Legend Biotech - Earnings Call - Q2 2025
August 11, 2025
Transcript
Speaker 4
Ladies and gentlemen, thank you for standing by. Welcome to Legend Biotech second quarter 2025 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you would need to press the Star 1 1 on your telephone and then you will hear an automated message advising your hand is raised, and to withdraw your question, please press Star 1 1 again. Please be advised that today's conference is being recorded. I would now like to turn your conference over to Caroline Paul, Associate Director of Investor Relations. Please go ahead.
Speaker 0
Good morning, this is Caroline Paul, Associate Director of Investor Relations at Legend Biotech. Thank you for joining our conference call today to review our second quarter of 2025 performance. Prior to this call, we issued a press release announcing our financial results for the quarter. You can find the press release on our IR website at legendbiotech.com. Joining me on today's call are Ying Huang, the company's Chief Executive Officer, Alan Bash, the company's President of CARVYKTI, and Jessie Yeung, the company's Interim Chief Financial Officer. Following the prepared remarks, we will open up the call for Q and A. We have our President of R and D, Guowei Fang, and Chief Medical Officer Mythili Koneru joining the Q and 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. These forward-looking statements are discussed in greater detail in our SEC filings, which we encourage you to read and can be found under the Investors section of our company website. In addition, adjusted net income or loss is a non-IFRS metric. This non-IFRS financial measure is in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with IFRS. There are a number of limitations related to the use of these non-IFRS financial measures versus their closest IFRS equivalents. However, we believe that providing information concerning adjusted net income or loss and adjusted net income or loss per share enhances an investor's understanding of our financial performance.
We use adjusted net income or loss as a performance metric that guides management in its operation of and planning for the future of the business. We believe that adjusted net income or loss provides a useful measure of our operating performance from period to period. Our press release includes IFRS to non-IFRS reconciliations for these measures. With that, I will now turn the call over to Ying.
Speaker 3
Hello everyone. Thank you for joining us today. We had quite an eventful second quarter as we made history with our long-term survival data at ASCO and achieved the most CAR-T sales ever during a single quarter. During the second quarter, CARVYKTI net trade sales were approximately $439 million, which is a 136% increase year over year. We have now treated over 7,500 patients with CARVYKTI and our launch remains the strongest CAR-T launch to date in the U.S. More than half of our utilization is now in the early line setting. We continue to anticipate achieving operational breakeven for CARVYKTI by the end of 2025 and company-wide profitability in 2026, excluding unrealized foreign exchange gains or losses. On the regulatory front, we're excited about the FDA's decision to remove REMS requirements for currently approved BCMA and CD19-directed autologous CAR-T therapies.
As a result of this change, CARVYKTI's FDA label was also updated to reduce monitoring requirements, such as instructing patients to remain within proximity of a healthcare facility for at least two weeks instead of four weeks, and advising patients to avoid driving for at least two weeks following product administration compared to eight weeks previously. We expect these label updates to improve the patient experience and enhance access for patients in both the community and academic settings. On another overwhelmingly positive note, we received a lot of great publicity following our presentations at ASCO and EHA in June, starting with new data presented at ASCO on our pipeline candidates. In the Phase 1 study LB1908, our autologous Claudin 18.2-targeted CAR-T cell product demonstrated encouraging antitumor activity with manageable safety and tolerability, and CAR-T cell expansion was observed in all patients.
Additionally, in the Phase 1 dose-escalating study evaluating LB2102, our DLL3-targeting CAR-T candidate, no dose-limiting toxicities were reported and a preliminary efficacy signal was observed up to four dose levels. As a reminder, we have an exclusive global licensing agreement with Novartis to develop and commercialize LB2102 and other DLL3-targeting CAR-T therapies discovered by Legend. Turning to CARVYKTI, there were two different analyses I would like to spend some time highlighting from ASCO. First, you'll recall that in the final protocol specified analysis of CARTITUDE-1, the median PFS was 35 months and median overall survival had not been reached, which had already established a new benchmark for triple class exposed patients with relapsed, refractory multiple myeloma.
Subsequently, at ASCO this year, in an analysis of remission and survival from CARTITUDE-1, one third of patients with heavily pretreated relapsed refractory multiple myeloma remain alive and progression free for five years or more after being treated with CARVYKTI without further multiple myeloma treatment. Furthermore, patients with high risk cytogenetics and those with extramedullary plasmacytomas were equally likely to be progression free. To put this into context, at the ASCO investor event, Dr. Sandar Jagnath noted that some of his patients were deciding between hospice and CAR-T therapy. The median overall survival of five years clearly set a new benchmark in this population. As a result of this groundbreaking data, numerous media outlets publicized these results as well as patient stories. A number of clinicians indicated to us that they have noticed increased patient awareness about CARVYKTI following some of these articles and TV news stories.
