Legend Biotech Corporation (LEGN) Q1 2025 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Legend Biotech’s First Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Caroline Paul, Associate Director of Investor Relations. Please go ahead.

Good morning. This is Caroline Paul, Associate Director of Investor Relations at Legend Biotech. Thank you for joining our conference call today to review our first quarter of 2025 performance. Prior to this call, we issued a press release announcing our financial results for the quarter. You can find the press release on our IR website at legendbiotech.com. Joining me on today's call are Ying Huang, the company's Chief Executive Officer; Alan Bash, the company’s President of CARVYKTI; and Jessie Yeung, the company's Interim Chief Financial Officer. Following the prepared remarks, we will open up the call for Q&A. We have our President of R&D Guowei Fang; and Chief Medical Officer, Mythili Koneru, joining the Q&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 Investors section of our company website. In addition, adjusted net loss is a non-IFRS metric. This non-IFRS financial measure is in addition to, and not a substitute for, or superior to measures of financial performance prepared in accordance with IFRS. There are a number of limitations related to the use of these non-IFRS financial measures versus their closest IFRS equivalents. However, we believe that providing information concerning adjusted net loss and adjusted net loss per share enhances an investor's understanding of our financial performance. We use adjusted net loss as a performance metric that guides management in its operation of and planning for the future of the business. We believe that adjusted net loss provides a useful measure of our operating performance from period-to-period by excluding certain items that we believe are not representative of our core business. Our press release includes IFRS to non-IFRS reconciliations for these measures. With that, I will now turn the call over to Ying.

Hello, everyone. Thank you for joining us today. During the first quarter we continued executing on our strategic priorities by increasing the number of global ATCs and patients treated with CARVYKTI in partnership with J&J, delivering operational efficiency and making continued investments. We continue to anticipate achieving operational breakeven for CARVYKTI by the end of 2025 and company-wide profitability in 2026, excluding unrealized foreign exchange gains or losses. Regarding CARVYKTI performance during the first quarter, net trade sales were approximately $369 million, which is a 135% increase year-over-year. We have now treated over 6,000 patients with CARVYKTI and our CARVYKTI launch remains the strongest CAR-T launch to date. In the U.S. more than half of our utilization is now in the earlier line setting. In a recent 50 respondent survey, after presenting CARTITUDE-4 data to 86% of physicians from the community setting, preference for CARVYKTI in early line multiple myeloma rose from 34% to 55%. On this note, we're very pleased that overall survival was added to CARVYKTI’s EMA label based on the CHMP positive opinion of data from CARTITUDE-4. We're also pleased that Australia's regulator has now approved CARVYKTI in the second line plus setting. We're looking forward to bringing CARVYKTI to more patients outside the U.S., who might benefit from its differentiated efficacy. CARVYKTI’s unique profile continues to be demonstrated through extensive data and we continue to facilitate best practice sharing as we treat more and more patients and generate additional safety data. For example, we have already incorporated additional safety measures in our ongoing CARTITUDE programs and new data is constantly being generated about CARVYKTI’s benefit versus risk profile. As a result of the posters presented at Tandem meeting and given that patients are already doing routine bloodwork, the majority of centers administering CARVYKTI have implemented monitoring for absolute lymphocyte count followed by dexamethasone intervention as needed. We'll continue highlighting new safety data to the oncology community as it is reported. On the clinical front for CARVYKTI, we continue to expect to complete enrollment for CARTITUDE-6 this year. We believe the CARTITUDE-5 and 6 trials are key to moving CARVYKTI into the frontline setting. Looking at long-term growth for Legend in addition to moving CARVYKTI into the frontline, we remain focused on building out our pipeline programs. As part of our mission to serve more patients around the world through innovative cell therapies, we’re investing in research and development where we can bring to bear our industry leading expertise to drive the advancement of innovative new assets. This includes in vivo CAR-T delivery, which we believe represents an important opportunity to strengthen our cell therapy leadership. We are excited about the new research facility currently being built in Philadelphia where in vivo delivery will be one of its key focuses, positioning us well to pursue this area of innovation with the right infrastructure and resources. We believe this next generation approach to off the shelf therapy holds a lot of promise for incurable diseases. By reprogramming immune cells directly in the body through direct infusion, the need for ex-vivo cell engineering and manufacturing is eliminated. No lymphodepletion apheresis are necessary for in vivo delivery, enabling even more scalable manufacturing. We're excited to be embarking on this next frontier of cell therapy innovation and we look forward to providing additional updates as we make progress on this front. Turning to our upcoming anticipated company milestones, we anticipate growth to be driven by capacity expansion in Belgium and in New Jersey, which Alan will detail in just a moment. In addition to increasing our manufacturing capacity, we continue to work toward the overall survival benefit being included in the U.S. label now that it's already in the European label. To sum up, regardless of the current macroeconomic uncertainties, Legend endures as the largest standalone cell therapy company with over 6,000 patients treated by CARVYKTI as we forged a path to cure. With a cash position of approximately $1 billion, we are investing in our core differentiators and remain focused on delivering operational efficiency in order to ensure durable long-term growth. With that, I'll pass it over to Alan to provide an update on CARVYKTI.

