Legend Biotech Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
March 11, 2024

There are 21 speakers on the call.

Operator

Good day, and welcome to the Legend Biotech Reports 4th Quarter Earnings Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time. As a reminder, this call is being recorded. I would now like to hand the call over to Jessie Young, Head of Investor Relations and Public Relations.

Operator

You may begin.

Speaker 1

Good morning. This is Jessie Young, Head of Investor Relations and Public Relations at Legend Biotech. Thank you for joining our conference call today to review our Q4 and full year 2023 performance. Joining me on today's call are Yan Huang, the company's Chief Executive Officer and Laurie Macomber, the company's Chief Financial Officer. Following the prepared remarks, we will open up the call for a Q and A.

Speaker 1

We have Guo Wei Fan, Chief Scientific Officer and Steve Gaffel, Head of Commercial Development for the U. S. And Europe joining the Q and A session. During today's call, we will be making forward looking statements, which are subject to risks and uncertainties that may cause our actual results to differ materially from those expressed or implied here within. These forward looking statements are discussed in greater detail in our SEC filings, which we encourage you to read and can be found under the Investor section of our company website.

Speaker 1

Thank you. I will now turn the call over to Ying.

Speaker 2

Good morning, everyone. We're glad you could join us today because a lot has happened since our last earnings call. First, we're excited at the prospect of bringing our lead therapy, Corvicti, to more multiple myeloma patients in Europe. As many of you have heard, CARVICTI received a positive opinion from the Committee for Medicinal Products for Human Use to expand into earlier lines of treatment. CARBICTI is the 1st CAR T therapy to receive a positive CHMP opinion in the second line setting for patients with relapsed and lenalidomide refractory multiple myeloma.

Speaker 2

The formal European Commission decision is expected in April. As for the approval of CARVICTI in the United States in the second line, we are scheduled to meet with the FDA's Oncologic Drug Advisory Committee this Friday, 15th, to answer any outstanding questions they have. We are preparing for a potential launch in this expanded indication on the PDUFA date of April 5th and we will of course keep you posted. Now, I'd like to turn to other achievements and activities since our last earnings call. Our work to bring Corvicti to more patients globally resulted in total net sales for the Q4 of 2023 of $159,000,000 For the full year, total sales for CARVICTI were $500,000,000 The increase in our 4th quarter performance versus the 3rd quarter was a result of the ongoing launch of CARVICTI and share gains from capacity expansion and manufacturing efficiencies.

Speaker 2

We have now been in the market for 7, 4 quarters and we are the fastest launched CAR T therapy. We anticipate continued quarter over quarter growth throughout 2024 as well. We believe our cash balance of $1,300,000,000 provides us with financial runways through the end of 2025. In order to serve more patients and meet our revenue targets, we have expanded our supply of lentiviral vectors significantly through a large reactor in Switzerland operated by our partner Johnson and Johnson. In addition, Johnson and Johnson has another factory under construction in the Netherlands.

Speaker 2

We also continued to expand our internal manufacturing capacity in partnership with Janssen. Our cell processing site in Ghent, Belgium called Obelisk produced the 1st batches of Corvecti for clinical use in January 2024. We hope to start commercial production in the second half of the year. Construction progressed on our second manufacturing site, Tech Lein in Belgium and it's expected to be complete at the end of the year. We have increased capacity at our Ryerson, New Jersey facility, doubling cell processing capacity since the beginning of 2023.

Speaker 2

The increases to our production capacity will help ensure we meet our target of supplying CARVICTI to 10,000 patients by the end of 2025. I am excited to announce we have a new veteran leader with more than 25 years of experience now overseeing our manufacturing sites. Our own Burk Vanderwin has been promoted to Senior Vice President, Global Manufacturing and Technical Operations. Our previous Head of Global Tech Ops, Liz Gosen has stepped aside from full time work for personal reasons and is now serving as a Senior Advisor for us. Bert joined us in 2021 to start our European organization and the manufacturing facilities I just mentioned.

Speaker 2

The site in Ghent that has just came online and second one under construction. Before joining Legend, he served at Janssen, Teva and AstraZeneca. Burke has earned the trust and respect of our global manufacturing teams and he's already made a big impact. The increase in production capacity enabling us to meet growing patient demand comes in parallel with new data we presented at the American Society of Hematology meeting December. In an oral presentation, we unveiled the data showing improvements in patient outcomes as early as second line treatment in our pivotal Phase 3 CARTTITUDE 4 study.

Speaker 2

The results demonstrated clinically meaningful improvements in health related quality of life measures and reductions in symptoms following treatment with CARBICTI compared to standard of care. In other news from the Q4, we continue to bring more hospitals online and we now have a total of 65 U. S. Hospitals certified to treat with CAR VICTI patients. Additionally, about 30% of patients are now administered in the outpatient setting.

Speaker 2

Turning to the pipeline, we're investigating the potential of our cell therapies in blood cancers beyond multiple myeloma and also in solid tumors. We have started dosing patients in our DLL3 targeted program. The Phase 1 clinical trial, LB2102 in lung cancer. The armory used in LB-two thousand one hundred and two can also be deployed in other pipeline programs if validated in the clinic. After Phase 1, Novartis will take over and conduct any further development including manufacturing and commercial activities.

