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Legend Biotech Corporation (NASDAQ:LEGN) is a midsize China-origin biopharma company with their global HQ in the U.S. In 2020, during the worst period of the pandemic, the company successfully launched a massive IPO that was one of the largest that year.
Legend’s lead candidate Carvykti or Ciltacabtagene autoleucel (cilta-cel) is an autologous CAR-T program approved in the U.S. and conditionally in the EU in fourth-line multiple myeloma. The product is licensed to Janssen, and Legend received upfront and milestone payments. The actual indication is:
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Treatment of adult patients with relapsed or refractory multiple myeloma after four or more prior lines of therapy, including a proteasome inhibitor, an immunomodulatory agent, and an anti-CD38 monoclonal antibody.
The company’s pipeline is mostly autologous therapies, which means the T cells are extracted from the patient. This is an expensive and delaying process, whereas allogeneic or off-the-shelf CAR-T is cheaper and quicker one. However, allogeneic comes with its own safety issue, which is mostly graft-versus-host, or the body’s rejection of what it considers foreign material. The company’s allogeneic assets are early preclinical.
The corporate presentation shows 3 phase 3 trials, in various types of multiple myeloma, and in various geographies. Their phase 2 trials are also in MM, while only in phase 1 trials do we find solid tumor indications. So despite the approval, the company is still quite early stage in some ways.
For its lead candidate, the company has a global collaboration with Janssen for which it received an upfront payment of $350mn and a milestone payment series totaling $300mn over since 2017. The company will also receive another $770mn in milestone payments.
In the third quarter, sales of Carvykti totaled $55mn, which is pretty good considering it was only approved in Q2. Another anti-BCMA CAR-T, Bristol Myers Squibb and 2Seventy Bio’s Abecma, saw a Q2 sale of $89mn. These are close competitors, and analysts are predicting multibillion dollar total sales for each product before the end of the decade. Label expansion in earlier line diseases is being worked out through a number of trials, notably Cartitude-4 trial for 1-3 lines of therapy RRMM, and Cartitude–5 for frontline disease.
In the CARTITUDE-1 trial which supported the initial approval, carvykti had unbeatable results: a 98% response rate, and a 78% complete response, which is anything beyond what Abecma has been able to achieve. At this year’s ASCO, the trial reported 28-month follow up OS and PFS data of 70% and 55% respectively, which is absolutely great for patients with such advanced disease. Carvykti, however, has to deal with toxicity issues, and comes with a black box warning of cytokine release syndrome, etc. Here’s the full text:
WARNING: CYTOKINE RELEASE SYNDROME, NEUROLOGIC TOXICITIES, HLH/MAS and PROLONGED and RECURRENT CYTOPENIA See full prescribing information for complete boxed warning. • Cytokine Release Syndrome (CRS), including fatal or life-threatening reactions, occurred in patients following treatment with CARVYKTI. Do not administer CARVYKTI to patients with active infection or inflammatory disorders. Treat severe or life-threatening CRS with tocilizumab or tocilizumab and corticosteroids. (2.2, 2.3, 5.1) • Immune Effector Cell-Associated Neurotoxicity Syndrome (ICANS), which may be fatal or life-threatening, occurred following treatment with CARVYKTI, including before CRS onset, concurrently with CRS, after CRS resolution, or in the absence of CRS. Monitor for neurologic events after treatment with CARVYKTI. Provide supportive care and/or corticosteroids as needed. (2.2, 2.3, 5.2) • Parkinsonism and Guillain-Barré syndrome and their associated complications resulting in fatal or life-threatening reactions have occurred following treatment with CARVYKTI. (5.2) • Hemophagocytic Lymphohistiocytosis/Macrophage Activation Syndrome (HLH/MAS), including fatal and life-threatening reactions, occurred in patients following treatment with CARVYKTI. HLH/MAS can occur with CRS or neurologic toxicities. (5.3) • Prolonged and/or recurrent cytopenias with bleeding and infection and requirement for stem cell transplantation for hematopoietic recovery occurred following treatment with CARVYKTI. (5.5) • CARVYKTI is available only through a restricted program under a Risk Evaluation and Mitigation Strategy (REMS) called the CARVYKTI REMS. (5.4)
Carvykti has been dubbed as “a poster child of successful innovation originating from China,” however, its pricing in China is critical for its acceptance within that country’s healthcare system, where a drug price beyond around $50,000 is not eligible for state reimbursement as of now. China’s only approved CAR-T therapy, yescarta, carries a price tag four-times that. However, local manufacturing could change that, and this is what Legend is trying to achieve in the long run, with its own manufacturing facilities in China.
Legend has seen its share of troubles. In February, the FDA placed a clinical hold on a phase 1 trial of autologous CAR-T cell therapy LB1901, designed to target cancerous CD4+ T-cells in the treatment of adults with relapsed or refractory T-cell lymphoma (TCL). The hold followed after the company reported to the FDA that the single patient dosed with LB1901 experienced low CD4+ T-cell counts – and just a few weeks before the company’s first approval. Although the hold was lifted within months, the company decided to end this trial, citing lack of benefits seen in a similar trial.
Another concern has been supply chain issues, mainly with the lentiviral vectors being supplied by Johnson & Johnson (JNJ), which may actually have led to a lower sales figure in the last couple quarters. This is a problem across the board, and Legend is also looking to solve this problem by shifting some of its manufacturing to China instead of sourcing it from its partner.
Financials
LGND has a market cap of $8.17bn and a cash balance of $796mn in cash and cash equivalents, deposits and short term investments. The company recently raised $350mn through a stock offering. Not being an U.S.-based company, Legend’s reporting standards are different from what we get in the U.S. So I have their R&D figure from here – “research and development expenses of approximately US$135.3 million to US$157.9 million,” but I cannot see their SG&A expenses anywhere. So I am unable to comment on their cash runway.
Recently, the company faced a delisting threat from the SEC after it was discovered that they were “utilizing an auditor restricted from Public Company Accounting Oversight Board (PCAOB) inspection.” There is a grace period of 3 years for the inspection, with a bill being discussed to reduce that to 2 years. Legend has quickly mitigated that risk by shifting from their current auditors, the Chinese arm of Ernst & Young, to its US-based arm, Ernst & Young LLP.
Bottom Line
Legend’s carvykti franchise has been touted as a multibillion dollar opportunity, which, in the hands of JNJ, it could quite possible be true. Their profit sharing is 70-30 in China and 50-50 in other countries. However, the company can only get to such figures if they are successful in earlier lines of therapy. I am also wary about their U.S. reporting standards and supply chain issues, which, admittedly, are abetting somewhat. Bottomline is, while I will closely watch Legend, I don’t plan to invest in it right now.
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