Legend Biotech (LEGN) Q3 2026 Earnings Call Transcript

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DATE

Nov. 10, 2026

CALL PARTICIPANTS

• Senior Director of Investor Relations - Caroline LeCates Paul
• Chief Executive Officer - Ingrid Zhang
• President of CARVYKTI - Alan Bash
• Chief Financial Officer - Carlos Santos
• Interim Head of R&D - Yuhong Qiu

TAKEAWAYS

• Revenue -- $359.5 million, representing a 32% increase year over year driven by CARVYKTI demand and global commercial expansion.
• CARVYKTI Net Trade Sales -- $710 million, increasing 36% year over year due to adoption in earlier lines of therapy and new market launches.
• U.S. CARVYKTI Sales -- $472 million, increasing 19% year over year reflecting 50% of volume now coming from second and third lines of treatment.
• Ex-U.S. CARVYKTI Sales -- $238 million, growing 86% year over year following launches in 20 markets worldwide.
• Adjusted Net Income -- $55.6 million, improving from an adjusted net loss of $18.7 million in the prior-year period.
• Adjusted Diluted EPS -- $0.14, compared to an adjusted loss of $0.05 per share in the third quarter of 2025.
• Gross Margin -- 58%, exceeding initial expectations of the lower 50% range because of manufacturing efficiencies.
• R&D Expenses -- $95.3 million, a 16% decrease year over year as costs for major frontline clinical trials concluded their dosing phases.
• SG&A Expenses -- $14.8 million, a 20% decrease year over year including a $24 million one-time credit related to share-based compensation.
• Operating Income -- $46.8 million, compared to an operating loss of $43.3 million in the same period last year.
• Cash and Cash Equivalents -- $853 million, including time deposits, with no long-term debt as of Sept. 30, 2026.
• Early Line Mix (U.S.) -- 50%, representing the portion of CARVYKTI apheresis volume in second and third lines during the third quarter.
• Global Treatment Sites -- 373, reflecting the total number of activated sites across 20 global markets.
• LB2501 Dose Level 2 Results -- 100% ORR and CR, based on updated clinical data from 19 patients with relapsed or refractory B-cell malignancies.
• LB2501 Dose Level 3 Results -- 60% ORR and CR, as reported in the clinical update for the in vivo CAR-T program.
• Five-Year Survival Rate -- 69.2%, demonstrating long-term durability for patients in the CARTITUDE-2 Cohort A study.
• Median PFS (CARTITUDE-2) -- 60.5 months, supporting the use of CARVYKTI in earlier lines of therapy.
• 2027 Revenue Guidance -- Double-digit growth, expected for CARVYKTI net trade sales according to management's trajectory projections.
• Q4 Gross Margin Outlook -- High 50% range, revised upward by management for the fourth quarter of 2026.
• Collaboration Revenue -- $353.2 million, up from $261.8 million in the third quarter of 2025 due to CARVYKTI sales under the Janssen agreement.

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RISKS

• Bash warned that "the current net trade sales consensus for 2027 would be at the higher end of the scenarios that we're currently anticipating," attributing this to launch delays in markets outside the United States and slower adoption in earlier lines of therapy.

SUMMARY

Legend Biotech Corporation (NASDAQ:LEGN) reported a transition to profitability in the third quarter of 2026, supported by the continued global commercial expansion of its lead cell therapy product. Management reported that the majority of CARVYKTI volume in the United States is shifting toward earlier lines of therapy, aided by updated clinical guidelines. The company stated that the development of its next-generation in vivo platform is advancing with the clearance of a new investigational application. Management maintained its focus on achieving company-wide profitability for the full year on an adjusted net income basis while expanding its manufacturing and treatment network.

• Ingrid Zhang noted that CARVYKTI expansion remains a primary objective alongside advancing the next-generation pipeline and strengthening execution to deliver sustained profitability.
• Alan Bash stated, "The trends reflect growing physician confidence in CARVYKTI's benefit risk profile earlier in the disease course and our ability to reliably support that shift at scale."
• Management indicated that updated NCCN Guidelines now recommend referring myeloma patients to T-cell therapy centers at first relapse and suggest CAR-T therapy is preferred over T-cell engagers when both are viable options.
• Carlos Santos reported that gross margins performed better than expected at 58% due to manufacturing efficiencies, leading to an upward revision for fourth quarter margin outlook to the high 50% range.
• Yuhong Qiu reported that the LB2501 in vivo CAR-T program demonstrated a 100% complete response rate at dose level 2 in 19 patients, with additional data expected at the upcoming American Society of Hematology meeting.
• The company confirmed that CARTITUDE-5 top-line results are expected in 2027 at the earliest, as the trial is event-driven and outcomes for newly diagnosed patients continue to improve.