Speaker 2

To sum up 2023, we closed the year with accomplishments on several fronts. Now, I would like to turn the call over to Lawrie to walk you through the financials for 2023. Laurie?

Speaker 3

Thank you, Ying, and good morning, everyone. As Ying mentioned, we generated approximately $159,000,000 in total net sales for CARVICTI during the Q4, an increase of 189% year over year, driven by the progress we have made with ongoing market launches, expanding market share and capacity improvements. As a reminder, we share equally in all profits and losses of CARVICTI ex China with our partner, Janssen. Turning to our revenue. Total revenues for the Q4 were $79,500,000 consisting almost entirely of collaboration revenue from the sale of CARVICTI.

Speaker 3

Net loss for the quarter ended December 31, 2023, was $144,800,000 or a loss of $0.40 per share compared to a net loss of $135,900,000 or a loss of $0.41 per share for the same period last year. For the year ended December 31, 2023, net loss was $518,300,000 or a loss of $1.47 per share compared to a net loss of $446,300,000 or a loss of $1.40 per share for the year ended December 31, 2022. Moving on to expenses. Collaboration cost of revenue for the Q4 2023 was $32,500,000 compared to $23,000,000 for the same period last year. These are Legend's portion of collaboration cost of sales in connection with the collaboration revenue under the Janssen agreement, along with expenditures to support the manufacturing capacity expansion.

Speaker 3

Research and development expenses for the Q4 2023 were $105,700,000 compared to $80,800,000 for the same period last year. The increase of $24,900,000 for the 3 months ended December 31, 2023, compared to 3 months ended December 31, 2022, was due to primarily due to continuous research and development activities in citadel, including higher patient enrollment for Phase III clinical trials for sitacel and an increase in research and development activities for other pipeline items. Administrative expenses for 3 months ended December 31, 2023, were $28,700,000 compared to 26 $700,000 for the same period last year. The increase of $2,000,000 year over year is primarily due to the expansion of administrative functions to facilitate continuous business growth and continuing investment in building Legend Biotech's global information technology infrastructure. Selling and distribution expense for 3 months ended December 31, 2023 was $33,700,000 compared to $25,800,000 for the same period last year.

Speaker 3

The increase was $7,900,000 year over year due to costs associated with the commercialization of CARVICTI. To summarize, our spending remains on track, and we continue to maintain a strong balance sheet. As of December 31, we had $1,300,000,000 in cash and equivalents, deposits and investments. Additionally, as we enter the new year, we received $100,000,000 upfront payment in early January in connection with our global license agreement with Novartis for certain CAR T therapies targeting DL3. Thus, we believe we have sufficient capital to fund our operating and capital expenditures through the end of 2025.

Speaker 3

Thank you. I now pass it back to Ying for closing remarks.

Speaker 2

Thank you, Laurie. 2023 was an impressive year for Legend. CARVICTIA has proven to be the fastest launched CAR T therapy. The achievements of our global teams have set us up for great success in 2024 and we're poised to provide more therapy to even more patients around the world. I want to thank each of our 1900 employees for their commitment and dedication to Legend.

Speaker 2

And with that, we'd like to take your questions. Operator, we're ready for the first question.

Operator

Thank Our first question comes from Jessica Fye with JPMorgan. Your line is open.

Speaker 4

Great. Good morning. Thanks for taking my questions. Question on supply and I appreciate the color in prepared remarks. I know you put the year end 2025 target out there for I think 10,000 doses.

Speaker 4

You have a year end 2024 target you could share? And if not, I guess, what's the right way to think about the, for example, the manufacturing

Speaker 2

Hey, Jess. This is Nyn. Thank you for the question about the manufacturing. So I'll take that one. We did mention in the beginning of last year that our goal is to provide a combined global supply of 10,000 doses per year when we exit 2025.

Speaker 2

Beyond that, we're not providing any guidance on 2020 for manufacturing scale up. But I can tell you that, Jess, if you look at last year, we applied for FDA approval for 2 capacity increases in our site in Ryerson, New Jersey, and we did successfully achieve both approvals from FDA. This year, our plan is the same. That is we are planning additional two capacity increases that we plan to request FDA. So that's the same cadence as last year.

Speaker 2

That's a time for 2020 year

Speaker 5

4. Thanks.

Speaker 6

Thank

Operator

you. Our next question comes from Jonathan Miller with Evercore ISI. Your line is open.

Speaker 7

Hi guys. Thanks so much for taking the question. I'd like to ask about your early pipeline both beyond DLL3 and that armored car. What can investors look forward to? And even if you're not specifying targets, can you give us a little bit of color about whether your choices are likely to be familiar to folks, will be familiar targets or these are new places to go looking for car?

Speaker 7

And then separately, do you have any plans to get into the autoimmune space like so many of your peers?

Speaker 8

Thanks, Jonathan. This is an important question. Yes, so on the target front, some of our pipeline target are new ones, others are novel ones. I probably can provide some high level thinking about where we're heading towards our internal pipeline. We have a few priorities.

Speaker 8

1st is really try to build the multiple myeloma franchise, especially for patients post the CARVICTI treatment. So in that space, we are targeting some of the non targeted as well as novel targeted currently under research and development. Where you see a very diverse platform both of our partners as well as genetic approach. Our second priority we have is really focusing on autoimmune disease indication. We see this as an emerging area with great opportunities.