Second, based on analysis of subgroups in intent to treat population from CARTITUDE-4, CARVYKTI improved progression free survival and overall survival versus the standard of care in all subgroups including patients with standard and high risk cytogenetics, EMD and one prior line of therapy and beyond. For example, the median PFS for patients with high risk cytogenetics was 37 months compared to 10 months for the standard of care. These data continue to support a positive benefit versus risk ratio for CARVYKTI in patients with lenalidomide refractory multiple myeloma as early as after first relapse. Turning to further improvements in CARVYKTI safety profile, we continue to leverage our learnings on extensive data that's been generated on over 7,500 patients treated with CARVYKTI. We are facilitating best practice sharing on predicting, mitigating and managing neurologic events and we continue to highlight new safety data to patients and physicians.
Importantly, we do not see a material impact on utilization and expect continued strong performance on CARVYKTI. In a few moments you will hear from Alan Bash on how we and our partner Johnson & Johnson are trying to bring CARVYKTI to more patients in need of a CAR-T therapy with a demonstrated survival benefit. On a final note on CARVYKTI before we turn to our pipeline, we continue to expect to complete enrollment for CARTITUDE-6 this year. We believe CARTITUDE-5 and 6 trials are key to moving CARVYKTI into the frontline setting. Looking at long-term growth for Legend Biotech, in addition to looking toward moving CARVYKTI to the frontline, we remain focused on solidifying our leadership in the field of cell therapy. We're making progress in new indications such as solid tumor programs as you have seen with the recent ASCO data.
Additionally, we remain excited about the new research facility currently being built in Philadelphia where in vivo delivery will be one of its key focuses, positioning us well to pursue this area of innovation with the right infrastructure and resources. We believe this next-generation approach to off-the-shelf therapy holds a lot of promise for incurable diseases. Our new platform, TARVEC, which is short for T Cell Activation Vector, is being used to target oncology and autoimmune indications. It provides T cell specificity, activation, and safety through mutations in glycoprotein to block transduction of non-T cells. We've already dosed a few patients in an IIT study for non-Hodgkin's lymphoma and we're planning for multiple U.S. IND enabling studies in the future. We're excited to be embarking on this next frontier of cell therapy innovation and we look forward to providing additional updates as we make progress on this front.
To sum up, Legend Biotech is the largest standalone cell therapy company with over 7,500 CARVYKTI patients treated as we forge the path to cure. With a cash position of approximately $1 billion, we are investing in our core differentiators in cell therapy and remain focused on delivering operational efficiency in order to ensure durable long-term growth. With that, I'll pass it over to Alan Bash to provide an update on CARVYKTI.
Speaker 5
Thank you, Ying. As Ying mentioned, CARVYKTI is now the highest selling CAR-T therapy in a single quarter. CARVYKTI net trade sales of $439 million during the second quarter surpassed the previous CAR-T industry record of $414 million in sales in a single quarter, and all of this was achieved in just 12 quarters, which is record breaking in the industry. Diving deeper into our performance this quarter, CARVYKTI net trade sales grew 136% year over year and 19% from the first quarter. Our global growth was driven by continued share gains and capacity expansion. U.S. net trade sales of $358 million grew 114% year over year and 13% quarter over quarter. Quarter over quarter growth in the U.S. was primarily driven by continued strong demand with nearly 60% utilization in earlier line settings.
Regarding OUS performance, we had sales of $81 million, which is four times the amount over the same period a year ago and represents a 59% increase quarter over quarter. Our OUS performance was driven by expansion in Germany, Switzerland, Austria, and Brazil, and we continue to be excited about bringing CARVYKTI to more eligible patients in Spain, Denmark, Sweden, Belgium, Portugal, and the private markets of Israel and the UK, where we recently launched. Turning to tailwinds to build upon our CAR-T market leadership in multiple myeloma as it relates to manufacturing, we expect to receive approval for our physical expansion in Raritan by the end of the year. Our Tech Lane facility also remains on track to initiate commercial production later this year. This is another critical component of our plans for serving patients in Europe to meet the increasing demand.
The progress we've made in executing our manufacturing plan and investments has enabled us to be among the best in class. Our manufacturing success rate remains at 97%, which we believe is the highest in the CAR-T industry, and we are focused on continued reductions in our turnaround time, which stands at 30 days. We believe this turnaround time is more than sufficient based on our conversations with physicians. As we expand manufacturing capacity and enhance our efficiency, we expect to benefit from a number of demand tailwinds as well. First, of course, is the recent unprecedented long-term survival data that we presented at ASCO on CARTITUDE-1. Second is our demonstrated overall survival benefit. The superior efficacy we have compared to other CAR-Ts should be further aided by the recent REMS updates, which are an incremental positive for patients receiving CAR-T therapy and their quality of life post CAR-T administration.
