Legend Biotech Corp (LEGN) 2024 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

Welcome to Legend Biotech Reports.

Third quarter, 2024 financial results.

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I would like now to turn the conference over to Jessie Young Vice President of Investor Relations and Finance.

Please go ahead.

Good morning.

This is Jess Yang VP of Relations and Finance.

Thank you for joining our call today to review our third quarter 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 Q&A.

We have our Chief Medical Officer Michael Kuro and our VP of commercial development, Steve Dle 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 community website.

Turning to our highlights in the third quarter, we are pleased that Kric T cells continue their strong momentum, delivering quarter over quarter growth of 53% and year over year growth of 87%.

We are also very excited about the results from the second interim analysis from the card trial, particularly the overall survival benefit that achieved these results were announced as a late breaking oral presentation at the International Myeloma Society meeting in Brazil in September and they received an enthusiastic response from health care providers around the world.

Now, I am pleased to turn the call over to our CEO for his remarks.

Hello everyone.

I'm glad that you're able to join us and hear about our recent accomplishments.

As you can see on slide 5, it's been another eventful quarter for us as we continue to make significant progress against our strategic priorities.

I'd like to start by expanding on the importance of CVTI achieving overall survival benefit in the second line plus patient population.

Let's turn to slide 6 to frame this achievement precisely.

CARC is the first and only cell therapy to significantly extend overall survival compared to standard of care in patients with multiple myeloma.

As early as the second line, specifically, KTI reduced the risk of death by 45% versus standard therapies after a three year follow up period.

Reaching this milestone is monumental for the company for the marketplace, health care providers and patients.

It puts convicting in the enviable position of providing patients with longer lives, what some call the Holy Grail of oncology.

Clinical trials hand in hand with overall survival.

Car has also maintained significant improvement in progression free survival as compared to standard of care.

Also at the International Myeloma Society meeting, a real world analysis of carc efficacy and safety was also presented.

The results demonstrated the importance of risk mitigation and the critical learnings from our development program and real life experience with KBDI.

It is noteworthy that with over 4,000 patients treated, we see a very low incidence of parkinsonism and FDA public safety data also suggests that this condition is likely a class effect.

As you know the prior positive interim data from cartitude four resulted in FDA and the European Commission approving CVUS use in second line setting for relapse and refractory multiple myeloma patients.

We along with our collaboration partner, Jonathan Johnson are planning to submit the cartitude for overall survival results to regulatory authorities in the US and Europe.

In order to update our label with this new paradigm shifting results.

In third quarter, we also received approval for KTI from China's National Medical Product Administration for treatment.

In the fourth line plus setting, we are pleased that KTI continues to gain recognition from health care regulators around the world for the significant clinical benefits.

Our one time infusion provides importantly for all us rest of the world market.

We have expanded our ability to produce curity for patients in Europe.

Moving to slide 7 in September, we received approval to produce CVTI commercially at our facility called Obelisk in Ghent Belgium.

This is a critical component of our plans for serving patients in Europe and beyond.

Congrats to the team in Ghent for securing the approval in what we believe to be record type.

It's another demonstration of legends, commitment to expediting delivery of CARC to all patients who can benefit from it worldwide.

Moving to slide 8 in third quarter, net trade sales of KTI were approximately $286 million which as Jesse highlighted is an 87.6% increase year over year and a 53.2% increase quarter over quarter.

The robust quarter over quarter performance was aligned with our expectations of accelerating growth in the second half of the year and was driven by continued demand, particularly strength in the second line demand, share gains, continued capacity expansion and manufacturing efficiencies.

We are firing on all cylinders and we expect sequential growth into the fourth quarter.

We look forward to treating many more patients in need in the months and years to come.

Our O US sales increased over 100% year over year and 35% quarter over quarter.

Thanks to our increase in capacity and ongoing launch expansion in the third quarter, Kti became commercially available in Switzerland and I am pleased to share that Swissmedic.

Just updated label expansion to the third line plus treatment.

Switzerland is the fifth country where KTI is now commercially available to patients along with United States, Germany, Austria and Brazil in the United States.

We continue to certify more hospitals as authorized treatment centers.

The total number of us hospitals that are approved to treat CARC patients is now 82.

We call that CARC has a unique delayed CRS onset profile that allows for extensive outpatient administration.

As you can see on slide, 10 outpatient treatment now compromise up to 48% of our volume and is a significant growth opportunity for us to reach even more patients usage in the outpatient setting is very important as we expand further into the community setting.

This is a key consideration for hospitals as they seek to optimize allocation of limited beds and resources.

Patients and their caregivers often prefer to check out of hospital after treatment.

The option for outpatient treatment is a real differentiator for cerity as the number of patients increases.

Car T has now achieved nearly 90% market share in the BC MA car T class of sales in the US and Germany and it continues to be the fastest launch car t product on the market with the explosive growth of Kti and our evolution as a company, we're excited to announce that recently we appointed a President of Kti Business Unit.

Alan Bash Allen will be responsible for managing the continued growth of KTI, overseeing legends, commercial technical operations and quality functions of the franchise.