Speaker 8

In this space, I think the differentiated approach is critical. Our internal focus at this point is primarily on the allogeneic approach and we also have some type of program in our target space, but really focusing on the differentiation, focusing on the value those differentiated approach can bring to the patient, bring to the treatment setting. We also have some investment in soft tumor space, where we are focusing on some of the key hurdles associated with disease state, disease pathology, for example, our targeted expression heterogeneity, normally commonly associated with some of the tumor disease indication, which is the major limitation of duration of therapy from the current format. So there we are investing on the key technological innovation to address the solid tumor targeting threat in this reality and hope to generate the bystander cytotoxicity effect and therefore be able to extend the PFS, the benefit of the treatment. So this probably will be just the high level summary.

Speaker 8

Thank you for the question.

Speaker 7

Thanks so much. And then one follow-up, if I may. I noticed your burn here at about $103,000,000 a quarter, looks like you're not at a runway guidance to end of 2025. Seems like you're not guiding for a lot of improvement in burn rate or any improvement in revenue is offset by corresponding increases in spend. Is that a fair way to think about it?

Speaker 4

That's correct. If you take a look, it's being conservative saying cash can run way through the end of 2025. It's really going to be dependent upon our pipeline and how our pipeline advances. But we do believe as it stands today, we're comfortable with our cash balance, which is a possibility for

Speaker 7

for the BCMA compound. Thank you so much.

Operator

Thank you. Our next question comes from Zhi Chen with Goldman Sachs. Your line is open.

Speaker 9

Thank you for taking my questions.

Speaker 6

And for the upcoming ODAC meeting on Friday, so could you share a bit more about the cut off day for those data to potentially share with the committee? And also for the OS data for the ash treated group who was shared in 2023 ash, which showed a very strong OS benefit compared to intend to treat group. So will they discuss including as trader group as well? So which group would you like to be more important per your previous communication with the regulators? And also we're trying to understand about your initial thoughts on the European countries launches.

Speaker 6

So any incremental updates on the launch and any preliminary strategy on that? Thank you.

Speaker 2

Hey, Ziyi. This is Ying. I'll take your first question around OLAP. So at this point, I can tell you we submitted 3 data cuts to the FDA and also EMA on overall survival because we were told by the FDA that the focus of the upcoming ODAC on March 15 will be overall survival. So as you mentioned, the first data cut was submitted in the BLA in June of last year, and that was part of the first pre specified interim analysis with the data cut on November 1, 2022.

Speaker 2

And then as part of the day 120 safety update we submitted to the FDA in October of last year, we put in another update on survival from CAR T2 before. That was with a data cut of April of last year. And then most recently, on January 7, we submitted the latest survival data from CARTITUDE 4 with a data cut of December 13, 2023. So those are the 3 different overall survival analysis we provided to the FDA. And those are 3 data that will be discussed on Friday by ODAC as well.

Speaker 2

In terms of ITT versus as treated, I can tell you that all our data analysis on the survival benefit was provided on the basis of intention to treat ITT, and that is the all cause mortality analysis, which is the most conservative scenario here. We do not plan to submit to the agency the data of survival on the basis of activity. So I hope that answers your question about ODAC. And then I'll ask my colleague Steve to comment on the European launch, given the most recent CHMP opinion.

Speaker 10

Yes. Thanks, Singh. A couple of things just to remind the listeners that our partner is responsible for the for our VICP's launch planning outside the United States and with the exception of China. As far as Europe goes, as Ying mentioned, and maybe I don't think you did mention, we are currently in Germany with Correviki as well as Austria and Austria came on board in December of last year. The intention and this is through our partner, I know our partner is in active negotiations currently around our new CAR T2-four data.

Speaker 10

So in terms of guiding in terms of the country launch planning, we don't have anything yet to guide because I know this is a pretty fluid environment right now with the agencies in Europe and our partners. So unfortunately, I can't guide

Speaker 2

you at this point in time. Got it.

Speaker 6

Thank you, Ying and Steve.

Operator

Thank you. Our next question comes from Yaron Werber with TD Cowen. Your line is open.

Speaker 11

Hi, this is Jaina on for Yaron. Thanks for taking our question.

Speaker 1

I kind of wanted to

Speaker 11

ask about Parkinsonism, which is seen more CAR VICTI than other CAR Ts. Why do you think CAR VICTI uniquely produces Parkinsonism? And also,

Speaker 1

we spoke to KOL and said that

Speaker 11

it can have pretty irreversible effects. So do you think that this is going to deter use in earlier line setting, especially if competing CAR Ts don't show this? Thanks.

Speaker 2

Hey, Gina. This is Ian. I'll take your question on Parkinson's. Well, first of all, if you look at the data that's both in clinical trials and also from the FDA AER database, This phenomenon of parkasone is not unique on CARBXI. In fact, it was reported from patients who are taking on YAKHANA, Kymriah and also albacamab.

Speaker 2

And so far, as of end of last year, we could see about 7 cases reported in the FDA database from the U. S. Patient. So that's the number. That's actually the fact.

