Analysis: Legend Biotech raises $487m in IPO

China-based cellular therapy developer Legend Biotech, a spin off from biotech producer Genscript Biotech, debuted on public markets with its initial public offering at approximately $487m on the Nasdaq Global Select Market. Its investors include pharmaceutical firms Johnson & Johnson and Eli Lilly, from which it had raised a $160m pre-IPO round in April this year. The offering was comprised of about 21.2 million American depositary shares, representing two common shares each. The shares were priced at $23.00 each, above the $18 to $20 range the company had set earlier. Legend Biotech’s shares closed at $37.50, giving it a valuation of about $4.85bn. The capital raised also included a full over-allotment option, exercised by joint book-running managers Morgan Stanley, JP Morgan and Jefferies. The parent company GenScript itself bought an additional $23m of shares in a private placement. GenScript has retained a 66% stake in Legend Biotech post-IPO, down from 76.9%.

Founded in 2014, Legend Biotech develops cell-based therapeutics to treat diseases including cancer and has drug candidates for haematological malignancies and solid tumours in clinical testing from phase 1 to 3, in addition to an HIV drug in preclinical phase. Up to $185m of the IPO proceeds are expected to go into clinical development of its lead candidate, LCAR-B38M/JNJ-4528, being developed in partnership with J&J’s Janssen Biotech.

Going into public markets is an often-used strategy by emerging pharmaceutical companies once they have reached a certain level of development. As the historical bar chart from GCV Analytics illustrates below, this is also true for corporate-backed life sciences enterprises. The number of such IPOs reached a record (36) in 2018 when also the total estimated capital in these transactions stood at $5.62bn. Both the count and the dollar figures have gone down since. We are yet to see if the Covid-19 crisis will spark more interest in such IPOs.