INDUSTRY GLOSSARY

• Apheresis: A medical procedure in which a patient's blood is passed through a device that separates out one particular constituent and returns the remainder to circulation.
• BCMA: B-cell maturation antigen, a protein highly expressed on malignant plasma cells in multiple myeloma and a common target for cell therapy.
• CAR-T: Chimeric Antigen Receptor T-cell therapy, a type of treatment in which a patient's T-cells are genetically modified to attack cancer cells.
• CR: Complete Response, indicating that no detectable cancer remains following treatment.
• DLL-3: Delta-like ligand protein 3, a target protein being explored for CAR-T therapies in various solid tumors.
• IND: Investigational New Drug application, which must be cleared by the FDA before clinical trials can begin in the United States.
• In vivo CAR-T: A next-generation technology designed to generate CAR-T cells directly within the patient's body after a single infusion.
• NCCN: National Comprehensive Cancer Network, an alliance of cancer centers that publishes clinical practice guidelines for oncology treatment.
• ORR: Overall Response Rate, the proportion of patients who have a partial or complete response to therapy.
• PFS: Progression-free survival, the length of time during and after treatment that a patient lives with the disease but it does not get worse.
• TCE: T-cell engagers, a class of immunotherapy that helps the immune system's T-cells find and kill cancer cells.

Full Conference Call Transcript

Operator: Hello, and welcome to Legend Biotech Third Quarter 2026 Earnings Call. [Operator Instructions]. I would now like to turn the call over to Caroline Paul, Senior Director of Investor Relations. You may begin.

Caroline LeCates Paul: Good morning. This is Caroline Paul, Senior Director of Investor Relations at Legend Biotech. Thank you for joining us today to review our third quarter 2026 performance. Prior to this call, we issued a press release announcing our financial results, which can be found on the Legend Biotech Investor Relations website. Joining me on today's call are Ingrid Zhang, our Chief Executive Officer; Alan Bash, President of CARVYKTI; and Carlos Santos, Chief Financial Officer. Following the prepared remarks, we will open the call for Q&A. Yuhong Qiu, our Interim Head of R&D, will also join us for 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. 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. Our press release includes IFRS to non-IFRS reconciliations for these measures. With that, I will now turn the call over to Ingrid.

Ingrid Zhang: Thank you, Caroline, and good morning, everyone. Before reviewing our third quarter results, I'd like to share a few thoughts as this is my first earnings call as Legend's CEO. Over the past several weeks, I have spent time with colleagues across the entire organization and engage with physicians and other stakeholders working to bring CARVYKTI to patients around the world. What has become clear to me is the strength of what Legend has built. Legend has demonstrated its ability to bring innovative cell therapy to market at meaningful scale through strong science, manufacturing excellence and a deep focus on patients.

This is incredibly difficult to accomplish and speaks to the foundation that exists that we can leverage for the rest of the pipeline. I've also been impressed by the quality of our people and the collaborative culture across the organization. Together, these strengths reinforce my confidence in Legend's future. I joined Legend because I believe the opportunity ahead is significant. CARVYKTI continues to expand its impact for patients with multiple myeloma. Our pipeline provides an opportunity to extend our leadership in cell therapy for years to come. My priorities as CEO are clear: number one, maximize CARVYKTI; number two, advance our next-generation pipeline; and number three, strengthen execution on all fronts to deliver sustained profitability.

We enter this next chapter from a position of financial and commercial strength with a differentiated asset that has extensive real-world results and innovative platform and a team focused on delivering for patients and external stakeholders. With that, let me turn to our third quarter highlights. Slide 7, please. In the third quarter, CARVYKTI net trade sales increased approximately 36% year-over-year to $710 million. Growth was driven by continued adoption in the earlier line settings in the U.S. and new country launches, with net trade sales increasing 19% in the U.S. and 86% outside the U.S. on a year-over-year basis. We also continue to expand global patient access, reaching 373 activated treatment sites globally.

During the quarter, we presented important long-term follow-up data from the CARTITUDE-2 Cohort A study at the 2026 International Myeloma Society Annual Meeting, or IMS. These results further strengthen the growing body of evidence supporting the potential impact of CARVYKTI in earlier line multiple myeloma. We also received FDA clearance of our IND application for LB2501, an investigational in vivo CD19/CD20 dual-targeting CAR-T therapy in relapsed or refractory B-cell malignancies, including B-cell non-Hodgkin lymphoma. This represents an important achievement step as we advance our next generation of cell therapy programs. Slide 8, please. Turning to our IMS results.

