Legend Biotech Corp
NASDAQ:LEGN
Earnings Call Analysis
Q4-2023 Analysis
Legend Biotech Corp
Legend Biotech Corporation showcased an impressive track record in 2023 and is continuing to gear up for greater achievements. With sights set on expanding therapeutic production, the company is aiming to secure 10,000 treatment doses available by year-end 2025, a number that's expected to grow even after 2026. They're also crafting strategies to address increasing demands for their product, CARVYKTI, with sights on amplifying outpatient administration, which currently sits at 30% and has potential to double. The growth is attributed to active engagement and referrals from outpatient clinics to their hospitals.
Officials discussed ongoing clinical trials, such as CARTITUDE-2, with data from specific cohorts expected to be reported by the end of 2023. Additionally, CARVYKTI is capturing approximately an 80% market share at sites where it competes with ABECMA, indicating strong performance and physician preference. The company also highlighted the stability of their out-of-specification (OS) rate over recent quarters and are anticipating a wider release specification approval from the FDA, which they believe could further reduce the OS rate.
To meet their ambitious treatment dose targets and address European demand, Legend Biotech is planning to bring a new site in Ghent to commercial production by the year's end. Another facility, Tech Lane, is expected to enter commercial production in the second half of 2025. These expansions are part of a strategic collaboration with Novartis, which will potentially begin producing clinical trial material following FDA approval of their Investigational New Drug (IND) application. Furthermore, the company is gearing up to release European pricing guidance, specifically regarding Germany, in the near future and anticipates this will lean towards parity with U.S. pricing eventually.
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Good day, and welcome to the Legend Biotech Reports Fourth Quarter Earnings Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to hand the call over to Jessie Yeung, Head of Investor Relations and Public Relations. You may begin.
Good morning. This is Jessie Yeung, Head of Investor Relations and Public Relations at Legend Biotech. Thank you for joining our conference call today to review our fourth quarter and full year 2023 performance. Joining me on today's call are Ying Huang, the company's Chief Executive Officer; and Lori Macomber, the company's Chief Financial Officer. Following the prepared remarks, we will open up the call for a Q&A. We have Guowei Fang, Chief Scientific Officer; and Steve Gavel, Head of Commercial Development for the U.S. and Europe, joining the Q&A session. During today's call, we will be making forward-looking statements, which are subject to risks and uncertainties that may cause our actual results to differ materially from those expressed or implied here within. These forward-looking statements are discussed in greater detail in our SEC filings, which we encourage you to read and can be found under the Investors section of our company website. Thank you. I will now turn the call over to Ying.
Good morning, everyone. We're glad you could join us today because a lot has happened since our last earnings call. First, we're excited at the prospect of bringing our lead therapy, CARVYKTI to more multiple myeloma patients in Europe. As many of you have heard, CARVYKTI received a positive opinion from the Committee for Medicinal Products for Human Use to expand into earlier lines of treatment. CARVYKTI is the first CAR-T therapy to receive a positive CHMP opinion in the second-line setting for patients with relapsed and lenalidomide-refractory multiple myeloma. The formal European Commission decision is expected in April. As for the approval of CARVYKTI in the United States in the second line, we are scheduled to meet with the FDA's Oncologic Drug Advisory Committee this Friday, the 15th. To answer any outstanding questions they have, we are preparing for a potential launch in this expanded indication on the PDUFA date of April 5, and we will, of course, keep you posted. Now I'd like to turn to other achievements and activities since our last earnings call. Our work to bring CARVYKTI to more patients globally resulted in total net sales for the fourth quarter of 2023 of $159 million. For the full year, total sales for CARVYKTI were $0.5 billion. The increase in our fourth quarter performance versus the third quarter was a result of the ongoing launch of CARVYKTI and share gain from capacity expansion and manufacturing efficiencies. We have now been in the market for 7, 4 quarters, and we are the fastest launched CAR-T therapy. We anticipate continued quarter-over-quarter growth throughout 2024 as well. We believe our cash balance of $1.3 billion provides us with financial runway through the end of 2025. In order to serve more patients and meet our revenue targets, we have expanded our supply of lentiviral vectors significantly through a large reactor in Switzerland, operated by our partner, Johnson & Johnson. In addition, Johnson & Johnson has another factory under construction in the Netherlands. We also continued to expand our internal manufacturing capacity in partnership with Janssen. Our cell processing site in Ghent, Belgium, called Obelisc produced the first batches of CARVYKTI for clinical use in January 2024. We hope to start commercial production in the second half of the year. Construction progressed on our second manufacturing site, Tech Lane in Belgium and is expected to be complete at the end of the year. We have increased capacity at our Raritan, New Jersey facility, doubling cell processing capacity since the beginning of 2023. The increases to our production capacity will help ensure we meet our target of supplying CARVYKTI to 10,000 patients by the end of 2025. I am excited to announce we have a new federal leader with more than 25 years of experience now overseeing our