Legend Biotech Corporation

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Legend Biotech First Quarter 2024 Financial Results Conference call. At this time, all participants on the listen only mode. After the speaker's presentation, there will be a question and answer session. So as a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automatic message advising your hand is raised. Please note that today's conference may be recorded. I will now hand the conference over to your speaker host, Jess Yeung, Head of Investor Relations and Public Relations. Please go ahead.

Good morning. This is Jess Yeung, Head of Investor Relations and Public Relations at Legend Biotech. Thank you for joining our conference call today to review our first quarter 2024 performance. Joining me on today's call are Ying Huang, the company's Chief Executive Officer, and Laurie McCumber, the company's Chief Financial Officer. Following the prepared remarks, we will open up the call for a Q&A. We have Guowei Fan, Chief Scientific Officer, and Steve Gaffel, Head of Commercial Development for the US and Europe 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 herewithin. These forward-looking statements are discussed in greater detail in our SEC filings, which we encourage you to read and can be found under the Investor session of our company website. Thank you.

Hello, everyone, and welcome to our first quarter earnings call. I am pleased that you could join us. As many of you on this call know, 2024 has been an eventful year for us. Obviously, our major news was the approval of CARVICTI by the FDA and European Commission for second-line relapse or refractory mod-pomeloma. These approvals have the potential to change the treatment paradigm for tens of thousands of patients in the United States and Europe. The feedback from key opinion leaders, oncologists, advocates, patients, and caregivers has been tremendous. On March 15th, we received international media attention when the FDA's Oncologic Drug Advisory Committee, or ODAC, meeting raised awareness about mod-pomeloma and the positive benefit risk profile of CARVICTI. ODAC's unanimous 11-0 recommendation in favor of CARVICTI was independent and objective validation of its value proposition. We also added another noteworthy approval to our growing list. The Brazilian Health Regulatory Agency has approved CARVICTI for second-line mod-pomeloma. I am pleased to report that CARVICTI is now available by prescription in Brazil. Our patient-facing colleagues and those who work in manufacturing are energized and eager to share our transformative therapy with more patients around the world. As you will see on our addressable market slide, our second-line indication translates to an addressable patient population of 80,000 across three major markets. Turning to financial developments, CARVICTI net trade sales for the first quarter were $157 million, which is 100% increase year over year. Sequentially, net sales decreased by $2 million from $159 million in the fourth quarter of last year. This was a result of phasing due to the timing of orders and when they were delivered and built for, as well as manufacturing testing needed for the upcoming expansion. Importantly, there was growth in patient demand, and obviously that was before the recent second-line approvals. So we do anticipate continued growth for CARVICTI, particularly in the second half of the year as we continue to add more slots and expand our capacity. Right now, there's no higher priority in the company than making more supply available to the market and reducing the -to-van time. We're working to expand production from every angle. We're continually increasing production at our Raritan, New Jersey facility, where we have doubled sale processing capacity since the beginning of 2023. We're laser-focused on completing physical expansion of our Raritan site this year. We plan to double CARVICTI capacity by the end of 2024 compared to the end of 2023. Our production capacity will be augmented later in the year when our Obelisk facility in Ghent, Belgium is approved for commercial production. Clinical production already started back in January. With the second-line FDA approval, the specifications for manufacturing CARVICTI were widened, which should give us greater yield going forward. Finally, Legend and J&J expanded a previous agreement with Novartis to perform commercial manufacturing for CARVICTI through the end of 2029. The increases to our production capacity will help ensure we meet our target of annualized capacity of 10,000 patient slots by the end of 2025. Our cash balance now stands at $1.3 billion, which we believe provides us the resources needed to increase production and gives us financial runway into 2026 when we expect to begin to achieve an operating profit. In other developments, we continue to bring more hospitals online as authorized treatment centers. We have now a total of 72 US hospitals certified to treat CARVICTI patients. So our reach in the community is growing in parallel with the increase in eligible patients. Outpatient treatment comprises approximately one-third of our volume and remains an important differentiator for us. Due to the longer onset of CRS for CARVICTI patients, this side effect can potentially be managed in the outpatient setting, which allows those hospital beds to be utilized for other patients who need them. Finally, since our last earnings call in March, we published our first ESG report. Not only does it summarize our achievements as responsible corporate citizens, the report provides a great overview of the company and transparency into how we conduct our business. To sum up, so far in 2024, we have achieved our significant regulatory goals and are working to execute with excellence to meet the growing demand for CARVICTI. Now I would like to turn the call over to Laurie to walk you through the financials for the first quarter. Laurie?

