Legend Biotech Corporation (LEGN) Earnings Call Transcript & Summary

Great. Welcome, everyone. My name is Jess Fye. I'm a biotech analyst here at JPMorgan, and we are continuing the 43rd Annual Healthcare Conference today with Legend. You're going to hear a presentation from the company, and then we're going to go into some Q&A. [Operator Instructions] So with that, let me turn it over to Legend's CEO, Ying Huang.

Thank you, Jess, and thanks to JPMorgan for inviting Legend Biotech. So this is our standard safe harbor disclaimer. For those who are not familiar with Legend, I'll just give a very quick overview of the company. So today, Legend is the largest stand-alone cell therapy company with over 2,500 employees across 3 continents, and we're a pioneer in treatments that changed cancer care. We are at the forefront of the CAR-T therapy revolution with our legendary treatment called CARVYKTI, which is a onetime injection for the treatment of multiple myeloma. And we develop, manufacture and also co-commercialize with our partner, Johnson & Johnson in the U.S. CARVYKTI to date has been the fastest launch among all FDA-approved CAR-T therapies. And then lastly, we have built an end-to-end cell therapy company based in the U.S., and we're expanding our leadership to maximize the CARVYKTI potential. A few things to highlight how we are a proven leader in the cell therapy space on the path to cure. To date, we have treated more than 4,500 patients with CARVYKTI. And CARVYKTI is the first and only CAR-T therapy providing superior survival benefit over standard of care in a randomized Phase III trial in the second-line multiple myeloma setting. CARVYKTI continues to be the most successful CAR-T launch to date, generating about $286 million in global sales in the third quarter of 2024, which was the tenth quarter since FDA approval in February of 2022. And recently, we and J&J have been focusing our efforts on the second-line launch and penetration into earlier lines of therapy in this setting, educating community hematologists and oncologists about the benefit of CARVYKTI. And also, we're trying to increase the use of outpatient setting. We have made a lot of progress on all these fronts I just mentioned, and we have just scratched the surface. We're addressing a significant unmet medical need in the treatment of multiple myeloma. The incidence in the U.S. alone is about 36,000 cases of new diagnosis every year, and the median survival for patients who have failed 3 major classes of therapy in the market today before BCMA-targeting modality was introduced into market was shorter than 12 months. As many of you already know, we entered into a global collaboration agreement with Johnson & Johnson in December 2017 to address this unmet medical need in multiple myeloma. We have a cost-sharing and profit split arrangement with J&J, which you can see in this slide. J&J has been a great partner for Legend. Within multiple myeloma, J&J is the #1 player in the global market, and CARVYKTI is shaping to become a foundation therapy in that portfolio. This has translated into deep experience in both the community and academic settings. Here in this slide, it's a snapshot of the unique profile of CARVYKTI, which is the first and only CAR-T therapy in multiple myeloma to achieve a significant and also clinically meaningful survival benefit over standard of care in a Phase III setting. We're working to have this important update, including the label in 2025 in both U.S. and in Europe. Turning next, I want to focus on our plans to maximize multiple myeloma market leadership for CARVYKTI. You can see this is our record launch trajectory among CAR-T therapies. This slide actually includes the launch performance for all 6 FDA-approved CAR-T therapies. With our fifth line launched back in 2022, we became the market leader, and our successful launch is a model for the ongoing second-line launch and beyond. The next slide illustrates the global uptake for CARVYKTI. We continue to drive demand for and also supply of CARVYKTI since our approval in second line last year and also the expansion of manufacturing capacity. We have accelerated the growth, both in the U.S. and globally, with 88% year-over-year growth in the last quarter we reported, which is third quarter of 2024. We have also recently welcomed a new leader for our manufacturing and commercial areas, Alan Bash, who will singularly focus on maximizing the potential of CARVYKTI in 2025 and beyond. The U.S. market remains the primary area of focus for us, but we have been gradually expanding our presence in Europe as well as with the initiation of clinical and commercial production recently at our first facility in Ghent, Belgium. We're proud to have the most extensive life cycle management and also development program in cell therapy with more than 2,000 patients enrolled in the CARTITUDE clinical program. To that end, we have several early line studies, including CARTITUDE-2, which is a Phase II multi-cohort trial, and CARTITUDE-5 and also CARTITUDE-6 study in the frontline. These studies are well underway designed to generate new indications for CARVYKTI. We're looking forward to sharing data in the newly diagnosed setting, when the studies are complete. Notably, our CARTITUDE-5 trial, which is testing CARVYKTI versus standard of care in the setting of transplant-ineligible or transplant-deferred patients. We have already completed global enrollment last year. With our second-line approval recently, we have the opportunity to treat more than 100,000 patients. And we do see a tremendous opportunity to make a difference for more patients than ever, given we have only treated a small fraction of those patients to date. CARVYKTI can be administered in both inpatient and also outpatient setting because of its unique late onset of CRS. Physicians are able to utilize outpatient administration for CARVYKTI to support patient needs and also hospital