manufacturing sites. Our own Birk Vanderweeën has been promoted to Senior Vice President, Global Manufacturing and Technical Operations. Our previous Head of Global Tech Ops, Liz Gosen has stepped aside from full-time work for personal reasons and is now serving as a senior adviser for us. Birk joined us in 2021 to start our European organization and the manufacturing facilities I just mentioned. The site in Ghent that has just came online and second one under construction. Before joining Legend, he served at Janssen, Teva and AstraZeneca. Birk has earned the trust and respect of our global manufacturing teams, and he's already made a big impact. The increase in production capacity enabling us to meet growing patient demand comes in parallel with new data we presented at the American Society of Hematology meeting in December. In an oral presentation, we unveiled the data showing improvements in patient outcomes as early as second line treatment in our pivotal Phase III CARTITUDE-4 study. The results demonstrated clinically meaningful improvement in health-related quality of life measures and reductions in symptoms following treatment with CARVYKTI compared to standard of care. In other deals from the fourth quarter, we continue to bring more hospitals online, and we now have a total of 65 U.S. hospitals certified to treat with CARVYKTI patients. Additionally, about 30% of patients are now administered in the outpatient setting. Turning to the pipeline. We're investigating the potential of our cell therapies in blood cancers beyond multiple myeloma and also in solid tumors. We have started dosing patients in our DLL3-targeted program, the Phase I clinical trial LB2102 in lung cancer. The [indiscernible] used in LB2102 can also be deployed in other pipeline programs if validated in the clinic. After Phase I, Novartis will take over and conduct any further development including manufacturing and commercial activities. To sum up 2023, we closed the year with accomplishments on several fronts. Now I would like to turn the call over to Lori to walk you through the financials for 2023. Lori?
Thank you, Ying, and good morning, everyone. As Ying mentioned, we generated approximately $159 million in total net sales for CARVYKTI during the fourth quarter, an increase of 189% year-over-year, driven by the progress we have made with ongoing market launches, expanding market share and capacity improvements. As a reminder, we share equally in all profits and losses of CARVYKTI ex-China with our partner, Janssen. Turning to our revenue. Total revenues for the fourth quarter were $79.5 million, consisting almost entirely of collaboration revenue from the sale of CARVYKTI. Net loss for the quarter ended December 31, 2023, was $144.8 million or a loss of $0.40 per share compared to a net loss of $135.9 million or a loss of $0.41 per share for the same period last year. For the year ended December 31, 2023, net loss was $518.3 million or a loss of $1.47 per share compared to a net loss of $446.3 million or a loss of $1.40 per share for the year ended December 31, 2022. Moving on to expenses. Collaboration cost of revenue for the fourth quarter 2023 was $32.5 million compared to $23 million for the same period last year. These are Legend's portion of collaboration cost of sales in connection with the collaboration revenue under the Janssen Agreement, along with expenditures to support the manufacturing capacity expansion. Research and development expenses for the fourth quarter 2023 were $105.7 million compared to $80.8 million for the same period last year. The increase of $24.9 million for the 3 months ended December 31, 2023, compared to 3 months ended December 31, 2022, was due to primarily due to continuous research and development activities in cilta-cel including higher patient enrollment for Phase III clinical trials for cilta-cel, and an increase in research and development activities for other pipeline items. Administrative expenses for 3 months ended December 31, 2023, were $28.7 million compared to $26.7 million for the same period last year. The increase of $2 million year-over-year is primarily due to the expansion of administrative functions to facilitate continuous business growth and continuing investment in building Legend Biotech's global information technology infrastructure. Selling and distribution expense for 3 months ended December 31, 2023, was $33.7 million compared to $25.8 million for the same period last year. The increase of $7.9 million year-over-year due to costs associated with the commercialization of CARVYKTI. To summarize, our spending remains on track, and we continue to maintain a strong balance sheet. As of December 31, we had $1.3 billion in cash and equivalents, deposits and investments. Additionally, as we enter the new year, we received $100 million upfront payment in early January in connection with our global license agreement with Novartis for certain CAR-T therapies targeting DLL3. Thus, we believe we have sufficient capital to fund our operating and capital expenditures through the end of 2025. Thank you. I now pass it back to Ying for closing remarks.
Thank you, Lori. 2023 was an impressive year for Legend. CARVYKTI has proven to be the fastest launched CAR-T therapy. The achievements of our global teams have set us up for great success in 2024, and we're poised to provide more therapy to even more patients around the world. I want to thank each of our 1,900 employees for their commitment and dedication to Legend. And with that, we'd like to take your questions. Operator, we're ready for the first question.
[Operator Instructions] Our first question comes from Jessica Fye with JPMorgan.
Question on supply, and I appreciate the color and prepared remarks. I know you put the year-end '25 target out there for, I think, 10,000 doses. You have a year-end 2024 target you could share? And if not, I guess, what's the right way to think about the, for example, the manufacturing step-ups you're going to ask the FDA to grant this year? Thank you.