Thank you, Ying, and good morning, everyone. As Ying mentioned, we generated approximately 157 million in total net sales for CARVICTI during the first quarter, an increase of 118% year over year. Sequential growth was roughly flat due to the timing of orders and when they were delivered and billed for, as well as manufacturing testing needed for the upcoming expansions. As a reminder, we share equally in all profits and losses for CARVICTI, ex-China with our partner, Yansim. Turning to revenue, total revenues for the first quarter were 94 million, consisting of 78.5 million of collaboration revenue from the sale of CARVICTI and license revenue of 12.2 million from the recognition of deferred revenue in connection with our agreement with Novartis to develop, manufacture, and commercialize LB2102 and other potential CAR-T therapies selectively targeting DL3. Net loss for the quarter ended March 31st, 2024, with 59.8 million, or a loss of 16 cents per share, compared to net loss of 112.1 million, or a loss of 34 cents per share for the same period last year. Moving on to expenses. Collaboration cost of revenue for the first quarter of 2024 was 49.1 million, compared to 35.6 million for the same period last year. These are Legends portion of collaboration cost of sales in connection with the collaboration revenue under the Yansim agreement, along with expenditures to support the manufacturing capacity expansions. Additionally, cost of license and other revenue for the first quarter of 2024 was 5.6 million, compared to no cost of license and other revenue for the first quarter of 2023. These costs are in connection with our agreement with Novartis to develop, manufacture, and commercialize LB2102 and other potential CAR-T therapies selectively targeting DL3. Research and development expenses for the first quarter 2024 were 101 million, compared to 84.9 million for the same period last year. The increase of 16.1 million for the three months and in March 31st, 2024, compared to three months and in March 31st, 2023, was due to primarily to research and development activities in CITESA cell, including higher patient enrollment for phase three clinical trials and continued investment as well in our solid tumor programs, which includes two IND approvals that advanced into phase one development. Administrative expenses for three months and in March 31st, 2024, were 31.9 million, compared to 22.2 million for the same period last year. The increase of 9.7 million year over year is primarily due to the expansion of administrative functions and infrastructure to increase manufacturing capacity. Selling and distribution expense for three months and in March 31st, 2024, was 24.2 million, compared to 18 million for the same period last year. The increase of 6.3 million year over year due to the cost associated with the commercialization of CARVICTI, including the expansion of the Salesforce and second line indication launch preparations. To summarize, our spending remains on track and we continue to maintain a strong balance sheet. As of March 31st, we have 1.3 billion in cash and equivalents, deposits and investments. Additionally, we earned in April a milestone payment of 45 million in connection with the FDA's approval of CARVICTI's label expansion to treat second line multiple myeloma in accordance with the Janssen agreement. Thus, we believe we have sufficient capital to fund our operating and capital expenditures into 2026 when we expect to begin to achieve an operating profit. Thank you. I will now pass it back to Ying for closing remarks.

Thank you, Laurie. To sum up, 2024 has already been a monumental year for legend with a string of regulatory successes. CARVICTI continues to be the fastest launched CAR-T therapy and now we have new opportunities to serve even more patients. I want to thank each of our 1,900 employees for their commitment and dedication that will ensure patients who need CARVICTI are able to access it. And with that, we'd like to take your questions. Operator, we're ready for the first question.

Thank you. Ladies and gentlemen, as a reminder to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, simply press star one one again. Please stand by while we compile the Q&A roster. Thank you. Now, first question coming from the line up, Jessica Fyfe with JPMorgan, Yolanda Soppen.

Hey, guys, good morning. Thanks so much for taking my questions. I have two, please, sort of related. First, I know 1Q was impacted by a number of non-revenue batches for comparability work. How should we think about the scale of that work in 2Q and beyond? And then second, when you talk about doubling capacity from the end of 23 to the end of 24, but I think you mentioned that the obelisk commercial production was gonna be kind of back half-weighted or back-end plated, what does that mean for how we should think about revenue year over year in 24 relative to 23? Just trying to figure out kind of is it one to one on that doubling year end, from year end to year end of capacity or are there other factors we should think about when we're thinking about revenue this year? Thank you.

Hey, good morning, Jess. Thanks for the questions. This is Ying. I'll help answer

those too. So first on the manufacturing investments, I would tell you that qualitatively, in first quarter of this year, we did have a number of non-revenue generating rounds and that includes bringing up the CMO from Novartis and also bringing up a couple of other additional notes, including our facilities in Ghent for production, including clinical and then in the future, also for commercial production. So I cannot disclose exactly the number of the non-revenue generating rounds, but it is on a similar order of magnitude compared to, for example, clinical rounds. And we do expect that for the rest of the year in the next three quarters, that number will come down. The reason is we are pretty much complete in terms of the work we're doing with Novartis. So we believe that Novartis is in a position to file IND very soon. And assuming the IND is cleared by the FDA, we expect Novartis to start clinical trial production in the third quarter and then followed by commercial production first quarter of next year. And then of course, we also have two other facilities in Ghent, the first one, phase one is called Obelisk and Obelisk is already producing for Part 2-6 as we speak. And we expect pending regulatory approval probably around late third quarter or early fourth quarter this year. Obelisk will start commercial production and then followed by a much larger facility in Belgium called Techland. Techland right now is on track to complete physical construction and validation by end of this year. So we expect that facility to start clinical trial production early next year, followed by commercial production the second half of 2025. So that's kind of like the cadence. And then to address your second question, as I just mentioned, Obelisk is expected to start commercial production late three Q or early four Q this year. So in general, I think we have said that, we are looking at a roughly doubling of our capacity from 2023 to 2024. We don't provide guidance for the product self, but I think the capacity expansion gives you a good idea of where the revenue would lie. Consistent with our policy to have similar disclosure from J&J, which does not provide product specific guidance. We cannot guide the product self. But I think that doubling of expansion gives you a confidence that where the revenue would be in terms of growth year over year. Thank you.

Can I just clarify, when you say doubling of capacity, there's other factors as it relates to revenue, whether it's kind of like in spec, out of spec, the amount going to clinical trials, the amount going to these comparability batches or what have you. So when you say doubling of capacity, is that just like total total capacity inclusive of all these other things that may not generate revenue or is that commercial capacity?

That is correct. When we talk about capacity, that includes the number of total slots from all nodes of production. That includes clinical production, that includes non-revenue manufacturing investment funds, that includes commercial production. And then when you think about commercial production, just of course, you have to make assumption of the inspect success rate, right? I mean, we're encouraged by the trend so far this year because given what we're seeing in Q1 and now in Q2, that continues to improve. So then there's of course the net pricing. So all this will figure into the revenues. But when we talk about total capacity, we're talking about all the capacity, all the slots from different nodes, and that includes everything.

Thank you. And our next question coming from the line of Gina Wang with Barclays, Yolana Sophan.

