On November 16, 2021 Legend Biotech Corporation (NASDAQ: LEGN) (Legend Biotech), a global, clinical-stage biotechnology company developing and manufacturing novel therapies, reported its 2021 third quarter unaudited financial results (Press release, Legend Biotech, NOV 16, 2021, View Source [SID1234595714]).
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"It continues to be a banner year for us, as we launch our clinical trial in the US for the T cell lymphoma program and see promising developments in our pipeline," said Ying Huang, PhD, CEO and CFO of Legend Biotech. "We intend to close the year on a strong note by presenting new and updated results from our CARTITUDE Clinical Development Program at the 63rd American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting next month and work to bring cilta-cel to more patients."
Recent Highlights
In October 2021, Legend Biotech and its collaboration partner Janssen Biotech, Inc. (Janssen) completed the enrollment of the Phase 3 CARTITUDE-4 study, evaluating cilta-cel in patients with multiple myeloma who have received 1-3 prior lines of therapy including a proteasome inhibitor and immunomodulatory agent and are refractory to lenalidomide. The purpose of this study is to compare the efficacy of cilta-cel with standard therapy – either pomalidomide, bortezomib and dexamethasone (PVd) or daratumumab, pomalidomide and dexamethasone (DPd).
The U.S. FDA has extended the PDUFA target date for cilta-cel by three months to February 28, 2022. The extension allows the FDA sufficient time to review information recently submitted pertaining to an updated analytical method following an FDA information request.
On October 18, 2021, Legend Biotech hosted its first Research & Development (R&D) Day in New York, sharing updates on Legend Biotech’s pipeline advancements, including expanded capabilities in cell therapy, and milestones in the cilta-cel clinical development program. The Legend Biotech pipeline has been updated to reflect the disclosures made at this event, including the targets for two of the company’s investigational autologous CAR-T therapies, LB2101 and LB2102. Additionally, the investigator-initiated clinical trial in China evaluating an investigational autologous CAR-T targeting CD33 and CLL-1 for the treatment of acute myeloid leukemia has been removed. The Phase I dose escalation study showed a lack of CAR-T expansion and efficacy.
In September 2021, the Phase 1, open-label, multicenter clinical trial began in the United States for LB1901, an investigational autologous CD4-targeted CAR-T therapy for the treatment of adults with relapsed or refractory peripheral T-cell lymphoma (PTCL) or cutaneous T-cell lymphoma (CTCL). The primary objectives of the trial are to characterize the safety and tolerability of LB1901 and determine the optimal dose.
Key Upcoming Milestones
New and updated data from the CARTITUDE Clinical Development Program will be presented at the 63rd ASH (Free ASH Whitepaper) Annual Meeting and Exposition taking place from December 11-14, 2021. Highlights include:
CARTITUDE-1 updated results from the Phase 1b/2 study of cilta-cel in patients with relapsed or refractory multiple myeloma (RRMM)
Adjusted indirect comparisons of patient outcomes in CARTITUDE-1 versus therapies from real-world clinical practice from the prospective LocoMMotion study
CARTITUDE-1 subgroup analysis data
CARTITUDE-2 first data in patients with multiple myeloma and early relapse after initial therapy (Cohort B) and updated data in lenalidomide-refractory patients with progressive multiple myeloma after 1-3 prior lines of therapy (Cohort A)
First preclinical in vivo data for novel tri-specific single-domain antibody (VHH) CAR-T cells (LCAR-AIO)
Legend Biotech’s collaboration partner, Janssen, anticipates submitting a New Drug Application (NDA) to the Japan Pharmaceuticals and Medical Devices Agency in Q4 2021, seeking approval of cilta-cel for the treatment of adults with RRMM.
Financial Results for the Three-month and Nine-month Periods Ended September 30, 2021
Cash and Cash Equivalents and Time Deposits
As of September 30, 2021, Legend Biotech had approximately $636.0 million of cash and cash equivalents, interest yielding securities and time deposits.
Revenue
Revenue for the three months ended September 30, 2021 was $16.9 million compared to $11.7 million for the three months ended September 30, 2020. $2.2 million out of the increase of $5.2 million was due to two additional milestones achieved pursuant to Legend Biotech’s agreement with Janssen in the fourth quarter of 2020 and in the second quarter of 2021, respectively. The remaining $3.0 million increase in revenue was consideration for the exclusive licensing of patents to Nanjing Probio Biotech Co., Ltd (Probio), a related party controlled by Legend Biotech’s majority shareholder, Genscript Corporation, and affiliates of Probio in September 2021.