Jess, this is Ying. Thank you for the question about manufacturing. So I'll take that one. We did mention in the beginning of last year that our goal is to provide a combined global supply of 10,000 doses per year when we exit 2025. Beyond that, we're not providing any guidance on 2020 for manufacturing scale up. But I can tell you that, just if you look at last year, we applied for FDA approval for 2 capacity increases in our site in Raritan, New Jersey and we did successfully achieve both approvals from FDA. This year, our plan is the same. That is we are planning additional 2 capacity increases that we plan to request FDA. So that's the same cadence as last year. That's the plan for 2024.
Our next question comes from Jonathan Miller with Evercore ISI.
I'd like to ask about your early pipeline both beyond DLL3 and that [indiscernible], what can investors look forward to? And even if you're not specifying targets, can you give us a little bit of color about whether your choices are likely to be familiar to folks, they'll be familiar targets or these are new places to go looking for CAR? And then separately, do you have any plans to get into the autoimmune space like so many of your peers?
Thanks, Jonathan. This is [indiscernible] the question. Yes. So on the target front, some of our pipeline targets are [indiscernible]. I probably can provide some high-level thinking about where we are heading towards through our internal pipeline. We have a few priorities. First is really try to build multiple myeloma franchise, especially for patients who are post CARVYKTI treatment. The net space, we are targeting -- some of the known target as well as novel target currently under research and development, where you see a fairly diverse platform with [indiscernible] approach. Second priority we have is really focusing on the autoimmune disease indication. We see this as an emerging area with great opportunities. In this space, I think the differentiated approach is critical. Our internal focus at this point, primary on the allogeneic approach, and we also -- some type of programs [indiscernible] space, but really focusing on the differentiation -- focusing the value those to patient approach can bring to the patient, bring to the treatment and setting. We also have some investment in solid tumor space, where we are just focusing on some of the key hurdles associated with disease state, disease pathology. For example, [indiscernible] commonly associated with solid tumor disease indication, which is the major limitation of the duration from the current [indiscernible]. So there, we are investing on the key technological innovation to address solid tumor target [indiscernible] and how to generate the by standard cytotoxicity effect and, therefore, being able to extend the TFS, the benefit of retreatment. So that's probably will be just a high level sum. Thank you for the question.
And then one follow-up, if I may. I noticed your burn here at about $103 million as a quarter. It looks like you're not at a runway guidance to end of '25, seems like you're not guiding for a lot of improvement in burn rate or any improvement in revenue is offset by corresponding increases in spend. Is that a fair way to think about it?
That's correct. If you take a look, the -- being conservative [indiscernible] from way through the end of 2025. It's really going to be dependent upon our pipeline and how our pipeline advances. But we do believe as it stands today, we're comfortable with our cash balance, will bridge the profitability for the BCMA program.
Our next question comes from Ziyi Chen with Goldman Sachs.
And for the upcoming ODAC meeting on Friday, so could you share a bit more about the cutoff day for those data to potentially share with the committee? And also for the OS data for the ASH Trade Group who was shared in 2023 ASH which showed a very strong OS benefit compared to [indiscernible] group. So will they discuss including ASH Trade Group as well, so which group would like to be more important per your previous communication with the regulators. And also we're trying to understand about your initial thoughts on the European countries launches. So any incremental updates on the launch and any preliminary strategy on that?
This is Ying. I'll take your first question around ODAC. So at this point, I can tell you, we submitted 3 data cuts to the FDA and also EMA on overall survival because we were told by the FDA that the focus of the upcoming ODAC on March 15 will be overall survival. So as you mentioned, the first data cut was submitted in the BLA in June of last year, and that was part of the first pre-specified interim analysis with the data cut on November 1, 2022.
And then as part of the day 120 safety update we submitted to the FDA in October of last year, we put in another update on survival from CARTITUDE-4. That was with a data cut of April of last year. And then most recently, on January 7, we submitted the latest survival data from CARTITUDE 4 with a data cut of December 13 of 2023. So those are the 3 different overall survival analysis we provided to the FDA and those are 3 data cuts that will be discussed on Friday by ODAC as well. In terms of ITT versus [indiscernible], I can tell you that all our data analysis on the survival benefit was provided on the basis of intention to treat ITT and that is the all-cost mortality analysis, which is the most conservative scenario here. We do not plan to submit to the agency the data of survival on the basis of [indiscernible]. So I hope that answers your question about ODAC. And then I'll ask my colleague, Steve to comment on the European launch given the most recent CHMP opinion?
Yes. Thanks, Ying. A couple of things just to remind the listeners that our partner is responsible for CARVYKTI's launch planning outside the United States and with the exception of China. As far as Europe goes, as Ying mentioned, and maybe, I don't think he did mention. We are currently in Germany with CARVYKTI as well as Austria, and Austria came on board in December of last year. The intention -- and this is through our partner. I know our partners in active negotiations currently around our new CARTITUDE-4 data. So in terms of guiding, in terms of the country launch planning, we don't have anything yet to guide because I know this is a pretty fluid environment right now with the agencies in Europe and our partners. So unfortunately, I can't guide you at this point in time.