Lastly, in the U.S., we have expanded access to CARVYKTI in the community by continuing to activate more treatment sites. The number of authorized treatment centers has quickly increased since launch. We now have 123 sites across the United States, and outside of the U.S., we will continue to benefit from the recent launches I mentioned earlier. I'd like to expand now on our strategy for second line plus adoption in the U.S. and provide an update on our progress outside the U.S. First, the opportunity to offer CARVYKTI to the second line multiple myeloma patients and beyond remains significant. We estimate that there are about 80,000 patients globally in the second to fourth line who could potentially benefit from our treatment. Combined with the fifth line plus opportunity, this represents over 100,000 patients globally.
Aside from targeting specific types of relapsed refractory patients who might benefit most from CAR-T based on their prognosis, we have now implemented strategies to engage treaters, referrers, and patients in parallel with educating physicians on CARVYKTI's profile in order to increase referrals to CARVYKTI sites. We are also working to increase patient awareness through advocacy efforts and even direct-to-consumer education efforts. In fact, we know that multiple myeloma patients and their caregivers are highly educated and engaged in their care, which is why we think engaging them directly will be impactful. We recently launched an awareness campaign on multiple digital, streaming, and social platforms about the benefit versus risks of a one-time infusion of CARVYKTI. We are looking forward to building awareness through this first ever patient campaign.
While we engage community physicians and patients today, we are also looking ahead to continue to expand treatment into the community as well. Our launch took us from a concentrated set of tertiary care and academic centers to where we are today with an expanded footprint, about a third of which is made up of regional and community hospitals who have become local experts in CAR-T. As we look to the rest of this year and beyond, we are embarking on bringing CARVYKTI even closer to the community by identifying community practices that can do CARVYKTI administration. We are pleased to announce that Virginia Oncology Associates, a network of practices serving a large part of the state, is one of our first partners in this effort. To sum up, I'm very pleased with our progress to date to reach more patients.
Alongside Johnson & Johnson, we have activated 123 treatment sites since launch, and while practices in the community setting cannot be activated overnight, we have multiple strategies in place to make CARVYKTI a more readily available treatment option in the future. CARVYKTI has also seen significant international expansion. In 2024, we launched four markets, and we've more than doubled that for 2025, and we are only in August. Our growing footprint in markets outside the U.S. is supported by our manufacturing facility in Raritan, and we will be further supported with the Tech Lane site expected to start commercial production for Europe later this year. Globally, with the help of our partner Johnson & Johnson, we have activated 213 treatment sites.
The record-breaking pace at which we have moved to expand access and become the highest selling CAR-T therapy in a single quarter with a demonstrated overall survival benefit is a testament to our joint ability to trailblaze in the field of myeloma cell therapy. Now it's time to take a closer look at the financials, so I will turn the call over to Jessie.
Speaker 2
Thank you, Ellen, and good morning, everyone. During the second quarter, we delivered solid financial results with CARVYKTI net sales up 136% year over year. Total revenues were $255 million, driven by collaboration revenue growth of 136% year over year. Q2 delivered a $125 million net loss, but $10 million in adjusted net income after excluding items that are not representative of the company's core business, such as a $111 million unrealized foreign exchange loss due to our treasury center based in Ireland. Importantly, our operating loss of $41 million in the same period one year ago was reduced by almost half to an operating loss of $22 million during the second quarter. The meaningful improvement in operating result was driven by our operational efficiency and disciplined expense management.
Even though we continue to invest in our robust pipeline and supporting the second line indication launch and our manufacturing capacity, our second quarter gross margin on net product sales was 57%. As expected, R&D expense on an IFRS basis declined slightly to $98 million or 39% of revenue, while SG&A on an IFRS basis grew 23% from the prior year to $81 million in the second quarter or 32% of revenue. Overall, we believe we have been making strides towards positive operating cash flow generation and profitability. Our adjusted diluted earnings per share was $0.03 compared to negative $0.01 for the same period last year. Now, turning to capital allocation, we continue to have a strong balance sheet with $1 billion in cash and equivalents and time deposits.