Prior to joining us, Alan served as the CEO of two oncology focused biotech companies most recently at Zo Bio and prior to that at Checkmate Pharmaceuticals.

Before that, Alan had a 23 year career with Bristol Myers script, where he held various leadership positions across all major therapeutic areas including oncology, where he drove the expansion of products such as off Devo, Evo and bit Allen also contributed to several Blockbuster products in collaboration with other companies such as Abilify with Ouca and Eliquis with Pfizer.

We welcome Alan to the Legend Family and look forward to introducing him to many of you soon turning to midterm growth for Kti and Legend.

We are pleased with the pace of enrollment for our first line trials.

Cartitude five and cartitude six as you may know cartitude five is fully enrolled and we expect to complete enrollment for cartitude six next year.

The speed of enrollment in these trials is a testament to the benefit risk profile of convicting demonstrated by our growing body of positive clinical trial results.

Looking at longer term growth for legend.

We recently announced a new research facility being built in Philadelphia which is a growing hub for biotechnology companies.

The new site is centrally located among some of the top research institutions in cell therapy and provides potential opportunities for collaborations which would expedite our innovative cell therapy research.

We expect to be up and running in the summer of 2025.

And we look forward to updating you on the progress of this exciting project to summarize the third quarter.

It's been another quarter where we executed with Excellence which sets us up for a strong finish to the year.

Now it's time to take a closer look at the financials.

So let me turn the microphone over to Laurie.

Thank you, Ying and good morning, everyone.

As Ying mentioned, we generated approximately 286 million in total net sales for KTI during the third quarter, an increase of 87.6% year over year.

As a reminder, we share equally in all profits and losses of Kti ex China with our partner Jansen.

As you can see on slide, 12 total revenues for the third quarter were 160 million consisting of 143 million of collaboration revenue from the Clovi and license revenue of 17 million from the recognition of deferred revenue in connection with our agreement with Novartis to develop manufacture and commercialize LV 2,102 and other potential car T therapy selectively targeting DL three net loss for the quarter ended September 30th 2024 with $125 million or a loss of 34¢ per share compared to a net loss of $62 million or a loss of 17¢ per share for the same period for the quarter.

Unrealized foreign exchange losses of 63 million was incurred primarily due to intercompany transactions and balances between the US and non US legal entities for the same period last year, 16 million in unrealized foreign exchange gain was reported moving on to expenses on slide.

13 collaboration cost of revenue for the third quarter, 2024 was 52 million compared to 43 million for the same period last year.

These are legends portions of collaboration cost of sales in connection with the collaboration revenue under the Johnson Agreement along with expenditures to support the manufacturing capacity expansion.

Additionally, costs of license and other revenue for the third quarter of 2024 was 3 million compared to no cost of license and other revenue for the third quarter of 2023.

These costs are in connection with our agreement with Novartis to develop manufacture and commercialize lb 2102 and other potential car t therapies selectively targeting DL three research and development expenses for the third quarter, 2024 were 96 million similar to the same period last year.

These expenses are primarily due to research and development activities in CLL including startup costs for clinical production in Belgium, as well as continued investment in our solid tumor programs.

Administrative expenses for three months ended September 30th 2024 were 35 million compared to 28 million for the same period last year.

The increase of 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 ended September 30th 2024 with 44 million compared to 21 million for the same period.

Last year.

The increase of 23 million year over year was due to costs associated with the commercial activities for KTI including the expansion of the sales force and support.

A second line indication.

Launch other expenses were 62 million for the three months ended September 30th 2024 compared to 0.1 million for the same period last year.

This increase was almost entirely driven by unrealized foreign exchange losses for the three months ended September 30th 2024.

In the same period last year, there were no unrealized foreign exchange losses.

The unrealized foreign exchange losses were primarily driven by intercompany transactions and balances between the US and non US legal entities related to research and development activities to summarize our spending remains on track and we continue to maintain a strong balance sheet.

As of September 30th, we have 1.2 billion in cash and equivalents and time deposits.

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.

Moving to slide 14.

We are excited that we had so much good news to share from this past quarter and we could not have done it without the dedication of our 2,400 team members globally.

Their commitment inspires me every single day, but we continue to have lots of work ahead of us and we strive to execute our strategic priorities.

Before we take your questions.

I'd like to share context on recent development.

After our annual general shareholder meeting in October Genscript announced that they will deconsolidate legend from their financial statements as they're no longer a majority shareholder of the company.

This has no material impact on our operations as legend has operated as a separate company since our spinoff in IPO in 2020.

Now it's time to take your questions, operator.

We're ready for the first question, please.

Thank you as a reminder to ask a question.

Please press star 11 on your telephone and wait for your name to be announced.

And our first question will come from Gina Wang with Barclays.

Your line is now open.

Thank you for taking my questions.

Maybe I will ask two questions.

Oh The the first question is you know, regarding, I think that the upcoming data update, investors have been very focused on card to one comparison to a need to cell imaging one heading to ash update.

And now we see the ash abstract and we are going to see the full data at the ash in three weeks.

