Legend Biotech Corporation (LEGN) Earnings Call Transcript & Summary

Before I get started, I just need to read a disclaimer statement. Please note that all-important disclosures, including personal holdings disclosures and Morgan Stanley disclosures, appear on the Morgan Stanley public website at morganstanley.com/researchdisclosures. So pleased to have Ying Huang, the CEO of Legend with us.

Ying, I thought maybe just to start us off, I mean, I know there's not a lot to say, but it's obviously the focus for a lot of people, which is progress towards your PDUFA date and your first approval. So maybe just to the extent you can update people on where we are in that process.

Sure. Thank you, Matthew, and Morgan Stanley for inviting Legend. So I know it's on top of the mind for many investors, and it's something we're also working on every single day these days. So I can say that since our BLA was fully accepted and validated by FDA, there's not any surprises in this process. Obviously, there are this regularly scheduled meetings, as everyone know, there's early cycle, mid-cycle and also late-cycle mites, those were scheduled. So I can report that at this point from the perspective of Legend and J&J, we continue to expect approval of cilta-cel on or before the PDUFA date of November 29.

Okay. Great. Good. And obviously, the first competitor is in the market now, and I think people are sort of interested in the insights that you can get from that. So maybe just give us your perspective on how the BCMA launch is going and what that tells you about market size, market demand and sort of other factors as we think about how cilta-cel can launch.

Yes. So I think one big takeaway for us is that I know before BCMA launch, there might be some degree of skepticism around the true demand and also whether there's a big number of patients out there who would like to be treated with a BCMA CAR-T. So based on the reported sales, which was $24 million last quarter reported by Bristol-Myers Squibb, we think that obviously there is a true demand out there and also based on the feedback we hear from the field, from KOL and treating physicians, we know that there's actually much bigger demand than the actual reported sales. So clearly, I think we're encouraged by the demand and also by the potential number of patients who are willing to be treated by BCMA CAR-T. So that's our biggest takeaway. And secondly, I think, again, you probably have the question already in your list, Matthew. That is, there is a supply shortage compared to the demand. So how do we satisfy that demand? And that is, again, something J&J and Legend have been working very hard, not just now, but also since last year, because both parties here realized that it's extremely important for us to have a robust manufacturing protocol and also a reliable supply for the commercialized product pending the FDA approval. So that is something we're working very hard to us.

And maybe specific questions. I don't know if you're going to answer or not, but the top questions people get are obviously, we know there's a vector problem. So maybe if you could just talk about your vector supply and the sustainability of that supply? And then, second, any comments you can make on how many patients you can supply at launch?

Well, those are not easy questions for me, even though I wish I could answer with more details. But -- so first of all, let's talk about lenti supply. I think our competitor did mention on their earnings call that it's an industry-wide shortage and I believe BMS has said that they're using Brammer, which is a part of Thermo Fisher to supply the lentiviral vector for BCMA. So we actually looked at this ahead of time. And that is why we are actually looking at redundancy in terms of the supply of lentiviral vector. So even though I am not at liberty to disclose exactly who will be our internal or external suppliers, but since last year, Janssen and also Legend already planned for potentially redundant supply for lentiviral. And this is something we have already planned ahead. So we believe that we'll be in a better position, hopefully, when it's time to commercialize cilta-cel. And then secondly, I want to mention that since everyone knows, it is actually industry-wide shortage for lenti supply, the reason is there are many cell and gene therapy companies out there, and majority of them actually are using external third-party suppliers. So this is why you are seeing this industry-wide shortage, because typically, you have to reserve the manufacturing slot probably about 12 months or in a very minimum, 6 months ahead of that. And there is a very long lead time to plan such a manufacturing slot at a third party. And that is why we're also looking at different types of supply, whether it's going to be external or internal. And as I told you, we're looking at redundancy supply here for lentiviral.

And then, I don't know, you probably can't comment, but number of patients or just give people some order of magnitude of how much you can supply at launch?