infrastructure. Today, CARVYKTI is available in 97 authorized treatment centers in the United States. Outpatient setting represents approximately 48% of our volume in the third quarter compared to 30% almost a year ago. On this side, you will see our supply map. We have discussed our 4-nodes approach to the manufacturing. But as a reminder, CAR-T manufacturing is complex. We're pioneering and undertaking that has never been done in the treatment of multiple myeloma. If you look at this global supply map in the U.S., our main commercial facility is located in Raritan, New Jersey. That's where we have been manufacturing clinical supply since 2019. Our CMO, Novartis, began clinical production in the summer of 2024, New Jersey, and we expect commercial production to begin in the first half of this year, pending FDA approval. On the right side of the slide, we have initiated both clinical and commercial production at our first site called Obelisc in Ghent, Belgium, which is at the bottom. And we plan to begin production this year in another much larger greenfield facility called Tech Lane in the same city, Ghent, Belgium. Moving to this slide, you can see our upcoming milestones in expanding our manufacturing capacity. We continue to work towards doubling our commercial supply again this year versus what our supply was in 2024. We also expect FDA approval on the physical expansion of our facility in Raritan, New Jersey by end of this year. We're thrilled that we're having the most successful CAR-T launch to date, but we're working hard to bring CARVYKTI to all the potential patients who might benefit from its unprecedented efficacy and ease of administration. The studies we have underway and our manufacturing expansion will enable us to maximize the benefit of CARVYKTI. Beyond CARVYKTI, we're also leveraging our research and development capabilities in building next-generation CAR-T therapies. We look to use the successful model we have developed CARVYKTI and take it to other therapeutic areas where options are limited. We're leveraging our end-to-end R&D capability across 3 key areas. The first is on blood cancers and also next-generation multiple myeloma therapies, including allogeneic and in vivo CAR-T therapies. The second is on solid tumor indications, such as through our partnership with Novartis on the DLL3 program, which we will discuss shortly. And finally, we have also initiated Phase I study for our first autoimmune indication where CAR-Ts have not been approved, yet we do see significant commercial opportunities. I would like to also further highlight our end-to-end R&D capabilities I just talked about. First, we have a unique armoring strategy. For example, in our DLL3 program that's partnered with Novartis, we use a tandem binder design and an armor to improve the penetration of the CAR-T cells into the organ, in this case, the lungs, to overcome the immunosuppressive tumor microenvironment. Second, we have an excellent in-house antibody screening and engineering capability. That's exemplified by the structure of CARVYKTI. It took us 2 years and hundreds of constructs to screen before we started our first in-human study back in 2016. And finally, we have a diverse platform for allogeneic therapies, including alpha beta T cells, gamma delta T cells, and NK cells. As most of you know, we announced a partnership in November 2023 with Novartis to advance certain DLL3-targeted CAR-T therapies. We received $100 million upfront payment and are eligible to receive up to $1 billion in future milestone payments. Once the product is commercialized, we're eligible to receive tiered royalty payments from Novartis. Through this partnership, we're able to combine our best-in-class binder design and our knowledge of DLL3 biology with the T-Charge fast manufacturing technology developed by Novartis. Why is that important? The T-Charge manufacturing technology is particularly important in this indication for small cell lung cancer, which accounts for approximately 15% of all lung cancer diagnosis in this country. The standard frontline therapy is chemotherapy with a median progression-free survival in the neighborhood of 10 months. After the patient relapses from chemotherapy, it becomes a rapidly progressive disease. And that is why it's so important to use this fast manufacturing technology developed by Novartis for this indication. As it relates to the ongoing Phase I study for LB2102 we're running, we're actually actively treating and enrolling patients at 4 different clinical sites in the U.S. After Phase I, Novartis will take over, and they will conduct any further development, including manufacturing and future commercial activities. Turning to our next program in IND in the U.S., LB1908, which is an auto CAR-T targeting a protein called Claudin 18.2, and that's over-expressed in gastric, pancreatic and esophageal cancers. For the Phase I study, we are in active enrollment and treating patients at 6 different clinical sites in the U.S. We have a number of important milestones coming up, both for CARVYKTI and beyond. First of all, we are working to include the overall survival benefit in the label, which is the gold standard for all doctors. We're continuing to increase our manufacturing capacity in New Jersey and in Belgium as well as our CMO at Novartis to meet the increasing demand for CARVYKTI. And finally, we look forward to sharing data from CARTITUDE-5 studies, and we'll continue to enroll CARTITUDE-6 studies and advance our early-stage programs. In conclusion, CARVYKTI is the proven leader among CAR-T therapies in multiple myeloma forging the path of cure. We're committed to building upon the most successful CAR-T launch to date, and we look forward to executing our strategy to maximize the commercial opportunity for CARVYKTI and to providing you with updated data this year. With that, I just want to thank you for your attention. And Jessica, I'm sure you have questions for me.