So what are the key data points that you know, investors should focus on regarding efficacy and safety.

And a quickly a follow up question regarding the OS benefit show the data for card 24.

When should we see the OS benefit to be included in the NCCN guideline and in the label, where are you in terms of the steps?

Hey, good morning.

Gina, thank you for the questions.

I'll take the first one.

So we already saw the baseline from the imagine one trial and you can tell that from every metric we look at including the number of prior lines of therapy, the percentage of only three prior lines of therapy, the triple refractory patient population, the Penta refractory population.

I think we can conclude that clearly the patient population in imagine one is less sick than the patients we enrolled in card 21.

That's first.

Now, we don't know, for example, some other metrics including the percentage of E MD patients, but that might be another metric that could tell us more, right?

But even compared to their own phase one trial, this is easier to treat patient population, suffice to say.

Now, secondly, if you look at efficacy, we did present cartitude one with about 12 month follow up at ash 2020.

And again, if you look at the or rate, which is 97% and then the cr rate, it's 67%.

But I want to mention that all every cr we observed is a stringent cr again, we would like to see whether the other party breaks down the percentage of cr versus stringent cr.

However, as you may know, in myeloma treatment, it's always about the ability for that.

Unfortunately, we will not get much data from the other party and we stand behind the consistent results we have seen from card one, card to two, card four and all trials in across all the settings.

So I think it's all about durability.

It's about PFS and we have three years, nearly three years pfs in the last time, patient population as demonstrated in card one.

So regarding your second question, I'm going to ask Steve to comment on maybe NCCN.

Yes, I'm.

Sorry.

Sorry.

Also regarding safety, can you comment?

Sure.

I mean, we do understand that if you use a proactive management strategy in terms of selecting patients and also managing patients with both IO six and steroids, it can be very effective.

In fact, if you look at the history of CD 19 car T, right.

If you recall almost 10 years ago, there was a perception that maybe the Juno Cd 19 was not as safe as the kite party yet in real life.

I don't think, you know, it's been that case, right?

If you look at the real world CRS and also neurotox, so clearly a lot of that has to do with the patient selection and also management.

And we are already starting to institute those.

And we're talking to chaos about this.

You will see more data at ash as well.

Yeah.

Hi.

It's Steve.

And what I was saying is that it's hard to predict the guidelines in terms of when they will be updating them in terms of new data.

But we would, we would be expecting an update sometime by the end of the fourth quarter.

And Gina just to supplement We and our partner, Jonathan Johnson are planning to submit the overall survival data in a supplement to both FD A&E Ma in the near future.

So we do expect that will be reflected in the label in both the US and Europe by end of next year.

And our next question comes from Yaron Werber with TV co when your line is open.

Hi.

This is Jaya on for your own.

Congrats on your quarter and thanks for taking our question.

I have two obviously for the first one, you had a strong Q3.

But I'm curious how we should think about quarter over quarter growth going into Q4.

Should we expect the same kind of cadence or is most of kind of the growth driven from the additional manufacturing already realized in Q3?

And then secondly, I think you've noted in the past that a key limiting factor for BC MA car T supply is the FDA cap on car T production.

Is this just for BC MA car Ts?

Because we're hearing that Gilead was never limited in their volumes for Garda and Tardis.

So what do you think that might be?

Thank you so much.

Sure.

So let me address the first question about sequential growth in the fourth quarter.

I think you have heard from both the legend and the Johnson and Johnson teams reiterating that we confirm we will expect sequential growth in the fourth quarter.

Now, it is our policy not to comment or provide guidance.

So I'm not able to give you any quantitative guidance.

But yes, we are reaffirming sequential growth even though we have a fantastic growth rate in the third quarter already, but we still expect to see higher revenue number in the fourth quarter.

So, regarding your second question, I guess what we can tell is that from the BC MA class in both experience for a Bema from Bristol and also for Carvi from J&J and Legend.

Yes, in both cases FDA did regulate the capacity.

Now, I would refer you to ask kite about their capacity for CD 19.

But our standing, our understanding is that FDA as a regulator does regulate all car T manufacturing facility capacity.

It's not just even for franchise, but also for each individual facility that produces car T.

You can also download the FDA review documents on the FDA website of you know the process and also how FDA determines the capacity.

Sorry, I also want to add that if you look at the performance of all commercial car brands in the market, 10 quarters in, since FDA approved of car in February of 2022 we have been able to supply the market with the highest number in terms of revenue and also slots.

And our next question comes from Kelly Shay with jeffries'.

Your line is open.

Congrats on the progress and thank you for taking my questions.

So for the second line launch, can you elaborate more on the ramp up attendance?

And how should we think about it comparing to face line launch?

Given that now we are two quarters after the approval in early line.

And also do you expect the majority of the majority use of convected shifting to early line from late line in near future?

Thank you.

Yeah, why don't I take that question, Steve?

Thanks.

Thanks for asking.

Why don't I start with the second question first.

And the question I think had to do with a percentage of patients in our cartitude, one versus cartitude four indications we expect to be exiting next year.

For example, with the overwhelming majority of our patients treated to be in the cartitude four population.