One of the most important data updates during the quarter came from a 5-year follow-up analysis of CARTITUDE-2 Cohort A in patients with relapsed or refractory multiple myeloma after 1, 2, 3 prior lines of therapy. The data demonstrated strong durability responses. Five years after single CARVYKTI infusion, half of the 20 patients from CARTITUDE-2 Cohort A remained alive and progression-free without further anti-myeloma treatment compared with 33% in CARTITUDE-1. Five-year overall survival was 69% compared with 51%, respectively. Importantly, the safety profile remained consistent with the known profile of CARVYKTI with no new CAR-T cell-related neurotoxicity reported during the extended follow-up period.

Taken together, we believe these findings support the use of CARVYKTI in earlier line settings, which may increase the likelihood of achieving durable treatment-free remission for patients living with multiple myeloma. Earlier use of CARVYKTI was also reinforced by recent updates to NCCN guidelines, which Alan will explain in detail. As shown on the next slide, we continue to evaluate CARVYKTI through the CARTITUDE-5, CARTITUDE-6 and CARTITUDE-10 studies. These programs represent an important opportunity to evaluate CARVYKTI in frontline settings, including transplant ineligible and transplant eligible patients and central to our long-term strategy for that asset. Slide 9, please. Beyond CARVYKTI, we're advancing our in vivo CAR-T programs, along with additional programs across hematological malignancies and solid tumors.

Slide 10, please. During the quarter, we achieved FDA clearance of IND for LB2501, representing an important step forward for our in vivo CAR-T platform. As you might recall from our EHA presentation over the summer, our NHO program designed as a CD19/CD20 dual-targeting therapy for relapsed or refractory B-cell non-Hodgkin lymphoma demonstrated compelling early data with a 100% ORR and 83% CR rate for 6 patients at dose level 2. As you may have seen in the abstract for the upcoming American Society of Hematology Annual Meeting, we recently provided an update with 19 patients across 3 dose levels compared to the 12 patients across 2 dose levels at EHA.

We are very pleased that LB2501 continues to demonstrate a favorable safety profile and encouraging efficacy with remarkable 100% ORR and 100% CR rates at dose level 2 with a median follow-up of nearly 5 months. We intend to share additional updates across the dose levels at ASH. In terms of clinical development plans, the Phase Ia study for LB2501 is intended to confirm and further characterize dose selection in the U.S. clinical setting based in part on insights from the ongoing IIT study in China, enabling the program to potentially transition quickly into Phase Ib.

Phase Ib is planned to broaden the evaluation of LB2501 across multiple B-cell malignancies, including DLBCL, MCL and CLL as well as further inform patient selection. Following this, we intend to advance LB2501 into Phase II in appropriately selected patient populations to further characterize and confirm efficacy and safety. Regarding LB2505, our BCMA-directed therapy for multiple myeloma, we do not have further updates to share at this time, but we remain focused on dosing patients as soon as possible. As a reminder, this program falls under the terms of our agreement with Johnson & Johnson pertaining to BCMA-directed CAR-T programs in multiple myeloma.

Overall, we are encouraged by the breadth of opportunities represented across our pipeline and remain focused on disciplined execution. Slide 11. IDP Legend remains well positioned for long-term growth. Commercially, CARVYKTI remains the leading CAR-T therapy in multiple myeloma supported by expanding global demand, earlier line adoption and a growing body of long-term clinical evidence. Operationally, we ended the quarter with approximately $853 million in cash, cash equivalents and time deposits and remain focused on achieving company-wide profitability for full year 2026 on an adjusted net income basis. Across our pipeline, we continue to advance our differentiated cell therapy programs, including our next-generation in vivo platform.

Taken together, these strengths provide a solid foundation for sustainable long-term growth and value creation. With that, I will turn the call over to Alan Bash for a commercial update.

Alan Bash: Thank you, Ingrid. CARVYKTI continued to deliver solid global growth during the quarter. Net trade sales increased approximately 36% year-over-year to approximately $710 million, reflecting continued demand growth globally. In the United States, year-over-year growth was driven by ongoing adoption in earlier treatment settings and continued expansion of our authorized treatment network. Outside the U.S., growth was supported by launch execution across 20 markets worldwide and continued treatment site activation. Turning to the next slide. We want to provide an update on how we are accelerating growth through our earlier line momentum.

Although we do not intend to break this out every quarter, we wanted to provide another update on the traction made in earlier line settings in the United States in recent months. This provides clear evidence that we are executing across our objectives. As shown in teal on the far right, patients in the second and third lines represented 50% of CARVYKTI apheresis volume in the U.S. in the third quarter of 2026, which is a significant increase from the 41% in the first quarter of 2026 and 29% in the first quarter of 2025.