Our next question comes from Yaron Werber with TD Cowen.
This is Jenna on for Yaron. I kind of wanted to ask about parkinsonism, which has seen more CARVYKTI than other CAR-Ts. What do you think CARVYKTI produces parkinsonism. And also, we spoke to [indiscernible] that you can have pretty irreversible effects. So do you think that this is going to deter using earlier line setting, especially if competing CAR-T's don't show this?
Jenna, this is Ying. I'll take your question on parkinsonism. Well, first of all, if you look at the data, that's both in clinical trials and also from the FDA AER's database, this phenomenon of parkinsonism is not unique on CARVYKTI. In fact, it was reported from patients who are taking on Yescarta, Kymriah and also ABECMA. And so far, as of end of last year, we could see about 7 cases reported in the FDA database from the U.S. patients. So that's the number. That's actually the fact. With regard to why you are seeing this kind of delayed parkinsonism, I would say there's a couple of hypotheses out there. For example, it could be because of the T-cell trafficking into the CNS or in the brain when the patient has a leaky blood-brain barrier after years of therapy or if the patient already had pre-existing neurology situations such as neuropathy. So that could be one of the hypothesis. Although at this point, I don't think there's any solid clinical evidence to show which is the root cause of parkinsonism. Regarding your question on parkinsonism in the earlier lines. As we reported at ASCO, given the risk mitigation strategy we implemented following the 6 cases reported from CARTITUDE-1, we were able to show that the incidence of parkinsonism was going down from about 6% in CARTITUDE-1 to about 0.5% in CARTITUDE-4. And that was the grade 1 case we reported at ASCO. So we believe that if you look at the earlier line patient population because of the risk mitigation and also potentially because of the patient baseline difference, we think that is entirely manageable phenomenon here. Thank you.
Our next question comes from Kelly Shi with Jefferies.
This is Dave on for Kelly Shi. Congrats on the progress. I have a couple of questions. One is as the multiple BCMA agents are available now, have you received any feedback from physician on how does they position CARVYKTI versus other treatment? Also on sales, when do you expect to provide sales guidance? And although you mentioned J&J will be responsible for outside U.S. Any color on when should we expect to record the first revenue in other countries in EU and Japan?
Why don't I take the last question around sales. So the -- as far as the EU in Japan, I mentioned that we're already in Austria and Germany. And unfortunately, because the negotiations being ongoing, we can't comment on what country may be up next in Europe. And that includes Japan for that matter. I think your other question had to do with selection of CARVYKTI in terms of patient type. What we're seeing, obviously, right now within the U.S. and in Europe in the fifth line plus setting here in the States, I mean, as Ying mentioned in his opening remarks, we're running about an 80% market share in sites where we are basically competing against ABECMA. So I think that speaks volumes in terms of preference in terms of positions. And it's in all risk categories, whether be standard risk or high risk. I think where you see some other product use around bispecific uses when potentially CARVYKTI may not be available or if a physician wants to bridge to a CAR-T therapy, you're seeing some uptick for sure in the bispecific space, I think that has -- in terms of market erosion, where you're seeing it at least in the research that we're doing is you're seeing the market erosion occurring with ABECMA when a bispecific is used in front of a CAR-T therapy as opposed to [indiscernible].
I'll take your first question. I think it was on the label update. So I'll provide an answer into our respects. Number one is that you're all aware that in late last year, we did receive an official label update. That includes a 2-year minimum follow-up of the CARTITUDE-1 in late line multiple myeloma. And with that, FDA also included label update on AML and also MDS, so I want to provide a little bit of clarification on this. So if you look at the total of 97 patients from CARTITUDE-1, we saw 9 patients with 10 cases. If you look at the cumulative rate of AML/MDS, it's roughly 10%. But recall, this trial was started back in 2019. So essentially, in the last 5 years, the cumulative rate of AML/MDS is roughly 10%. Now there's a paper that was published in ASH December of last year which looked at insurance claim database over 1,000 patients who were triple exposed, which means these patients have been treated with triple classes, including one drug from IMiD class, one drug from protease inhibitor and then one drug from CD38 antibody. So if you look at that patient population, even without any treatment, the background rate of developing MDS or AML is roughly 3% each year. Therefore, if you look at the data from CARTITUDE-1, we don't believe that is actually higher than the background rate. And we already got the label update on AML and MDS. Now regarding the second one, as you guys all saw from the public communication from the FDA. All 6 brands of CAR-T therapies will receive a label update on T-cell lymphoma. And FDA believes this is a class effect. So everyone will get similar or the same language. And right now, we and J&J are in discussion with the FDA about the exact language of label update. Suffice to say that given the '23 cases reported from the FDA and also denominated is over 27,000 patients who were treated with those different than some clinical trial patients. It is a small and rare risk and we think we'll get the label update in the near future. You also have a question about feedback from physicians on how they think about CARVYKTI versus other novel therapies. We have been in touch with our physicians and [indiscernible]. And at this point, we have not seen any prescription behavior that's changed based on the either T-cell lymphoma or AML/MDS label change. And if you look at efficacy, physicians continue to believe that CARVYKTI provides best-in-class efficacy with nearly 3 years PFS in late line. And then also, again, if you saw the results from CARTITUDE-4 compared to standard of care such as DPD or [indiscernible] dexamethasone. We saw a 74% risk reduction in progression of that. And you will see on Friday how CARVYKTI has helped those patients in survival as well. So at this point, I think it's still positioned as best-in-class efficacy with the one-time injection convenience. That is how physicians view CARVYKTI.