Thanks Ying. Moving on to CARVYKTI's performance, as Ying mentioned, net trade sales of CARVYKTI were approximately $369 million, which is a 135% increase year-over-year and a 10% increase from the fourth quarter. Our global growth was driven by continued share gains and capacity expansion. U.S. net trade sales of $318 million grew 127% year-over-year and 5% quarter-over-quarter. In the U.S. we continue to certify more hospitals as authorized treatment centers and the total number of U.S. hospitals that are certified to treat with the CARVYKTI is now 114. We remain pleased with the progress we have made in the outpatient setting and continue to anticipate that a majority of our volume will be coming from outpatient use by the end of this year. Regarding OUS performance, which was notably strong, we had sales of $51 million, which is more than double compared to the same period a year ago and represents a 65% increase quarter-over-quarter. Our OUS performance was driven by expansion in Germany, Switzerland, Austria and Brazil and we are pleased to be bringing CARVYKTI to more eligible patients in Spain, the UK, Denmark, Belgium and Israel where we recently launched. To this end, we're excited to share that Tech Lane initiated clinical production in Ghent during the first quarter and remains on track to initiate commercial production there later this year. This is another critical component of our plans for serving patients in Europe to meet the increasing demand and to meet additional demand in the United States, we expect to receive approval for our physical expansion in Raritan in the second half of the year. The progress we've made in executing our manufacturing plan and investments has enabled us to be among the best-in-class. We now have a 97% manufacturing success rate, which we believe is the highest in the CAR-T industry. 95% of the time we deliver CARVYKTI on or before the promised delivery date and our median turnaround time has been consistently declining and now stands at 30 days. We believe this turnaround time is more than sufficient based on our conversations with physicians. As physicians place their orders, they are mindful that bridging therapy on alone takes multiple weeks for a number of patients. Going forward, we expect to continue to reduce out of spec rates and increase our efficiency and expect further declines in our turnaround time. Now it's time to take a closer look at the financials, so I will turn the call over to Jessie.

Thank you, Alan and good morning everyone. During the first quarter we delivered solid financial results with CARVYKTI net sales up 135% year-over-year. Total revenues were $195 million, driven by collaboration revenue growth of 137% year-over-year. Q1 delivered a $101 million net loss and a $27 million adjusted net loss after excluding items that are not representative of the company's core business, such as a $52 million unrealized foreign exchange loss due to our treasury center based in Ireland. Importantly, our operating loss of $118 million in the same period one year ago was reduced by over half to an operating loss of $51 million. The meaningful improvement in operating results was driven by our operational inefficiency and disciplined expense management. Even though we continue to invest in a robust pipeline and supporting the second line indication launch as well as our manufacturing capacity, our first quarter gross margin on net product sales was 63%, improving from 59% in Q4. As expected, R&D expense on an IFRS basis grew only 1% year-over-year and SG&A on an IFRS basis only grew 29% from the prior year to $72 million. Overall, we believe we have been making strides toward positive operating cash flow generation and profitability. Our adjusted diluted earnings per share were negative $0.07 compared to negative $0.23 for the same period last year. Now, turning to capital allocation, we continue to have a strong balance sheet with $1 billion in cash and equivalents and time deposits. We believe this is a competitive advantage for us in our industry and we will continue to prioritize disciplined expense management as we fund our operating and capital expenditures, including future innovation, until we achieve profitability, which we anticipate in 2026, excluding unrealized foreign exchange gains or losses. In summary, our first quarter results demonstrate the durability of our standalone cell therapy platform. We are pleased with our performance and the advancements of many impactful initiatives along with increasing operational efficiency in 2025. And now it's time to take your questions. Operator, we are ready for the first question, please.

Thank you. [Operator Instructions] And our first question comes from the line of Gena Wang of Barclays. Your line is now open.

Thank you for taking my questions. I have three quick questions. First one is regarding the CARVYKTI price differences between U.S. and ex-U.S. if you can give any color there? And the second is regarding the new Raritan section approval in second half 2025, would you be able to walk us through the steps you need FDA sign off and any concern on FDA on-time execution? And lastly, very quickly, I know you have multiple pipeline assets. Just give us a rough idea when shall we see which program first in the coming years or 2025 we will see additional data?

Hi Gena, it's Alan. The price differential between the U.S. and ex-U.S. is approximately 30%. Obviously varies country to country. In terms of the Raritan approval in the second half, we're confident that we will be able to achieve the approval from FDA in terms of capacity expansion and that is based on the filings with them and the CB30 with that process.