Something in terms of a ratio of two thirds to third in terms of where we are right now.

For this, this particular year, we are well ahead of what we thought we would be in terms of early line adoption.

I think that's built up a number of different things.

Most notably, the most recent o overall survival data that we're, we're, we're coming out with now.

So we expect that trend to continue and accelerate where we would expect to be next year.

But in terms of where we're pacing right now for the year, we're outpacing where we thought we would be in terms of our cartitude for launch.

I don't think there was any other follow up questions to that.

Let me look here.

I think that's it.

Thank you.

You're welcome.

And our next question comes from Jessica Fye with JP Morgan.

Your line is open.

Hey guys, good morning.

Thanks for taking my question.

My question is on just how we should think about the evolution of the mix of inpatient versus outpatient use.

Specifically is the shift that we're seeing driven by the conversion of existing treatment sites to more outpatient use or is that more a function of the new sites coming online as outpatient sites?

And can you, can you also just remind me where you think that proportion of inpatient versus outpatient could be looking out say 12 months from now?

Thank you.

Yeah, I'm happy to take that question.

It's an important one.

We've been monitoring this since our launch of cartitude one.

So just to kind of kind of back up to your point, the reason why and the reason why I think was highlighting this in his opening of why it's so important is as we were launching our initial indication, we had basically our eye on the second indication knowing that with the volume increase going into second line plus, it would be substantial and it would be something that would be unprecedented in terms of the marketplace and in terms of volume of car t eligible patients hitting our hos hospitals.

So it's the reason why you've seen rapid adoption almost up to 50% and in some cases at 50% in certain sites.

So that what's driving your question about what's driving the adoption.

It's primarily due to the fact of of sites, recognizing the volume impact that they will need to absorb.

And as a strategy to account for that, many sites have now moved to as much as possible outpatient use, where appropriate, where you see inpatient use in sites that have adopted, the outpatient model are in are in the higher risk population, which makes sense.

You see those patients often being admitted upon administration.

So I think one of your question was so that hopefully speaks to what's driving the the outpatient adoption.

You had a question about who's adopting.

Well, we're seeing a pretty much wide adoption across the board.

The primary adopters are those large major academic sites in the United States.

Really kind of our TOP18 sites that are driving the majority of our volume.

Anyway, As sites come on board, new sites come on board.

We, we, we see typically and this is true with even our early adopting sites, it takes some time for these sites to, to get going in the, in terms of the outpatient setting.

And the reason for that is the providers really just need to get enough patients on product to see how these patients are reacting and, and compare that to our label to get some real world experience.

So, so you see kind of a slower adoption and we've seen that pretty much consistently with any new site that we have onboarded as, as far as far as our commercial footprint in the US.

Thank you.

Sure.

And our next question comes from Umar Rafi with evercore.

Your line is open.

Hi guys.

This is John Mon for Omar Congrats on the quarter and thanks for taking my question.

I'd love to start with one on the drivers of neurotox evolution across your trials.

Obviously, you mentioned management, patient selection being very important there.

But where do you think the tolerability profile could go in the future for KV?

Is it possible to control this even further going forward and to eventually get a better safety profile in the label?

And then secondly, maybe since nobody's asked about it, I'd love to get the latest update on your autoimmune progress.

I know you're in phase one there.

But what are you seeing from a patient enrollment perspective?

And when could we see potential data?

Thanks so much.

So John, I am going to ask our Chief Medical Officer, my theory to ask to start to answer the first question.

Right.

Yeah.

Thank you for your question.

So, regarding the neurotoxicity profile, you can see that compared to the cartitude one and the cartitude four data, we've seen a significant decrease in the neuro delayed neurotoxicity including the Parkinson's and and I think that's a testament to the improvement in the management of these patients.

So improved in terms of decreased tumor burden, appropriate like identification of these patients, etcetera.

So clearly, there's it's currently with the cartitude for less than 1% which I think is important to mention.

In addition, moving forward, we've identified additional factors that we think can further drive this down.

And you know, we've talked to many kols that are already using this in the sort of the commercial setting.

And as you mentioned before, competitors are using actively in their studies, which is the steroid use.

And what we found is that absolute lymphocyte count or A LC is a good early indicator of potential rapid expansion and application of steroids in that setting, does potentially mitigate this delayed neurotoxicity.

And this is something that the KOLS have described to us and that they're actively doing in the commercial setting.

So really good bridging therapy and sort of monitoring, active monitoring of the A LC.

We both we feel that both of these are important mitigations to potential neurotoxicity.

And also John, I would like to also mention that, you know, for our potential competitor, it's not fair for them to compare our data from four years ago when they compare efficacy.

But then when they talk about safety again, why don't they compare to our current data, right, where we do see a dramatic lower incidence parking on in the car four trial and also in real world physicians have been gaining experience in terms of how to manage that and it is lower again than what we observed in card 21.

Now on to your second question about our autoimmune program.

Yes, we have officially kicked off our first in human study for the trispecific CD 19 CD 20 CD 22 targeting car T for autoimmune indications and we have already opened.

