Legend Biotech Corporation (NASDAQ:LEGN) Q3 2023 Earnings Call Transcript
Legend Biotech Corporation (NASDAQ:LEGN) Q3 2023 Earnings Call Transcript November 20, 2023
Legend Biotech Corporation beats earnings expectations. Reported EPS is $-0.17, expectations were $-0.56.
Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to Legend Biotech Reports Third Quarter 2023 Financial Results Conference 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 note that today's conference may be recorded. I will now hand the conference over to your speaker host, Jessie Yeung, Head of Investor Relations and Public Relations. You may begin.
Jessie Yeung: Good morning. This is Jessie Yeung, Head of Investor Relations and Public Relations at Legend Biotech. Thank you for joining our conference call today to review our third quarter 2023 performance. Joining me on today's call are Ying Huang, the company's Chief Executive Officer and Lori Macomber, the company's Chief Financial Officer. Following the prepared remarks, we will open up the call for a Q&A. We will be joined by Guowei Fang, Chief Scientific Officer and Steve Gavel, Head of Commercial Development for the US and Europe. 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. Thank you. I will now turn the call over to Ying.
Ying Huang: Good morning and thank you for joining us today to discuss the third quarter financial and corporate accomplishments of Legend Biotech. We are pleased with the progress we have made over the last quarter to advance our portfolio and pipeline of innovative therapies that are focused on addressing the serious and intractable disease patients face. Last week, we announced that we have entered into an exclusive global licensing agreement with Novartis, which grants Novartis the right to develop, manufacture, and commercialize LB2102 and other potential CAR-T therapies selectively targeting DLL-3. LB2102 is an investigational autologous chimeric antigen receptor T-cell therapy for the treatment of adult patients with extensive stage small cell lung cancer.
As part of this agreement, we will receive an upfront payment of $100 million and are eligible to receive up to $1.01 billion in milestone payments as well as tiered royalties on net sales. We will also be reimbursed for development costs for the ongoing Phase I clinical trial, which will evaluate the safety and efficacy in patients with small cell lung cancer and patients with large cell neuroendocrine carcinoma and to determine the recommended dose for Phase II study. We're excited by this transaction and we look forward to seeing how this therapy performs in the clinic. CARVYKTI or cilta-cel, continues to drive our revenue and direct our priorities. We have worked tirelessly to bring CARVYKTI to patients who are eligible for treatment. And our efforts are reflected in the total net sales of $152 million in third quarter, bringing total net sales for 2023 to $341 million so far this year.
Our third quarter performance was driven by ongoing market launches, expanding market share, and capacity improvements, as well as the commercial launch of CARVYKTI in Germany which contributed to quarter-over-quarter ex-US growth of 300%. In the US, we have experienced growth of 23% quarter-over-quarter. We remain steadfast in our goal to make CARVYKTI available and accessible to patients worldwide and we look forward to sharing highlights of that journey with you today. We have progressively met strong demand for CARVYKTI in collaboration with Janssen. First, Janssen has scaled the in-house production of Lentivirus at its factories in Switzerland and has another factory in the Netherlands under construction to complement and support LV supply, which should be online by 2025.
LV expansion is crucial because it is often the rate-limiting factor in any CAR-T manufacturing and growing LV supply is an important front in our ramp-up. Second, we're still on track with our pre-planned capacity increase at our Raritan site and production from our CDMO is supporting that expansion next year. Third, the first of our state-of-the-art manufacturing facilities in Ghent has received a license from the Federal Agency for Medicines and Health Products in Belgium. This was an important hurdle to clear and once the Investigational Medicinal Product Dossier is approved by local authorities, we will begin manufacturing cilta-cel at Ghent for clinical use by end of this year. The Ghent facility will be an important part of the CARVYKTI supply chain network.
We're committed to bring CARVYKTI to more patients who are eligible for this important therapy. Our manufacturing ramp-up supports commercial delivery, as well as our ongoing CARTITUDE clinical development program with Janssen. Of the five clinical trials evaluating cilta-cel, three are ongoing and CARTITUDE-6, our Phase III study for frontline patients, enrolled its first patient. The activation of one of our Ghent facilities will enable us to continue the commercial ramp we began in the US while on-boarding new clinical patients. In addition to making capacity enhancements, we work with roughly 60 certified treatment centers across the US and are expanding access to CARVYKTI in select European countries, including Germany. Our teams are working hard on multiple fronts to bring this efficacious one-time treatment to patients in need.