We will continue to prioritize disciplined expense management as we fund our operating and capital expenditures, including future innovation, until we achieve profitability, which we anticipate in 2026, excluding unrealized foreign exchange gains or losses. In summary, our second quarter results demonstrate strong commercial execution supported by CARVYKTI's differentiated clinical profile, along with increasing operational efficiency. We are also pleased with our progress towards pioneering next generation cell therapy treatments for intractable and incurable diseases as we look to maximize our cell therapy platform. Now it's time to take your questions. Operator, we are ready for the first question, please.
Speaker 4
Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. The first question comes from Terrence Flynn with Morgan Stanley. Your line is open.
Speaker 5
Hi.
Speaker 3
Congrats on all the progress. Thanks for taking the question. Maybe two for me. I was just wondering if you can give any update on potential timing of interim readouts from CARTITUDE-5 and 6, recognizing the importance of these studies to moving into the first line setting, and then on the efforts in the community oncology setting. Can you provide us any more details about Virginia Oncology Associates, like why they elected to lean in here and how you think about that as a template for maybe some other community oncology centers to follow and what the timeline might be. Thank you.
Speaker 1
Thanks for your question regarding the interim readouts. I think we're monitoring the events closely and ultimately going to be driven by the events that we see. Obviously, we're in discussions also with the FDA about, you know, using MRD as a dual primary endpoint. We don't have much to say beyond that. We will continue those discussions and continue to see how the data evolves.
Speaker 5
Hi, Terrence, it's Alan. Yes, our efforts in Virginia Oncology is in fact a template for how we're thinking about the community adoption. As we talked about before, it has the following components. We want to make sure that we are expanding our footprint into the community and regional hospital setting. We want to make sure we're driving referrals from community practices, and as Virginia Oncology Associates demonstrated as a key milestone for us, also starting to activate in the network of community oncology practices. Virginia Oncology Associates is a leader in this space. They previously administered CAR-T both in the lymphoma and the myeloma space, so they're well respected in this area. They're part of the McKesson network, and they were very excited to partner with CARVYKTI.
Speaker 4
The next question will come from Gena Wang with Barclays. Your line is open.
Speaker 2
Thank you. Also, congrats on the strong quarter. Maybe I will follow Taren's question regarding the community expansion effort. Have you seen any % of revenue was driven by this effort into Q2 2025? If not, when do you see this effort will start to be shown in the revenue, and then also related launch questions. Of 123 treated centers, treatment centers, what % has outpatient setting set up? Also, for Q2 2025 revenue, what % of patient or revenue were from outpatient setting?
Speaker 5
That's Alan, I'll share a couple of factors here. First of all, 70% of patients come from the community setting. That's why the community setting and our continued penetration in that space is very important. As I mentioned, those efforts will include not only expanding the footprint within the community and regional hospitals, driving referrals, but also starting to administer in the community practices. I think it's a little early for us to pin specific numbers on each element or the contribution of each element or any particular site. In terms of outpatient, though, I'll also give an update. We continue to see that a little over half of our patients are administered in the outpatient setting. That is both across any of these community sites, as I mentioned, as well as in the academic centers, their ability to use an outpatient setting.
That's important because that frees up capacity from the inpatient constraints and infrastructure constraints and enables us to not only improve the experience for patients, but also improve the experience for the centers. The other element that we've talked about before is earlier line treatment. As we go into the community, we expect to be able to see more patients referred into the academic centers and the authorized treatment centers from the earlier lines of therapy.
Speaker 4
Thank you. The next question will come from Jonathan Miller with Evercore. Your line is open.
Speaker 3
Hi guys, thanks so much for taking my question, and congrats on all the progress. Two for me.
Speaker 5
I would love to hear more about.
Speaker 3
The breakdown of your currently treated patients in these early line settings. I know you talk about the CARTITUDE-4 label from second to fourth line, but what about patients in the second line specifically, in the third line specifically, where you won't be overlapping at all with competitors? How much of your current revenues are driven by those second and third line patients specifically? Just one on Johnson & Johnson's bispecific efforts, how do you expect that their next gen T cell engagers are going to interact with CARVYKTI eventually when they're competing on the market? How do you expect Johnson & Johnson to be positioning them relative to cell therapy? Thank you.
Speaker 5
We don't plan to break down any more detail around the various lines of therapy. What I can say is, as we said before, that nearly 60% of our orders are coming from the second through fourth line population. Those are the earlier line patients who we feel will provide us a significant advantage to any potential competitor who comes in later lines. That's from our ordering system. That is self-reported data from physicians and we're very excited about that growing each quarter and continuing to grow throughout the course of this year and certainly before any competitor launches. In terms of the bispecifics, I think we've seen that CAR-T is very well regarded as not only a treatment because of its one time infusion, but also the overall survival benefit and the durability that CAR-T and specifically CARVYKTI can provide.