Our first site enrollment is ongoing now.

But besides that, we also are working on a couple other programs that are all unique.

Again, targeting auto immune indications.

So that should go into first in human study sometime in 2025.

With regard to data.

Again, we're not guiding, but we do expect some sort of clinical data to emerge in the year of 2025 for the first program.

Thank you.

And our next question comes from Costes Belos with BMO capital.

Your line is open.

Good morning, everyone.

Thanks for taking our question and contract on the progress.

One question from us on the competitive dynamics.

Although you already alluded to that, but given that the competitor c product will be entering the market potentially in the late lines in about a year or so, how should we be thinking about the competitive dynamics?

There?

Are you focusing on protecting your market share in late lines or just focusing on getting as much market share as possible in early lines?

Thank you.

Sure, coas let me start by mentioning a fact which is in the case of registration program for late line multiple myeloma, the first assessment of efficacy at day 28 or a month after the last patient was enrolled.

And then after that FDA requires a 12 month minimum follow up.

So if you do the math, that is 13 months after the last patient in.

And of course, following that, the sponsor needs to clean up the data, lock up the database, get all the filing into the FDA acceptable format and then FDA will review.

So, we're not expecting anything to come in to the market next year or maybe even the year after that.

H1stly depends on how fast the regulatory reviews go.

Right.

And that's just a fact.

If you look at the regulatory history for Car T for Bema, I don't understand why the agency FDA would take any special treatment to any others.

And then I'll ask Steve to comment on the question.

Yeah, thanks thing.

In terms of promotional focus, the fact that we are now clearly differentiating yourself in terms of the only car T therapy in earlier lines today, which is second line plus, we will continue to, to promote in those earlier lines and that will remain our focus for the foreseeable future.

One thing to keep in mind, I think it's an important comment here as relates to any downstream competitors in the United States when a car T therapy is used right now, at least in the private sector.

And this is consistent with Medicare, the payers are not paying to go from a car T drug to another car T therapy it's denied.

So it's the primary reason, one of the reasons why we'll be driving our promotional efforts in the earlier lines.

Not to mention that's where the majority of the benefit is for our patients.

But that will be consistent in terms of our promotional focus again for the foreseeable future.

And cost is maybe I would also add another two comments here.

First of all, I think outpatient administration is very, very important today.

That is why compared to all the other brands, we have the highest revenue mix coming from the outpatient use, close to 50% of our revenue is coming from outpatient use.

And that that is a distinct important commercial advantage.

Secondly, as you probably know, every hospital, every insurance plan has a preferred provider has a formulary and as a third or fourth entry into the market that increase the degree of difficulty in terms of launching into the commercial space as well.

Yeah, maybe before we jump off that question, I think it's important because we, we never get the question.

Why?

Right.

I mean, we get it once in a while, we get it early in terms of why, why now this is one of the only car t therapies that have been used so frequently in the outpatient setting and will be continuing to be the case in the foreseeable future, including this competitor that I think people are referring to the reason behind the why is around the onsen onset of crs that you're seeing with car VTI it's the only car T therapy today where you see a prolonged time frame pass before the actual onset hits, which which does allow or enable our site to dose monitor remotely and then have these patients being brought in at a, at a later date.

Is my understanding with the competitor that we're referring to is their onset is relatively acute.

So that's going to be very, very difficult to, to in essence, utilize outpatient type guidelines for a competitive product that has that type type of acute onset, it makes it very difficult for physicians to discharge if patients are experiencing short term toxicity.

So I did want to highlight that for you because I keep hearing about, you know, outpatient use and other particular car T products.

It's one of the distinct distinct clinical differences with this program which enables us to in essence, take our patients out outside the hospital.

And our next question comes from James Shin with DB.

Your line is open.

Hey guys, thanks for my question.

Maybe this is another question for Allen and Yang on the outpatient setting.

I think we kind of have a real preview of what short onset crs is with it to sell, right?

Like that doesn't do very well in outpatient.

So how would Anita cell do well in outpatient?

That's my question.

Thanks.

Yeah.

Medical perspective, the well the the onset of action or the onset.

So I think that you know, CARC D being given outpatient is something that we actually recently did an advisory board on and there are several institutions that are actually doing this quite successfully and able to completely monitor remotely.

And they're actually working on a publication to kind of continue to kind of promote this outpatient model, which is very easy to do because of what Steve mentioned earlier about the delayed cr on set.

You know, other competitors have it tend to be very early to two days.

And so what that does is it creates a setting where right after administration, you have to kind of monitor these patients closely.

It's not to say that you can't give it outpatient, but it tends to be a higher hurdle to do so.

And that I think is a significant advantage given that these hospitals are extremely burdened by, you know, doing all of these things in patient keeping the the the patient in the hospital for prolonged periods of time.

So it's a significant advantage as he's mentioned.

One thing to add to my comments once you're all spot on the best proxy to look at and to ask yourself the question is why has the market if outpatient administration is so relevant, why hasn't the market successfully moved outpatient treatment with the BEMA?

