When the BIOSECURE Act hit a setback and missed the chance of becoming law in 2024, the deceleration of the draft legislation created a window of reprieve for the affected biotech companies.
The situation invited the question of whether biotechs living under the shadow of the bill—but not directly targeted by it—should grasp the opportunity and seek an exit in 2025. By selling themselves to another company, they could solve the BIOSECURE overhang once and for all.
Two names immediately came to mind: BeiGene and Legend Biotech.
The companies share some similarities. Although not named in the BIOSECURE legislation, both firms have deep China links, with their stock prices on Nasdaq trading at what analysts described as a BIOSECURE discount. BeiGene was long viewed as a Chinese biotech until recently given its heavy commercial presence in the country and stock listings in both Shanghai and Hong Kong.
Legend, for its part, has its roots in Nanjing Legend Biotech from China and counted Chinese CDMO GenScript as its parent and majority shareholder until recently.
Both firms have a star, fast-growing blood cancer product: BTK inhibitor Brukinsa for BeiGene and Johnson & Johnson-partnered CAR-T therapy Carvykti for Legend. And questions have been raised regarding the value of their pipeline assets.
But the prospects of the two companies being bought out appear quite different, according to analysts.
Legend Biotech
Legend appeared more vulnerable—or open—to a takeover. The CAR-T specialist reportedly received a buyout offer last summer, although eventually no deal came out of it.
The widely suspected bidder from the rumored exchange was J&J. But TD Cowen analyst Yaron Werber, M.D., doesn’t think so, because, as he sees it, J&J could wait for such a deal.
“I don’t think it would have made a lot of sense for J&J at that time to buy them, given that they’re not going to be profitable for another two years,” Werber said in an interview with Fierce Pharma. “J&J has an option to continue to see how Carvykti will shake out and understand what the anito-cel competition would look like. So why rush it?”
Anito-cel is an investigational BCMA CAR-T being developed by Arcellx and Gilead Sciences. The candidate drew attention at the American Society of Hematology (ASH) annual meeting in December after its phase 2 iMMagine-1 study in the late-line multiple myeloma setting showed similar efficacy to Carvykti but without the delayed neurotoxicity seen with Carvykti.
Jefferies analyst Kelly Shi, Ph.D., also argued that the potential competition from anito-cel is making Legend less attractive to potential buyers at the moment. Buyers will want to wait to see whether Carvykti can continue to maintain its efficacy advantage over competitors, including bispecifics, she argued.
On top of uncertainties in the BCMA market, Werber noted Legend’s shared stake in Carvykti also makes it less attractive a buyout target.
“If you’re a company and you buy Legend, I guess you are getting a CAR-T platform, but you’re basically getting commercial Carvykti royalty stream or a co-profit stream—that’s not really what most companies want to do,” Werber said. “I’m not saying that you can’t find someone who might find it attractive, but the rest of the pipeline is a bit weak.”
There was one Big Pharma company who recently did such a transaction. About a year ago, Eli Lilly paid $1.4 billion to acquire Point Biopharma. Lilly was attracted to Point’s radiopharmaceutical platform even though rights to the biotech’s lead program, PSMA-directed PNT-2002, belong to Lantheus.
Lilly may be interested in a technology platform and a blood cancer asset given its existing presence there with the BTK inhibitor Jaypirca. But Legend is far bigger than the less-than-$4 billion purchases that the Indianapolis pharma has made in recent years. Trading at below $40 per share, Legend’s market cap is at about $6 billion these days, and Werber’s price target for the company is about twice that number.
As for other potential buyers, instead of an acquisition, Novartis opted to partner with Legend on the DLL3 target. Roche just made a $1.5 billion acquisition of Poseida Therapeutics for off-the-shelf cell therapies, and AstraZeneca went after rival Chinese CAR-T player Gracell Biotechnologies in a $1 billion deal. With those firms seemingly out of the picture, Jefferies’ Shi suggested that for companies developing bispecifics, “it’s not unreasonable to think there’s a strategic value for this best-in-class CAR-T.”
Another reason J&J became the rumored bidder for Legend last summer was the hint of a potential expansion of the biosecurity crackdown. In May, two House lawmakers requested an intelligence briefing with the U.S. government on GenScript and three of its related business branches, including Legend.
But Werber noted that J&J has nothing to worry about regarding BIOSECURE. Carvykti’s IP and production reside in the U.S. and Europe, and all the contracting with Medicare and other payers is performed by J&J, not Legend, Werber noted. The BIOSECURE Act aims to forbid the U.S. federal government from contracting with certain biotech companies that are deemed to pose a risk to national security.
“I think we all thought that this was a way to maybe try to force a sale, and also a way to try to tidy up the concerns about [GenScript] owning almost half the stock,” Werber said. “If you can force a sale, then the whole [BIOSECURE] situation goes away.”
BIOSECURE’s future looks uncertain after the bill passed the House but failed to make into the Senate’s legislative program in 2024. TD Cowen’s Washington researchers predicted that the bill will be back in some form this year given the strong support it has garnered so far, Werber said. But Jefferies’ Shi suggested that the chance for BIOSECURE to become law is lower under the new administration. A recent Jefferies report noted that healthcare in general will likely hold a low priority in Congress’s legislative agenda under Trump.
Reached by Fierce for comment for this story, a Legend spokesperson cited the company’s policy to not comment on market speculation or rumors.
BeiGene
BeiGene’s situation is different. As both Werber and Shi noted, there’s a lack of indication that the company is up for a sale.
“We don’t see the company as being a takeover target, because we’re not convinced that the management wants to sell,” Werber said.