In terms of positioning, right now CARVYKTI is really owning that second through fourth line opportunity within the Johnson & Johnson portfolio. This is an opportunity for us to really solidify our position with patients for whom they've already had one relapse. They're looking for overall survival. They're looking for long term durability and Johnson & Johnson and Legend Biotech are combined, very committed to this positioning for CARVYKTI.
Speaker 3
This is Ying. I want to add to Alan's comments. If you notice, you can find actually trials on ClinicalTrials.gov where our partner Johnson & Johnson is actually combining and or sequencing CARVYKTI with some of the bispecifics in their portfolio. You will see the direction of that development. It's a bit too early and premature to comment on strategy on developing the trispecific because right now it's still at the very early stage and phase one stage. Although we cannot disclose this breakdown of second, third, fourth, and fifth line beyond, and plus some of those are coming from actually insurance claims data. It's not necessarily coming from our own data, but I can tell you if you combine second and third line, those are probably the fastest growing revenue contributor in the mix of CARVYKTI.
If you talk to physicians, you will notice that the large majority, probably 70-80% of patients, are actually receiving a bridging therapy. Sometimes if you look at insurance claims, you will see a second line patient who comes in and then receives a bridging therapy for one or two cycles would actually be classified as a third line patient. That is another reason why we should look at second and third line combined.
Speaker 1
One other comment regarding the trispecifics from Johnson & Johnson. It's the data that was released, a lot of it was in the BCMA-naive population, which as we know is getting harder and harder to find. As we move CARVYKTI into earlier lines of therapy, it's really going to be, if other BCMA products are approved, it's going to be hard to find that patient population.
Speaker 4
Thank you. The next question will come from Jessica Fye with JP Morgan. Your line is open.
Speaker 3
Hello, this is Adam on for Jess. Thank you for taking our question. I really had two. Can you comment on the recent Blood paper as it relates to real world rates of neurotox with CARVYKTI? My second one, what is your latest perspective on CARVYKTI's penetration into the CARTITUDE-4 indication of second to fourth line? Thank you.
Speaker 1
Sure. Regarding the Blood paper that you're referring to by Dr. Dacall, in that large data set, 98 patients were treated with CARVYKTI at 20 various centers. In those patients that used TALVEY as bridging therapy to a single infusion of CARVYKTI, it was noted that there were no events of Parkinsonism or Guillain-Barré syndrome, and there are only two reports of ICANS, both of which resolved. It really highlights the opportunity of an improved safety profile with strong bridging like with TALVEY. If you compare that to the real-world data of about 2%, it decreases to 0% in this large data set.
Speaker 5
In terms of the CARTITUDE-4 population, second to fourth line, again as we said before, this is our main growth driver. We're focused on driving earlier lines of therapy and as we said before, nearly 60% of our sales are coming from that population. I would say again as we talked about before, this is a population that is about 80,000 patients worldwide. You can just based on see on the numbers of patients that we treated to date, we still have a lot of opportunity in this space, a very large opportunity for us to continue to capture in the second to fourth line population globally.
Speaker 3
Adam, thanks for this question on Blood paper. We actually think it's a very important paper here because if you compare this data set from the competing dataset, you're looking at a total of 134 patients receiving TAVI, out of which 119 proceeded to get a CAR-T, and then 98 patients received commercial CARVYKTI. These are from multi centers, right? 20 centers including 18 in the U.S. and two in Germany. If you also look at patient baseline, they received the median five prior lines of therapy. 44% had high-risk cytogenetics, 41% had EMD, extramedullary disease. 85% of those patients would not have qualified for CARTITUDE-1. Yet still, if you look at the safety profile, we did not see any delayed neurotox such as Parkinsonism or GBS. There were only two cases of mild cranial nerve palsy, and both resolved.
If you compare this data set to the competing data set of about 120 patients, I would argue it's a very similar denominator here. Also, if you look at the neurotox, very similar as well. I think that is a very well-documented study, like I said, peer-reviewed on Blood Journal. This gives you a sense of the real-world safety. Thank you.
Speaker 4
Thank you. The next question will come from Kostas Biliouris with BMO Capital Markets. Your line is open.
Speaker 3
Thanks for taking our question and congrats on the progress. We would love to hear your thoughts around the recent efficacy data from a competitor and specifically the 18 month PFS which appears to be similar to CARTITUDE-1.
Speaker 5
Any thoughts around that?
Speaker 3
Although the follow-up is shorter than what you have presented, how do you think, are you thinking about the positioning of CARVYKTI moving forward? Thank you.