Yes. Again, unfortunately, due to the contractual obligation with J&J, we cannot disclose exactly the manufacturing capacity, but I can say that both J&J and Legend plays extreme high emphasis on the reliability of the supply chain here. And we're looking at every single process of our supply chain to ensure that we'll be able to meet the demand. So when you look at the manufacturing capacity, right, which is actually separate issue from lentiviral, because that has to do with the number of the workstations or suites you have in each part and then a number of the parts you have in your manufacturing plant. And then it has to do with also how many shifts or the number of workers you have in each suite. And then lastly, as you know, because this is almost like a 40 close process, so you have to map out how long each patient sample or slot will basically occupy that workstation. And that's, in theory, how you calculate the output of your manufacturing plant. Another factor here is the agency will look at in the real world how many batches have you actually manufactured in a certain period of time. So what I can say is that since the Raritan New Jersey manufacturing plant was commissioned, to date, we have already manufactured hundreds of batches. That includes all 97 patients in the CARTITUDE-1 trial and also the ongoing CARTITUDE-2 Phase II trial and now 2 global Phase III trials, right, CARTITUDE-4 and CARTITUDE-5. So we have accumulated a lot of experience in manufacturing cilta-cel from Raritan manufacturing plant. And one thing I also want to mention is that we did disclose at ASH that among the 97 patients in CARTITUDE-1 trial, our manufacturing success rate was 100%.

Okay. Good. Two more difficult topics and then we can move on to some other items. I think one of the other focuses or at least debates that people have is the kind of label you could get given the data that you have and I think the kind of label that your competitor got in terms of lines of prior therapy and what's included in the label. So maybe you could just talk about what your view is on -- or your confidence around how the data is going to be presented to physicians?

Yes. I think if you look at the BCMA label, right, it is somewhat narrower than what the trial design was and also probably narrower than what investors expected, right? So that's a judgment called by the agency and also, if you compare the label from FDA to the label for BCMA approved by EMA, there's a difference there even though it's all based on same trial design. So like I said, it's a judgment call by FDA. And it's likely a factor of the number of patients who were treated by, for example, 3 prior lines or the number of patients who were treated by 4 prior lines or beyond in the trial, right. So one thing I can tell you, Matthew, is that we do have a higher percentage of patients were only treated with 3 prior lines of therapy in the CARTITUDE-1 trial. Whether that will be a factor or not in the eyes of FDA, we cannot speculate on that. So that is one factor we believe. And then the other thing I want to mention is that even though that was the FDA label, but if you look at the [ NCNN ] guideline, I don't know if you noticed that or not, the guideline actually said that instead of 4 lines, it says, well, BCMA could be used for patients who have been treated with 4 different therapies. So as you know, in multiple myeloma, frequently, patients are being treated with a combination of a few therapies. Therefore, 4 lines is not necessarily equal to 4 different therapies. So it sounds like the commercial insurers would typically follow NCNN guideline. Actually, that is actually a little bit wider than what the label itself stipulates. So that's our interpretation of the label. Of course, when we are into the discussion phase with FDA on label, we'll put our argument in front of agency and let the FDA judge.

Okay. Okay, good. And then I guess last question as we think about pre-launch activities and things like that. It's just reimbursement. What work is being done there? And I guess, also, I think you'd probably agree that the BCMA launch was aided by the fact that you have a few CAR-T therapies already approved out there. So maybe just talk about reimbursement dynamics and to the extent you think any of those could be an issue or were a tailwind for you?

So why don't I start with the overall reimbursement for CAR-T? I mean, back in 2017, it was not easy because of the first launches out of the manufacturers. And the field, it was not very familiar. Reimbursement was not there in the first 1 year or 2. However, things have changed quite significantly in the last few years. For example, now you do have a DRG code assigned by CMS or Medicare Part. And then secondly, both the field, including the physicians to patients and also insurance companies, they're much more familiar with the CAR-T and also the resulting benefit from CAR-T. So I think, overall, reimbursement has improved quite a bit since 2017. And then, specifically, I think on BCMA CAR-T, I think the efficacy demonstrated from clinical experience really speaks for itself. We don't foresee a significant hurdle for the reimbursement for so-called on-label use for cilta-cel here. And then the other one is that, as we mentioned previously, we believe the majority of the patients who will be treated by cilta-cel should be able to be administered this therapy in outpatient setting. In fact, we have done this already in both CARTITUDE-2 and also CARTITUDE-4 trials. And so far, the real-world experience is quite encouraging, I would say. So that also potentially could shift the reimbursement slightly, right, from Part A to Part B in the Medicare patients. And we've been working very hard also on this, because our partner, J&J has been engaged in certain stakeholders about the potential coverage and also reimbursement, as well as so-called P&T formulary access among the hospitals and also regional insurers.