Thank you for taking my questions. Maybe I'll just follow Jessica's questions. So Shoeist, do you expect revenue growth in second quarter 24 or Shoeist wait into second half 24 when a blitz commercial production onboard in 3Q4Q? And another related question is regarding Cardiac Q5 and 6, now mainly 6. You still have maybe roughly 700 patients that need to be enrolled. Where do you expect these 700 patient enrollment mainly at? Would that be in New Jersey side or would that be in Belgium side?

Hi, Gina, this is Lori. I'll take your first question on revenue. We do expect to see some growth in Q2, but as we've talked about, we expect pronounced growth in the second half of the year. As you mentioned, we have different factors coming into play in the second half of the year. With the Raritan ramp, we expect a second capacity ramp coming on there. Again, facilities, the largest driver, without coming online in order to do some commercial production. And then we do have a CMO that we anticipate a clinical production can shift there. That'll free up some commercial capacity at Raritan. So in addition to that, as we start to get these additional nodes that come online, we will have some multiple country launches we anticipate in the back half of the year. And as you know, with the complexity and cell therapy, some of the achieving those sales will depend upon how those launches go. And you've seen in prior launches, we tend to get a lot of the acute patients first. So we wanna be conservative, but we do anticipate more pronounced growth in the second half of the year. Ying, do you wanna take the CAR2-5 and CAR2-6 question?

Yeah, Gina. So on CAR2-5, we have completed all international enrollment already for CAR2-5. And that's actually above our pre-planned number. Right now we're just enrolling additional US-based patients so that we satisfy the minimum of the US patient representation by the FDA. So by now we have manufactured a significant portion of CAR2-5 patients. Now on CAR2-6, since we opened enrollment in October last year, right now it's enrolling really fast. It's actually faster than our plan. So in terms of where we're manufacturing for those trials, I can tell you that right now, Briarwoodton, New Jersey is the main site for CAR2-5 manufacturing. For CAR2-6, right now actually, again, our first facility called Obelisk is the main site for that trial now. And it will shift to other sources, but we're trying to really save the Briarwoodton facility for commercial production for the rest of 2024. So that's where we're manufacturing for CAR2-5 and CAR2-6 for now.

Thank

you. Thank you. On one for next question. And our next question coming from the line up, Kelly Hsu with Jeffrey, CLN is open.

Thank you. Congrats on achieving great milestone in early on approval. So for the launch in the US, could you talk about the current launch activities? Have you started training patients in second to first line? And do you see switch from last line? And also have follow up, thank you.

Yeah, why don't I take that question? This is Steve Gabel. So I think the question had to do with CAR2-4, the status of it and patients and so forth and so on. One of the things I do wanna just piggyback a little bit to Lori's response earlier concerning the second half component of this year, even though the product was approved in earlier lines in April, there's just a natural lag in the market, especially with a CAR2-4 launch where we are looking for getting patients referred into our institutions. So I think this is one of the key differences with the CAR2-1 launch versus four, that there will be a natural lag in it just because of the referral piece of this. Now, also to Lori's point, there are a number of patients that meet the eligibility criteria today in our hospitals that are moving very quickly through the approval processes and so forth. So again, we continue to move very quickly in terms of patient identification and APHORESIS, but I did wanna caution you all that it's just a natural phenomenon of referrals and manufacturing and ultimately to revenue recognition. That's why we're basing our assumption on a really strong second half.

Thanks. And also to reach the goal of 10,000 doses by year end of 2025, we do need to consider the sign up for additional CDMO contract. Also, what percentage of the patients would be needed to treat it in all patient settings to reach the 10,000 doses goal if we're assuming like on the hospital side, there's also capacity constraints. Thanks.

So Kelly, let me take the first part of the question and then I'll ask Steve to talk about the outpatient demonstration of curvectin. So when we look at the goal of reaching 10,000 annualized capacity by end of 2025, we believe that with existing four nodes, that includes our own site in Ryerson, New Jersey, our two sites in Ghent, Obelisk and Techland, plus on the Vardy side here. That should be pretty much give us the reach to that number. Of course, we're continuing to evaluate the CDMO of other companies that could potentially give us a boost as well. So stay tuned on that front. And then I'll ask Steve to talk about the outpatient demonstration of curvectin. All right, thanks, Eng. So

you're hurting at the top, talking about roughly about a third of all patients now being treated in the outpatient setting. And that's grown quite a bit. I mean, that's to give you a comparator versus other CAR T's in the market that we compete with is right around 15%. So I think the question was, from an outpatient perspective, what would we need to see in order to achieve the target doses that you referenced earlier? We expect by the end of 2025 to be at least double to where we are today. And it's reflective in the growth in the outpatient sector that we are seeing today. So we are relatively confident that we are going to be there. I think the one wrinkle, and you're seeing now a number of our sites investigating this today, is the partnerships that they are going to be, and they're currently embarking with other outpatient players, whether it be in the community setting. I'm talking now pure community retail setting. And actually, if you haven't seen a good example of that, is back in 2022, ACA Healthcare announced a partnership with McKesson, which is US Oncology. And I know that they are very interested in leveraging assets outside of their own hospitals to bring these therapies out to as many patients that are eligible to receive them. So you'll see the definition of outpatient will change quite a bit over the next couple of years, not just hospital outpatient, but in the next few years, you will start to see community administration

of our program.

Terrific, thanks. Thank you. And our next question coming from the line of John Miller with Evercry, so I'll let this open.