Speaker 2

With regard to why you're seeing this kind of delayed parking zone is, I would say there's a couple of hypotheses out there. For example, it could be because of the T cell trafficking into the CNS or new brain when the patient has a leaky blood brain barrier after years of therapy or if the patient already had pre existing neurology situations such as neuropathy. So that could be one of the hypothesis. Although at this point, I don't think there's any solid clinical evidence to show, which is the root cause of our Parkinson's disease. Regarding your question on Parkinson's disease in the earlier lines, as we reported to ASCO, given the risk mitigation strategy we implemented following the 6 cases reported from CAR T1, we were able to show that the incidence of Parkinson's was going down from about 6% in CAR T2-one to about 0.5% in CAR T2-four and that was a grade one case we reported at ASCO.

Speaker 2

So we believe that if you look at the earlier line patient population because of the risk mitigation and also potentially because of the patient baseline difference, we think that is entirely a manageable phenomenon here. Thank you.

Operator

Thank you. Our next question comes from Kelly Hsieh with Jefferies. Your line is open.

Speaker 12

Hi, this is Dave on for Kelly Shi, contract on the progress. I have a couple of questions. One is, as multiple BCMA agents are available now, have you received any feedback from physician on how does they position CARVEKT versus other treatment? Also on sales, when do you expect to provide sales guidance? And although you mentioned J and J will be responsible for outside U.

Speaker 12

S, any color on when should we expect to record the first revenue in other countries in EU and Japan? Thank you.

Speaker 10

Why don't we take the last question around sales. So the as far as the EU and Japan, I mentioned that we're already in Austria and Germany. And unfortunately, because of negotiations being ongoing, we can't comment on what country may be out next in Europe. And that includes Japan for that matter. I think your other question had to do with selection of CARVICTI in terms of patient type.

Speaker 10

What we're seeing obviously right now within the U. S. And in Europe in the FIFTH LINE plus setting here in the States. I mean, as Ping mentioned in his opening remarks, we're running about an 80% market share insights where we are basically competing against the Beqma. So I think that speaks volumes in terms of preference, in terms of physicians.

Speaker 10

And it's in all risk categories, whether it be standard risk or high risk. I think where you see some other product use around bispecific use is when potentially CARP-three may not be available or if a physician wants to bridge to a CAR T therapy, you're seeing some uptick for sure in the bispecific space. I think that has in terms of market erosion where you've seen at least in the research that we're doing is you're seeing the market erosion occurring with the Vecna when a bispecific is used in front of a CAR T therapy as opposed to cilta cel?

Speaker 2

Hey, Doug. I'll take your first question. I think it was on label update. So I'll provide answer in 2 respects. Number 1 is that you're all aware that in late last year, we did receive an official label update that includes a 2 year minimum follow-up of the CAR T1 in late line multiple myeloma.

Speaker 2

And with that, FDA also included label update on AML and also MDS. So I want to provide a little bit clarification on this. So if you look at the total of 97 patients from CAR T1, we saw 9 patients with 10 cases. If you look at the cumulative rate of AMLMDS, it's roughly 10%. But recall, this trial was started back in 2019.

Speaker 2

So essentially, in the last 5 years, the cumulative rate of AML MDS is roughly 10%. Now there's a paper that was published in ASH December of last year, which looked at insurance claim database over 1,000 patients were triple exposed, which means these patients have been treated with triple classes, including 1 drug from EMIT class, 1 drug from protein behavior and then one drug from CD38 antibody. So if you look at that patient population, even without any treatment, the background rate of developing MDS or AML is roughly 3% each year. Therefore, if you look at the data from CAR T1, we don't believe that is actually higher than the background And we already got the label update on AML and MDS. Now regarding the second one, as you guys all saw from the public communication from the FDA, all six brands of CAR T therapies will receive label update on T cell lymphoma.

Speaker 2

And FDA believes this is a class effect, so everyone will get similar or the same language. And right now, we and J and J are in discussion with the FDA about exact language of label update. Suffice to say that given the 23 cases reported from the FDA and also the denominator is over 27,000 patients who are treated with those different, some clinical trial patients. It is a small and rare risk and we think we'll get the label update in the near future. You also have a question about feedback from physicians on how they think about Hervecti versus other novel therapies.

Speaker 2

I think we have been in touch with physicians and care ops since ASH. And at this point, we have not seen any prescription behavior that's changed based on the either T cell lymphoma or AML, MDS label change. And if you look at efficacy, physicians continue to believe that CARVICTI provides best in class efficacy with nearly 3 years PFS in late line. And then also, again, if you saw the results from CAR TUL4 compared to standard of care such as DPD or DARZALEX, POMICIM, BECOMETASONE. We saw a 74% risk reduction in progression of that.

Speaker 2

And you will see on Friday how CARBICI has helped those patients in survival as well. So at this point, I think it's still positioned as best in class efficacy with a one time injection convenience. That is how it positions VEOCARBICI. Thank you.

Speaker 12

Thank you.

Operator

Thank you. Our next question comes from Leonid Timoshenko with RBC Capital Markets. Your line is open.

Speaker 13

Hi, thanks. Thanks for taking my question. I also wanted to ask on the ODAC. And I guess specifically, how you're thinking about competitive implications coming out of that meeting? I guess with regards to the drug you're going to be sharing the committee with, do you think any setbacks for them are going to be a positive for you?

Speaker 13

Is there less market splitting, potentially less competition? Or do you think if they succeed, that's going to be helpful given that they can drive greater awareness? And I guess, is there any risk of the CAR T space broadly being painted with the same brush depending on what the competitor presents? Thanks.