So in terms of pipeline our focus are on two different technology platform in vivo cell therapy platform for oncology indication and alligeneratic cell platform for autoimmune disease. We are looking forward to multiple clinical readout later this year. For the in vivo CAR-T platform we expect to have first patient dose in an investigator initiated study in June or July and expect to have preliminary clinical result towards the end of this year. On the alloplatform side we expect to have clinical readout in the second half of this year, again through investigating this study. Autoimmune, currently we are running some IIT trial in China using triple targeting autologous cell therapy product targeting CD19, CD23, CD22 try to drive a deeper response and we also expect to have clinical results in the later part of the year. Lastly on U.S. side we have two ongoing Phase 1 program targeting Claudin 18.2 for gastric cancer and DLL3 for small cell lung cancer. Again we are reading out of the Phase 1 dose escalation data for both programs.

Yes, I can expand on that a little bit. For the DLL3 program we have an oral presentation at ASGCT next week and both the DLL3 programs and the Claudin 18.2 programs have ASCO posters that you may have seen from the titles that were released back in April.

Hi Gena, this is Ying. Maybe I'll supplement the answers by pointing out two things. First of all, I know you guys are looking at the price difference, right? So you're pretty much aware that in the United States there are three types of customers that we pay a mandatory federal required rebates. So it's Medicaid 340B hospitals and also VA hospitals. Right? We provided 23.1% rebate to those customers from the list price. And this is why we don't see a really significant difference between the Euro price and those types of customer in the U.S. So we don't see a big impact regarding some of the proposals from the administration here. And then on FDA approval, I know people are concerned that you're seeing some staff reduction in the Agency, but based on our current interaction with FDA on expansion at Raritan, like Alan mentioned, FDA agreed that we'll use the so called CBE-30 pathway. That is once we and J&J file the application in writing. Within 30 days, if we don't hear from the Agency it's deemed approval or if there's any request during that 30-day we can answer then again we don't expect any delays here. So we fully expect the on-time approval from FDA for the fiscal expansion for Raritan and right now we're still on track to achieve that by end of this year.

Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Jessica Fye of JPMorgan. Your line is now open.

Hey, guys, good morning. Thanks for taking my question. I was wondering if you could just take a minute to kind of make the case to investors that CARVYKTI will successfully penetrate the community? And the reason I ask is, one pushback we hear from investors is that when they do KOL calls, so, you know, with key centers, the physicians indicate they don't have a backlog. And thus I think some investors come away thinking that demand is largely satisfied and there's limited growth ahead. So just hoping you can spend a minute on kind of making the case about why you have conviction this product can get into the community. Thank you.

Based on many of the discussions we've had both with the KOLs in the authorized treatment centers as well as physicians out in the community, there is a high demand for providing CARVYKTI as an option for patients in earlier lines. And what we hear is that the benefits based on the profile of extending survival and extending long-term remission to these patients is very attractive. And there are obviously, as you know, the majority, nearly 80% of the patients out there in the community. What we have done is, and based on the feedback we've received is we've increased our investment and efforts along with J&J in terms of educating the community, going out and reaching all the major community sites and we're in the process of doing that. And not only raising awareness, there's already high awareness of CARVYKTI as an option, but actually where we see more opportunity is to raise awareness and increase that call to action in terms of referring patients into the authorized treatment centers. The second thing we're doing is we are connecting the experts in the authorized treatment centers with the experts out in the community. And this is getting a lot of great traction, a lot of increased dialogue, a lot of really good opportunities for those referrals to happen. And then thirdly, we are explaining to the community that those patients are going to be coming back to them and we are building a platform around transition of support so that those patients actually will need to get back to their community physician for ongoing monitoring, other health checks, and so that the committee understands that they will not be losing those patients. So the profile of the product, the outpatient administration, the overall survival benefit, the unique differentiated benefit, these are all things that we see gaining traction in the community.

And Jess, this is Ying. Maybe I'll just add one more point to Alan's comments. So we will present some long-term data at ASCO. In fact, you will see the abstract coming out next week and we and J&J are extremely, extremely pleased with the results and we think this will be actually another impetus for the community to take up [indiscernible] second line given the unprecedented benefit. Also, I'm happy to report that our overall survival result was just added officially into the label in Europe following the positive CHMP opinion already. So again, in both the U.S. market and European markets, we will be able to promote on the merit of overall survival and also the significant result from CAR 4 that demonstrates both clinically meaningful and also statistically significant superiority in survival over standard of care. So that will help the community uptake.

Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Yaron Werber of TD Cowen. Your line is now open.

Great. Thanks so much. I have two quick questions. Number one, in terms of capacity for Q2, now that Obelisc is online and continuing to sort of, you’re pushing volume through it, should we expect -- can you give us a sense sort of, we’re expecting obviously a step up in, in terms of quarter by quarter growth over Q1, but is that going to be more European centric than U.S.? And then secondly, it sounds like you do not need to get the new Raritan facility inspected, the new expansion, can you just confirm that? Thank you.