This trend reflects growing physician confidence in CARVYKTI's benefit risk profile earlier in the disease course and our ability to reliably support that shift at scale. More broadly, we continue to see meaningful opportunities to expand market penetration as physician familiarity grows and as increasing numbers of eligible patients are referred earlier in their treatment journey, supported by the recent updates to the National Comprehensive Cancer Network guidelines. Turning to the recent NCCN guideline updates from September.

The guidelines state that all patients with myeloma should be referred to a T-cell therapy capable center at the time of first relapse for consideration of available therapies that when both BCMA CAR-T and T-cell engagers are viable options, current data suggests that CAR-T is preferred given the established efficacy of TCEs following CAR-T cell therapy failure. And third, that prior BCMA-directed therapies should be minimized in patients planning to receive BCMA CAR-T cell therapy. We have been highlighting the updates in our recent discussions with physicians and other stakeholders involved in the development of clinical pathways and we'll continue to emphasize this new set of recommendations in the coming months.

In summary, we remain focused on operational execution, treatment center support and education, patient access and ensuring that physicians and patients can benefit from CARVYKTI across the markets where it is available. With that, I will turn the call over to Carlos to walk through our financial performance.

Carlos Santos: Thank you, Alan. We have built a strong and scalable business model around CARVYKTI. Over the last several years, we have delivered revenue growth at a CAGR of 64% since 2023, while steadily improving operating efficiency across the organization. As revenue continues to scale, we are seeing increasing leverage throughout the business, reflected in improving operating margins and adjusted earnings performance. Importantly, we are making progress while we continue investing in our commercial execution, manufacturing network and next-generation pipeline opportunities. While quarterly results may fluctuate, our focus remains on the long-term trajectory of the business.

Based on the discipline with which we are managing our cost structure, we remain confident in our expectation of achieving company-wide profitability for the full year on an adjusted net income basis. Our financial performance this quarter reflects continued global demand for CARVYKTI, disciplined operating execution and the benefits of increasing scale within the organization. Revenue growth continues to be the primary driver of financial performance, supported by ongoing expansion of CARVYKTI across geographies and treatment settings. Total revenue increased 32% year-over-year, driven by CARVYKTI demand and commercial expansion. We continue to manage our investment profile thoughtfully. We remain committed to advancing our pipeline and supporting long-term growth opportunities while maintaining a strong focus on operational efficiency.

Moving down the income statement. Gross margins performed much better than expected, improving to 58% compared to our expectation in the lower 50% range. The improvement is primarily due to manufacturing efficiencies. While there is still likely to be some quarter-to-quarter variability in gross margin, we are revising our outlook for fourth quarter gross margin on net product sales to be in the high 50% range for Q4. Research and development expense decreased 16% year-over-year as the costs from the later-stage BCMA frontline clinical studies roll off. This will be partially offset by increased spending on our in vivo assets as they move into Phase I and later studies.

Selling, general and administrative expense decreased 20% and includes a $24 million one-time credit related to share-based compensation. Excluding this impact, SG&A would have increased by 8% year-over-year. Total operating expenses decreased 18% year-over-year and similarly includes a $24 million one-time credit related to share-based compensation. Excluding this impact, operating expenses would have declined 6% -- as a result, excluding the impact of the one-time credit related to share-based compensation, operating margin improved to a positive 6% compared to a negative 16% in the third quarter of 2025. The result is a business that continues to demonstrate improving leverage as it grows.

Although quarterly adjusted net income may vary from quarter-to-quarter over the near term, we are increasingly confident in the long-term durability of our profitability profile. Adjusted net income for Q3 was $55.6 million, representing $0.14 per diluted share on a non-IFRS basis compared with an adjusted net loss of $18.7 million or a loss of $0.05 per diluted share in the same period last year. We view our balanced approach as critical to creating long-term shareholder value, investing where we see compelling opportunities while ensuring that revenue growth increasingly translates into earnings and cash generation over time. Our balance sheet remains an important strategic advantage.

We ended the quarter with approximately $853 million in cash, cash equivalents and time deposits and no long-term debt, providing considerable flexibility to support both growth and innovation. Our capital allocation priorities remain unchanged. We will continue investing in programs that have the potential to strengthen our leadership in cell therapy, including our in vivo CAR-T platform, while remaining disciplined in how we deploy capital.

Looking ahead, our expectations for the remainder of the year are centered on 3 key priorities: first, continuing to drive CARVYKTI growth globally as patient access expands and adoption continues to deepen; second, advancing our pipeline and translating our innovation platform into future value-creating opportunities; and third, delivering on our goal of achieving company-wide profitability in 2026 on an adjusted net income basis. Given the global growth we are seeing today, the expanding body of clinical evidence supporting earlier use of CARVYKTI and the continued operational discipline across the organization, we believe we are on track to achieve company-wide profitability for the full year on an adjusted net income basis and remain confident in the long-term outlook for the business.

