Legend Biotech Corporation (NASDAQ:LEGN) Q4 2023 Earnings Call Transcript

Legend Biotech Corporation (NASDAQ:LEGN) Q4 2023 Earnings Call Transcript March 11, 2024

Legend Biotech Corporation isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day, and welcome to Legend Biotech Reports Fourth Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. 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.

Jessie Yeung: 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 US 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.

Ying Huang: 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 drugs 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 5th, and we will, of course, keep you posted. Now I’d like to turn to other achievements and activity 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’ve now been market in for seven full 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’ve 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 side 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] (ph) in Belgium.

And it 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 supply in CARVYKTI to 10,000 patients by the end of 2025. I am excited to announce we have the new veteran leader with more than 25 years of experience now overseeing our manufacturing sites. Our own Birk Vanderweeen has been promoted to Senior Vice President, Global Manufacturing and Technical Operations. Our previous Head of Global Tech Op, Liz Gosen, has stepped aside from full-time work for personal reasons and is now serving as a Senior Advisor 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 that 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 is showing improvements in patient outcomes as early as second-line treatment in our pivotal Phase 3 CARTITUDE-4 study. The results demonstrated clinically meaningful improvements in health-related quality-of-life measures and reductions in symptoms following treatment with CARVYKTI compared to standard-of-care.

In other news from the fourth quarter, we continue to bring more hospitals online and we now have a total of 65 US hospitals certified to treat with CARVYKTI patients. Additionally, about 30% of patients are not administered in an 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’ve started dosing patients in our DLL3-targeted program, the Phase 1 clinical trial LB2102 in lung cancer. The armoring using LB2102 can also be deployed in other pipeline programs if validated in the clinic. After Phase 1, Novartis will takeover 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?

Lori Macomber: 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 31st, 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 31st, 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 31st, 2022. Moving on to expenses, collaboration cost to 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 three months ended December 31st, 2023, compared to three months ended December 31st, 2022 was due to — primarily due to continuous research and development activities cilta-cel, including higher patient enrollment for Phase 3 clinical trials for cilta-cel and an increase in research and development activities for other pipeline items.

Administrative expenses for three months ended December 31st, 2023 were $28.7 million compared to $26.7 million for the same period last year. The increase of $2 million year-over-year was 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 three months ended December 31st, 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 31st, we had $1.3 billion in cash and equivalents, deposits and investments.

Additionally, as we enter the new year, we received a $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.

Ying Huang: 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.

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Q&A Session

Operator: Thank you. [Operator Instructions] Our first question comes from Jessica Fye with J.P. Morgan. Your line is open.

Jessica Fye: Great. Good morning, Thanks for taking my questions. Question on supply and I appreciate the color and prepared remarks. I know you’ve put the year end 2025 target out there for, I think, 10,000 doses. Do 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 up you’re going to ask the FDA to grant this year? Thank you.

Ying Huang: Hey, 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 2024 manufacturing scale-up. But I can tell you that, Jess, if you look at last year, we applied for FDA approval for two capacity increases in our site in Raritan, New Jersey, and we did successfully achieve both approval from FDA. This year our plan is the same, that is, we are planning additional two capacity increases that we plan to request FDA. So that’s the same cadence as last year. That’s our plan for 2024.

Jessica Fye: Thanks.

Operator: Thank you. Our next question comes from Jonathan Miller with Evercore ISI. Your line is open.

Jonathan Miller: Hi, guys. Thanks so much for taking the question. I’d like to ask about your early pipeline, both beyond DLL3 and that armored CAR. 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 if 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?

Guowei Fang: Thanks, Jonathan. This is [indiscernible] question. Yeah. So, on the targeted from some of our pipeline targets are known ones, others are novel ones. I probably can provide some high-level thinking about where we’re heading towards our internal pipeline. We have a few priorities. First is really try to build the multiple myeloma franchise, especially for patients post the CARVYKTI treatment. So in that 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 both autologous as well as allogeneic approach. Second priority we have is really focusing on the autoimmune disease indications. We see this as an emerging area with great opportunities.

In this space, I think differentiated approach is critical. Our internal focus at this point primary on allogeneic approach, and we also, — some have probably in autologous space, but really focused on the differentiation. focused on the value, those differentiated approach can bring to the patient, bring to the treatment setting. We also have some investment in solid tumor space where we’re focusing on some of the key hurdles associated with this disease state, disease pathology, for example, target expression heterogeneity, normally — commonly associated with solid tumor disease indication, which is the major limitation of durational therapy from current format. So, there we are investing on the key technological innovation to address solid tumor target [indiscernible] and hope to generate bystander cytotoxicity effect and therefore being able to extend the PFS benefit for treatment.