Yes, so in terms of Obelisc, you're absolutely right. It came online in September of last year and it is now delivering for Europe. So we do expect that that will continue to improve our ability to supply Europe. And we do expect modest growth in Q2 with more sequential growth and acceleration in the back half of the year, supported by not only Obelisc, but also the U.S. capacity expansions as we've outlined previously, with Raritan as well as Novartis coming online in the first half of this year. In terms of the Raritan physical plant expansion as Ying described, at this point we do not expect that there will be required any inspections relative to that CB30 process and the approval there.

Thank you. One moment for our next question. And our next question comes from line of Kostas Biliouris of BMO Capital Markets. Your line is now open.

Good morning everyone. Thanks for taking our question. Can you remind us please, what is the difference between high risk patients and functional high risk patients? What is the percentage of functional high risk patients in multiple myeloma and what percentage of the patients treated with CARVYKTI early lines correspond to functional high risk patients? Thank you.

Sure. When we refer to high risk patients, we are referring to patients with certain cytogenetic factors, whereas the definition of functional high risk is more related to the concept that they progress quickly after sort of a frontline setting. So it's more of related to how the patients respond to a particular therapy. In Terms of the CARTITUDE-4 study, as the abstract titles show for ASCO, we will be having data coming out on the subgroup analysis on these various patients in CARTITUDE-4. But in general, CARTITUDE-4 has shown very strong both PFS and OS in the population in these early lines of patients. So we feel confident that both of these populations, both high risk and functional high risk, do very well with Cilta-cel administration.

And in terms of CARVYKTI uptake in early lines, what dynamics do you see there with functional high risk patients? Is this a high percentage of such patients in the uptake that you see in early lines?

Yes, I think in the early lines, namely the second through fourth line, we do see that where physicians tend to start are in these categories that Mythili just described, the functional high risk and the high risk patients. That's a natural place for them to begin to think about CARVYKTI as an option. But we've also in our conversations, heard that many physicians, once they've gotten comfortable there and they have started to use it in that population, will then expand. So I think to your point, this is a progression from utilizing CARVYKTI in the early lines for the patients who are either fast progressors or have the high cytogenetic risk and then moving on from there.

Thank you.

Thank you. One moment for our next question. And our next question comes from the line of Kelly Shi of Jefferies. Your line is now open.

Hi, good morning. This is Claro [ph] on for Kelly. Thanks for taking our questions. So you just initiated CARVYKTI clinical production at the Tech Lane facilities. So just wondering if you can give us a little bit more color about the manufacturing expansion moving forward. And also just want to quickly touch upon the in vivo CAR-T initiative you mentioned, wondering where do you see the differentiators might land in this novel space? Thank you.

Yes, as you mentioned, we achieved approval for the clinical production and began that in Tech Lane and that sets us up well for the ability to start commercial production in Tech Lane by the end of this year and we're on track for that. So between Tech Lane and the Obelisc facility, which is already approved in commercial, we are quite significantly ramping there to support the European launches. And just to remind you, the European launches are across Germany, Switzerland, Austria, Denmark and then throughout the world. We have the UK in private market, Israel in private market, and Brazil as well. And as you saw from the release, Australia is now achieving approval. Reimbursement and launch will come later. Just to add to the two facilities again, as we've already mentioned, we've talked about that we’re in expansion and the Novartis commercial production which started the first part of this year in January, is also starting to meaningfully contribute in Q2 here and then Q3 and beyond. In addition, let me just mention because we have talked about the fact that there is an investment in Tech Lane that the companies have jointly approved and so that speaks to the additional capacity that we plan to build in Tech Lane to the tune of $150 million jointly by the collaboration.

So in terms of in vivo CAR-T approach, this is a platform where we use molecular engineering nanivirus [ph] that can specifically recognize the immune cell in this case T cell in the body of patient. At the same time, we also engineer virus to reduce the generic or nonspecific transduction to normal tissue and we are expecting the first patient dosing in June and July this year. In terms of advantage of in vivo CAR-T compared to conventional ex vivo manufactured cell therapy, there are a few key areas. One is those T cell recognized engineered in the body of patient and therefore in general it has better cell phenotype based on our preclinical data [indiscernible] issues. Second it is completely off shelf without the need for depletion. So there's no delay in terms of administrative therapy and no lymphoid [ph] depletion also provide additional safety benefit to the patient. Lastly, it's a scalable manufacture due to the nature of lentivirus being the drug product. So those are the few key areas.

Thank you. One moment for our next question. And our next question comes from the line of Jon Miller of Evercore ISI. Your line is now open.

Hi guys, thanks so much for taking the question. A couple of clarifications if I may start with those. I know you already spoke about the general price difference U.S. versus ex-U.S., but what's the price delta between the U.S. and the lowest cost anywhere else in the world? Not just the average difference A and secondly B you talked a little bit about penetrating the community Ying, but most of the stuff that you were talking about is how to get referrals into academic centers. I know you've also talked about getting actual CAR-T infusion into select community centers this year. Can you give us an update on how that process is going and how rapidly you expect to be able to deliver CAR-T in the community itself? And then maybe lastly on those in vivo CAR-T differentiators that you just spoke of, that makes sense relative to an ex-vivo CAR-T. But how do you feel differentiated for your approach in vivo space relative to other in vivo players who are also working on similar lenti based approaches? Thank you.