Speaker 1
Thanks for your question. I'd like to stress that CARVYKTI is really the best in class BCMA CAR-T. We've treated over 7,500 patients as you just heard earlier, and it's really demonstrated an overall survival benefit in this early second to fourth line patient population as reported in the CARTITUDE-4 study. In addition to that, the CARTITUDE-1 data from ASCO has shown that with the one time infusion of CARVYKTI, a third of the patients in this very heavily pretreated population actually didn't progress after five years. This is unprecedented data and shows the long follow up that we have with patients treated with CARVYKTI. I would argue that the patient population or cell study that you're referring to is really fundamentally a different patient population, in particular the prior lines of therapy.
The CARTITUDE-1 study is a much more heavily pretreated patient population and as you have mentioned, their data is immature and still evolving with not sufficient follow up. Based on some other conversations we've had with physicians, they're really wondering how these patients have done when they reach the 18th month PFS, how many of them have actually reached that point. Without the evidence of the Kaplan-Meier curve, which actually the CARVYKTI had reported around the 18 month timeframe, it's really hard to tell on the RFLEX study how these patients did overall. That's why I think it's important that we see that data and stress the fact that CARVYKTI is really key differentiated and has very durable responses with the large amount of data sets that we've provided to date.
Speaker 4
Thank you. The next question will come from Yaron Werber with TD Cowen. Your line is open.
Speaker 1
This is from Yaron, if you bought from the quarter.
Speaker 2
Thank you for taking our questions.
Speaker 0
You noted on the call that you're.
Speaker 2
On track to finish enrolling CARTITUDE-6 this year. This seems incrementally pushed out versus the mid-2025 previously. Is there any reason that enrollment might be progressing a little more slowly than expected? Does this mean that we're still going to see an impact on Q3 revenues from slots being diverted to CARTITUDE-6? Overall, does that change your expectations that you said previously on accelerating growth for CARVYKTI in the second half of the year versus first half? Thanks so much.
Speaker 1
Our enrollment in CARTITUDE-6 has been progressing quite speedily. In fact, we've completed enrollment globally, except for continuing to complete in Japan, which is the last country. We're very excited about the fact that physicians were enrolling on the study, and it shows the excitement of this patient population with CARVYKTI. Just.
Speaker 5
To add in terms of your second part of your question, we're very confident in our ability to continue to drive capacity expansion in the second half of this year. Novartis continues to ramp throughout the year. The Tech Lane clinical approval is taking on those patient slots and enabling more commercial capacity across the network as we continue to get efficiencies from our network in terms of out of spec rates, improved turnaround time, and better manufacturing success rates across the network. As we mentioned before, in the second half this year we anticipate the physical expansion for Raritan as well as the commercial approval for Tech Lane.
Speaker 3
Jana, maybe I'll just add that if you recall for the CARTITUDE-1 trial for that indication we actually enrolled also very small, less than 10 patients cohort just specifically for the Japanese approval because that's a requirement from PMDA. We're doing the same for CARTITUDE-6. Like you just heard from our Chief Medical Officer, we have already completed global enrollment for CARTITUDE-6.
Speaker 2
Thanks so much.
Speaker 4
The next question will come from Kelly Shih with Jefferies. Your line is open.
Speaker 2
Congrats on another strong quarter. As CARVYKTI has treated now over 7,000 patients. Also, follow up on your commentaries on overall safety profile including delayed neurotox. Curious, any noticeable difference that has been observed in earlier line patients versus late line? If so, what are the factors that drive the difference? Thank you.
Speaker 1
Thank you for your question. As we've shown from the CARTITUDE-1 to the CARTITUDE-4 data, the delayed neurologic events have decreased, particularly the Parkinsonism, from 6% to 1% in CARTITUDE-4. We do believe that earlier line treatment does improve the safety profile quite significantly. Part of that success is the strong bridging therapy that is provided to these patients. These patients just have more options for good bridging therapy in the earlier lines. As we discussed earlier in the call, the Blood paper by Dr. Dicol Talvi shows that in a large data set there was no evidence of Parkinsonism, further showing the importance of having good bridging therapy to decrease the neurologic events but also improve the efficacy profile. Ultimately, both of these things I think will be really important.
I think as we continue, the mitigation strategies that we put in place are important and treating physicians are using them, and they continue to show improvement in these AP events.
Speaker 5
Kelly, I'll just add a little color on what we're seeing from physicians and hearing from the field. The earlier the patients are referred in and treated, the better experience. Overall, the T cells are fitter. That means that we have lower out of spec, we have better efficacy. We also, by virtue of what Mai outlined, have lower rates of any of the rare bacterial side effects. We are in a situation where everything is better when you treat earlier. That message is very much resonating. That's what the thought leaders are talking about from the podium. Get your patients in earlier and you get the benefit of CAR-T earlier in the treatment paradigm.
