On May 18, 2023 Legend Biotech Corporation (NASDAQ: LEGN) (Legend Biotech), a global biotechnology company developing, manufacturing and commercializing novel therapies to treat life-threatening diseases, reported its first quarter 2023 unaudited financial results (Press release, Legend Biotech, MAY 18, 2023, View Source [SID1234631875]).
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"We are extremely pleased to announce that we have recently raised $762 million in funding. With this substantial capital infusion, we are poised to embark on a critical chapter in our company’s growth to advance CARVYKTI toward its full potential, and we look forward to presenting the latest data from our CARTITUDE clinical development programs at ASCO (Free ASCO Whitepaper) and EHA (Free EHA Whitepaper) this June," said Ying Huang, Chief Executive Officer of Legend Biotech. Dr. Huang continued, "We would like to extend our deepest gratitude to our investors for their overwhelming support and confidence in our company’s mission and remain committed to creating long-term value for all of our stakeholders."
Financial Results for Quarter Ended March 31, 2023
Cash and Cash Equivalents, Time Deposits, and Short-Term Investments
As of March 31, 2023, prior to giving effect to the registered direct offering, private placements or warrant exercise noted above, Legend Biotech had approximately $854 million of cash and cash equivalents, time deposits, and short-term investments.
Revenue
Total revenue for the three months ended March 31, 2023 was $36.3 million compared to $50.0 million for the three months ended March 31, 2022. Collaboration revenue recognized in the first quarter of 2023 was from CARVYKTI sales primarily in the U.S. License revenue recognized in first quarter of 2022 was due to the achievement of commercial milestone for FDA approval in the U.S. in connection with the license and collaboration agreement (the "Janssen Agreement") with Janssen Biotech, Inc. ("Janssen").
Collaboration Cost of Revenue
Collaboration cost of revenue for the three months ended March 31, 2023 was $35.6 million. Legend Biotech did not have any collaboration cost of revenue in the three months ended March 31, 2022. The $35.6 million is a combination of Legend’s portion of collaboration cost of sales in connection with collaboration revenue under the Janssen Agreement along with expenditures to support the manufacturing capacity expansion which cannot be capitalized.
Research and Development Expenses
Research and development expenses for the three months ended March 31, 2023 were $84.9 million compared to $81.5 million for the three months ended March 31, 2022. This increase of $3.4 million was primarily due to higher patient enrollment for Phase 3 clinical trials for cilta-cel in the first quarter of 2023.
Administrative Expenses
Administrative expenses for the three months ended March 31, 2023 were $22.2 million compared to $12.7 million for the three months ended March 31, 2022. The increase of $9.5 million was primarily due to continued investment in building global information technology infrastructure along with non-recurring financial and legal fees related to Legend Biotech’s restatement of its historical financial statements as reported by Legend Biotech in February 2023.
Selling and Distribution Expenses
Selling and distribution expenses for the three months ended March 31, 2023 were $18.0 million compared to $21.3 million for the year three months ended March 31, 2022. This decrease of $3.3 million was primarily due to non-recurring launch expenses incurred in the first quarter of 2022 to support the commercialization in the U.S market.
Other Income and Gains
Other income and gains for the three months ended March 31, 2023 were $8.2 million compared to $1.0 million for the three months ended March 31, 2022. The increase of $7.2 million was primarily due to increase in interest income and gain on investments.
Other Expenses
Other expenses for the three months ended March 31, 2023 were $10.7 million compared to $1.5 million for the three months ended March 31, 2022. The increase was primarily due to unrealized foreign currency exchange loss in the quarter.
Finance Costs
Finance costs for the three months ended March 31, 2023 were $5.1 million compared to $1.0 million for the three months ended March 31, 2022. The increase was primarily due to interest on advance funding, which is interest-bearing borrowings funded by Janssen under the Janssen Agreement and constituted by principal and applicable interests upon such principal.
Fair Value Gain of Warrant Liability
Fair value gain of warrant liability for the three months ended March 31, 2023 was $20.0 million caused by changes in the fair value of a warrant that Legend Biotech issued to an institutional investor through a private placement transaction in May 2021 with an initial fair value of $81.7 million at the issuance date. The warrant was assessed as a financial liability with a fair value of $47.0 million as of March 31, 2023. On May 12, 2023, Legend Biotech announced that the warrant had been exercised in full.
Loss for the Period
For the three months ended March 31, 2023, net loss was $112.1 million, or $0.34 per share, compared to a net loss of $32.3 million, or $0.10 per share, for the three months ended March 31, 2022.