Okay. Okay. Good, good. You typically have some data updates towards the end of the year. So assuming we might be getting those, again, maybe just give people a sense of what they could be looking forward to seeing and what you think is going to be sort of most important, as we think about especially earlier lines of therapy.

Yes, absolutely. So we typically update our clinical data for CARTITUDE program at both ASCO in the beginning of the year and also at ASH in the end of the year. So J&J and Legend have stated that we are planning to update the CARTITUDE-1 data at a major medical meeting by end of this year. So I'm sure you can guess what it could be. So that's the plan. And, for CARTITUDE-1, as you recall, at ASCO, we presented data with a median follow-up of 18 months, and that was with data cut in February. So ASH had a abstract submission in early August. So you can do the rough math, right, how many more months roughly in terms of median follow-up we likely will have for the CARTITUDE-1. But, it is our intention to present another update by end of this year. So I think a couple of things I think our investors should focus on the update. First of all, at ASCO, we did say that with median follow-up of 18 months, we had provided 95% confidence interval for median PFS with a lower bound at 22.8 months. However, we did not have a mature data set to provide you with a higher bound. So we'll see with a few more months of follow-up, whether actually, we'll be able to give a single point estimate of the median PFS with both lower bound and also higher bound of the confidence interval. So that is something I think we're looking forward to providing with -- to the investors. And then secondly, I know safety is another focus. So I think at ASCO, you saw that there's no new safety signal here, and we continue to monitor the data set. But, overall, in whole CARTITUDE program, we're not seeing any new safety signal. In fact, in CARTITUDE-2 and CARTITUDE-4 ongoing trials, broadly speaking, we're seeing somewhat lower incidents and also less severity in terms of grade of neurotox. That's something we reported for Cohort A for CARTITUDE-2 at ASCO. So in the next major medical meeting, we are also planning to present some other cohort data potentially for the CARTITUDE-2 data. For CARTITUDE-4, while it's still ongoing and we are continuing to enroll patients, so likely, we're not going to have any new data update this year.

Okay. Okay. Good. Why don't we spend a few moments then, I think just talking about the strategy in earlier lines and sort of the broader opportunity there and I guess, how you see your profile coming out there versus the competitive profile?

Yes. So the first lead indication pending FDA approval for cilta-cel will be late line or last line for myeloma. However, we have all intention to push forward. So as you can see, we have already opened 6 cohorts in CARTITUDE-2, including the most recent cohort, we call it Cohort F, which will enroll patients with frontline myeloma and also standard risk factor. And then in June, J&J and Legend actually announced the protocol for the first Phase III global trial in frontline myeloma called CARTITUDE-5. So we're planning to enroll 650 patients globally, and it's going to be 1 to 1 randomized between the cilta-cel arm and also the control arm, which will be [ 8 ] cycles of RVD followed by Revlimid and dexamethasone maintenance. So PFS is going to be the primary endpoint. And that's, again, our first foray into the frontline myeloma. So we're going to be a few months behind BCMA in terms of the launch into the U.S. marketplace. However, if you look at our frontline strategy, we believe we have the opportunity to leapfrog the competition because we actually already initiated and have already started enrolling patients in the CARTITUDE-5 Phase III trial. And then we're also looking at potentially another Phase III trial for the other part of the frontline that is the patients who are actually eligible for stem cell transplant. So that is something we're actively engaging with the regulators and also with the KOLs in the field. So I believe the right place to use cilta-cel will be in frontline when the patient's immune system are still relatively healthy, and the T-cells are more active. Therefore, we expect to get the most benefit out of that using autologous CAR-T for cilta-cel.

And given the data that you had at ASCO with the very high CR rate in some earlier patients, I mean, how representative do you think that is of the potential that you can have in earlier patients? And also, I guess, given what we've observed with many sort of non-cell therapies, but CRS in earlier lines are pretty durable. So how you think about durability?