We are pleased to share that since trials began in 2018, we have treated more than 2,000 people with cilta-cel. Our pipeline is also robust and we're exploring the potential of cell therapies in both hematologic malignancies and solid tumors. The funds from our transaction with Novartis will primarily be used to develop other promising pipeline assets such as our allogeneic cell therapies. The armoring used in LG2102 can also be deployed in other pipeline programs if validated in a clinic. We continue to explore innovation in our pipeline and are excited about their progression. Now I want to turn this to Lori.
Lori Macomber: Thank you, Ying, and good morning, everyone. As Ying mentioned, we are very pleased with the performance of our commercial product CARVYKTI this quarter, which generated approximately $152 million in total sales, an increase of 30% over the previous quarter driven by ongoing market launches, expanding market share, and capacity improvements. That performance also represents a 176% year-over-year increase. As a reminder, we share equally in all profits and losses of CARVYKTI, ex-China, with our partner Janssen. Starting with cash and cash equivalents, time deposits, and short-term investments of $1.4 billion, this will fund our planned operating and capital expenditures into 2025. Starting with revenue. Total revenues for the third quarter were $96 million, consisting of $75.9 million in collaboration revenue from the sale of CARVYKTI and $20.1 million in license revenue for the achievement of a milestone during the quarter as outlined in the Global Development Plan under the Janssen Agreement for cilta-cel.
Net loss for the three months ended September 30th, 2023 was $62.2 million, or a loss of $0.17 per share compared to a net loss of $85 million or $0.26 loss per share for the same period last year. For the nine months ending September 30th, 2023, net loss was $373.4 million or a loss of $1.07 per share compared to a net loss of $310.5 million or a loss of $0.99 per share for the nine months ended September 30th, 2022. Moving on to expenses, collaboration cost of revenue for the third quarter 2023 was $43.5 million compared to $25.5 million for the same period last year. These are Legend's portion of collaboration cost of sales in connection with the collaboration revenue under the Janssen Agreement along with expenditures to support the manufacturing capacity expansion.
Research and development expenses for the third quarter 2023 were $95.9 million compared to $104.5 million for the same period last year. The decrease of $8.7 million for the three months ended September 30th, 2023, compared to the three months ended September 30th, 2022 was due to timing of expenses incurred in connection with the Master Technology Transfer, Manufacturing and Clinical Service Agreement for BCMA CAR-T product with Janssen and Novartis Pharmaceuticals Corporation. Administrative expenses for three months ended September 30th, 2023 were $28.1 million, compared to $23.2 million for the same period last year. The increase of $4.9 million year-over-year is primarily due to the expansion of administrative functions to facilitate continuous business growth and continued investment in building Legend Biotech's global information technology infrastructure.
Selling and distribution expense for the three months ended September 30th, 2023 was $21.1 million compared to $18.9 million for the same period last year. The increase of $2 million year-over-year due to costs associated with the commercialization of CARVYKTI. To wrap-up, our spending remains on track, and we continue to maintain a strong balance sheet. As of September 30th, we have $1.4 billion in cash and equivalents, deposits and investments, which Legend Biotech leaves will fund operating and capital expenditures into 2025. Thank you. I will now pass it back to Ying for closing remarks.
Ying Huang: Thank you, Lori. 2023 continues to be another remarkable year for Legend Biotech, and we look forward to closing out the year strong in the fourth quarter. We have made considerable strides in enhancing our manufacturing capabilities and lowering our out-of-spec rate. We're proud to be a fully integrated cell therapy company focused on both hematologic, malignancies, and solid tumors. Looking forward, we'll continue to invest in our manufacturing capacity as we work to deliver CARVYKTI to patients expeditiously and responsibly. We'll also continue to expand our pipeline. At Legend Biotech, we strive to deliver long-term value to our shareholders and are encouraged by these developments. Thank you for joining us today. We'll now open the call up for questions.
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