Hi guys, this is Omar filling in for John. I don't have any single question on CARVICT today. And instead, I want to focus on a very important area in CAR T space, which I don't think has come up in legend conversations. So you have this triple targeted CAR T ongoing in China since March 22, I think it's wrapping up now, that's CD19, CD20, CD22, on autologous. And separately, you have this Lucar G39P, which is the dual targeting CD19, CD20 Allo, that I think you just started phase one, both are these in China. My question is, shouldn't those trials have been an autoimmune, and or is that a plan that you're intending to do near term?

Okay. Hey, Omar, good morning. I will ask our CSO, Dr. Goi, if I can answer your question.

Oh yeah, thanks John for the question. This is an important question. And our disease focus area, both oncology and autoimmune diseases. For both as said, we have plans to develop those in autoimmune disease indication as well. And it's in process.

And when would that start, Ying? And would it be a US trial? I think that's the other very important question,

obviously. Currently, all in one is in the process of initiating autoimmune IT study in China across multiple disease indications. For the US autoimmune diseases as said, our current strategy is focusing on the heterogeneity approach given some of the key challenges associated with autogast treatment options. For example, the requirement of liver depletion and the requirement of a manufacturer at individual patient level, high cost, et cetera. We have as said, in the process for initiating the US &D-enabled study. And we will disclose additional information in the future. Thank you. And

if I may clarify, sorry, one last one. If I may just clarify, in that ALO trial for US, I'm assuming that's your CD19, CD20 dual targeting, is it safe to assume that you would not need the flu-sci loading, the preconditioning for autoimmune?

That's an open question. And I think we will make a decision based on the clinical data we are collecting. In terms of our targeting mechanism, we think that autoimmune disease cover a very broad spectrum of different diseases. And we want to have option and a choice for patients. In terms of targeting mechanism, CD19, CD20 certainly are very good targeting mechanism. I think plasma cell may also play a major component in BCR-driven disease pathology. So we're also considering the BCMA as additional targeting opportunities.

And Umar, I know you had a question about the disclosure and also moving to US IND. So I'll just add that you see that we already initiated the triple specific CD19, CD20, CD20, the clinic program, and it will start those in for autoimmune by end of this year. So based on that clinical data, we will make the decision when and how to move assets into the US IND process. And of course, like Dr. Frank just mentioned, we are very interested in whether we can either I-PASS or lower the dose intensity for flu-side lymphoid depletion regimen. That is one goal of our IIT trials in China. So is also the trial we're conducting for the dual targeting allocytin-90, CT20, Gamdella T-Program.

Sounds great, thank you very much. So Ying, it sounds like you could have some autoimmune data next year. Is that a reasonable conclusion from all of this?

Without officially guiding,

yes,

that is

a

possibility.

Excellent, thank you so much for this.

Thank you. And our next question coming from the line of Yaron Webber with TD Colonial and it's open.

Great, let me maybe just follow Umar's last question and then I have a question on Corvicti. Can you just discuss a little bit the concept of autologous with the triple, CD19, CD20, and CD22 versus with allo, it looks like you're doing dual targeting. Can you just help us understand your thoughts, why not do triple and both, and then I have a follow-up on Corvicti.

So for triple targeting, design principle is to drive deep response by targeting multiple B-cell biomarkers. And so for that, we are currently initiating the IIT study and collecting the data. For allo, we are going to have different targeting mechanism and based on the IIT study, we will have additional insight in terms of which disease we should target among different autoimmune indications.

Okay, with the dual, but we'll keep that as a dual, 19, 20 only, because you don't need to drive deeper responses, is that the thinking? You just need to reset the immune system?

Yeah, so we are targeting both CD19 and CD20 as well as different assay targeting CD19 and BCN. Having different aspects.

Okay, got it. Okay, maybe just to move back, I have a quick question on Corvicti. Can you give us a little bit of a sense now that second line is approved? Is the auto specs now different, pretty much an easier across the board? Or is the FDA still keeping a certain bar sort of on fourth line onwards and a different bar in the second line?

Yeah, Jerome, good morning. This is the answer to your question. So the answer is that when we received FDA approval on April 5th for second line, we did receive one label with one spec. So as of today, right, if we treat any patient on label, the release back is the same for second line patient versus the fifth line and beyond. And also by the way, it is a wider release back. So I know it's early days, but based on the data from the full month of March production, which we tested in April, so far we're seeing encouraging trend in OAS so far based on either probably the wider release back approved by the FDA and also potentially, once we start to see more second line patients rolling in, the natural evolution of better baseline for those patients.

And those release specs, how do they compare with the Beckman and maybe Kimwai and Yaskarta as far as you can tell?

Without disclosing a number, I can tell you that based on latest data we have on auto specs, I think our success rate is approaching that of our competition at this point. Of course, like I said, it's very early days. We have only March of production data. We have only a little bit partial of the April production data.

Okay, and maybe just final, I think you talked about 100 ATC target for the year. What's the gating kind of rate to open all of those? Is it capacity or are there other factors as well? Thank you.

Yeah, I know it's, hi, it's Steve Gaville. I mean, the gating element is really the site certification process. One thing to take note, and I've talked about this on previous calls, is as we add more and more sites, you don't see nearly the volume that you see in our initial phase one site. But we will continue to certify sites and our attendance, you get between 90 to 100 this year. The key metric, just so you know what we look at, is because there's so much outpatient now administration of CARBICTI in our facilities on a per site basis, we're seeing much more throughput per site versus what you would see, for example, with the BACMA. So I just wanted to make sure we're kind of viewing this the same way.

And our next question coming from the lineup. Ziyu Chen with Goldman Sachs. The line is open.