This is Alan. I don't think we'll be commenting on the specific lowest price, but I do want to just remind you that we have a band, a pricing band that J&J, given their pricing policy, does adhere to. So we don't go below that price. And that's supported basically based on the costs and other factors, obviously speaking to the value of CARVYKTI in the marketplace as well. So there is a price ban there. You're absolutely right that I was speaking to the penetrating of the community in terms of referral base. But to add to that, we are also in active discussions around having CARVYKTI closer to the patient and administered in the community setting. We have several, I would say sort of demonstration projects and initial plans with certain community centers this year in the works. Nothing to announce as of yet, but we do expect that this year we'll have at least one, if not two or more community, large community networks starting to administer CARVYKTI in some of their centers. And then the third leg of that journey, if you will, is actually bringing it to even more sites around the country and having CARVYKTI adopted in the community setting as well. So we are on that journey, starting with some centers this year.

Yes. Getting to your second question. In terms of differentiation of our in vivo approach versus our peer group's approach across the industry. This is a novel platform and rapidly evolving. We began to invest in this platform two years ago. We think that there are probably four or five areas of key differentiation that we actually set up from the get go. One is on the T-cell recognition mechanism. So there are many different ways to recognize T-cell and then induce the transduction. We are testing multiple mechanism of T-cell recognition and to drive the construction efficiency as well as to control the safety signal. Those approach we invested well play out in the clinical setting. The second area of differentiation is really about the engineering of lentivirus reducing generic transduction capacity of virus. design: So I think that's a key area that can drive the differentiation and the activity of in vivo CAR-T. The fourth area is another area we have a tremendous expertise coming from CARVYKTIs experience, I.e. the CMC, the process development, process robustness and ability to scale up. From the get go, our goal is to optimize the CMC process so that we can not only supported initial IST trial, but also have ability to further develop down the road. And then last area, the fifth area of differentiation we focus on is really the execution of for clinical validation for those platforms. We have end to end capacity in clinical development on the ground in China. We can execute the IST trial very efficiently. Our first development candidate for in vivo platform was selected last December and six months later we are looking forward to first patient dosing. So let's speak to the speed and efficiency of our clinical development process. All those, I think will bring value to our in vivo plan.

Thank you. One moment for our next question. And our next question comes from the line of Leonid Timashev of RBC. Your line is now open.

Hey, thanks guys. Thanks for taking my question. I wondered if you could talk a bit more about the community referral process. I guess, I'm wondering how much brand awareness and stickiness actually is there in the community for CARVYKTI specifically versus that decision being made at other centers. I guess effectively are you laying the groundwork for CARVYKTI or for all CAR-T's including I guess future and current competitors? And then related to that, I guess what's the messaging from you and your partner in the community, given that your commercialization partner also has bispecific offerings which are pretty popular in the community. Thanks.

Yes, there's growing awareness of CAR-T and specifically CARVYKTI in the community. We estimate, we do some surveys that about 70% of community oncologists are aware of CARVYKTI, where we see more opportunity is actually to get them to kind of go from awareness to action based on the earlier line approval of the CARTITUDE-4 population. But we are certainly laying the groundwork for that in the ways that I described earlier in terms of strong education through our field teams, through medical education, through connecting the experts at the treatment centers to the community and making sure that the community understands that they will be getting their patients back for a transition of support and monitoring and ongoing care. In terms of, I think that was the answer on that. Oh, the messaging with the partner. Yes. So we and our partners are very committed to the fact that cell therapy, specifically BCMA CAR-T is the very best option for patients in terms of earlier lines. We have the overall survival data. We have the durability. And the IMWG recommendations are very clear that for patients who are eligible for both, bispecifics and CAR-T should really be evaluated for CAR-T first. And that's based on the clinical profile. J&J is committed to this. And I should just remind you that we have our own teams out in the field, our own sales teams dedicated to CARVYKTI, both on the J&J side and on the Legend side making this case.

Thank you. One moment for our next question. And our next question comes from line of Vikram Purohit of Morgan Stanley. Your line is now open.

Hi, good morning. Thank you for taking our questions. We had two. So first, could you just kind of walk us through your initial thoughts on the recently appointed leadership at CBER and what you see as the potential implications and key considerations here that we should keep in mind for the CARVYKTI development program. And then secondly, related to an earlier question, could you remind us what portion of CARVYKTI use is currently in the CARTITUDE-4 population and where do you see that trending over, say, the course of the next year? Thank you.

Just to answer your second question first, we see that nearly 60% of our patients, and this is based on our ordering system, nearly 60% are coming from that CARTITUDE-4 population. We expect that to continue to evolve in that direction and get to about three quarters either by the end of this year or certainly before our competitor in this space is launched. So again, as they get into the market in a later line population, we will have significantly evolved our business into the earlier lines.