Great. So last year marked the approval in second line for CARVYKTI. What is the next milestone for this franchise that's going to rival an event like that?

I think, first of all, like I mentioned in the prepared remarks, we're just scratching the surface for second line because if you look at the 3 major markets for CAR-T therapies, namely U.S., Western Europe and Japan, you're looking at about 100,000 patients per year. That's the patient flow or the addressable market for us. Yet we have treated, like I said so far, 4,500 patients to date in the last few years. So we believe that we'll continue to deepen our penetration into the community and also into the second-line setting. And to that end, we're very happy that right now, if you look at the revenue mix, approximately half of our incoming orders are from the CARTITUDE-4 indication, which is second to fourth line. And we believe that by end of this year, the majority of the patients who are treated with CARVYKTI in the U.S. will come from that early line indication. So that is a very important goal for the company and also for our partner at J&J.

Great. I feel like we've spent a lot of time over the past couple of years talking about manufacturing capacity. Can you take us through where Legend ended 2024 with from a capacity standpoint? What's the volume goal you expect to achieve by the end of 2025? And where could it go from there?

Sure. We continue to be in a so called supply-constrained situation. I can tell you that last year, overall, our utilization rate for the Raritan facility was 96%. And since May of last year, following the second line approval by the FDA, our plant has been running at 100% utilization. We don't even lose one single slot that's approved by the FDA in the last year. And we continue to see the situation here because there's a queue we're actually seeing in almost every step of the way because we're facing unprecedented demand from the early line and also the fifth line old indication. So our goal, in fact, that's what I think J&J and Legend talked about 2 years ago at this conference, remains to be the same, which is we'll achieve 10,000 doses per year capacity by end of this year. And I can tell you, at this point, we're solidly on track to deliver that. So maybe I'll give you a little bit of detail about how we get there. First of all, we're actually implementing the ongoing ramp-up recently that's approved by the FDA for the Raritan site. Secondly, we're done pretty much for the physical construction for expansion for Raritan, where we're planning to double the manufacturing square footage for the suites. And we're expecting FDA to approve our expansion to start commercial production by end of this year. So that's what's happening in Raritan site, which, by the way, is the world's largest cell therapy manufacturing site. And secondly, Novartis started clinical trial production in the summer of last year after FDA approval. Right now, we're awaiting FDA approval, again, for commercial license for Novartis to start commercial production for CARVYKTI. That should happen in the first half of this year. Once that happens, we're expecting a pretty meaningful boost in our capacity. And thirdly, for the Tech Lane greenfield facility in Belgium, we're expecting clinical production to start in this quarter, pending EMA approval. And then following that, we expect the commercial approval to be approved by the regulatory authorities by end of this year. That's how we go from where we are today to 10,000.

Great. You touched on this a little bit, but I wonder if we could spend a little more time here as you kind of shift to the patients being treated with CARVYKTI from the super, super late line to earlier lines. What proportion of patients by the end of '25 do you think will be in that kind of second line plus CARTITUDE-4 setting?