So this probably will be just high-level summary. Thank you for the question.

Jonathan Miller: Yes. Thanks so much. And then one follow-up if I may. I noticed your burn here at about $103 million a quarter, looks like you’re not kind of in a runway guidance to end of 2025, it seems like you’re not guiding for a lot of improvements in burn rate or any improvement in revenue was offset by corresponding increases in spend. Is that a fair way to think about it?

Lori Macomber: That’s correct. And if you take a look at the being conservative saying cash runway 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 bridges profitability for the BCMA program.

Jonathan Miller: Thank you so much.

Operator: Thank you. Our next question comes from Ziyi Chen with Goldman Sachs. Your line is open.

Ziyi Chen: Thank you for taking my questions, and for the upcoming ODAC meeting on Friday, so could you share a bit more about the cut-off date for those data could potentially share with the committee and also for the OS data for the as-treated group who was shared in 2023 ASH, which showed a very strong OS benefit compared to intend-to-treat group. So will the discussion include as-treated group as well. So which group will 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. Thank you.

Ying Huang: Hey, Ziyi. This Ying. I’ll take your first question around ODAC. So at this point, I can tell you we submitted three 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 15th 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 prespecified interim analysis with the data cut on November 1st, 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. And 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 13th of 2023.

So those are the three different overall survival analysis we provided to the FDA, and those are three data cuts that will be discussed on Friday by ODAC as well. In terms of ITT versus as treated, 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-cause 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 as treated. 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.

Steve Gavel: Yes, thanks. 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 partner is 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.

Ziyi Chen: Got it, thank you. Ying, and Steve.

Operator: Thank you. Our next question comes from Yaron Werber with TD Cowen. Your line is open.

Unidentified Analyst: Hi, this is [Gina] (ph) on for Yaron. Thanks for taking our question. I kind of wanted to ask about Parkinsonism, which is seen more with CARVYKTI than other CAR-Ts. Why do you think CARVYKTI uniquely produces Parkinsonism? And also we spoke to KOL that said that it can have pretty irreversible effects. So do you think that this is going to deter use in earlier line of setting, especially if competing CAR-Ts don’t show this? Thanks.

Ying Huang: Hey, Gina. 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 database, this phenomenon of Parkinson’s is not unique on CARVYKTI. In fact, it was reported from patients who were taking YESCARTA, KYMRIAH and also ABECMA. And so far, as of end of last year, we could see about seven cases reported in the FDA database from the US patient. So that’s the number. That’s actually the fact. With regard to why you’re 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 brain when the patient has a leaky blood-brain barrier after years of therapy, or if the patient already had preexisting 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 our Parkinsonism. Regarding our question on parkinsonism in the earlier lines, as we reported at ASCO, given the risk mitigation strategies we implemented following the six 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 a grade one 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 phenomena here.

Thank you.

Operator: Thank you. Our next question comes from Kelly Shi with Jefferies. Your line is open.

Dave Windley: Hi, this is Dave on for Kelly Shi. Congrats on the progress. I have a couple of questions. One is, as 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 US, any color on when should we expect to record the first revenue in other countries in EU and Japan? Thank you.

Steve Gavel: We are going to take the last question around sales. So as far as the EU and Japan, I mentioned that we’re already in Austria and Germany. And unfortunately, because of negotiations being ongoing, we can’t comment on what country may be out 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 US and in Europe, in the fifth line plus setting here in the states, as Ying mentioned in his opening remarks, we’re running about an 80% market share in sites where we are basically competing against the BCMA. So I think that speaks volumes in terms of preference, in terms of physicians, and it’s in all risk categories, whether it be standard risk or in high risk.

I think where you see some other product use around bispecific use is 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 bi-specific space. I think that has, in terms of market erosion where you’ve seen it, at least in the research that we’re doing, is, you’re seeing the market erosion occurring with a BCMA when a bi-specific is used in front of a CAR T therapy as opposed to cilta-cel.