Hey, Vikram. So I'll answer the question about the new CBER leadership at FDA. So, we're happy to see that Dr. Prasad has been appointed the Director of CBER, which regulates all the cell and gene therapy approvals. First of all, we agree with Dr. Prasad's point that in any cancer trial you should use GO standard of survival benefit. And to that end, we're happy to report that, first of all, we will report long-term, minimum five-year follow-up from CARTITUDE-1, and you guys will see the data at ASCO. In fact, the abstract is coming out next week. So you will see the unprecedented benefit we bring to this population and that is survival, which is a hard endpoint. Right? Secondly, I think if you look at the history of CARVYKTI approval, we did secure FDA approval back in February of 2022 based on the primary endpoint of overall response rate. However, when we started the trial back in 2018, 2019, these patients have exhausted all the available therapy to them. So it represents a very significant unmet medical need by then. Today, of course you can argue things are different because you have two BCMA targeting CAR-T available as commercial therapy and three soon to be four antibodies again indicated for myeloma. So it's very different. But since we conducted that CARTITUDE-1, we have demonstrated the survival benefit. We have demonstrated the PFS, which is nearly three years from historically about four to five months in this patient population. So that is the hard evidence we demonstrated. And then thirdly, we also secured both FDA and also EMA approval based on PFS endpoint. However, in September of last year, we demonstrated again clinically meaningful and also statistically significant benefit in survival with a hazard ratio of 0.55, which means 45% improvement in survival from standard of care. So we think CARVYKTI comes with a very, very strong benefit in terms of clinical outcome, which survival. And then that's also accompanied by the surrogate endpoints such as PFS and overall response rate. Right? That is why Legend and also J&J stands by the best-in-class profile CARVYKTI. So we welcome Dr. Prasad as the CBER leadership because we have clearly demonstrated the survival benefit here. Now, I know there are questions from investors about MRD negativity. So we think that, given the support from ODAC last year, using MRD as a surrogate endpoint, we plan to sit down with the FDA to explore the possibility of using MRD activity as a potential endpoint for accelerated approval. We think this is a good setting in the first-line setting because as you know, today if a newly diagnosed multiple myeloma patient is treated, expect survival is probably over five to seven years. Therefore, in this setting, a surrogate endpoint makes perfect sense. Now, in last line or even second line, if you look at our data from CAR-4, right, the standard for care had a PFS of shorter than one year. So in that setting, we're not sure whether a surrogate endpoint makes sense or not under the leadership of Dr. Prasad. As I mentioned again, we agree that in oncology settings survival should be the gold standard. And we're happy to report that CARVYKTI does bring that lifesaving benefit to patients.

Great. Thanks so much.

Thank you. One moment for our next question. Our next question comes from the line of James Shin of DB. Your line is now open.

Hey, good morning guys. Thank you for taking our question. I want to kind of piggyback on the Dr. Prasad question. I know base case for CARTITUDE-6 is to lean on PFS and it sounds like you have engaged on possibly exploring MRD, but any thoughts on competitors or the utilization of percentage of patients completing 12 months of follow-up? And then for Alan, what is the status on I believe there was an industry coalition for lowering community-based CAR-T accreditation. Is that I guess call it a bottleneck for community adoption right now? Thank you.

Regarding your first question, unfortunately as we do not comment on competitors. I can't say what they are doing. We're confident about our approach and discussions that we will be having with the FDA on our CARTITUDE-6 study.

Yes, the industry discussions around providing some sort of sort of fact light accreditation are ongoing. There are some centers we are in discussions with that and they are affiliated with the larger academic centers around the country. So that I would say is in process and that should potentially unlock some of the opportunity in the community as well.

In addition, just to add to the CARTITUDE-6 as I mentioned, we have a clear plan to have conversations with the FDA and we intend on meeting with them in about two-month time frame.

Thank you. One moment for our next question. And our next question comes from the line of Mitchell Kapoor of H.C. Wainright. Your line is now open.

Hey everyone, thanks for taking the questions. Wanted to ask one about outpatient volume. I think last quarter you had mentioned that it comprised over half of all volume for CARVYKTI. Can you quantify that trend now and just give us a little bit of the direction of where that is heading? And then secondly, can you talk through your assumptions and pipeline efforts for cash runway through second quarter of 2026? Would you need to seek some avenues of non-dilutive capital to bridge yourself well into profitability? Or do you think that maybe there's some other opportunities you might see.

In terms of outpatient volume? We see that growing steadily and but slowly also because as new centers come on, sometimes they start in the inpatient. So our latest claims data continues to show that it's a little over half. We do see growth each quarter, but it's kind of in the single digit percentage points. I expect that over time we will continue to see continued move to the outpatient setting. Again, this might be center specific or it might be patient specific, depending on the patient characteristics. But I would say we probably get into kind of the two-thirds, one-third outpatient versus inpatient over time with the treatment centers that we have now and the ones that will be coming on board in the future.

