykti for Legend and J&J after its own CD19 CAR-T drug, Kymriah, underperformed in a key lymphoma trial. While Novartis has stated that its merger and acquisition focus is on deals valued around or below $5 billion, it did acquire The Medicines Company for $9.7 billion in 2020. Following the recent surge in Legend's stock price, the company's market capitalization is approaching $10 billion.

In related industry news, AstraZeneca recently acquired another Chinese CAR-T player, Gracell Biotechnologies, for up to $1.2 billion. However, given that Gracell’s primary asset, GC012F, is a direct competitor to Carvykti, it is unlikely that AstraZeneca would be interested in Legend. Centerview Partners advised Gracell on the AstraZeneca transaction and previously advised Kite Pharma on its 2017 acquisition by Gilead Sciences.

Overall, Legend Biotech's potential acquisition has stirred significant interest and speculation within the biotech industry, reflecting the growing importance and value of CAR-T therapies in treating complex diseases like multiple myeloma.