Yes. Sure. So we believe the Cohort A data is actually very important because in Cohort A, which is actually the mirror image for the trial design for CARTITUDE-4 Phase III trial, we are enrolling patients who are being treated with 1 to 3 prior lines of therapy. So because we had a small data set at ASCO, only 20 patients, we did not disclose the percentage of patients who were treated with 1, 2 and 3 lines, are respectively. However, when we look at this data set internally, right, look at the patients who got only 1 line or 2-line or 3 line, I can tell you, Matthew, that data is very consistent among those 3 different groups, even though it's a small data set. So we have relatively high level of confidence that cilta-cel should be equally effective in patients, who have been treated only 1 or 2 or 3 lines. And that means we expect to see high ORR rate and also CR rate across the board in early lines. And then you also mentioned that obviously for other drugs, including Darzalex combinations, we have seen pretty high CR rate. For example, in the Phase III products right, where the medium prior lines of therapy was 1. So that means technically, it's a second-line trial. The CR rate reported from products was about 56%, and that was after mature data set, right? So as you recall, in the ASCO presentation, we presented data with only 5.8-month median follow-up among those 20 patients, and we already saw 75% CR rate. So we fully expect that 75% CR rate over time will improve just like in the CARTITUDE-1 trial, what we have observed across the CARTITUDE program. And that is why we believe that even though other availing -- available treating options in the market has provided high CR rate, but we still think we can have best-in-class CR rate using cilta-cel.

Okay. Okay. Good. I'm sure we could spend the whole time on cilta-cel, but maybe we should just touch on what else you're doing, because you do have a pipeline beyond that. So maybe just remind people sort of the pipeline beyond that and what sort of milestones we can expect from that?

Yes, absolutely. So we don't want to be only branded as a cilta-cel company, right? And we have worked hard on 2 areas for the research focus in the last couple of years. One is solid tumor indications. So we already have 2 programs in Phase I testing. One is Claudin 18.2, targeting autologous CAR-T for gastric cancer. The other one is the mesothelin targeting autologous CAR -T for ovarian cancer. Both are enrolling patients and actually we have treated patients with both already. We have some early data already, and we're hoping to maybe start to disclose those data set in the next 6 to 12 months. And you may have noticed that we also have updated our pipeline chart on Legend website. So we're bringing forward to other solid tumor programs into preclinical development. That is a program for small cell lung cancer, and then another program for HCC or liver cancer. We have not disclosed the therapeutic targets yet, but we intend to do that probably by end of this year, as we continue to do the preclinical work to ready for IND filing maybe in the next 12 months or so. So those are the progress we have made in solid tumor side. And then another focus for our research team has been allogenic program. So again, we have 2 Phase I programs. One is the BCMA program. The other one is a non-gene-editing approach, alpha-beta T program targeting CD20 for diffuse large B-cell lymphoma. Again, we're starting to enroll patients. So we're making some progress over there, and we continue to also work in our lab, quite a few other approaches, including gamma-delta T cells and also [ NKT-NK ] cells. So hopefully, we'll have more to tell you guys maybe in the next 12 months' time frame. So we're not providing any official guidance on exactly when the data will be out there, but suffice to say that likely will be at a major medical meeting when we start to publish the data set.

And maybe just talk about your solid tumor strategy a little bit. Obviously, been a tough area for CAR-T therapy. So what do you think are the key differentiating factors of the way you're designing therapies for solid tumors to break through the microenvironment to actually have an impact on tumor reduction?

Yes. So I think, first of all, we need to find the right target, right? Whether you can find a target that's suitable for T-cell targeting and also that's safe for patients. So we believe, for example, Claudin 18.2 is a good target because it's overexpressed in stomach, and also in cancer patients with gastric cancer. But, it's not really widely expressed anywhere else in the body. And within the stomach besides cancer cell expression, you also see a little bit expression in endothelial cells that line the stomach tissue. So I think reasonably safety margin here based on our preclinical data and also, we have a little bit clinical data to date that says that it's actually a good target. And then secondly, we do a lot of work around our antibody binders here. That exactly what we did with BCMA and that's what we're always doing for other targets here, including the Claudin 18.2. That is -- we screen a lot of antibody fragments, and then also, we optimize them. And then we put them on a CAR-T construct, and then we do screening again because in our experience, right, the best antibody fragment does not necessarily mean the best CAR-T, in fact, because there's all this interaction with T cell and also activation of T-cells. That's why we do a lot of work on screening of the construct. And then lastly, in solid tumor, what we have learned so far is that likely you would need an armor here. The reason is you need armor to help the T-cell to be persistent and also secondly, to be able to penetrate into the tumor microenvironment and to overcome those immunosuppressive microenvironment here. So that's what we're learning, and that's the approaches we're taking.

Okay. Okay, great. Well, good. Well, Ying, thanks for being here. Nice to see you, and maybe some time, we'll all get to see you in person.

Yes, we're hoping so. COVID-19 been difficult, but we're pleased that we're continuing to move forward according to our plans. Thank you.