And Mitchell, as you know we have many reasons to be optimistic about Legend's future and we are the market leader with the fastest launch in the CAR-T space and we continue to expect CARVYKTI will breakeven operationally by the end of 2025. And we anticipate profitability in 2026 excluding fluctuations. We have $1 billion of cash on hand and that will reach profitability when we that will last to 2026. So we don't have any present needs to raise capital and we have a joint investment with J&J on CapEx for $150 million that will last through 2028 for the Tech Lane Phase 2 expansion and that is included in our cash runway. Thank you.

Great. Thank you guys.

Thank you. One moment for our next question. Our next question comes online of Jeet Mukherjee of BTIG. Your line is now open.

Great. Thanks for taking my questions. Just two from me. First, coming back to integrating CAR-T therapy into the community setting. When it comes to the tertiary and regional centers, what are the biggest infrastructure hurdles for them currently and what are you doing to facilitate this? And second, on the DLL-3 and Claudin 18.2 data sets we're expecting will the data be as part of the conference abstracts or will they perhaps be saved for the conference presentations themselves? Thank you.

In terms of infrastructure, certainly capacity and chair space and staff are some of the factors that we look at. But again, speaking to the prior question around outpatient, we do see that over half of our patients are getting CARVYKTI in the outpatient setting. And that's based on a couple of factors, one of which importantly is our profile around the time of onset for CRS. And that gives the centers confidence to safely infuse it in the community and then monitor patients. And that opportunity for outpatient is one of the ways that we overcome some of the infrastructure hurdles there. One of the other infrastructure hurdles that we are monitoring and we keep a close conversation on with our centers is any capacity limits in terms of pickups in apheresis and cryopreservation. Again, there are multiple ways that centers around the country are addressing this, including use of third-party suppliers for apheresis pickup as well as cryopreservation. And we're engaging those companies to help make sure that those infrastructure hurdles are not a limit to patients getting apheresis.

Regarding DLL-3 and Claudin 18.2 as I mentioned, DLL-3 will have an oral presentation at ASGCT next week regarding the ASCO abstracts. There will be key data from the dose escalation in both studies that will be available next week when the abstracts are released and look forward to providing more details at the conference itself.

Thank you. One moment for our next question. And our next question comes from the line of Ash Verma of UBS. Your line is now open.

Yes, thanks for taking our questions. So maybe just on CARVYKTI. So I know you've talked about second quarter as a step up since the Novartis supply comes online. Is that a step up more of the magnitude what we saw in the third quarter of last year which was pretty robust sequential growth quarter for you and then secondly, any thoughts you can share on the potential upcoming clinical data from Arcellx? We saw 98 patients of data at the ASH conference and presumably now getting 19 additional patients with more than two months of follow-up. Do you think that there can be any non ICANS neurotox that can show up in the upcoming update? Thanks.

The step up for Novartis is now starting to contribute to our capacity expansion towards our goal of 10,000 doses by the end of this year and we feel very confident with that target of providing the ability to supply 10,000 annualized patient doses. In terms of size of the step ups and size of growth, I think we're projecting that Q2 will be another modest step up in terms of our growth based on demand and supply with sequential growth and then further acceleration in the back half of the year. Just in terms of some of the dynamics for Q1, I think one of the reasons why we saw a solid 10% growth not only because of the European markets coming online, but also based on some of the improvements we saw in out of spec with turnaround time and our Obelisc facility ramping a little bit faster than we expected. This is just great execution from our team in Europe to supply the European launches and that helped pull in some of the revenue from what we were projecting for Q2 into Q1 for a solid Q1 performance.

Regarding your second question on the clinical data from -- I can't comment on what's going to be presented besides just the header abstract that we are aware of at ASCO. And what I can say is that or whether they'll have any evidence of neurotoxin in their studies. They are obviously starting a Phase 3 randomized study and so I think that will be very telling about more of their safety profile. What I can say, is regarding our study, we're very excited about the ASCO presentation of a CARTITUDE-1 long-term data set. I think you'll be pleasantly excited as well when you see the data being presented. In addition, I can also say that our monitoring of the absolute lymphocyte count or ALC and use of prophylactic steroids with ALC counts of greater than 3,000 is being further incorporated into major academic centers as well as in our CARTITUDE studies. And we're seeing good response from the KOLs who are implementing this and we expect additional data to come out later this year. So we will report on that in the near future.

Thank you. One moment for our next question. And our next question comes from the line of George Farmer of Scotiabank. Your line is now open.

Hi, good morning, this is Clovy [ph] on for George. Thank you for squeezing us in. A couple from us. So, I wanted to double click on the survey number that you mentioned earlier about the preference from heme-oncs [ph] in second-line prescribing CARVYKTI in the second-line rising from 34% to 55%. I was wondering if you could provide a little bit more color here on the diversity or the geographic location or volume of the centers where these heme-oncs are operating at and what they need to see to keep pushing beyond that 55%. And if you could also comment on uptake in this earlier line setting in the EU, if you expect the updated label to have a significant impact there on earlier line use? Also wanted to ask about outpatient administration, you did say, over 50% now, and could you maybe break that down for us between the earlier and the end-stage disease like in your second to full time patients, what proportion of those are being treated in outpatient versus inpatient and how does that compare to the end stage patients? And a last question if I may. Just to clarify, when you specify the BGN [ph] turnaround time is around 30 days for CARVYKTI, are you using that kind of interchangeably with vein-to-vein time here? Thanks.