Yes. So we received FDA approval in April of last year. In the last 2 quarters, as we commented on the third quarter financial earnings call, we already saw nearly half of our incoming orders based on CARTITUDE-4 indication. That is actually a very pleasant surprise because we actually did not expect the uptake for second line to fourth line so quickly from the community and also from tertiary centers. So this year, we set a very aggressive goal that we believe at least 2/3 or maybe even 3/4 of our coming order by end of this year should come from early line, second to fourth line, because our competition strategy is always that we want to leapfrog our competition and also potential competition by getting into the second line as early as possible. So that is our goal. And I think at this point, based on the feedback from the field, we're pretty much on track to deliver that by end of this year.

Okay. You mentioned competition. Can you walk through why you think CARVYKTI should remain the market leader in BCMA CAR-T?

Yes, absolutely. I think we have a compelling argument here. Number one, CARVYKTI today is the only and first CAR-T that realized this significant benefit in improving survival versus standard of care in a randomized global Phase III study. And like I said in the prepared remarks, we and J&J are working hard to include that label in the U.S. and also in the FDA and EMA label by end of this year. So we will go out and be able to talk about the benefit of improving survival in this case. That is number one benefit. I think, again, we're not matched by any other therapies in the field today. And secondly, we're working hard to continue to increase our manufacturing capacity here. And like I said, by end of this year, we feel really confident that we will be able to deliver a total capacity in our 4 nodes at 10,000 doses per year. And lastly, which shouldn't be taken lightly, we have seen consistent benefit and also managed safety in more than 4,500 patients. So we feel really good about strength of our data and also the consistency in the performance of CARVYKTI.

I guess, while we're talking about kind of competitive positioning, when do you think your competitor could see their first case of Parkinsonism if they haven't already?

I would -- I'm not in the business of projecting what competition could achieve. But I do want to, again, since we're talking about the strength of our data, right, this table here summarizes the key Phase III data that was enabling FDA approval for all major drugs in the treatment of multiple myeloma, including CARVYKTI in CARTITUDE-4, ABECMA in KarMMa-3, and also those clinical trials in Phase III setting that enabled the approval from FDA for Pomalyst, Darzalex, [ from Pfizer ], Kyprolis. So these are all major Phase III trials. And you can see, hands-down, we have the best hazard ratio because in PFS compared to a 3-drug cocktail such as DVD -- DPd, which is a 3-drug cocktail of Darzalex, the #1 selling drug in myeloma, by the way, Pomalyst and dexamethasone, we were able to reduce the risk of progression of death by 71%. And then if you look at the right side of this, we're also able to show in the first analysis for survival, we hit the statistical significance and also a clinically meaningful result. We're able to show that compared to DPd, we can reduce the risk of death by 45%. And again, we have listed all the hazard ratios. You guys can parse out why we say CARVYKTI has the best in class. This is backed by data, not any hypothesis from any claim from potential competition. So we feel really good because I think even a patient who understands sixth-grade math would understand why he or she should choose CARVYKTI based on these numbers.

It sounds like part of the way this is going to become a really big drug is treating patients in the outpatient setting. Can you walk through what Legend and Johnson & Johnson are doing to help encourage more patients to be treated outpatient?

Yes. As you know, like I said, we only launched the drug back in the first quarter of 2022. We only received the second line label in April of last year. Within 2 quarters of second-line approval, we're seeing about up to 48% of our use in the outpatient setting. And J&J will report that quarter next week. And in our next earnings call, we'll talk about where we're actually seeing increasing use of outpatient use for CARVYKTI because of the unique late-onset CRS. So among all these 6 or 7 FDA-approved CAR-T brands, we're the only one that can claim this wide extensive use in the outpatient setting, which provides convenience for patients, which also achieves significant savings for the system.

I noticed in the competitor IMAgINE 1 data, it seems like some patients were also treated outpatient in that trial. So I guess, will CARVYKTI's delayed-onset CRS enabling outpatient treatment remain a competitive edge?

Yes, absolutely. Because if you look at the data set, it's in fewer than 100 patients with a relatively short follow-up. They have 6 or 8 patients who have been treated in the outpatient setting. Like I mentioned, we have treated more than 4,500 patients, and we have nearly half of the use already today in a real-world setting, in a commercial setting, that is administered in outpatient setting. So in terms of what we're doing to support that use, A, we are educating centers and also community-based physicians the product on how to use CARVYKTI in the outpatient setting. And secondly, because of the wealth of the experience we have in both clinical trials and CARTITUDE program and also in real-world setting, we're able to show them, hey, you really can do this. In fact, there are centers such as Johns Hopkins University Hospital or Sarah Cannon Hospital, they use only CARVYKTI in the BCMA CAR-T setting, and they only use it in 100% outpatient setting. That proves to you that clearly, that is something you can do rather than from 6 or 8 patients.