And, and the reason for that is they also have a very acute onset of CRS if it's that simple or you would have seen that migration outside the hospital there.

So again, it's a, it's a benefit that it's like I said earlier, it's, it's a very unique toxicity attribute of this program that is not only the BC MA therapies, but also the CD 19.

And it's the first time that you're seeing this type of outpatient adoption across the class of car T and it was something that we were hoping to have happen quite frankly and it was something that our investigators predicted back when we were launching back in cartitude one.

So, anyways, I'll, I'll stop with that.

And our next question comes from Leonette Tacy with R BC capital market.

Your line is open.

Hey, this is Joan for Leo.

Thanks for taking our question.

What are your expectations for Europe now that you have commercial capacity up and running?

And what are some differences in between European and us positions in selecting car T over other options?

Thank you.

Yeah.

So it's the, so I don't want to take a crack at that one.

So Europe, Europe had a very different model.

So we, we just had a long discussion here, I think around outpatient administration.

So that model is not available for most sites in Europe.

So this whole outpatient conversation, I don't think you're going to hear a whole lot about with car T therapies in general.

The so, so in terms of the car T adoption within Pan Europe, whether it be PC MA or CD 19.

It's been relatively slow and unfortunately, it's been mostly a product of coming to an agreement around pricing.

It's unfortunate but that is a situation in Europe, as I believe, you know, our partner is driving car VTI in the European markets today and I won't reiterate the countries that we are launched into today because already did that in the opening.

But right now, the key driver for this brand in Europe is Germany and we'll continue to to ramp up into next year and beyond.

So that will continue to be our major market in in Europe.

This is the, I also want to add that you probably know that in Europe where pretty much every country has a single payer system, the survival data is utmost important because those government agencies, they do care a lot about the outcome, right?

So it's not about response rates or even just stringency.

R it is about durability, it is about PF and most importantly, they do ask questions about survival.

So we're very pleased to be armed with this survival benefit that we have observed in Cartoon four.

In fact, we're already talking to different countries and agencies in Europe, including Germany about this latest survival benefit we observed, observed.

And you know, I want to emphasize again to date, KTI is the only and also the first car T targeting BC MA or any BC MA targeting modalities in the treatment of myeloma that has demonstrated both clinically meaningful and also statistically significant survival benefit with the highest ratio of 0.55.

That is probably the lowest health ratio you have seen in any major myeloma trial to date.

I will also add that the clinical trial enrollment as Ying mentioned in his opening that cartitude five and six had significant or is having significant enrollment in Europe.

So clearly, the treating physicians are very interested in being able to provide this therapy for their patients.

And the next question will come from Vikram Per Howitt with Morgan Stanley.

Your line is open.

Hi, good morning.

Thank you for taking our questions.

We had two on Carvi the pipeline efforts first for the cartitude two study.

We just wanted to see what you think the timeline could be for an update from cohorts enf and your guidance on the best way to interpret that, that data when it's available.

And the second apologies if you mentioned this and we missed it, but I wanted to see what the status was on your and J and Js plan to discuss the MRD negativity as a potential endpoint for cartitude six and when we could receive an update here.

Thanks.

Sure.

Thank you for your questions.

Regarding part two cohorts EF which are the front line, newly diagnosed, multiple myeloma, we ultimately need longer follow up.

So we will continue to monitor those cohorts very closely.

And when we're able to have more follow up, we'll be able to report that externally regarding your second question regarding the cartitude six by signatures of MRD negative.

You know, this is obviously with the recent OD discussion, the D A is more open to using MRD negativity cr as you know, a potential as an end point, particularly in the front line studies where these end points tend to be extremely long in terms of P&O.

Therefore, we hope to get in front of the FDA and have some interactions with them on using this as an end point, the more to come.

And the next question comes from Mitchell Kapoor with HC Wainwright, your line is open.

Hey, thanks.

For taking the questions.

I wanted to build on a question from earlier when KLS are successfully using steroids to manage some of the safety events.

Such as CR SS and narrow talks.

Could you just talk about, is there a way to follow that formally and potentially include that in the label at some point?

And then se and then separately, could you talk about if there's any significant work that remains on the payer side for getting them up to speed with the second line label?

Thank you.

Yes.

So regarding the steroids question, we hope to incorporate something like that in the cartitude six protocol.

So that we can look at using A LC as an early surrogate marker for expansion and, and treat with steroids accordingly.

Therefore able to incorporate that.

And we hope that that can also, you know, potentially go into the label and we do have precedent for this.

If we look at yes, Carta's label, they do have recommendations on, on steroid use.

So we think that this is a good management tool moving forward.

Why don't I take the second piece of that?

I think it was a question on payer coverage.

Yeah.

So for the cartitude four indication, I'm happy to say that no, there are no barriers at all around payment with their commercial plans at all.

As a matter of fact, given the overall survival benefit that we're, we're now seeing in that, that, that extensive treatment, free interval.

Private insurers love a drug like Carvi because of all the down downstream cost savings that it presents.

Not to mention we've talked, I think we've beat up outpatient enough.

They love a car T drug that can then be moved to the outpatient setting and reduce all that inpatient costs associated with that.