Speaker 3
Callie, this is Ian. Maybe I'll just add the last point, which is everyone follows the FDA AER database. If you look at the overall incidence, it's increasing, but that's because we're treating more than 7,500 patients. However, if you do the math using the denominator numerator we just provided, you will see, in fact, I've seen a few CELTA reports saying that the % incidence rate is actually coming down in terms of delayed neurotoxicities.
Speaker 2
Thanks for the color.
Speaker 4
Thank you. The next question will come from Leonid Timashev with RBC. Your line is open.
Speaker 5
Hey guys, thanks for taking my question. I wanted to ask on where demand.
Speaker 3
Is going to be coming from in the future.
Speaker 5
I guess in the past you've talked about your ability to titrate demand. I'm thinking, how are you guys?
Speaker 3
Thinking about 2026 specifically, where the supply.
Speaker 5
Curve is going to be relative to the demand curve? I'm curious if you can speak to that.
Speaker 3
Maybe on a geography basis, I guess the U.S. and EU separately, just given that CAR-T historically have done well in Europe, should we expect.
Speaker 5
More growth coming out of Europe in 2026 and ultimately approach relative parity with the U.S. I guess just how are you thinking about the relative position of.
Speaker 3
The supply and demand curves for U.S. versus EU?
Speaker 5
Thanks. We will be driving both supply and demand simultaneously. They don't grow necessarily in a linear fashion each, but as both grow, we'll be able to support the market with supply. In terms of the breakdown in terms of geography, you saw in this quarter increasing contribution from Europe with the 11 markets outside of the U.S. now launched. We anticipate that will continue to grow over 2026 and beyond. Additional major markets are planned for 2026, and so ex-U.S. contribution will continue to become an increasing and meaningful component of the CARVYKTI sales. In terms of demand, just to add a little bit more detail on some of the demand dynamics within the U.S., we talked about it in the opening remarks.
The ASCO data and the recognition of the overall survival benefit and the long-term survival is something that's going to continue to grow in terms of awareness, and that will translate into not only driving referrals, but also increasing utilization. In the earlier lines, we also talked about the fact that the REMS removal will be an important component of improving the patient experience. Patients can then be treated in an authorized treatment facility, but then monitored closer to home. As you heard from Ying, a lowered number of weeks in terms of monitoring, fewer number of weeks in terms of the driving restriction. These things really do matter to patients and their family and caregivers when they're trying to get back into a normal functioning life. If you think about the REMS removal, you think about the overall survival, the ASCO data.
As we talked about as part of the opening remarks, we've also started to directly engage patients. This is our DTC effort in a very targeted way, recognizing the fact that myeloma patients and their caregivers want to hear about CAR-T, they want to learn about CAR-T, they want to be able to have the conversation with their physicians, and that's what we started to do. I expect the demand to come from many of those drivers.
Speaker 4
Thank you. The next question will come from James Shin with DB. Your line is open.
Speaker 3
Good morning, guys.
Speaker 5
Thank you for the question.
Speaker 3
Virginia Oncology Associates coming online, but what does the partnership actually bring to Legend? I guess broader question is what % of the smaller community practices like Virginia Oncology Associates are still pending CARVYKTI slots. Secondly, is the biggest driver for community adoption getting a lighter version of FACT accreditation? Thank you.
Speaker 5
We're in the very early stages of having more penetration in the network practices like Virginia Oncology Associates. Virginia Oncology Associates is the first key milestone for us, but as I mentioned, it's the first one in ones that are planned with Johnson & Johnson and Legend Biotech. In terms of FACT accreditation, there are several efforts underway, both industry groups as well as legislation at the state level to lift the requirement for FACT accreditation. We want to make sure that authorized treatment centers for cell therapy and for BCMA-directed CAR-T therapy are of course qualified to do so, experts in that area, but not necessarily facing all the significant burdens required with FACT accreditation.
There are multiple efforts, as you mentioned, to provide some sort of either FACT light or create a FACT umbrella from an academic center such as UPenn to other community hospitals that are part of that umbrella. These are all efforts that will continue to bring CAR-T closer to patients. Patients don't want to have to travel into the cities or the major centers for their treatment, and this enables them to get CAR-T closer to home.
Speaker 3
James, just to supplement what Alan just commented, in fact, Texas is the first state in the U.S. that actually passed a state legislature recently that in the state of Texas there's no longer requirement for FACT accreditation for reimbursement by insurance carriers. We do foresee that more and more states will follow suit. Thank you.