Our next question comes from Leonid Timashev with RBC Capital Markets.
I also wanted to ask on the ODAC. And I guess, specifically, how you're thinking about competitive implications coming out of that mean? I guess with regards to the drug you're going to be sharing the committee with, do you think any setbacks for them are going to be a positive for you? Is there less market splitting potentially less competition? Or do you think if they succeed, that's going to be helpful, given that they can drive greater awareness. And I guess, is there any risk of the CAR-T space broadly being painted with the same brush depending on what the competitor present?
Thanks, Leo, for the question. So I think if you look at the federal registered publication, you will see even though it's the same roster of ODAC, but it's actually 2 different panels. On the morning of March 15, ODAC will discuss the application from us on the second line indication for CARVYKTI. And then in the afternoon, same ODAC roster of KOLs and experts will discuss the application from competition in the third-line application. So I think it is a separate panel. It's not necessarily a panel on a CAR-T class. And I believe each application will be discussed and also debated by the [indiscernible] and on its merit. So I can't comment on our competition application of data, but we firmly believe that CARVYKTI provides overwhelming benefit or in the PFS and also overall survival endpoints here. So that's what we can say about this. And if you look at CAR-T as a class in general, in late-line multiple myeloma clearly, the class of therapy has provided a new option for patients who have treated -- who have been treated and also failed all major classes, including an IMiD, a protease inhibitor and also a CD38 antibody. At that point, these patients really did not have much choice besides the BCMA directed agents. So we firmly believe that there is a very important place for BCMA-directed CAR-T in the treatment of multiple myeloma here.
Our next question comes from Vikram Purohit with Morgan Stanley.
We had two, one on the pipeline and one on commercialization. So on the pipeline, for the CARTITUDE-2 study, we were just curious what your latest thoughts were on timing for data from cohorts E&F. And then on commercialization, you mentioned that around 30% of patients are administered CARVYKTI in the outpatient setting. How high do you think that could go kind of in the near to midterm and what do you think facilitates greater use in the outpatient setting if you think that's a number that can move up significantly in the near term?
So I'll take the first question on CARTITUDE-2 cohort E&F question and then my colleague Steve will probably answer on the second. So on CARTITUDE-2 cohort E&F, as a reminder, we enrolled a total of roughly 60 patients in cohort E&F, and these are newly diagnosed multiple myeloma patients. So we're not providing any guidance. But at this point, I think the earliest timing when we can report data probably will be towards the end of this year. And as you know, Vikram, we always report data at major medical conferences. So that's what we can say about timing for cohort E&F. Steve?
Thanks, Ying. Yes, the outpatient metric is an important metric, especially as we stand into earlier lines with much larger patient populations. So to the question about what's causing the increase. I mean there's a number of things that are driving outpatient use in the United States. One, as I mentioned, just around volume itself. Our sites are recognizing the fact that they need to look at other options other than admitting all these CAR-T patients into their hospitals. In terms of what are we assuming? I mean, like you said, we are at a 30 share today, roughly thereabout. I think we could easily double that. I think the issue of rate limit around the doubling of the outpatient metric would be largely on our ability to get product into market. We're very clear with our sites or sites that have been with us since the very beginning. They have much higher outpatient uses or rates in 30%. As new sites come on board, and we're hoping to get pushing to around 100 this year, if I just need to have patient reps, quite frankly, to ensure that what they're seeing in the global setting from a safety perspective, it's consistent with that of the label. So it's really right now just a matter of getting product into the hands of physicians and allowing them to use this drug to get comfortable with it and then also put the necessary infrastructure that they need to put in place for outpatient use.
Our next question comes from Kostas Biliouris with BMO Capital Markets.
Congrats on the progress. A couple of questions from us. So the first one is around the 10,000 slots by year-end 2025, which is great to see again. I'm wondering how should we be thinking beyond 2026. Is there any saturation of the slots you can produce or you can potentially even double this 10,000 slots that you are guiding in the future if there is enough supply? And the second question is on CARTITUDE-4 data. If I recall correctly, last year, you showed that during the briefing phase, the CARVYKTI arm had more events than the standard of care arm, although both arms were under standard of care. I recall that there was not really any characteristic between the speculations that could explain this difference, I'm wondering if there is any update on this front.