“BeiGene is in a very good position and will continue to be in a very high-growth stage,” Shi said.
To Shi, BeiGene has built a robust pipeline, proved its commercialization capabilities with Brukinsa and just established a biologics manufacturing facility in the U.S. “This is probably the prime time for BeiGene to benefit from all of these in the next three to five years,” she said.
But not everybody agrees. Macquarie Capital’s Tony Ren acknowledged that Brukinsa has exceeded expectations so far, going strong against AstraZeneca’s Calquence and AbbVie/Johnson & Johnson’s Imbruvica. But he suggested that the BeiGene med is about to plateau, because it “cannot be much better than AstraZeneca.”
Industry watchers have been debating whether Brukinsa can claim the best-in-class title because of its unique head-to-head efficacy win against Imbruvica in previously treated chronic lymphocytic leukemia (CLL). For its part, AZ has conducted a matching-adjusted indirect comparison, arguing that Calquence and Brukinsa aren’t so different even though Calquence didn’t show efficacy superiority versus Imbruvica in its own trial.
Werber and Shi predicted that BeiGene is slated to take a leading share of the CLL market also thanks to its BCL-2 candidate, sonrotoclax, which is being billed as a better option than AbbVie/Roche’s Venclexta.
At ASH 2024, BeiGene provided updated phase 1 data for sonrotoclax in combination with Brukinsa in treatment-naïve CLL. In a December note, Shi called the results, including zero progressions at the recommended dose after a median follow-up of 19.4 months, “very promising.” The combo is already in phase 3 testing.
But the rest of BeiGene’s pipeline, as Ren sees it, is less exciting. The company’s BTK degrader is still in early development undergoing dose optimization. Its CDK4 selective inhibitor appeared to be more tolerable than Pfizer’s rival candidate atirmociclib, although data again were too early to draw definitive conclusions.
An examination of BeiGene’s pipeline is important, because “a biotech’s value proposition is really coming up with new molecules, and BeiGene is lacking there,” Ren said in an interview with Fierce, later adding that “this is a difficult task for most” biopharma companies.
Successful large biotechs such as Vertex and Regeneron have powerful internal R&D engines, whereas BeiGene currently is not at the same level.
BeiGene has been busy filling its pipeline with external assets, having inked licensing pacts in antibody-drug conjugates, CDK2 and MAT2A, among others. But small- or mid-cap biotechs have no advantage when it comes to business development, Ren said.
“They were pretty prolific in dealmaking, but so is everyone else,” Ren said. “You have to compete against the Mercks, the AbbVies and the Pfizers of the world.”
Perhaps the biggest problem of a hypothetical buyout of BeiGene is: At what price? The analysts from Jefferies, Macquarie and TD Cowen raised the same point that BeiGene is simply too big and pricey for any large pharma to swallow.
BeiGene’s market cap on Nasdaq is currently sitting at above $20 billion. Shi’s price target for BeiGene would push its valuation at more than $30 billion, and Werber argued that because BeiGene is currently trading at a BIOSECURE discount, a buyout deal should come with a 100% premium, which would put its value at more than $40 billion, similar to what Pfizer paid for Seagen.
As Ren sees it, such a price tag is not attractive.
“A few years ago, people were into big-ticket M&A. These days, it’s not very appetizing,” Ren said. “It’s far safer if you do small bolt-ons. The sweet spot is probably about $10 billion. That’s easy to digest, easy to pull off.”
Fierce and the analysts ran through potential Big Pharma names that have a large hematology presence and might take an interest in BeiGene and found no probable buyer, except for Roche on the condition that the Swiss pharma divests its interest in Venclexta.
Novartis has a stated focus on bolt-on deals below $5 billion in value and has already parted ways with BeiGene on PD-1 and TIGIT checkpoint inhibitors. AZ, Lilly and J&J would appear to be out because of their existing BTK rivalries. Pfizer doesn’t have the balance sheet capacity after Seagen, and its CDK4 program represents a potential conflict. Bristol Myers Squibb and Takeda are both in cost-cutting mode.
A combination with Amgen might make sense, especially given that the two firms are already in a broad strategic collaboration in China. But after its $27.8 billion buyout of Horizon Therapeutics in 2023 and increased investor interest in obesity, Amgen may lack the cash and motivation to pursue a large deal.
Meanwhile, BeiGene is rebranding as it tries to diffuse the geopolitical risks. The company is being renamed to BeOne Medicines and redomiciling—changing jurisdiction of incorporation—from Cayman Islands to Switzerland.
“This change enables us to further execute on our global growth strategy and reinforces our corporate presence in Switzerland and our current European headquarters,” a BeiGene spokesperson told Fierce Pharma.
BeiGene has been trying to rid itself of the Chinese biotech label by pointing to its Cayman Islands incorporation, although, as Werber noted, the Chinese tech giant Alibaba is also incorporated in Cayman Islands.
“This shows their global aspirations,” Jefferies’ Shi said. “Instead of being viewed as a China ADR, I think BeiGene actually should be considered a global biopharma company.”
“They’re really pointing at this as mostly a symbolic gesture to show that they’re really a global business, to align their IP and their strong global footprint in a place that’s fairly neutral from a geopolitical perspective,” Werber said. “I think they’re really hoping that people will recognize they’re not a China-owned business.”
As to whether these changes can be viewed as a prelude to a potential sale process, the BeiGene spokesperson declined to comment on whether a buyout is in the ticket.
“We believe that we are optimized for global growth to help as many cancer patients as possible,” the company's spokesperson said.