Ingrid Zhang: Thank you, Carlos. The third quarter was marked by continued execution across our business. We expanded global access to CARVYKTI, presented important long-term CARVYKTI data at IMS and advanced our next-generation pipeline with FDA clearance of the LB2501 IND. We remain focused on executing our priorities and creating long-term value for patients and shareholders. Operator, we're now ready to begin the Q&A session.

Operator: [Operator Instructions] Our first question comes from the line of Terence Flynn with Morgan Stanley.

Terence Flynn: Great. I guess, obviously, ASH is coming up here. So I just was wondering on your 2501 program, if you can elaborate on how much more data we're going to see versus the abstract in terms of time of follow-up? And then any more details on path to market here? And then the other ASH question is just there will be some updated data for a competitor BCMA CAR-T. When we see their data at ASH, what are you going to be most focused on?

Alan Bash: This is Alan. I'll answer the question about the competitor BCMA CAR-T. But first, let me turn it over to Yuhong to speak to the 2501 data.

Yuhong Qiu: Yes. Thank you. Compared to what we presented in EHA, the ASH abstract showed an expanded patient experience. The sample size has increased from 12 to 19. As shown in the ASH abstract as of June 28, 6 patients were treated at dose level 1, 8 at dose level 2, 5 at dose level 3. Both the ORR and CR were 100% at dose level 2 and both the ORR and CR were 60% at dose level 3. With a median follow-up of 4.8 months for all patients, no DLT, no ICANS, no non-ICAN neurotoxicities were reported. So the strong signal we reported for DL2 at EHA has maintained and strengthened.

So for the ASH presentation, we will have another data cut and the details will be available at the time of the conference.

Alan Bash: And Terence, this is Alan. Speaking to your question about the ide-cel data, we saw the abstract, and I think we remain very confident in the unique profile that CARVYKTI provides. We are the only BCMA CAR-T with 5-year data, 15,000 patients treated, and we have demonstrated both in the later line setting and now in the early line setting based on the data that we presented at IMS, the potential for cure with CARVYKTI based on the plateau of the curve and 5-year long-term progression-free survival.

We also note the fact that we have raised the efficacy bar in that fourth-line setting based on the data set we presented at last year's ASH, which is that a 15-month PFS can be seen in our data sets across both CARTITUDE-1 and CARTITUDE-4. And on the safety front, I will note that I think we've made significant strides here in educating the community about the importance of bridging therapy to reduce tumor burden and reduce the risk of long-term or delayed neurotoxicities. And that has helped, I think, close this perceived gap based on what ide-cel had previously shown.

Finally, I'll just point out that I think it's important that as they do present their data, it's recognized that it's a limited data set. You learn a lot about a therapy once you get into the real world. We treat more patients in a week than they've shown in their entire program. And I also think that these are 2 different -- very different studies. When you look at CARTITUDE-1, we had a very heavily pretreated population, 6 median prior lines versus what the iMMagine study shows. So I think the differences will become evident now during the abstract and also over time.

Operator: Our next question comes from the line of Jon Miller with Evercore.

Jonathan Miller: I was struck by the progress that you've made in driving CARVYKTI use into the earlier lines of therapy in the U.S. It seems like you're really accelerating that with the NCCN guideline, but it doesn't seem to be translating directly to sales growth in the U.S. So my question is with more patients in the earlier lines and better outcomes and a strong motion to get those patients on CARVYKTI as early as possible, when will this translate into resumption of U.S. growth for the franchise? And then maybe just a follow-up on that 2501 question. I'm just saying there's going to be a new cut -- data cut at ASH.

Should we be expecting evidence of dose responsiveness continuing as we increase in dose to dose level 3? Or is dose level 2 going to be the best efficacy that we're going to see?

Alan Bash: Jon, to your question about where we're focused, again, as you saw in the data, we've been strategically focused on the early line setting, and that has translated into more of our business coming from the second and third line. And as you referenced, the fact that we're now reporting that 50% of our mix is coming from second and third line. So we are gaining share in second and third line despite the continued, and I would say, strong uptake of the bispecifics in earlier lines based on the approval of TECVAYLI earlier this year. So this is becoming an increasing competitive space, both in the early line setting and the late-line setting.

But we do believe that based on the fact that, a, we are starting to see that migration of business towards earlier lines, the NCCN guidelines, which we are now educating the community on around the concept of CAR-T first and the fact that earlier is better when it comes to BCMA CAR-T in terms of efficacy, safety, manufacturing, really selecting patients, we are very confident that we'll continue to gain share in the early lines, and that will ultimately translate into continued growth for the product.

Yuhong Qiu: Would you like to take the second question about what we can disclose at ASH. In terms of...