I'll take your question. So on the first one regarding the 10,000 slots by end of 2025. Obviously, we and our partner, J&J have plans to extend beyond that 10,000 capacity because we do see that there will be a quite significant demand once the drug is approved in the second line and beyond. So I would say we cannot provide any specific guidance on which year. But I can tell you given the roughly $1 billion CapEx program we are conducting now, we think with certain incremental investments, we can actually get to a larger number in the near future after 2026. Now of course, there is a limit of what we can do with this current round of CapEx. So -- we and our partner already are thinking about the next step. In fact, a decision could potentially be made this year in 2024, whether we need to conduct another round of CapEx or not? It all depends on, obviously, regulatory approvals and also the market assessment based on the feedback from physicians. So we do surveys of physicians from time to time based on latest clinical data and also the competitive landscape and you guys can stay tuned on our CapEx plan here. On your second question on the initial imbalance of PFS events in the first couple of months when both arms of the CARTITUDE-4 patients are receiving exactly the same, either bridging therapy on the CARVYKTI arm or the Standard of Care in [indiscernible]. We and our partner have tried exhaustively to look at all the subgroup analysis and also baseline characteristics. And in fact, Kostas, I can assure you that, that was a question from regulators because we did have the [indiscernible] meeting in February when EMA conducted that committee to look at CARTITUDE-4 data. And that was a key question. So I can tell you that after the exhaustive analysis, the only thing we found was that there's a slight imbalance on the dose density for a couple of Standard of Care regimens, including some dose difference in [indiscernible] and then some dose difference in [indiscernible]. And you guys will see that on the briefing book. I think I believe that will be published on Wednesday. So that's the only difference we could have seen. Now does that difference in dose intensity of [indiscernible] account for the imbalance in the first couple of months. Unfortunately, the post-hoc analysis, it's difficult to conclude that. But that's pretty much the only thing we could find out. And that is also why after looking at all the data as you see Kostas, we did receive a very clean label from CHMP recommendation, right? If you look at the document, you said that CARVYKTI is recommended for second-line treatment of multiple myeloma after patient has received 1 line of treatment. That includes an IMiD and also protease inhibitor and also the patients are refracted to Revlimid. That's exactly the enrollment criteria for CARTITUDE-4, and that's a clean label we got from Europe. So that hopefully gives you a hint. Thank you.
Our next question comes from Ash Verma with UBS.
So in terms of the belt to get to 10,000 annual doses exiting 2025, by our math, you'll need a slot expansion of roughly 30% every 6 months to get to those pools. Does that align with your thinking and then how much of the 10,000 doses are you expecting Europe to contribute? So that's one. And then secondly, can you comment on the European price in the long run? Would it trend more towards where U.S. pricing is? Or is there any different dynamic at play there?
Yes. Maybe I'll take the last question first and then I'll turn to Ying to talk some of the manufacturing questions you had. Yes. In terms of the European pricing, you're going to see some guidance coming out shortly related to Germany pricing dose. We expect to see that by the end of the month, possibly going into the early part of April. So stay tuned on that. Ying, you want to talk about the manufacturing question?
Yes. So Ash, let me talk about how we plan to get to that 10,000 number by end of 2025. So first of all, we have 3 internal notes, right? In Raritan, like I mentioned earlier in this call, we already got 2 increases in capacity last year and we're planning something similar this year. And we'll continue to do that in the year of 2025 as well, so that's part of that. But beyond that, we and J&J are doing actually the physical expansion of the Raritan side. So essentially, after this physical construction is done this year in 2024. We are doubling our effective area of manufacturing in the Raritan side. So that will also figure into the capacity increase in the year of 2025 because once the physical construction is done this year, we'll spend months installing the equipment, training the staff and then get all the suites validated on the current GMP standard. So that's an important part of the Raritan increase, right? And then let's talk about the 2 other notes in Belgium. So the first one is called Obelisc, which is a stand-alone building released. That started clinical batch production in January. And our plan is to bring that site to commercial production for European demand by end of this year. So towards the end of this year, we'll have another commercial note at Ghent. And then the much larger facility called Tech Lane, which is roughly 240,000 square foot by design. The physical construction will be done by end of this year. So our plan is to bring that Tech Lane facility to clinical production early next year. And again, in the second half of 2025, that Tech Lane facility will enter into commercial production mode. So those are the 3 internal nodes. And those are very important cornerstone strategies, how we can get to that 10,000. Now beyond that, you guys all know, we executed a 3-way agreement with Novartis last year. It was for 3-year clinical supply. Right now, we're expecting Novartis to file for IND potentially first half of this year. Now that pending the FDA approval of the IND, Novartis will start to produce clinical trial material for us. So that external CMO strategy is also an important pillar of our strategy to get to that 10,000. So all this combined by end of 2025, we're on track at this point to get to that $10,000 annual capacity. And last, I think, Ash, you asked about the revenue split. Obviously, it's way too early for us to comment because right now, whatever revenue we generate for CARVYKTI from Europe, it's all really by allocation because there's only so much capacity we could allocate to Europe. But in the future, once we have enough capacity to satisfy demand from both the U.S. and European demand, then if you look at some of the prior CAR-T revenue split, it's usually roughly maybe 50-50, slightly favoring the U.S. and then the ex-U.S., especially European revenue is just shy of 50%. So we think that should be the same dynamic for BCMA CAR-T myeloma.