Speaker 2

Thanks, Leo, for the question. So I think if you look at the federal register publication, you will see, even though it's the same roster of ODAC, but it's actually 2 different panels. On the morning of March 15, ODAC will discuss the application from us on the 2nd line indication for PERVICTI. And then in the afternoon, same ODAC roster of KOLs and experts will discuss the application from our competition in the 3rd line application. So I think it is a separate panel.

Speaker 2

It's not necessarily a panel on the CAR T class. And I believe each application will be discussed and also debated by the K ON and also agency on its merit. So I can't comment on our competition's applications also the data, but we firmly believe that CARBICTI provides overwhelming benefit in the PFS and also overall survival endpoints here. So that's what we can say about this. And if you look at CAR T as a class, in general, in late line multiple myeloma, clearly, the class of therapy has provided a new option for patients who have treated who have been treated and also failed all major classes, including an EMID, a protease inhibitor and also a CD38 antibody.

Speaker 2

At that point, these patients really did not have much choice besides the BCMA directed agents. So we firmly believe that there's a very important place for BCMA directed CAR T in the treatment of multiple myeloma here. Thank you.

Operator

Thank you. Our next question comes from Vikram Parrott with Morgan Stanley. Your line is open.

Speaker 9

Hi, good morning. Thank you for taking our questions. We had 2, 1 on the pipeline and 1 on commercialization. So on the pipeline, for the CARTTITU-two study, we were just curious what your latest thoughts were on timing for data from Cohorts E and F? And then on commercialization, you mentioned that around 30% of patients are administered CARVICT D in the outpatient setting.

Speaker 9

How high do you think that could go in the near to midterm? And what do you think facilitates greater use in the outpatient setting if you think that's a number that can move up significantly in the near term? Thanks.

Speaker 2

Hey, good morning, Vikram. So I'll take the first question on CAR T2 Cohort E and F question and then my colleague Steve will probably answer on a second. So on CAR T2 cohort E and F, as a reminder, we enrolled a total of roughly 60 patients in cohort E and F, and these are newly diagnosed multiple myeloma patients. So we're not providing any guidance, but at this point, I think the earliest timing where we can report data probably will be towards the end of this year. And as you know, Vikram, we always report data at major medical conferences.

Speaker 2

So that's what we can say about timing for cohort E and F.

Speaker 10

Steve? Yes, thanks Nick. Yes, the outpatient metric is an important metric, especially as we stand into earlier lines with much larger patient population. So to the question about what's causing the increase, I mean, there's a number of things that are driving outpatient use in the United States. 1, as I mentioned, just around volume itself, our sites are recognizing the fact that they need to look at other options other than admitting all these CAR T patients into their hospitals.

Speaker 10

In terms of what are we assuming, I mean, like you said, we are at a 30 share today, roughly thereabouts. I think we could easily double that. I think the issue or rate limit around the doubling of the outpatient metric would be largely on our ability to get product into market. It's very clear with our sites, our sites that have been with us since the very beginning, they have much higher outpatient uses or rates of 30%. As new sites come on board and we're hoping to get pushing to around 100 this year, sites just need to have patient reps quite frankly to ensure that what they're seeing in the overall setting from a safety perspective is consistent to that of the label.

Speaker 10

So it's really right now just a matter of getting product into the hands of physicians and allowing them to use this drug to get comfortable with it and then also put the necessary structure that they need to put in place for outpatient use.

Speaker 9

Very helpful. Thank you.

Speaker 2

Sure. Thank

Operator

you. Our next question comes from Costas Beliaris with BMO Capital Markets. Your line is open.

Speaker 14

Thanks for taking our questions and congrats on the progress. A couple of questions from us. So the first one is around the 10,000 slots by year end 2025, which is great to see again. I'm wondering how should we be thinking beyond 2026? Is there any saturation of the slots you can produce?

Speaker 14

Or you can potentially even double these 10,000 slots that you are guiding in the future if there is enough supply? And the second question is on CARTTITUDE 4 data. If I recall correctly, last year, you showed that during the bridging phase, the CARVICTI arm had more events than the standard of care arm, although both arms were in under standard of care. I recall that there was not really any characteristic between the 2 populations that could explain this difference. I'm wondering if there is any update on this front.

Speaker 14

Thank you.

Speaker 2

Hey, good morning, Costas. This is Dean. I'll take your question. So on the first one regarding the 10,000 slots by end of 2025, obviously, we and our partner, J and J have plans to extend beyond that 10,000 capacity because we do see that there will be quite significant demand once the drug is approved in the second line and beyond. So I would say, we cannot provide any specific guidance on which year, but I can tell you given the roughly $1,000,000,000 CapEx program we are conducting now, we think with certain incremental investment, we can actually get to a larger number in the near future after 2026.

Speaker 2

Now of course, there's a limit of what we can do with this current round of CapEx. So we and our partner already are thinking about the next step. In fact, a decision could potentially be made this year in 2024, whether we need to conduct another round of CapEx or not. It all depends on obviously regulatory approvals and also the market assessment based on the feedback from physicians. So we do surveys of physicians from time to time based on latest clinical data and also the competitive landscape.