Hey, thank you for taking my questions. Just two questions. One is on the EU launch. Well, I think the US has been down quarter over quarter, but EU has been increased 23%, which is still growing nicely. So could you share a bit more color on the Europe pricing, and also how's the reimbursement coverage in your countries? And also any updates on the commercial launch in UK and in Japan? And a small financial question is really regarding the DLL3 partnerships. So we understand that for upfront payment, you just recognize about US dollar 12 million in the first quarter out of the 100 million upfront payment. So is that the specific accounting treatment for that? So it's gonna be spread out over next few quarters. And secondly, there is a cost of license related in connection to that. So could you help me helping us to understand a bit more about where does this cost coming from? Thank you.

Yeah, we're gonna try to unpack this, a lot of things from that. Why don't I take the first European question. So I think folks on the line are aware of a partner is responsible for all ex-US promotional activities specifically in Europe. I can tell you, I think you're aware of this already. We are into a partner in Germany and Austria in both Carter 2.1 and 4. The other thing to take note from a global allocation, even though we are in those countries, the majority of the global slot allocation is coming into United States. And if you had a question around pricing, pricing has not been disclosed as of yet in Europe. So we can't unfortunately provide information around that until it becomes publicly disclosed. I'm trying to think of the other

European questions that were out there. Oh, let me see here. I'm not sure if I can find the pricing and reimbursement piece.

Which

one am I hearing, Jess?

Yeah, so we're not commenting, again, we aren't commenting yet in terms, we have received approvals obviously in Japan, but we have yet to launch there. And again, I'm gonna defer to my partner on that one because they have not disclosed their intention on timing there, nor as far as in the UK as well. So, Gloria, in the next one.

So for deal three, as you guys saw on the, how we recognize on the P&L, there's actually three different locations of what we're recognizing there and then on our balance sheet. As you guys remember, and we disclosed, we received 100 million upfront payment. However, we have to defer that recognition of that 100 million over time for the activities that we're performing that we're obligated to perform as part of the collaboration agreement. So to your question of how will that spread out? Yes, that will spread out over various quarters in the future as we continue to do our activities that we're obligated to perform for that study. Now, we do have a pass through, there are certain material costs that we will pass through those costs to our collaboration partner. So we recognize that as other income. So that is actually separated out. And then the cost of the license is the actual, what triggers that revenue recognition is the cost that we've incurred based upon those obligations that we have to perform. So that's the actual cost that we're incurring for the clinical study.

Great, thank you, Stephen and Laurie. Thank you.

Thank you. And our next question coming from the line of Leonid Timashev with RBC Capital Markets, Yelena Selfin.

Hey guys, thanks for taking my question. I wanted to maybe talk, ask on the cadence of data that we should expect for the rest of the year. And specifically, I'm curious on cohort ENF, when we might see that data, what level of follow up, and what sort of efficacy measures we should be focusing on. And then, really to that, I guess, what in your mind is the PFS benchmark that we should be looking for there and for Cartitude V as a whole? Thanks.

Hello, this is Ning.

So first, maybe I can give you a quick preview of ASCO. We expect to present some data from one cohort, cohort D. These are the patients who did not achieve optimal response to the standard care of regimen in the front line. And then, for cohort E and F, we enrolled and dosed a total of roughly 60 patients in newly diagnosed multiple myeloma. So right now, we're expecting to release and publish the data at a major medical meeting towards the end of the year. So that's roughly the timing for cohorts E and F. And in terms of the level of follow up, I think you should expect to see a year of follow up, or maybe even longer than that. If you talk about the PFS benchmark, so for Cartitude V, as you know, the standard care regimen we use here is RVD, or Revlimit, Velcade, and dexamethasone. If you look at the registration study for that regimen in front line, the median PFS is about 34, 35 months. And that is the benchmark we're looking at to beat, right? I just want to remind you that this is a superiority trial. And then for Cartitude VI, I think you've got the answer from the PASUSE trial that was presented at the ASH last year. That is a DRVD regimen in combination of stem cell transplant. So there you're looking at the four year PFS rate of 84%, and that's the benchmark we're looking at, right? Again, we are looking at a superiority in PFS as a primary endpoint. Now, given the recent ODAC vote, we will be engaging with the agency to talk about potential of using MRD as endpoint to accelerate the approval timeline. So if you look at Cartitude V, MRD inactivity is already a secondary endpoint. And then for Cartitude VI, if you look at our clinicaltrials.gov, actually the co-prime endpoint is PFS and MRD inactivity. So we will follow all the patients with MRD inactivity, and at the same time, we plan to engage the FDA and the EMA to talk about the potential of using MRD as endpoint

as well.

That's very helpful, thank

you. Thank you. And our next question coming from the line of the -Perot-Hit from Morgan Stanley. Yelena Sullivan.

Hi, good morning. Thanks for taking your questions. We just had two on CARVICTI. The first on the topic of future disclosures. Ying and team, do you anticipate providing kind of a split of patients by line of therapy or any directional sense of how kind of patient use in the quarters, trying to between earlier line versus later line in the coming quarters of performance data? And then secondly, I know you don't provide long-term guidance, but looking a couple years out, how do you expect the CARVICTI sales base to kind of trend US versus ex-US?

Thanks.

So I'll, Steve, to take your first question.

Yeah, so thanks for that question. And it's an important metric, because it's your question around looking at line of therapy use. It's an important question. It's a very difficult question to track from. So just because of the available data that's in the public domain right now around that. So let me give you a way how we're thinking about this. So we're assuming in a year plus time, about 70% of our product use is gonna be in earlier line therapies, earlier line treatments, I should say. And that's gonna increase over time. It's because the market is so large, and obviously there's high demand to use this in patients that are doing quite well. But we will not be per se teasing that out by line of therapy, not because we don't want to, but like I said, you get that data through different sources. One of the big sources is claims data, but the source information's a bit choppy. So no, to answer your question directly, we will not be disclosing that by line. Things are a second follow-up. Yeah,

so Vikram, on your second question, I mean, again, we're not in a position to provide guidance for carvacti. But as you know, typically when you launch a new indication, it takes about three years to get to that peak sales. And as of now, we are not changing the projection that carvacti will peak at five billion plus. And by the way, that is really on stipulation that will have a healthy market share in second line, for which we already have received official approval from both FDA in the US and EMA in Europe. So we feel confident about the growth potential for carvacti in the second line in the next few

years. Got it, thank you. Thank

you. One moment for our next question. And our next question coming from the line of Costas Spiliaris from BMO Capital Markets. Your line is open.