Our next question comes from Edward Tenthoff with Piper Sandler.
And I appreciate all the good color and the update today. Congrats on the progress. So my question really has to do with kind of second line plus utilization. How do you envision physicians prioritizing patients assuming label expansion? Do you think that will see CARVYKTI use move earlier line as evidenced by the kind of superior results that you saw from CARTITUDE-4. Is it really going to be up to the sites, how they're allocating CARVYKTI? Any color on your early thoughts on that would be appreciated.
Yes. Why don't I take that since we just have some data readout specific to that question. So if you step back and look at the myeloma population segmented by standard risk versus high risk. That's how we do it. And if you assume that of that high-risk population, they represent about 25% of the total, and that's pretty consistent across all lines of therapy. What our data is showing, and we ran some research right after last year's ASCO when we released this data and we actually just re ran it recently. And it's been fairly consistent. So based upon the results that Ying shared earlier in terms of our CARTITUDE-4 data, we're seeing, for sure, that 20% to 25% high-risk group moving over or physician is going very quickly with CAR-T therapy [indiscernible] and second line. And then we're also seeing -- and this was a bit of a change, which was a positive change for patients is, yes, with even within the standard risk population, physicians have said that they see them moving forward with CARVYKTI in standard risk in second line plus population as well. So that's quite exciting. Now that -- as you know, that's quite a sizable patient population for us. But that data, like I said, is fairly fresh now. We just had that readout here in the first quarter. I guess the last maybe tidbit of information, this real quickly is does the new dynamic that this launch represents is the referral dynamic, especially in the standard risk group, so as opposed to our CARTITUDE-1 launch, which was pretty much most of those [indiscernible] plus patients were already within our hospitals through our partner and our partners fully staff trained up and ready to go. They'll be pushing from a referral front in the outpatient setting where most of the standard risk patients are today to refer those patients that are CAR-T eligible to our site. So that's the only, I would say, added wrinkle to the second line plus indication is really this active engagement in terms of referral from the outpatient clinics into our hospital.
Our next question comes from Justin Zelin with BTIG.
Congrats on the progress. So Ying, I wanted to ask if you could give us an update on the out-of-spec rate that you're seeing and your confidence on the FDA's widening of the out-of-spec window with the most recent submission.
Justin, thanks for the question. So I think what I can say is that in the last 9 months or 3 quarters or so, the out spec rate has been quite stable, like we mentioned, it's in the teens range. So at this point, we are seeing a very stable trend of OS. And the next leg up would be pending the FDA approval, we hope we'll get a wider release spec and then we hope to have another significant reduction in the out spec rate. Now regarding the FDA approval. So as you know, Justin, we did submit it in the supplemental [indiscernible] in June of last year asking us the FDA to widen our release spec based on the clinical data we received from CARTITUDE-4 data. So we provided a wealth of what I call the sensitivity analysis by correlating the release spec with the clinical outcome. At this point, we are still confident that we should be able to receive the wider spec but we don't comment on detailed interaction with the agency. You're going to have to wait and see when we receive the FDA approval, then we'll let you guys know what kind of the regulatory action the agency has taken.
Our next question comes from Mitchell Kapoor with H.C. Wainwright.
I have 2. The first one is kind of on the strategy of moving into earlier lines, knowing that you'll undoubtedly treat patients who would have otherwise been treated in the later line setting, can you kind of help us contextualize the true additional expansion opportunity of moving into earlier lines? And then the second is on the strategy of the sales force messaging, assuming a new approval in the earlier line setting, with new accounts, do you expect to ask the physician to potentially put patients on CARVYKTI in later lines first and then move to earlier lines? Or would you initially ask them to begin their patients in earlier line setting?
Yes, this is Steve. Thanks for that question. That's a good one. So we will be -- obviously, we'll be in launch mode with CARTITUDE-4. So we will be messaging hard. Obviously, the new indication, the second line plus nature of it in all the patients that meet the eligibility criteria. So we will be really from a messaging perspective, really dominating our message here on CARTITUDE-4 and second-line plus. As far as the eligible patient population, I could actually give you some numbers here that may help you and these are folks who -- patients -- these are global numbers that meet the eligibility criteria, not necessarily a treated population, but at least the patients that are eligible. This may help with some of your math, your modeling. So in the frontline setting, this is a global number. We foresee about 22,000 patient opportunity globally CARTITUDE-4, there's about a tripling of that moving to 60,000. [indiscernible] around the same number, 20,000 to 28,000. So hopefully, that will give you some perspective in terms of incremental impact as we go into earlier lines.
Our next question comes from George Farmer with Scotiabank.
You guys mentioned 80% market share of CARVYKTI in multiple myeloma versus ABECMA. Can you comment on what's driving that decision for physicians to use ABECMA even in the first place? And do you think that can improve? And then second question, maybe I missed this. Are you still guiding for profitability in 2026?