Alan Bash: In terms of DL3, DL2. DL3, dose level 3 and dose level 2.

Yuhong Qiu: What DL3?

Alan Bash: 2501.

Yuhong Qiu: I'm sorry. So for ASH, as shown in the abstract, we have dose level 2, we have 8 patients, all of them have shown 100% response rate -- overall response rate and complete response rate. For dose level 3, we have 5 patients and the overall response rate and complete response rate are over 60%.

Operator: Our next question comes from the line of Jessica Fye with JPMorgan.

Jessica Fye: I was wondering if you could just give us your latest estimate for when we could expect top line results for CARTITUDE-5 and for CARTITUDE-6. And maybe just following up on that last question or maybe last comment, Alan, about the increasing competitiveness in earlier lines with TECVAYLI. It does seem well understood that BCMA CAR-T works better before and not after BCMA bispecifics. So why do you guys think it's competitive there?

Alan Bash: Sure. So in terms of timing for CART-5 and CART-6, as we've said before, these are event-driven. And fortunately, for patients, I think outcomes continue to improve for patients in the newly diagnosed space. So we need to wait for the events to accrue. We previously said that the soonest that we would see a readout for CART-5 would be in 2027. But again, I would just point to the fact that these are event-driven and we need to wait for events to accrue. And then CART-6 would be beyond that. Again, this is a space where there's a demonstrated based on the literature along PFS.

I think we've also, as we've discussed before, continue to explore the concept, especially with CART-6, the potential for leveraging MRD data in support of trying to get an early read that correlates very well with long-term survival, both PFS and OS. In terms of your question about the competitive landscape, I think what we acknowledge is the fact that physicians have a choice here and that it's important that we continue to educate physicians on the concept exactly as you said, that CAR-T before bispecifics is really a better choice for patients because of the fact that it allows both options to be used.

The NCCN guidelines were very clear on this point that the data suggests that CAR-T before bispecifics provide a better outcome versus the other way around where you potentially foreclose or forestall the option to ultimately get to BCMA CAR-T. So I think we're acknowledging the fact that there are choices out there. But again, I think we're very, very pleased with the NCCN guidelines validating this concept that CAR-T first is the best way to go for patients.

And so we're doing everything we can along with our partner to educate both the community referral physicians as well as the treaters in the authorized treatment centers around this concept that it's really not about which product you choose, it's really about the sequence in which you offer them.

Operator: Our next question comes from the line of Leonid Timashev with RBC.

Leonid Timashev: I know we talked a lot about the commercial dynamics, but I was just wondering if you could maybe dive into them a little deeper if we can get any kind of quantitative sense of what you're expecting for the 2027 trajectory, just balancing all the competitive headwinds, the bispecifics, the competitor CAR-Ts against where you're seeing the growth coming from and how you're thinking about the picture for 2027 across U.S. and ex U.S.

Carlos Santos: Thank you, Leo. This is Carlos. I'll take the question and maybe, Alan, you can then complement. As you know, we don't provide guidance, but what I can share is that we're still expecting substantial year-over-year growth on a global basis. And as Alan mentioned earlier, in the earlier line setting, CARVYKTI continues to gain share and momentum despite the fact of the faster uptake of bispecifics. So for Q4, we believe that the sales consensus is at the higher end of the range of scenarios that we're actually seeing. And this is primarily driven by changes in launch dynamics outside of the U.S.

And as I mentioned earlier, a slower earlier line share growth in the U.S. than we had previously anticipated. So that is for Q4. Now regarding the trajectory for 2027, we do expect to see double-digit growth year-over-year for CARVYKTI in '27. However, the current net trade sales consensus for 2027 would be at the higher end of the scenarios that we're currently anticipating. And again, this is in light of the launch delays in the OUS markets, and we're seeing a slower earlier line share growth in the U.S. than we had initially anticipated. Having said this, we remain really very confident in the long-term growth outlook for CARVYKTI.

I don't know, Alan, if you want to add some color to this.

Alan Bash: I'll add simply that when we go out and educate physicians about the concept of referring patients or using CAR-T in their second and third-line patients. It's a longer-term selling cycle, right? It's more education. We have to do more work to make sure that the broad spectrum of physicians understand this data, that patients understand this data and that, that will take a bit of a longer time for patients to get in, to be -- get their consultation to be evaluated. And so this is what we're doing with the work throughout both teams across J&J and Legend are doing.

And we now have the tools to do that, especially with the NCCN data, with the earlier is better data that we've shown with CART-4, with the bridging data from CART-4. So I think we have the tools to be able to tell the story and educate the community. And I will say, and I'll remind you that despite the increasing competitive nature of the space, only between 15% and 20% of patients in the second and third lines have been BCMA exposed, right?