Good morning, Gavri, and thanks for taking our question. One question from us on the guidance around the 10,000 slots production by year 2025. Can you maybe provide some color around the number of FDA approvals on manufacturing capping creams you will need to be able to manufacture these slots by

year 2025? Thank you. Morning, Costas, thanks for the question. So let

me just give you a little bit more details about how we think about all the different nodes, right? So obviously right now, the only commercial production site is Raritan New Jersey facility. And we are implementing an FDA approved increase as of now, and then we expect to have another increase towards the second half of the year. So that's what we're doing with Raritan. And then, meanwhile, we and our partner, Johnson & Johnson, are conducting a physical expansion of the Raritan facility. So that physical expansion should complete by end of this year. So over the course of next year, we are going to validate the equipment and then bring all the briefs up to the GMP facility standards. So sometime next year, towards the second half, we expect that doubling of the manufacturing area in Raritan to start to contribute to additional capacity. So that's what we're doing for Raritan. And then for the two facilities in Ghent, the first one, Obelisk, right now is already manufacturing for clinical trial. And I just said in the call that towards probably late three queue or early four queue, we expect that facility to receive the regulatory approval for commercial production. The much larger Techland facility in Ghent, right now we're on track to complete all the validation work by end of this year. So that we expect clinical trial production to start early next year in 2025. And in the second half of next year, that facility will also come online pending regulatory approval for commercial production. And then of course, we talked about Novartis as CMO. Again, we expect the commercial production to start early next year. So if you look at those four nodes, right? We're adding three additional nodes for commercial production starting second half of this year and then throughout 2025. That's how we can achieve the 10,000 dose capacity by end of next year, all these four nodes together. And I can tell you that without disclosing all the technical details, if we track, as of last Friday, we're on track to achieve that 10,000 total capacity by end of next year, given where we are in Raritan, where we are in the Ghent facilities and where we are with Novartis.

Thank you, very helpful.

Thank you. And our next question coming from the line of George Farmer with Scotiabank, Ilan Isopin.

Hi, thanks for taking the question. Yan, can you comment a little bit about how this wider release spec approval may translate into top line sales, number one. Number two, also recognizing that CARVICTI is moving into second line primarily, at least in the relapse refractory, fourth line plus. Can you talk a little bit about the dynamics between how CARVICTI is being positioned against buy specifics? It looked like there was a bit of a surprise number from J&J when they reported. And then also finally, can you go into a little bit more detail on how you get to your CAF's usage spend out to 2026? Thanks.

Morning, George. I'll take the first question and then ask Steve and Laurie to provide answers for the second and third one. So on the wider release spec granted by the FDA in April, I think what we have said previously is that based on our modeling and also the data from CARTADGE clinical program, we believe this widen spec should result in additionally five to 10% points lower OS compared to before the wider release spec was approved by the FDA. So right now, like I said, it's still very early days, but based on what we are seeing so far, the OS is already coming down by roughly 5% last month. So that is very encouraging and we're gonna have to have a little bit longer follow up data to provide you with better confidence about where exactly the OS will be. But so far, things are trending very positively.

Steve? Yeah, so why don't I take the question around how we're positioning the assets specifically for the CARTADGE IV launch in second line and then I'll get into a little bit around later lines in BiSpecific. So it is our number one promotional focus to launch CARTADGE IV in the second line plus setting. There's clearly a clear differential there versus standard of care and it's gonna be basically a single-minded focus for my team. The other thing though, in terms of the BiSpecific question because it's the appropriate one, in later lines of therapy, you heard Ing in the opening talk about speed. One of the things that is clearly apparent to us and you mentioned, I think, a Janssen surprise around the BiSpecific, what's happening there, and this is honestly something that we could foresee coming, is that one of the things that's a key focus for us, you heard Ing talking about it, is not only generate more slots in the market but get faster into the market. And that's extremely important in later line disease where patients are progressing very rapidly. So that's where you saw the growth happening with the BiSpecifics as the Clistamate hit the market and then was followed by Tauke. One of the things I do wanna point out to you and it's something we talked to our partner quite a bit about, is as now Tauke has entered into the market in fifth line plus in the US, what you're starting to see is a shift in the dynamic in terms of what BiSpecific is used in front of one another. What we're seeing, and it makes sense, is with Tauke coming on board now, you're seeing a shift where Tauke is actually being used first in front of Tech and the reason for that, and this is very out in research, is this is a very effective bridging strategy to also get the Ciltocell. So in the past, with Tauke not being around, obviously the market had no other option but to use Teclistamate if they needed it to bridge a patient, the challenge there is you're also targeting the same BCMA target. We know there's efficacy there, but by using Tauke instead, you're obviously targeting a different target. So they wanna preserve the BCMA target to get the CAR-50. So maybe it's a little bit more than you had asked for, but I did wanna just point that out to you that even though in this case, Tauke might be used with some of these quicker progressing patients, we anticipate them to get to Ciltocell at a later point in time. Lori?