Speaker 4
Our next question will come from Mitchell Kapoor with HC Wainwright. Your line is open.
Speaker 3
Hey Gena, thanks for taking the questions. Have two. The first one, could you just talk about, since we're halfway through the third quarter at this point about now, can you talk about the important CARVYKTI trends that you're seeing since the end of June that may show up in the third quarter numbers? Then second, on geography and mix, could you talk about the ex-U.S. mix trend and if the 30% U.S. to EU pricing delta is likely to hold as access broadens? Thank you.
Speaker 5
Our demand trends are strong. We're very comfortable with where things are headed for the rest of this year in terms of the mix. As I said before, we believe that the launches in Europe will continue to provide incremental demand. Germany is the largest of the markets ex U.S., and that is continuing to grow very nicely. We continue to see that Europe will be a meaningful and increasing contribution to the overall sales picture for CARVYKTI.
Speaker 3
Mitch, unfortunately, we cannot comment on pricing as you can understand. We believe that CARVYKTI offers a very, very strong health economic benefit based on the survival and also the PFS benefit we have seen. In fact, if you follow last month's ODAC held by the FDA to evaluate Blenrep from GSK, I think one doctor, one KOL, Dr. Paul Richardson from Dana-Farber and Harvard Medical School, actually pointed out in one of the slides that so far in the second line setting there's only one trial and one drug that proves survival benefit significantly over standard of care, and that is CARVYKTI in CARTITUDE-4. We are very well positioned with all these benefits.
More specifically on the first question, is there anything since the end of June that you guys are seeing that is different than what we've heard on the call so far that may be a trend in ThinkQ?
Speaker 5
The only thing I'll add is anecdotally, and Ying alluded to this earlier. Since the ASCO presentation, we've heard more and more patients coming in and actually either holding up one of the local newspaper articles or the New York Times article, or having heard about the data and it's reaching patients, they've started to have those conversations with physicians. We hear that from the physicians themselves that that's what patients are saying. Anecdotally, this is creating a lot of buzz and excitement both among the prescribing community. If you go to a medical conference, and there was one this past weekend, you'll see physicians start their talk by showing the New York Times headlines from ASCO. The anecdotes are showing that there's a lot of interest in the long term survival benefit that you get from CARVYKTI.
We see that is starting to take shape in the marketplace as well.
Speaker 3
Great, thank you.
Speaker 4
Thank you. The next question will come from Justin Zeland with BTIG. Your line is open.
Speaker 3
Thanks for taking our questions and congrats on the strong record-breaking quarters here. With $1 billion in cash here and you're approaching profitability, just curious, how do you think about approaching reinvestment with reaching profitability here across manufacturing, your pipeline, licensing, once you're reaching profitability with your vision and your position in the global cell therapy landscape.
Speaker 1
Hi, thank you for your question.
Speaker 2
We are committed to reach profitability with $1 million in cash. We are still disciplined in funding, but we are committed to the next generation of cell therapies, treatment for intractable and incurable diseases.
Speaker 3
Thanks. Just another question that we get is, do you expect any material impacts from the recent tariff changes on your manufacturing costs or supply chain, and any impact on how you're mitigating this?
Speaker 2
Our understanding is that the details relating to any potential pharma related tariffs are still being worked out. Because our U.S. products are predominantly made and sourced in the U.S. at this point, we believe that any potential exposure to tariffs will be immaterial based on our evaluation.
Speaker 3
Great, thanks for taking the questions.
Speaker 4
Thank you. The next question will come from Ashwani Verma with UBS. Your line is open.
Speaker 5
Hi, good morning. Thanks for taking our question. Just quickly, on the ramp of commercial supply, is that more steady for the remainder of the second half, or should we expect most of that to be reflected in the 3Q sales? Secondly, on the first line data generation for CARTITUDE-5, do you have line of sight that you can get this data in calendar year 2026? I know you previously talked about this CARTITUDE-2 cohort E and F, which are still pending. Is that something that we could see later this year? Thanks. On Novartis, we got the approval earlier this year, as you know, for commercial production, and that has continued to ramp. We expect it to be at full capacity by the end of this year. That will continue to contribute to our growth over the course of the year.
Speaker 1
Regarding your other parts of your question regarding CARTITUDE-5, it will be events driven, so we really need to monitor those closely. We will not be able to provide more details beyond that. Regarding the CARTITUDE-2 E and F cohorts looking at frontline patients, we cannot disclose what is being submitted to conferences later this year at this time.
Speaker 4
Thank you. This does conclude today's question and answer session and also concludes today's conference call. Thank you so much for participating and you may now disconnect.