Ying Huang: Hey Dave, I’ll take your first question. I think it was on label update, so I’ll provide answer in two respects. Number one is that you’re all aware that in late last year, we did receive an official label update that includes the two-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 clarification on this. So if you look at the total of 97 patients from CARTITUDE-1, we saw nine patients with ten 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 five 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 1000 patients who are triple exposed which means these patients have been treated with triple classes, including one drug from emit class, one drug from protein inhibitor, and then one drug from CD30 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 six brands of CAR T therapies will receive 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 exact language of label update. Suffice to say that given the 23 cases reported from the FDA, and also the denominator is over 27,000 patients who were treated with those six brands at 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. I think we have been in touch with physicians and KOLs since ASH, and at this point we have not seen any prescription behavior that’s changed based on 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 three years PFS in late line. And then also again, if you saw the results from CARTITUDE-4 compared to standard for care such as DPd or daratumumab, pomalidomide and dexamethasone, we saw a 74% risk reduction in progression of death. 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. Thank you.

Dave Windley: Thank you.

Operator: Thank you. Our next question comes from Leonid Timashev with RBC Capital Markets. Your line is open.

Leonid Timashev: Hi. Yes, thanks. Thanks for taking my question. I also wanted to ask on the ODAC and I guess, specifically, how you’re thinking about competitive implications coming out of that meeting. 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 as there’s 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 presents? Thanks.

Ying Huang: Thanks, Leo, for the question. So I think if you look at the Federal register publication, you will see even though it’s the same roster of ODAC, but it’s actually two different panels. On the morning of March 15th, 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 our competition in a 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 KOL and also the agency on its merit. So I can’t comment on our competition’s application, also the data, but we firmly believe that CARVYKTI provides overwhelming benefit 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 been treated and also failed all major classes, including an IMiD, a protein 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’s a very important place for BCMA directed CAR T in the treatment of multiple myeloma here. Thank you.

Operator: Thank you. Our next question comes from Vikram Purohit with Morgan Stanley. Your line is open.

Vikram Purohit: Hi. Good morning. Thank you for taking our questions. 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? Thanks.

Ying Huang: Hey, good morning, Vikram. So I’ll take the first question on CARTITUDE-2, cohort E&F question, and then my colleague Steve will probably answer on 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?

Steve Gavel: Yes, 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 or rate limit around the doubling of the outpatient metric would be largely on our ability to get product into market.

It’s very clear with our sites. Our sites that have been with us since the very beginning, they have much higher outpatient uses or rates than 30%. As new sites come on board, and we’re hoping to get pushing to around 100% this year, sites just need to have patient reps, quite frankly, to ensure that what they’re seeing in the real world setting, from a safety perspective is consistent to that of the label. So it’s really right now just a matter of getting products 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.

Vikram Purohit: Very helpful. Thank you.

Steve Gavel: Sure.

Operator: Thank you. Our next question comes from Kostas Biliouris with BMO Capital Markets. Your line is open.

Kostas Biliouris: Thanks for taking our questions and 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 these 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 breeding 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 two populations that could explain this difference. I’m wondering if there is any update on this front. Thank you.

Ying Huang: Hey, good morning, Kostas. This is Ying. I’ll take your questions. So, on the first one line 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 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 investment, we can actually get to a larger number in the near future after 2026. Now, of course, there’s 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 arm of the CARTITUDE-4 patients are receiving exactly the same, either bridging therapy on the CARVYKTI arm or the standard care in the control arm. We and our partner have tried exhaustively to look at all these 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 SAGO 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 dosing density for a couple standard of care regimens, including some dose difference in POMALYST and then some dose difference in Velcade. 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 dosing density of POMALYST or Velcade account for the imbalance in the first couple of months?

Unfortunately, it’s a 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, it says that CARVYKTI is recommended for second line treatment of multiple myeloma after patient has received one line of treatment that includes an IMiD and also a protein inhibitor. And also the patients are refactored 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 the hint. Thank you.

Kostas Biliouris: Super helpful. Thank you.

Operator: Thank you. Our next question comes from Ash Verma with UBS. Your line is open.

Ashwani Verma: Hi, thanks for taking our question. So, in terms of the build to get to 10,000 annual doses exiting 2025, by our math, you’ll need slot expansion of roughly 30% every six months to get to those levels. 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 pricing in the long run? Would it trend more towards where your US pricing is, or is there any different dynamic at play there? Thanks.

Steve Gavel: Maybe I’ll take the last question first and I’ll turn it over to Ying to talk about 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. So I would expect to see that by the end of the month, possibly filling into the early part of April. So stay tuned on that. Ying, do you want to talk about the manufacturing question?