Mitchell Kapoor: Okay. Thank you very much. And could you just kind of help us understand what the launch preparation is looking like for moving into earlier lines? Is it mainly just messaging changes with the salesforce or what else can you tell us about how you’re preparing for [Technical Difficulty] approved?
Steve Gavel: Yeah. Hey, Mitch. I’ll take that one. It’s Steve. So, no, it’s a bit different, right? So you’re moving from a later line population that was largely — these patients were largely in many of our major academic centers. In the earlier lines from the second line population, this will be a very different type of launch where you’re largely reliant on the referral. So what the US team has been working very closely with their partner is working through the models in terms of how to appropriately reach that outpatient clinic to ensure that an appropriate referral is made to one of our cilta-cel centers. So it’s a bit different. You’ll see some increase in FTE expansion on behalf largely of our partner at Janssen because they play largely in that outpatient space.
From the US Legend perspective, you’ll see some increase as we increase sites, but our commercial footprint for Legend has been largely built around the inpatient setting as opposed to outpatient. I hope that answers your question.
Mitchell Kapoor: It does. Thank you all very much for taking the questions.
Steve Gavel: Thank you.
Ying Huang: Thank you.
Operator: Thank you. And our next question coming from the line of Wilfred Yuen from Daiwa. Your line is open.
Wilfred Yuen: Hello. Well, congrats on the result and thank you for taking my questions. Well, I just have a follow-up on the gross margin currently at 43%, 44% over the past two quarter. So and you mentioned about the expanding capacity. So what are the other driver on margin — on the gross margin, given we have multiple facilities, both internal and external, coming online, as well as an improving out-of-spec rate? So what are the key moving part actually? And how should we be thinking of the margin profile, maybe even in a longer term as well? Thank you.
Lori Macomber: So just on the gross margin, again, as we talked about, there’s two components in the gross margin. So from your perspective, when you look at quarter-over-quarter, it’s a little bit hard for you to model it out. As I mentioned before, we continue to see improvement in the gross margin from a product perspective. Your gross margins are going to improve as your volumes go up. We’ve also have our out-of-spec that’s gone down based upon also process improvements we’ve made at the plant. So we are seeing the steady progression of the improvement under the gross margins from product perspective. But you’re going to continually get noise in that number we report externally because we have to report the facilities expansion, the expense side of it that cannot be capitalized.
And as you know, we have expansion going on in Raritan, we have expansion going on in Belgium, and we also have expansion going on with our CMOs. So you’re going to continue to see a lot of facilities expense related to those capital investments through the end of 2025. So it’s going to create noise. Some quarters are going to be higher than others, just depending upon where we are with some of those capital projects. But if there’s something specific, if you want to talk and submit more question and we can always set up a call with you and try to go over a little bit more detail, but I can’t give any granular numbers, I can’t disclose any granular numbers from a product perspective.
Wilfred Yuen: Understood. That’s helpful. Thank you.
Operator: Thank you. One moment for our next question. And our next question coming from the line of Kelsey Goodwin with Guggenheim. Your line is open.
Kelsey Goodwin: Hey. Good morning. Thanks for taking my question and congrats on the quarter. I guess two quick ones from me, I guess. First, do you have any updated view on how we should think about profitability for the joint venture, maybe kind of building on some of these past questions on gross margin. And then kind of following up on that, I guess, how should we think about the longer-term COGS for CARVYKTI kind of once these capital expenses are no longer included in those line items? And, yeah, maybe kind of what out-of-spec in manufacturing failure rate do you base in the assumption for longer-term COGS? Thank you.
Lori Macomber: Hey, Kelsey. So, profitability, the messaging is still consistent with what we’ve signaled before. For the BCMA program, we’re looking to have break-even and profitability by the end of 2025. And from a company perspective, we’re striving for profitability by 2026. And I always just put a disclaimer in there, it will depend upon what happens with our pipeline development, what we look to do from a business development perspective, but based upon the trajectory of what we know now, that is what we’ve been signaling. From a longer-term COGS, as I mentioned earlier, you’re going to continue to see noise in that COGS line all the way through, at the end of ’25 going into 2026. We’re not giving any guidance on our actual COGS. I would say, for your modeling purposes, you could probably use what’s been the standard in the industry. It would be a good proxy for your modeling.
Kelsey Goodwin: Okay, great. Thanks. And maybe just one quick follow up then, on the profitability. I guess, to what extent is that break-even profitability by 2025? How much is that reliant on hitting that 10,000 commercial doses by the end of the year?
Ying Huang: Hey, Kelsey. I hope you understand that we cannot really disclose our internal modeling. But you know, what I can say is that if you look at the COGS for CAR-T as a general modality, the cost of goods is probably somewhat higher than the typical cost of goods of monoclonal antibodies. However, the SG&A, in terms of selling and distribution costs, it will be much lower. You can tell that from our financials, right? While we almost quadrupling our sales for CARVYKTI this year versus last year. If you look at quarter — quarterly spend in sales and marketing, it’s actually slightly lower than what we spent last year. So that gives a hint how we think about the profitability of CARVYKTI overall. Thank you.
Kelsey Goodwin: Got it. Okay. Thank you so much.