Revenue for the nine months ended September 30, 2021 was $50.8 million compared to $34.9 million for the nine months ended September 30, 2020.
Milestone payments are constrained and only included as customer consideration for revenue recognition when it is highly probable that the associated milestone will be achieved, typically when the triggering event occurs. This resulted in an increase in revenue recognized in 2021.
Legend Biotech has not generated any revenue from product sales to date.
Research and Development Expenses
Research and development expenses for the three months ended September 30, 2021 were $72.3 million compared to $63.7 million for the three months ended September 30, 2020. This increase of $8.6 million was primarily due to continuous research and development activities in cilta-cel and toward other pipeline advancements. Consistently, research and development expenses for the nine months ended September 30, 2021 was $226.8 million compared to $165.2 million for the nine months ended September 30, 2020, an increase of $61.6 million.
Administrative Expenses
Administrative expenses for the three months ended September 30, 2021 were $11.8 million compared to $6.0 million for the three months ended September 30, 2020. The increase of $5.8 million was primarily due to Legend Biotech’s expansion of supporting administrative functions to facilitate continuous research and development activities as well as activities to establish elements of a commercialization infrastructure. Due to the consistent business expansion, administrative expenses for the nine months ended September 30, 2021 increased by $15.8 million, which was $29.8 million for the nine months ended September 30, 2021 compared to $14.0 million for the nine months ended September 30, 2020.
Selling and Distribution Expenses
Selling and distribution expenses for the three months ended September 30, 2021 were $19.5 million compared to $9.3 million for the three months ended September 30, 2020. This increase of $10.2 million was primarily due to increased costs associated with commercial preparation activities for cilta-cel. Driven by the same cause, selling and distribution expenses for the nine months ended September 30, 2021 was $49.7 million compared to $25.4 million for the nine months ended September 30, 2020, an increase of $24.3 million.
Other Income and Gains
Other income and gains for the three months ended September 30, 2021 was $0.6 million compared to $1.5 million for the three months ended September 30, 2020. Other income and gains for the nine months ended September 30, 2021 was $2.3 million compared to $5.3 million for the nine months ended September 30, 2020. The decrease of $0.9 million and $3.0 million, respectively, primarily resulted from lower government grant and interest income earned during the three- and nine-month periods ended September 30, 2021, as compared to the corresponding prior year periods.
Other Expenses
Other expenses for the three months ended September 30, 2021 was $2.5 million compared to $1.2 million for the three months ended September 30, 2020. The increase of $1.3 million was primarily due to higher foreign currency exchange loss. Other expenses for the nine months ended September 30, 2021 was $6.9 million compared to $1.3 million for the nine months ended September 30, 2020. The increase of $5.6 million was primarily due to higher foreign currency exchange loss, loss from disposal of assets and other expenses during the nine months ended September 30, 2021.
Finance Costs
Finance costs for the nine months ended September 30, 2021 was $0.3 million compared to $4.2 million for the nine months ended September 30, 2020. The decrease was primarily due to finance costs related to the issuance of convertible redeemable preferred shares in 2020, which were fully converted into ordinary shares upon the completion of Legend Biotech’s initial public offering in June 2020.
Fair Value Loss of Warrant Liability
Fair value loss of warrant liability for the nine months ended September 30, 2021 was $37.4 million caused by changes in fair value of a warrant, which was issued to an institutional investor through a private placement transaction in May 2021. Concurrently, ordinary shares were sold to the same institutional investor in a private placement transaction. The warrant was assessed as a financial liability with a fair value of $119.1 million as of September 30, 2021 and a fair value loss of $35.8 million was recorded for the three months ended of September 30, 2021.
Fair Value Loss of Convertible Redeemable Preferred Shares
For the nine months ended September 30, 2020, Legend Biotech reported a one-time non-cash charge of $80.0 million caused by changes of fair value of Series A convertible redeemable preferred shares (Series A Preferred Shares). Upon consummation of Legend Biotech’s U.S. initial public offering, all outstanding Series Preferred Shares were converted into ordinary shares of Legend Biotech and all accrued but unpaid dividends were settled in the form of ordinary shares of Legend Biotech.
Loss for the Period
Net loss for the three months ended September 30, 2021 was $124.8 million, or $0.43 per share, compared to $66.5 million, or $0.25 per share, for the three months ended September 30, 2020. Net loss for the nine months ended September 30, 2021 was $297.9 million, or $1.07 per share, compared to $245.7 million, or $1.08 per share, for the nine months ended September 30, 2020.