So I'll take the question on cash and the runway into 2026. As you guys know, we ended Q1 with 1.3 billion in cash. If we take a look over the next two to three years, that'll be adequate cash to bridge us until we get to profitability from the BCMA program. But what I do wanna say is, that doesn't prevent us from potentially looking at additional capital raises. And that's really gonna be dependent upon pipeline advancement, if there's something that we wanna do on a business development perspective, and also if there's a certain level of working capital that we wanna maintain. So yes, we do see us having adequate cash to get to profitability, but there are other factors that will come into play if we decide that we do wanna raise additional capital.

Okay, thanks very much.

Thank you. And our next question coming from the line of Justin Zelen with BTIG, Yolana Sopin.

Thanks for taking the question. And it's great to see the outpatient administration usage here pick up. Steve, can you talk about some of the factors that are constraining outpatient administration and just the dynamic that centers decide on whether to offer outpatient administration? Thanks.

Yeah, sure, thanks for that question. There's a number of different factors. The challenge in later-line disease is the fact that you're dealing with a very difficult to treat patient to begin with, right? So I think just from a patient perspective, it's a challenge. However, as we see in our trends, we're seeing almost 30% of the time, our facilities are working quite effectively to treat those very difficult to treat patients. What you're gonna see though in an earlier line where both mobile patient, often many of these patients are often working, is it become much easier for the sites. And that's what we are projecting as well, right? So from a patient selection, these are more mobile patients and some of the patient-related issues that the sites were challenged with will get a bit easier for them. So that's the first thing. And the other thing that we keep an eye on is their intent to move forward. The question was asked earlier around capacity, right? So the sites recognize this and they also want to use Outpatient CAR-T Administration as a strategy to reduce the amount of resources to treat the numbers of patients that are eligible for this therapy. So we just, from a resource perspective, sites also look at this as a very effective strategy to do so. So we're very, very excited about this. And you've heard me talk about a little bit on the back end of one of the questions around outpatient. You will see with this program a very different type of migration to full outpatient use. Our strategy, we've been very deliberate on how we went to market with this program. And I think I'm proud in terms of what's gone in the marketplace in terms of introducing this into the hospitals, having the hospitals move into their outpatient clinics. And like I said, over time, our hospitals are looking at other third-party partners on how to take this even further out to the community to ensure that these numbers that we talked about earlier, 10,000 doses, et cetera, we can meet that potential. So it's very exciting stuff.

Great, thanks for taking the question.

Thank you. And our next question coming from the line up, as Burma with UBS, Yelena Selfin.

Hi, good morning. Thanks for taking our question. So in terms of this double the capacity by year in 24 versus 23, like what is the respective annualized dose goal for this? Just to make sure we understand the apples to apple comparison to your year in 25 goal of 10,000 doses capacity. And then second, I wanted to ask, like this per se squad regimen adoption in the first line setting, eventually do you think that this delays or shrinks the second line pool of patients for cardiac in the long run? Effectively, these patients can have several years of progression-free survival, which could arguably impact the downstream market opportunity for cardiac patients. Thanks.

Yeah, so Ash, let me help with your first question. So yes, by end of 2025, we have this goal of reaching 10,000 annualized dose capacity, right? But that is when we exit 2025. So I just want to remind you that when we go into 2025, we are not going to be at the 10,000, but then because of the introduction of additional sites into the commercial production mode, we'll be able to end the year in 2025 with that capacity. And it doesn't stop there because we'll continue to maximize the capacity from each of those notes I mentioned. So we believe that we'll be able to actually get to a much higher number than that 10,000 dose. Once we complete all the expansion from the additional notes with the investment here. So it's going to be hard for me to give you any quantitative distribution among the three, I'm sorry, the four different notes we mentioned, but I can tell you that Raritan, New Jersey remains our biggest facility. And in the foreseeable future, Raritan will be the most productive site in terms of total output, probably followed by our site in Techland, Belgium. So that is how we think about the total peak capacity and then how we would plan to distribute the capacity among the different nodes. With regard to your second question, how the RVD getting to the front line would potentially affect the second opportunity, I'll ask Steve to answer.

Yeah, so thanks for the question. So just so you know, we've modeled certain assumptions in terms of eligible patient populations progressing on the quad. So I guess from an eligible patient population, it's been accounted for in our forecast. And that forecast then we've obviously communicated that with the manufacturing counterpart. So I guess from my perspective, again, we've accounted for that and we've accounted for it in our supply plan.

And then Ash, maybe I'll just add to Steve's answer that number one, you do have this 20, 25% so-called patients with high risk cytokinetic mutation. And those patients unfortunately do not respond well. So they'll relapse. And that is why we are releasing the data at ASCO for cohort D. These patients do not achieve a suboptimal or a complete response from the RVD. They need a second line therapy, right? That is your early adoption market. And then obviously, we are conducting -2-5 trial. If you look at clinical trials.gov disclosure, we expect the primary condition in the year of 2026. So hopefully within a couple of years, we'll have the first line label. And then obviously we are gonna pivot from second line to front line when that happens.

Thank you.

Thank you. And our next question coming from the line of Sean Minkerton with Raymond James. The line is open.

Hey guys, thanks for taking the question. Maybe to put a finer point on that MRD negativity at some outcome. What do you think are the implications here for, I guess, -2-5 and -2-6 timelines? And do you suppose the official draft guidelines will come in in time to be impactful there or a bit too late? And what's your view on what the details for that MRD negativity requirement could be? So in -2-6 is a 12 month sustained MRD negative CR. Do you think that's likely to be the bar or do you think maybe an earlier landmark could be informative or acceptable? And then just as a follow on to that, what do you think is the impact on the competitive dynamic for your earlier competitors if they're able to utilize MRD? And across different lines of therapy.

Thanks.