Obviously, when, when, when done effectively and safely.

Thank you.

And our next question comes from Justin Zelin with BT IG.

Your line is open.

Hey, good morning.

This is Jon for Justin.

Thanks for taking our questions.

So you've talked about lymphocyte monitoring and steroid use to manage the delayed neurotox.

But in your experience, are there still a fraction of clinicians that are hesitant to use KTI due to the neurotoxicity and Parkinson's in the second line setting.

And do those concerns gain more weight as they look to the front line setting?

And my second question was just with the China approval.

Now in place, how should we think about that launch trajectory moving forward?

Thank you.

You want to take crack at the.

I'll do the.

Commercial.

Sure, I can get started regarding the A LC and the storage use.

This is something that some clinicians have actively adopted.

And we are potentially working on, you know, more publications on this front to create more awareness on this.

That being said, clear, we, I think this is going to be an important factor as we move into earlier lines of therapy.

And that's why I think it's so critical to, to make sure that we inform treating physicians that there are ways to mitigate it appropriately.

Yeah, maybe I could provide some of the research that's been consistent for over the years.

You're absolutely right.

So in the earlier earlier line setting toxicity is becoming even more important for treating physicians.

We we've seen that with all the research we've done with our, our cartitude four launch.

It's one of the primary reasons why we've deployed additional promotional effort in the pure out outpatient setting.

So you heard earlier in the opening from Laurie that there was some expenses taken in the quarter for increasing the sales organization.

Well, that increase was due primarily to, to address some of the this particular question in terms of educating physicians who are not as familiar with car t therapies.

Most of those, those folks are found in the community setting and we are now actively deployed to educate those physicians with our partner on the features and benefits of a of a product like car VTI as well as the toxicity profile and benefits that, that, that, that a product like this provides them.

Again, I think the one of the key differentiators now and fortunately for us, we now have this overall survival benefit, which is extremely important.

And I'll make that conversation even easier in areas where that there might be concerns of neurotoxicity in the earlier ones.

So JIA on your second question about China launch.

So we're actually in discussion with our partner Johnson Johnson about this, but given the supplys trend and also the availability of anti viral vector, we are obvious obviously, you know, prior in markets such as us and Europe where we already launched car.

So that is an ongoing discussion with Johnson and Johnson.

And then regarding China, I do hear some questions from investors and analysts about the topic.

So I may just want to add another layer of the comment here that is with President elect Trump coming into White House in January and also all the discussion about tariffs.

Is there any impact on legend at all?

So I can confirm that we use no raw material or starting material from China in the production of car in us and in Europe, if you look at our supply chain operation to supply car in us and Europe, 100% of all raw mature study mature are coming from us or Europe.

So that is a very clear cut answer to, to the tariff question.

We don't see any impact at all whatsoever.

Thank you.

And our next question comes from Rick Binkowski with Cantor Fitzgerald, your line is open.

Hi, good morning.

Congrats on the progress and thanks for taking the questions.

I have two.

So about a week ago, there were reports that Peter Marks and the FDA were reconsidering the black box warnings on car key products based on having better information about the background rate of secondary malignancies.

I was hoping to get a little color on what this means from the perspective of KTI and also if there's been any recent communications with the FDA about this issue.

And the second question just looking at the clinical pipeline, there are quite a few phase one trials being conducted in parallel.

Could you just remind us which of these trials are in later stages and which of these programs are likely to see clinical updates from in 2025.

Yeah, thank, thank you for your questions.

Regarding the secondary primary malignancy, you know, despite the, you know, the comments by doctor marks, it still remains, you know, something that's seen across many different car t therapies.

We have not had any specific discussions with the FD on this as of yet.

Regarding your second question, regarding our pipeline, we do have two us studies in phase one, one involving DLL three and small cell lung cancer, which we are in collaboration with Novartis on and a second cloud an 18.2 in gastric and pancreatic cancer.

Both of these studies have been enrolling.

I think well, this year and we look forward to some publications next year on the phase one, a dose escalation, both in terms of some safety and efficacy as well.

And Rick, I would like to add that if you see some recent literature, which actually suggest that if you look at the background rate.

So for patients who have been treated with multimyeloma that are on standard of care versus the S PM rate in patients treated with cardi, there's really no difference in terms of the incidence rate of S PM or second primary malignancy.

So really, we're not seeing additional or higher rate of S PM in the car T treated patients versus patients treated with other method of therapies for myeloma.

And then also on the pipeline, we do have eight ongoing phase one it programs in China.

I'll say maybe we can focus more on allergenic modalities including our commodity programs and also our autoimmune programs.

So those are probably two focus for the research.

Effort.

All right, great.

Thank you.

And the next question comes from Sean mccutcheon with Raymond James.

Your line is open.

Hey guys, good morning.

And thanks for taking my question.

Just one quick follow up.

And then another question, the follow up is is there a specific reason you'll, you need additional follow up for cartitude two for E&F.

Are you waiting for any specific metrics?

That would have a read through to the front line, pivotal say 12 month MRD negative cr for example.