So that means that we still have up to 85%, between 80% and 85% of the patients in those early lines who have not been exposed to BCMA, and that represents opportunity for us to continue to grow long term. And that's why we do believe that we will continue to grow this business and continue to achieve the potential of it, which is a $5 billion-plus potential.

Operator: Our next question comes from the line of Etzer Darout with Barclays.

Etzer Darout: A couple from me. I guess the first one, the second line, third line shift you're seeing, do you have expectations that maybe starting in the fourth quarter, you can see incremental patients there versus primarily replacing later line volumes? Or maybe are those expectations maybe more for 2027 dynamic? That's one. And then maybe a point of clarification because I didn't hear the answer clearly, but will we see additional follow-up in the DL3 cohort data set for 2501 at ASH?

Alan Bash: So we are continuing to grow in the second line and third line. And so that's been ongoing, and we'll continue to see that throughout the rest of this year and into early next year and beyond.

Yuhong Qiu: In terms of the DL3 and 2501, we will see additional updated data in ASH.

Operator: Our next question comes from the line of Edward Tenthoff with Piper Sandler.

Edward Tenthoff: I'm curious as we look forward with the IO candidate 2501, what are your plans to develop this in autoimmune disease beyond B-cell lymphoma? And is this the right candidate? Or is there potentially another IO candidate that you would anticipate developing in autoimmune disease?

Yuhong Qiu: Yes. We are exploring all the options. We're very interested in autoimmune diseases using our in vivo platform. And of course 2501 is one of the candidates we're exploring.

Edward Tenthoff: Great. And what are the plans to advance it forward?

Alan Bash: What are the plans to advance it forward?

Yuhong Qiu: Well, as Legend as a leading cell therapy company, right, we have our capabilities to do IITs in China. So the first step we're going to do to explore anything would be to conduct IIT study to achieve early proof of concept.

Operator: Our next question comes from the line of Linhai Zhao with Goldman Sachs.

Linhai Zhao: This is Linhai from Goldman. Just want to follow up on the second line, third line dynamics a little bit more, particularly given that in 3Q, we saw that U.S. sales going flat quarter-over-quarter, but we continue to see the continued shift in the pie chart where we see increasing patients in the earlier line versus the later line. So can you help us to understand the more colors regarding the overall market demand for CARVYKTI and also the quality timing, manufacturing allocation and to understand the U.S. growth momentum? And in addition to that, would you be concerned about the increasing earlier line TCE penetrations would make the patients ineligible for late line for BCMA CAR-Ts?

Alan Bash: Yes. I think we've addressed some of these points, but let me just make -- just add a couple of points here. Again, we continue to gain share and grow the business in the second and third line, and that's important because that really represents the best place for CARVYKTI, especially as we think about late-line entrants coming into the market. The late-line space is one where more patients, as you referenced, have been and will continue to be BCMA exposed. You have patients who are perhaps older, more frail, less willing to travel.

And so it becomes, I think the more favorable place for BCMA CAR-T is, in fact, the place where we are indicated, which is in the early lines. And so we will continue to emphasize the value of CAR-T first, that earlier is better and that our best place is in second and third line or as we also call it at first relapse for patients. I think that really speaks to where we are strategically focused and where we believe we can continue to grow this business.

And again, I think there will be -- continue to be competition, both we see the -- not only from the approved bispecifics, but there are additional bispecifics coming on to the market. So yes, this marketplace will continue to become increasingly competitive.

Ingrid Zhang: Yes. Thank you, Alan. I would just add that we, at Legend are very confident in our ability to reach $5 billion plus peak potential, really driven by penetration into earlier lines. We talked a lot about second and third line. There's also the frontline study, which, of course, we're waiting for the events to read out, continued expansion of our global footprint and lastly, about bringing CARVYKTI closer to patients. I think we do this well. We're very confident on the future of this franchise.

Operator: Our next question comes from the line of Yaron Werber with TD Cowen.

Yaron Werber: Maybe a quick question on 2505. Maybe can you give us a little bit of a sense how fast can you start that study, that Phase I in myeloma in China? And then secondly, to advance into an IND in the U.S., do you need the green dot from J&J to actually do so pro line with your agreement?

Yuhong Qiu: Yes. With regarding to the IIT, as we disclosed previously, we are working to have the study started very soon. Regarding the IND, as a reminder, this LB2501 is subject to the collaboration agreement between Legend Biotech and Johnson & Johnson, and we will not be able to disclose more at this point. When the time comes, we'll share more.

Yaron Werber: And maybe can you comment whether the J&J is officially opted in or that hasn't happened at this point?

Yuhong Qiu: It's not -- we're not going to say anything more at this point. When the time is right, we're going to share more.

Operator: Our next question comes from the line of Kostas Biliouris with OPCO.

