Dealmaking is back with a vengeance in the pharmaceutical sector this year. According to a report by PwC, there were more than $65 billion in pharma and life sciences mergers & acquisitions in the first quarter, the best quarter for the sector since 2020. The report said the quarter had 16 M&A deals of at least $1 billion each.
In the second quarter, the pace hasn't slowed, with Sun Pharmaceuticals announcing in April that it would acquire Organon for $11.75 billion and AbbVie reporting in June that it would acquire Apogee Therapeutics for $10.9 billion. Many deals focus on biotech stocks that use gene editing and other unique technologies. When a larger pharmaceutical company acquires a biotech stock, it is often at a premium to the biotech's stock price, rewarding its investors.
If you're wondering which biotech stocks might be the next takeover targets, consider Legend Biotech (LEGN -1.00%) and BioNTech (BNTX +0.54%). Takeover or not, here are three reasons to consider each stock.
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Legend has a successful commercial therapy in Carvykti
Legend Biotech has frequently been at the center of takeover rumors, and the stock regularly spikes on speculation that it has received formal buyout bids. It stands out as one of the most uniquely attractive targets in the oncology and cell-therapy landscape.
Unlike some clinical-stage biotechs valued purely on potential, Legend has a massive commercial asset on the market. Carvykti, its BCMA-targeted CAR-T therapy for multiple myeloma, is growing rapidly. Partner Johnson & Johnson has projected that Carvykti's peak annual sales could eclipse $5 billion. In the first quarter, the therapy had $597 million in sales, up 62%, year over year.
Legend has other potential therapies
The company recently turned heads with phase 1 data for its next-generation in vivo CAR-T therapy (LB2501) in non-Hodgkin lymphoma, posting a 100% objective response rate. Unlike traditional CAR-T therapies, which require harvesting cells outside the body, in vivo technologies aim to engineer T cells directly within the patient's body. If perfected, it turns an incredibly complex procedure into an off-the-shelf treatment.
NASDAQ: LEGN
Key Data Points
Legend has solved the cell-therapy bottleneck
Historically, big pharma has been hesitant to acquire CAR-T companies because manufacturing complex autologous cell therapies (genetically modifying a patient's own T cells) can be difficult to manage.
Legend has eliminated this bear case, achieving a 99% manufacturing success rate and a 29-day turnaround. Legend's Raritan, New Jersey, facility is one of the largest cell-therapy manufacturing sites in the U.S., capable of scaling to support up to 10,000 patients annually. An acquirer wouldn't just be buying a drug; it would be buying a turnkey cell-manufacturing infrastructure.
BioNTech's huge cash pile makes it attractive
BioNTech has extended beyond its identity as a COVID-19 vaccine manufacturer. While its revenue has been steadily declining, including a 35.4% drop, year over year, to 118.1 million euros (roughly $134 million) in the first quarter, the German company reported 16.8 billion euros (approximately $18 billion) in cash, cash equivalents, and security investments. Any buyer would essentially be buying a world-class clinical platform at a steep structural discount, with BioNTech's own cash offsetting a large portion of the up-front purchase price.
BioNTech has a late-stage oncology and ADC pipeline
Rather than buying early-stage science, an acquirer would step into a mature oncology portfolio. BioNTech has more than 25 phase 2 and phase 3 clinical trials running. Some of the high-potential programs include Pumitamig, a bispecific immunomodulator currently being scaled into five new pivotal trials for lung, breast, and gastric cancers, and Gotistobart, a CTLA-4 antibody showing strong overall survival trends in non-small cell lung cancer, with pivotal phase III interim data due later this year.
A legacy pharma company facing its own patent cliffs could immediately absorb a late-stage portfolio spanning messenger RNA (mRNA) immunotherapies, next-gen immunomodulators, and highly sought-after antibody-drug conjugates (ADCs). BioNTech has six late-stage clinical readouts expected this year.
NASDAQ: BNTX
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New BioNTech leadership may be more open to a buyout
However, with the co-founders scheduled to transition out of management by the end of 2026 to launch a separate, early-stage mRNA innovation spinoff, the corporate governance structure is shifting.
It's still a good time to buy this duo
Both companies have seen their shares drop by more than 13% over the past year. Neither is profitable, so they may find that taking a buyout makes more sense for the success of their promising pipelines.
It's easy to see Johnson & Johnson as a potential suitor for Legend Biotech, as the two companies already partner on Carvykti sales. BioNTech has partnered with Pfizer and Bristol Myers Squibb, so those two would be potential suitors.
There are other large pharmaceutical companies facing patent cliffs for their therapies and could benefit from acquiring Legend's or BioNTech's pipeline. There's a risk in buying any unprofitable biotech stock, but the potential upside is evident for these two.