And then the second question is any additional color on the out of spec rate and where you see that moving in in your terms with the more distance between the widening of the release specs in April.

And presumably more patients entering the, the top of the funnel with the earlier line approval.

Thanks.

Thank you for your question.

So, regarding the courtesy two co ef just to remind you, these are both front line, newly diagnosed, multiple myeloma patients and as such, these patients typically have very prolonged course including, you know, extensive PSS.

So even for MRD negative cr we still need quite a bit of follow up in these patients and that's why, we won't be able to, you know, give you an exact time frame of when we anticipate this.

At, at this moment, unfortunately.

Yeah.

Sean also, just as a reminder, if you look at the data from the pus trial conducted by our partner for AD RVD regimen, you're looking at a four year PFS rate of 85%.

So that is why it's really not meaningful to release data with, let's say even one year follow up.

That's, that's the reason behind it.

And then regarding our out of spec rate in general, we are seeing quarter over quarter improvement and without giving any specific numbers, I can tell you our OS in general is a range of low TS and one interesting observation so far since the satellite approval by the FDA is that if we look at the preliminary out of spec data from the old indication based on card one and then versus the patients who are under indication of cardio second to fourth line.

We did notice that between the 22 groups of patients in our commercial mix here that the cardium four patients coming in with a lower spec rate.

I know this is early, this is preliminary, but that is an interesting observation.

We are seeing already in the manufacturing operation.

And our next question comes from George Farmer with Scotia Bank.

Your line is open.

Hi, good morning.

This is Chloe on for George.

Thank you for taking our questions.

We have two.

I was wondering if you could speak a little bit more to the drivers of of this accelerated approval for, for for commercial production at the Obela site in, in Belgium.

And can we add maybe some of the regular requirements around that?

And can we expect more step wise additions going forward, kind of similar to the US or now that we have obtained kind of like a bonus approval for a for a bunch of commercial slots?

You don't need to go back to the AD M before for further approval.

And the second question is if you could walk us through your current assumptions for penetration of the, of the front line market.

Hey Chloe.

Thank you for the questions.

I'll address the first one.

So yes, we're very pleased with the approval from E MA on commercial production at our facility in Ghent Belgium that happened on September 19th and on the second day, September 20th, we already started our first commercial batch production in that facility.

So this is again, testament to the quality of our manufacturing operation in in li facility.

And because lie right now is only producing for commercial patients in European Union.

We don't need any C or regulation because you probably know E MA actually does not regulate car manufacturing capacity.

This is different from the FDA policy in the US.

And next year when we do expect our much larger facility in Belgium called Tech land to be online and that will be the same case again.

So right now, we do expect clinical production to be approved in Tech land in probably first half of next year, followed by the official E MA approval for commercial production in that facility by end of next year.

And then I may also want to add that Novartis already want FDA approval to start the clinical production in the summer.

And I'm very pleased to announce that Novartis has already submitted the application to the FDA.

So right now, we do expect the FDA approval in the first half of next year for the Novartis facility in New Jersey to start commercial production.

So everything is on track and we reiterate that we do expect to have a combined in network capacity of more than 10,000 doses per year by end of 2025.

That is on track.

And then I'll ask Steve to talk about maybe fraud.

Is the front line or earlier lines.

Are we looking at cartitude?

Four, cartitude five and six?

I I.

Didn't.

Yes.

Yes.

So.

Thanks.

So let me just comment on four because it does relate strategically to five and six.

So with the cartitude four launch, we pivoted and changed our go to market model quite a bit.

As you could, we could recall when we were launching with Cartitude one, the fifth line plus, setting the overwhelming majority piece of our, our efforts as well as our partner was within our hospitals in the United States in particular.

And that's, that's true globally, with patients becoming healthier as we've talked about, you know, during this call today, our our focus has not only, you know, focus could continue to remain in hospitals in the US, but also we're pivoting outside the hospital.

So we're having a much out of reach in terms of the providers that will be diagnosing and eventually treating these patients.

So that, that's a key key component which will then layer into cartitude five and six by, by penetrating and making their presence known in the outpatient setting.

That will be the same provider group that'll be diagnosing, diagnosing these folks that will be eventually hopefully referred on as soon as possible for our front line indication.

So it's, it's important to note there.

I guess I'll finally leave you with up to now.

We have not really activated the patient or advocacy at this point in time, mostly because of supply.

We are actively actively now engaging with the patient and the advocacy groups now within the community setting So that's an important development.

And then finally, and I'll leave you with this because I think we're on time is we will also be now over time over the next few years, also be very active with the large retail or outpatient community GPO S out there, the US oncologies of the world, the Florida cancers, etcetera, to think through ways to partner, to bring this type of product closer to patients that are more mobile.

So that's sort of TBD.

But we're actively enva engaged with this now with our partner.

That's very exciting and it's really a new, a new big step for car T therapies.

You know, as we get closer to our cartitude five launch, so I'll end it with that.

Alright, thanks.

Thanks so much.

You got it.

This does conclude today's conference call.

Thank you for participating and you may now disconnect.