Joseph Thomas: This is Thomas on for Kostas. Just digging into the international growth a bit. I'm curious if you could give us some more color on if the growth reflected underlying demand in established centers or what mix was in new launches or new reimbursement agreements. And looking forward, as TECVAYLI begins to expand internationally, what gives you confidence that ex U.S. growth is going to remain a durable offset to any potential headwinds in the U.S.?

Alan Bash: Yes. So as you saw from our disclosures, we are now in 20 markets worldwide. And the growth that you're seeing in the ex U.S. market is really driven by both the combination of new markets launching, but also continued growth in markets such as Germany, Spain. And more recently, one of the big contributors is Italy. So I think these markets are doing very well. We also see even some of the smaller European markets, Belgium, Denmark, Switzerland, these are all markets that are really starting to emerge as growth contributors in the full global picture.

I think to your question about as bispecifics enter Europe, it's obviously going to be a dynamic we're going to watch, but we do believe that there are a couple of really favorable dynamics in Europe that support CAR-T. One is the geography. Obviously, it's easier for patients to get to some of the larger academic centers and get to the authorized treatment centers. And those referral patterns and those patterns are pretty well established in many -- especially the smaller markets around Europe. And the second point is that the single-payer system really does provide this concept that the government is looking at the long-term value of a one-time infusion.

The one-time infusion is really cost effective, and that's a story that really helps, I think, improve all of our support for reimbursement and education and uptake across some of these key markets. So we do expect that the OUS contribution towards the global picture will continue to grow. And we do believe that, that's going to be a significant driver of growth as we reach towards the $5 billion-plus potential for this product.

Operator: Our next question comes from the line of Mitchell Kapoor with H.C. Wainwright.

Unknown Analyst: This is Amit on for Mitchell. Congrats on a strong quarter. So 2 for me, one on CARVYKTI and one on 2501. So for CARVYKTI, within the community, are you seeing the incremental patients coming from physicians making the first CARVYKTI referral or from existing referrers sending more eligible patients? And for 2501, so we've seen dose-dependent CAR-T expansion. And so when you move into U.S. development, are there any particular T-cell characteristics, baseline characteristics or prior therapies that you're watching as predictors of T-cell fitness and adequate expansion?

Alan Bash: We're seeing both existing referrals as well as new physicians deciding to send their patients for consult and referral. And this has really been part of our educational effort to say, if you have a patient who's eligible even before they are relapsed to really start to think about and plan out their treatment journey. And so part of that education is around sending patients for consult, sending patients ultimately for referral. And so we're seeing both the growth in the number of referrals and the number of patients that are being referred.

Yuhong Qiu: Okay. For 2501, on the IIT study, what we have observed is that the expanded CAR-T cells were predominantly CD8 positive effector memory cells with limited terminal differentiation and exhaustion associated transcriptional signature in the samples that we analyzed. In the IND study, of course, we'll continue with our translational analysis and keep a close eye on the phenotypes of the T-cells that we observe.

Operator: Our next question comes from the line of Natalie McArthur with UBS.

Natalie McArthur: This is Natalie on for Ash. We're just wondering how representative is the CARTITUDE-5 trial control arm of real-world patients and current treatment patterns? And then how should we be thinking about efficacy benchmarks here as well?

Alan Bash: Yes. You are referencing the CARTITUDE-5 control arm, which is VRd We do see that this is an adequate control arm and an appropriate control arm and obviously, one we consulted with the FDA on. Having said that, I think you're probably alluding to the fact that more and more patients are getting quad therapy upfront D-VRd And so we will also plan to support and supplement that filing with data that shows a benefit from a D-VRd population as well. I think the important thing about CART-5 is that there are -- about 3/4 of the newly diagnosed patients are transplant ineligible or transplant deferred.

And so I think as transplant becomes less of an option that patients want to go through, we do believe that CART-5 will be a meaningful data set versus an appropriate control arm.

Operator: Our next question comes from the line of Jacob Orkwis with Raymond James.

Jacob Orkwis: This is Jacob on for Sean McCutcheon. We're curious about whether you can speak to the driver of the thresholding effect that you're seeing from DL1 to DL2 with 2501, specifically seeing much higher responses in DL2. And we're curious if you anticipate a meaningful addition of activity at higher doses moving forward.

Yuhong Qiu: Yes. So look, we're still very early in the in vivo study. And from what we can see, it seems there's a threshold in terms of response. That's why we see nothing in DL1 and we see 100% in DL2. And what we can find later on whether we can continue to see dose response or we have to wait for additional more patients in dosed and with longer follow-up to get a better understanding on the relationship between dose CAR-T expansion and response.

Operator: Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. That concludes today's conference call. Thank you for your participation. You may now disconnect.

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