Hey, Mitch, thanks for all the questions about MRD. So first of all, we have all along worked with the MRD endpoint, right? If you look at all the CAR-2 program trials, everyone has MRD measurement in the trial built in. Like I mentioned just on the call today, in -2-6, we actually have already designed the trial with MRD negativity as a co-prime endpoint with others in our mind. So if you look at the ODAC recommendation, right? The ODAC voted to recommend a 12 month MRD negativity as a potential endpoint. Right now, we don't expect FDA to publish official guidance documents, but we do plan to engage with the agency to talk about the endpoints for -2-5 and 6-12. And for -2-5, it probably would make a small difference because anyway, we expect the readout to be in 2026. Now for -2-6, it could make a big difference because if you look at our disclosure on clinicaltrials.gov, primary completion is estimated at 2033. Now, if FDA does agree upon the 12 month MRD negativity in combination, for example, with CR or any other endpoint as a potential endpoint for accelerated approval, then we can make that much, much faster in terms of the process, right? Because if we can complete all the enrollments for -2-6 by end of next year, which is end of 25, then if the 12 month MRD negativity is amenable as endpoint, that means potentially by end of 2026, we could have that kind of readout, right? So it does help a lot for frontline trials. Now, if you look at competition, I mean, I think in second line, based on our experience, it doesn't change too much, right? Because the median PFAS for our control arm was about 12 months. So once you complete the enrollment, the readout shouldn't take that much longer. So I don't think there's a huge difference if you look at the second line or third line, but for frontline, it does make a significant difference here. In terms of the bar, I don't think there's a quantitative bar here that the regulators have already determined at this point, but you can follow our disclosure from -2-4, -2-2, -2-1 trial, right? In general, we achieve a very high MRD negativity rate. In fact, at ASH last year, we even published the data from -2-1. If you look at patients who achieved six, 12 months, or even longer than 12 months MRD negativity in combination of CR, those patients tend to have a very good prognosis in terms of longer term PFAS and survival. So we do have data from the CAR-2 program to show that if a patient can achieve complete response in combination with some sort of longer term MRD activity, that is a very good predict marker for long term outcome here. Thank you.

Thank you. And our next question coming from the line of Mitchell Kapoor with HC when Regulon is open.

Hey everyone, thanks for taking the questions. I have two. The first one I wanted to ask a bit on the second line launch and the pair discussions. Can you just talk about kind of the color of pair discussions and the second line population, and how do those second line reimbursement discussions compare to those that you have had previously for later line reimbursement discussions? And then the second question is on COGS. Could you just talk about the trend in COGS and any impacting factors or levers that could influence the COGS in the future?

Yes, it's Steve. So why don't I, okay, good, wrong. Why don't I take the first question around pair and contrast -2-4 versus one? So it all comes down with these pair conversations around the value proposition associated with treatment pre-interval. The obviously the -2-4 data is significant in terms of our fee of death improvement. So payers, the net of this in an earlier line session, payers love a product like -to-Cell in terms of the benefit that we are able to give, not only from a financial perspective, but also from a patient perspective in terms of the patient-related metrics. So all systems are a go in terms of early line approvals, in terms of from a reimbursement perspective, we have had no issues at all. As a matter of fact, the payers, the privates in particular, are one of our biggest advocates out there. Good, Laurie, anything? I'll

take the COGS actually. So as you move into the second line and the pair structure changes, to your question, where you're gonna see that is in the gross to net adjustment. On the COGS line, the reason that you see variability actually has to do with the manufacturing capacity investments that we're making. So you will continue to see the COGS variability as we start to bring these in, finalize the capital investments and bring these nodes online in 24 and actually 25. So you will continue to see that noise. It's the revenue line and the gross to net where you'll see the impact for the second line launch.

Laurie, mind if I come back to that first point because it just occurred to me, one more thing, around the payers piece of this, it ties back into the issue around outpatient administration as well. I mean, other than the treatment free interval component of this, as you can imagine, private insurers love the fact of a now CAR T therapy that can be given by hospitals very safely in the outpatient setting, just purely from a cost reduction as opposed to admitting these patients, keeping them in sometimes for weeks to reduce costs and continue to maintain these patients safely and then also benefit from that long-term treatment free interval is

a very good and very compelling story to private insurers. Great, thank you for taking the question.

Thank you. Now, next question coming from the line up, Rick Biancoski with Cancer Physiotherapy, and it's open.

Hey, good morning everyone and thanks for taking our questions. For the CARVICTI launch in Europe, could you comment on the number of certified treatment centers that are open in Germany and Austria and how many are expected to be certified by the end of the year? And as a second question, Ying, I was hoping you could expand on the prepared comments around reducing the CARVICTI vein to aim time. Could you talk about the work that's being done here and if there are any internal targets for how much this could be improved?

Why don't I take the first question around Germany, around sites? Unfortunately, I cannot get into the details around sites and the rollout plan in Germany. I can tell you this, it's very robust and I could also tell you the fact that in any country, the site certification process is often somewhat lengthy. So I'm bringing that up because I know our partners working very hard to bring more and more sites on board, but

I can't unfortunately get into specifics around numbers of sites. Okay, so on the question about

vein to vein, I can tell you that our goal is to get to a median of less than four weeks by end of this year and also we have a new metric to measure, which is P90. That means 90% of all the sellbacks we shipped out will fall into the, what we call, a freeze to receipt to less than five weeks. So that is our goal by end of this year. That means average four weeks or shorter and then pretty much all the patients will be able to receive that within five weeks. That is our goal here.

Very great, thanks for taking the questions.

Thank you. I'm showing off for the questions at this time. Ladies and gentlemen, this concludes today's cell conference. Thank you for your participation and you may now disconnect.