Speaker 2

And you guys can stay tuned on our CapEx plan here. On your second question on the initial imbalance of PFS events in the 1st couple of months when both arm of the CAR T4 patients are receiving exactly the same, either bridging therapy on the CARBXA arm or the standard of care in the control arm. We and our partner have tried exhaustively to look at all these subgroup analysis and also baseline characteristics. And in fact, Carlos, I can assure you that, that was a question from regulators because we did have the FAGO meeting in February when EMA conducted that committee to look at CARDINAL4 data. And that was a key question.

Speaker 2

So I can tell you that after the exhaustive analysis, the only thing we found was that there's a slight imbalance on the dosing density for a couple of standard of care regimens, including some dose difference in POMLift and then some dose difference in PALKADE. And you guys will see that on the briefing book. I think I believe that will be published on Wednesday. So that's the only difference we could have seen. Now does that difference in dosing density of palmelets or Velcade account for the imbalance in the 1st couple of months?

Speaker 2

Unfortunately, it's a post hoc analysis. It's difficult to include that. But that's pretty much the only thing we could find out. And that is also why after looking at all the data, as you see, caused us, we did receive a very clean label from CHMP recommendation, right. If you look at the document, it says that CARBECTI is recommended for second line treatment of multiple myeloma after patient has received one line of treatment that includes an EMID and also a PROZEMIBDA and also the patients are refreshed to REVLIMID.

Speaker 2

That's exactly the enrollment criteria for CAR TIV and that's a clean label we got from Europe. So that hopefully gives you the hint. Thank you.

Speaker 14

Super helpful. Thank you.

Operator

Thank you. Our next question comes from Ash Verma with UBS. Your line is open.

Speaker 15

Hi, thanks for taking our questions. So in terms of the belt to get to 10,000 annual doses exiting 2025, by our math, you'll need a slot expansion of roughly 30% every 6 months to get to those levels. Does that align with your thinking? And then how much of the E10,000 doses are you expecting Europe to contribute? So that's one.

Speaker 15

And then secondly, can you comment on the European pricing in the long run? Would it trend more towards where U. S. Pricing is or is there any different dynamic at play there? Thanks.

Speaker 10

Yes, maybe I'll take the last question first and I'll turn it over to Ainge to talk about some manufacturing questions you had. Yes, in terms of the European pricing, you're going to see some guidance coming out shortly related to Germany pricing. So we expect to see that by the end of the month possibly going into the early part of April. So stay tuned on that. Dave, do you want to talk about the manufacturing question?

Speaker 2

Yes. So Ash, let me talk about how we plan to get to that 10,000 number by end of 2025. So first of all, we have 3 internal nodes, right? In Ryerson, like I mentioned earlier in this call, we already got 2 increases in capacity last year, and we'll plan you something similar this year. And we'll continue to do that in the year of 2025 as well.

Speaker 2

So that's part of that. But beyond that, we and J and J are doing actually the physical expansion of the railcar site. So essentially, after this physical construction is done this year in 20 24, we're doubling our effective area of manufacturing in the Ryerson side. So that will also figure into the capacity increase in the year of 20 25 because once the physical construction is done this year, we'll spend months installing the equipments, training the staff and then get all the suites validated on the current GMP standard. So that's an important part of the revenue increase, right.

Speaker 2

And then let's talk about the 2 other nodes in Belgium. So the first one is called Obelisk, which is a standalone building released. That started clinical batch production in January. And our plan is to bring that site to commercial production for European demand by end of this year. So towards the end of this year, we'll have another commercial node at Gantt.

Speaker 2

And then the much larger facility called Techland, which is roughly 240,000 square foot by design. The physical construction will be done by end of this year. So our plan is to bring that Techland facility to clinical production early next year. And again, in the second half of twenty twenty five, that Techland facility will enter into commercial production mode. So those are the 3 internal nodes and those are very important cornerstone strategy, how we can get to that 10,000.

Speaker 2

Now beyond that, you guys all know, we executed a three way agreement with Novartis last year. It was for 3 year clinical supply. Right now, we're expecting Novartis to file for IND potentially first half of this year. And after that, pending the FDA approval of the IND, Novartis will start to produce clinical trial material for us. So that external CMO strategy is also an important pillar of our strategy to get to that 10,000.

Speaker 2

So all this combined by end of 2025, we're on track at this point to get to that 10,000 dose annual capacity.

Speaker 4

Thank you.

Speaker 2

And last, I think Ash, you asked about the revenue split. Obviously, it's way too early for us to comment because right now, whatever revenue we generate for Correvicti from Europe, it's all really by allocation because there's only so much capacity we could allocate to Europe. But in the future, once we have enough capacity to satisfy demand from both the U. S. And European demand, then if you look at some of the prior CAR T revenue split, it's usually roughly maybe fifty-fifty, slightly favoring the U.

Speaker 2

S. And then the ex U. S, especially the European revenue is just shy of 50%. So we think that should be the same dynamic for BCMA CAR T in myeloma.

Operator

Thank you. Our next question comes from Edward Tenthoff with Piper Sandler. Your line is open.

Speaker 5

Great. Thank you very much for taking my question and I appreciate all the good color and the update today. Congrats on all the progress. So my question really has to do with kind of second line plus utilization. How do you envision physicians prioritizing patients assuming label expansion, do you think that we'll see, CARVICTI use move earlier line as evidenced by the kind of superior results that we saw from CARTITUDE-four?

Speaker 5

Is it really going to be up to the sites how they're allocating CARVICTI? Any color on your early thoughts on that would be appreciated. Thank you.