There is this considerable investor focus on neurotox and especially Parkinsonism. How does that factor into CARVYKTI's competitive positioning relative to [ immuno-cel ]?

We believe any potential competition is a me-too drug, and there's no differentiation in the safety profile. And let me walk you through the data, right? So in CARTITUDE-1, when we conducted the trial in 2019, we and our partner, J&J, did not know anything about this delayed neurotox. And the reason is because among the 74 patients we treated in Phase I, we did not observe any delayed neurotox or Parkinsonism. So when we reported data from CARTITUDE-1 at ASH 2020, we did see 5 cases of Parkinsonism. And then later, I think in the label, you see that there's additional case. That case happened on day 914, nearly 3 years after infusion of CAR-T. Based on these findings, we and J&J immediately started to look at the root cause, and we found out a couple of risk factors. One is high tumor burden at baseline because as you can imagine, if a patient is heavily pretreated, they come in with a very high tumor burden. Typically, the definition for that in clinic is that if you do a bone marrow biopsy, you will see 50% or 60% or even higher proportion of cancer cells in the bone marrow. So in that case, you do see a very fast and also very high peak T cell expansion, which correspond -- correlate to both CRS and neurotox. So there's a simple fix there. We ask the site to use effective bridging therapy, so you can reduce the tumor burden. Therefore, you can reduce the peak T cell expansion and also the Cmax there. And when that happens, you will see less delayed neurotox. Second correlation is high-grade CRS. So in our first protocol, we only recommended IL-6 or steroid use when the patient presented with grade 2 CRS. However, if you look at our competition, they actually started this management that whenever you see the first sign of CRS. So after we instituted those 2 risk mitigations in the CARTITUDE-4 trial, you can see that we dosed more than 200 patients. We only observed one case, a very mild grade 1, so 0.6% Parkinsonism. And then in the label, you see there's another case because there's one patient who actually progressed while we're manufacturing. So in this case, because the patient has progressive disease, you're not supposed to use CAR-T. We all know that. But unfortunately, the physician decided to use CAR-T because the patient has been progressing. So we did see another case. But again, in this case, it's a grade 2 downgraded to grade 1. So overall, in the label, you can see it is less than 1%, and it's all grade 1 mild case of Parkinsonism. So I believe with the more use of CARVYKTI in the second line, you will see a pretty significant decrease in the Parkinsonism. I think the latest finding is that we also have in-house biomarker data that showed that there's a direct correlation between ALC, absolute lymphocyte count, with this type of delayed neurotox. If you can manage that between day 7 and day 14, when you see peak expansion, then you can actually pretty much prevent this. In fact, we believe that in the next month or so, you will see a publication at a medical meeting to show from a single center where they institute this ALC biomarker protocol, where they will treat patients with about 3-day tapering course of dexamethasone. Before and after, you do see a pretty significant decrease in this type of delayed neurotox. So we think we found the root cause and also we found the solution. In fact, multiple clinical centers are doing this today, and that's why we feel really confident about the safety profile here.

Okay. How should we think about revenue growth in Europe and other ex-U.S. regions?

Yes. You probably would see that in the last year also, our revenue coming from ex U.S. accounts for 10% or less. That is not a reflection of the demand. In fact, that is actually our decision to allocate because we launched first in the U.S. and the U.S. remains our primary area of focus of commercialization. That is why. But with our new supply coming out from our first facility in Ghent and also by end of this year, another much larger facility, we do expect that over the year and also next year, you will start to see more contribution from ex U.S., especially European markets. And we do have plans to launch up to 15 markets this year outside of the U.S.

Just a question on the bridging therapy. In CARTITUDE-4, did you lose anything in that process? I wanted to follow up on the bridging therapy in CARTITUDE-4. The question is did you lose anything by instituting bridging therapy? I'm specifically referring to in the briefing document for a second and third line. There was an initial mortality signal. I think it lasted for maybe 6 or 8 months. There were about 5 questions in the briefing document with a number of charts. I know you answered it appropriately and you got approved. But I'm curious what your answers were. And does that affect the launch at all?