Yes. So first of all, in terms of the EU, we do expect that the updated label will support the use in the earlier lines and that's the feedback we've been getting from the centers in Germany that are now online and in the other European markets as we mentioned. So we do expect that it's the overall survival data that is very compelling and this will enable patients much like it has in the U.S. to sort of move into the earlier treatment settings with CARVYKTI. In terms of outpatient, we don't have a specific breakdown between how much of the outpatient use is in the earlier line versus the end-stage. But qualitatively I will tell you that as we get into more patients receiving CARVYKTI in the earlier lines, that does correlate somewhat with the ability and the comfort level with physicians to administer in the outpatient setting. Although the outpatient setting is more a factor of sort of safety monitoring. And we do see again in the earlier lines lower rates of CRS and lower rates of MNTs and so these are the things that physicians do gain comfort with as they move to earlier lines. In terms of turnaround time, our median 30 days, everyone uses a bit of a different definition in terms of what vein-to-vein is, but we think this is the most relevant way to think about our ability to deliver to physicians because this is the point at which they [indiscernible] the patient and then when is the product available for them to take it back and infuse patients. And as we discussed on the presentation, because of bridging therapy, this is a very acceptable, I wouldn't say, even acceptable, I would say, comfortable place for physicians to be by the time they get through the bridging therapy that most patients are going to receive, whether that's in later lines or in earlier lines. We're really at the 30-day mark. And so turnaround time is quite competitive to where physicians need it to be at this point. But we do expect that we'll continue to be able to reduce that over time.

Yes, I mean, you heard from us how much improvement we have seen in our manufacturing process. In fact, the latest data from RAS suggests that the median efficiency delivery time is about 27 days now. And then, Clovy, I want to answer a question about the publication. So the paper published actually from Cardinal Health with collaboration with Vanderbilt University Medical Center, and it was based on the response from 50 hematologists and oncologists. In terms of the breakdown of the survey physicians, it's about 86% in the community practice and then 14% in the academic setting. It's also very well distributed in terms of geographic distribution of these doctors. So it's 28% from the south, 28% from the western area, 24% Midwest, 20% Northeast. So if you want to know more about this paper on the survey of 50 physicians on CAR-4 data, we're happy to send you the paper, but it's a very well representative sample set here.

Okay, thanks. Ying, I'm wondering if you could maybe comment on what feedback you got from them on what, well, I guess what are you hearing and what is needed to further improve kind of their approval ratings in the second-line, prescriber setting?

So what we're hearing anecdotally from the field is that obviously the community based hematologists and oncologists are really excited about survival. When we surveyed them on the three most important decision factors when they choose a medicine for second-line, they rank in such order, right? Survival followed by PFS and then followed by response rate, including complete response rate. So that shows you there's a divergence here because in the academic setting the physicians in tertiary hospital tend to put PFS on par with OS, but in the community setting clearly there's a very strong preference on survival here. That's what we're finding out in the community setting. And like I said, we fully expect the FDA to approve our survival data in the label in the fall of this year. We have a PDUDFA here, and this survival benefit will also be augmented by our ASCO presentation in the next month. So you will see that once we have the detailed data and the physicians I'm sure will be excited about the long-term follow-up data in terms of the long term remission.

Got it. Thank you so much.

Thank you. One moment for our next question. And our next question comes from the line of Sean McCutcheon of Raymond James. Your line is now open.

Hi guys, thanks for squeezing me in. Can you speak to the bar to take the Claudin18.2 program forward? We've seen some decent results from CARsgen with some intriguing frontline signals in sequence with chemo and with the durability for the second-line setting, looks like it could be more of a question, and maybe it's restricted to the Claudin 18.2 high expressors. And secondarily should we expect a similar approach on the development compared to the DLL3 program? Meaning would you want to take it forward with a partner? Thanks.

Thank you for your question. So regarding the Claudin18.2 study, we are as discussed earlier, going to be presenting some data at ASCO. We anticipate the dose escalation to be complete later at the end of summer and then we anticipate the expansions to begin at that time. We have obviously Claudin18.2 is important both in gastric cancer but also pancreatic cancer. I think it's also while there is an antibody approved zolbetuximab in the frontline setting in gastric cancer the expression, the Claudin expression is quite high in order for people to use that antibody. I think in general we've seen that at CAR-T cells tend to have more sensitivity for lower expressing cells. So there's, I think, an opportunity to pursue CAR-T in this space, both in gastric cancer and pancreatic cancer. So we'll have to wait and see how the completion of the safety dose escalation is. But we are excited for the opportunity to explore this further in the expansion.

Thank you. This concludes the question-and-answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.