Speaker 10

Yes. Why don't I take that since we just had some data readout specific to that question. So if you step back and look at the myeloma population segmented by standard risk versus high risk, that's how we do it. And if you assume that of that high risk population, they represent about 25% of the total. That's pretty consistent across all lines of therapy.

Speaker 10

What our data is showing and we ran some research right after last year's ASCO when we released this data and we actually just reran it recently. And it's been fairly consistent. So based upon the results that Ingrid shared earlier in terms of our CAR T2-four data, we're seeing for sure that 20% to 25% high risk group moving over or physician going very quickly with CAR T therapy like cell upfront in second line. And then we're also seeing and this was a bit of a change, which was positive change for patients is yes, with even within the standard risk population, physicians have said that they see them moving forward with CARVICTI in standard risk in second line plus that population as well. So that's quite exciting.

Speaker 10

Now that's as you know, that's quite a sizable patient population for us. But that data, like I said, is fairly fresh now. We just had that readout here in the Q1. I guess the last thing maybe tidbit of information just real quickly is the new dynamic that this launch represents is a referral dynamic, especially in the standard risk group. So as opposed to our CARTA-two-one launch, which was pretty much most of those TFLINE plus patients were already within our hospitals through our partner and our partner is fully staffed, trained up and ready to go.

Speaker 10

They'll be pushing from a referral front in the outpatient setting where most of these standard risk patients are today to refer those patients that are CAR T eligible to our site. So that's the only, I would say, added wrinkle to the 2nd line plus indication is really this active engagement in terms of referral from the outpatient clinics our hospital.

Speaker 5

Great. Super helpful color. Appreciate it. And good luck this week.

Speaker 2

Thank you.

Operator

Thank you. Our next question comes from Justin Zeland with BTIG. Your line is open.

Speaker 16

Thanks for taking the question and congrats on the progress. So Ying, I wanted to ask if you could give us an update on the out of spec rate that you're seeing and your confidence the FDA's widening of the out of spec window with the most recent submission? Thanks.

Speaker 2

Hey, Justin. Thanks for the question. So I think what I can say is that in the last 9 months or 3 quarters or so, the out spec rate has been quite stable. Like we mentioned, it's in the teens range. So at this point, we are seeing very stable trend of OS.

Speaker 2

And the next leg up would be pending the FDA approval. We hope we'll get a wider release back and then we hope to have another significant reduction in the out of spec rate. Now regarding the FDA approval. So as you know, Justin, we did submit it in the supplemental BLA in June of last year asking FDA to widen our release back based on the clinical data we received from the CAR T4 data. So we provided a wealth of what I call the sensitivity analysis by correlating the release back with the clinical outcome.

Speaker 2

At this point, we are still confident that we should be able to receive the wider spec, but we don't comment on detailed interaction with the agency. You're going to have to wait and see when we receive the FDA approval. Then we'll let you guys know what kind of the regulatory action the agency has taken. Thank you.

Speaker 17

Thanks for taking my questions.

Operator

Thank you. Our next question comes from Mitchell Kapoor with H. C. Wainwright. Your line is open.

Speaker 18

Hey, everyone. Thanks for taking the questions. I have 2. The first one is kind of on the strategy of moving into earlier lines. Knowing that you'll undoubtedly treat patients who would have otherwise been treated in the later line setting, can you kind of help us contextualize the true additional expansion opportunity of moving into earlier lines?

Speaker 18

And then the second is on the strategy of the sales force messaging, assuming a new approval in the earlier line setting. With new accounts, do you expect to ask the physician to potentially put patients on CARVIC D in later lines first and then move to earlier lines? Or would you initially ask them to begin their patients in earlier line setting? Thank you.

Speaker 10

Yes. Thank you, Steve. Thanks for that question. That's a good one. So we will be obviously, we'll be in launch mode with Cartitude 4.

Speaker 10

So we will be messaging hard, obviously, the new indication, the second line plus nature of it, in all the patients that meet that eligibility criteria. So we will be really from a messaging perspective really dominating our message here at heart of 2, 4 and second line plus. As far as the eligible patient population, I could actually give you some numbers here that may help you. And these are folks who patients these are global numbers that meet the eligibility criteria, not necessarily a treated population, but at least the patients that are eligible. This may help with some of your math in your modeling.

Speaker 10

So in the frontline setting, this is a global number. We foresee about a 22,000 patient opportunity globally. CAR T2-four, there's about tripling of that moving to 60,000 by 28,006 around the same number, 20,000 to 28,000. So hopefully that will give you some perspective in terms of an incremental impact as we go into earlier lines.

Speaker 7

Great. Thank you.

Speaker 10

You got it.

Operator

Thank you. Our next question comes from George Farmer with Scotia Bank. Your line is open.

Speaker 17

Hi, good morning. Thanks for taking my questions. You guys mentioned 80% market share of CARBICD in multiple myeloma versus ABECMA. Can you comment on what's driving that decision for physicians to use Avekma even in the 1st place? And do you think that can improve?

Speaker 17

And then second question, maybe I missed this, are you still guiding for profitability in 2026?

Speaker 10

Hi, this is Steve again. We had a little mechanical difficulty on our end. Could you repeat that first question? I think you had the question was related to Abekma and Abekma use.