This is Steve again. We had a little mechanical difficulty on hearing. Could you repeat that first question? I think you added -- the question was related to ABECMA and ABECMA use.
Yes. So you guys said you had like 80% market share, right? And just like wondering what's driving that decision to even use ABECMA, do you think, and over CARVYKTI? And can you improve upon that? And then the second question had to do with profitability in 2026. Is that still a message you guys are communicating?
Sure. I'll take the first one. Sorry guys, we were having some WiFi problems, they got all right here. Can you guys hear me okay on your end?
Yes.
Okay, good. Okay. I think the first question had to do with, once again, ABECMA use and why you are going to bother using ABECMA. I think what's happening here, and this is the research now speaking is there's still a large number of patients in this second line setting that we just, quite frankly, can't satisfy yet. So therefore, thankfully, there's another CAR-T therapy available. and you're seeing ABECMA used in that setting. It's quite -- it's that simple. The other thing to think about, and we -- in the United States, we don't have marrying territories or commercial map, so to speak. We're not all in identical centers. So in some centers where ABECMA is, obviously, they're the only CAR-T in town, they're going to get ABECMA but that doesn't happen very frequently. So that is the other area where you might see some ABECMA use just in terms of the commercial footprint being a bit different than us. Lori, do you want to talk about process?
Sure. So the managing is still consistent with profitability in 2026. We've talked about bridging to profitability for the BCMA program. What's going to be critical there is our penetration into earlier lines of therapy and kind of our uptake on the revenues and continuing to drive our costs down. And then the other component of that is really, I talked about earlier, is our pipeline advancement. So by 2026, we are projecting that we can break even or be profitable from an overall company perspective.
Our next question comes from Gena Wang with Barclays.
Sorry, I dialed in late, so I apologize if those questions already been asked. So first question is regarding -- I think you mentioned that in the past, by the end of 2025, your capacity can reach 10,000 doses? And what would take for you to reach 20,000 to 25,000 doses? And how long would that take? And then second question is regarding ODAC, later this week. So maybe if you can share like what kind of data you submit to the FDA? And do you expect some discussion regarding the toxicity profile such as the neurotox?
This is Ying. I'll take your questions. So on the first one, I think I have commented previously that with this current round of very extensive capital investment between us and our partner, J&J, we think we can go beyond that 10,000 and potentially goes to the numbers to put it. It will take some incremental investment, and it will take probably another couple of years to get there. But at this point, I would rather not share any details around that. Just suffice to say that, yes, we'll go beyond 10,000 with this current round of CapEx and also potentially help from our external partners on [indiscernible] side. So that's the answer for your question -- the first question. And then the second one regarding ODAC, I can tell you that it's very clear from the PFA communication in writing and also verbal of that -- the focus of the ODAC will be discussed in the overall survival benefit CARVYKTI provides in this patient population valued in the CARTITUDE-4 study. And in the context of some early imbalance, which you have seen from the PFS curve, right? So that's really the focus of the ODAC here in terms of what they're focusing on. Now I'm sure it's a 4-hour ODAC session. And in any ODAC meeting, they always talk about the overall risk benefit. And that probably will touch upon also some of the adverse events, including CRS, neurotox, second primary malignancies. But like I mentioned, again, the survival is the focus -- the survival benefit is the focus not the SPM issue or the neurotox issue at this point based on what we heard from FDA. Thank you.
Our next question comes from Kelsey Goodwin with Guggenheim.
First, I guess, how should we think about the first quarter '24 sales given kind of the step up in the back half of '23 and likely not being fully recognized given the fourth quarter sales that we saw? And then secondly, on the AdCom. So given both are on the same day and crossover is obviously a main focus. Could you remind us the rationale for not allowing crossover in CARTITUDE-4? And do you think that, that might be a hang up for the FDA in any way?
So for quarter-over-quarter growth, we're not giving specific guidance, but I can tell you, we do anticipate quarter-over-quarter growth with more pronounced growth in the second half of the year with the anticipated launch into the second line setting. Ying, I don't know if you want to talk about crossover?
Sure. So thank you for the question, Kelsey. As you know, there is some difference between the 2 trials. And in the CARTITUDE-4 study, we did not allow crossover, which means we did not provide the patients who progressed on the Standard of Care to cross over to [indiscernible]. However, once the patient progresses on the Standard of Care, they can actually get any commercially available therapy, including the 2 commercially available CAR-T therapies and also the commercially available bispecifics. And also, they can enroll into clinical trials. So you will see some of the details on Wednesday when a briefing will come out, what those subsequent therapies those patients receive. But I can tell you, yes, there are patients who did receive CAR-T therapies after progression. So that's the fact. Now on the other hand, even though we didn't allow the crossover. But -- before we started enrolling patients, we actually had a very brief communication with both FDA and also EMA as global regulators to talk about the product of CARTITUDE-4 including the -- not allowing the crossover design. So at this point, I don't think that will be a big focus of debate here at ODAC.
That's all the questions we have for today. Thank you for your participation. You may now disconnect. Everyone, have a great day.