Speaker 2

Yes. So you guys said

Speaker 17

you had like 80% market share, right? And just like wondering what's driving that decision to even use Abekma, do you think and over CARVICTI and can you improve upon that? And then the second question had to do with profitability in 2026. Is that still a message you guys are communicating?

Speaker 10

Sure. I'll take the first one. Are we connected now guys? Sorry guys, we're having some Wi Fi problems on our end here. Can you guys hear me okay on your end?

Speaker 2

Yes. Okay, good. Okay, I think the

Speaker 10

first question has to do with once again Becca use and why you're going to bother using Becca. I think what's happening here and this is the research now speaking is there's still a large number of patients in the supply and setting that we just quite frankly can't satisfy yet. So therefore, thankfully there's another CAR T therapy available and you're seeing a vaccine use in that setting. It's quite that simple. The other thing to think about and we in the United States, we don't have marrying territories or commercial maps, so to speak.

Speaker 10

We're not all in identical centers. So in some centers where Vecna is, obviously, they're the only CAR T in town, they're going to get a Vecna. But that doesn't happen very frequently. So that is the other area where you might see some of that may use just in terms of commercial footprint being a bit different than us. Lori, you want to talk about profit?

Speaker 4

Sure. So the messaging is still consistent with profitability to 2020 6. We've talked about bridging to profitability for the BCMA program. What's going to be critical there is our penetration into earlier lines of therapy and our uptake on the revenues and continuing to drive our costs down. And then the other component of that is really, I talked about earlier, is our pipeline then.

Speaker 4

So by 2026, we are projecting that we can breakeven or be profitable from an overall company perspective.

Speaker 17

Great. Thanks very much.

Operator

Thank you. Our next question comes from Gena Wang with Barclays. Your line is open.

Speaker 19

Thank you for taking my questions. Sorry, I'm dialing late, so apologize if those questions are already being asked. So first question is regarding, I think you mentioned that in the past, by the end of 2025, your capacity can reach 10,000 doses. And what would take for you to reach 200,000 to 25,000 doses? And how long would that take?

Speaker 19

And then second question is regarding ODAC later this week. So maybe if you can share like what kind of data you submit to the FDA? And do you expect some discussion regarding the toxicity profile such as a neurotox?

Speaker 2

Hey, good morning, Gena. This is Dean. I'll take your questions. So on the first one, I think I've commented previously that with this current round of very expensive capital investment between us and our partner, G and J. We think we can go beyond that $10,000 and potentially close to the numbers you quoted.

Speaker 2

It will take some incremental investments and it will take probably another couple of years to get there. But at this point, I'd rather not share any details around that. Just suffice to say that, yes, we'll go beyond $10,000 with this current round of CapEx and also potentially help from our external partners on our CFO side. So that's the answer for your question the first question. And then the second one regarding ODAC.

Speaker 2

I can tell you that it's very clear from the FDA communication in writing and also verbally that the focus of the ODAC will be discussing the overall survival benefit Pravitin provides in this patient population value in the CAR T2-four study. And in the context of some early imbalance, which you have seen from the PFS curve, right. So that's really the focus of the ODAC here in terms of what they're focusing on. Now I'm sure it's a 4 hour ODAC session and in any ODAC meeting, they always talk about the overall risk benefit and that probably will touch upon also some of the adverse events, including CRS, neurotox, second primary malignancies. But like I mentioned, again, the survival is the focus.

Speaker 2

The survival benefit is the focus, not the SPM issue or the neurotoxin issue at this point based on what we heard from FDA. Thank you.

Operator

Thank you. Our next question comes from Kelsey Goodwin with Guggenheim. Your line is open.

Speaker 20

Hey, good morning. Thanks for taking my questions. First, I guess, how should we think about the Q1 '24 sales given kind of the step up in the back half of 'twenty three and likely not being fully recognized given the 4th quarter sales that we saw? And then secondly, on the adcoms, so given both are on the same day and crossover is obviously a main focus, Could you remind us the rationale for not allowing crossover and Cartitude 4? And do you think that, that might be a hang up for the FDA in any way?

Speaker 20

Thank you.

Speaker 4

So for quarter over quarter growth, we're not giving specific guidance, but I can tell you we do anticipate quarter over quarter growth with more pronounced growth in the second half of the year with the anticipated launch into the second line setting. Ying, I don't know if

Speaker 3

you want to talk about crossover?

Speaker 2

Sure. So thank you for the question, Kelsey. As you know, there's some difference between the two trials. And in the CAR T2-four study, we did not allow crossover, which means we did not provide the patients who progressed on the standard of care to crossover to sugar cells once they progress. However, once the patient progresses on the dental care, they can actually get any commercially available therapy, including the 2 commercially available CAR T therapies and also the commercially available bispecifics.

Speaker 2

And also they can enroll into clinical trials. So you will see some of the details on Wednesday when the briefing book comes out, what those subsequent therapies those patients receive. But I can tell you, yes, there are patients who did receive CAR T therapies after progression. So that's the fact. Now on the other hand, even though we did not allow the crossover, but before we started enrolling patients, we actually had a very frequent communication with both FDA and also EMA as global regulators to talk about the product of CAR TUR2-four, including the not allowing the crossover design.

Speaker 2

So at this point, I don't think that will be a big focus of debate here at ODAC.

Speaker 11

Perfect. Okay. Thank you so much.

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Earnings Conference Call
Legend Biotech Q4 2023
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