Investment Rating - The report maintains a "Buy" rating for Legend Biotech (LEGN US) with a target price of $76, indicating a potential upside of 119.2% from the current price of $34.67 [2][3]. Core Insights - Legend Biotech's CARVYKTI® sales in Q4 2024 exceeded expectations, with a year-over-year increase of 110% to $334 million, slightly above the forecast of $322 million. The sales also showed a 17% quarter-over-quarter growth, driven by capacity expansion and market penetration in the 2L+ treatment segment [1]. - The company has treated a total of 5,000 patients with CARVYKTI® across commercial sales and clinical studies, showcasing effective commercialization efforts [1]. - For the full year of 2024, CARVYKTI® sales reached $960 million, and the report anticipates sales to double to $1.9 billion in 2025 due to new capacity coming online and the product's approval in mainland China and more European countries [1]. Summary by Sections Sales Performance - Q4 2024 CARVYKTI® sales were $334 million, a 110% increase year-over-year and a 17% increase quarter-over-quarter [1]. - The sales growth in Q4 2024 improved from 88% in Q3 2024, indicating strong market demand and effective sales strategies [1]. Future Projections - The report projects that CARVYKTI® sales will double to $1.9 billion in 2025, supported by new production capacities and market expansions [1]. - The anticipated approval of CARVYKTI® in China and further commercialization in Europe are key drivers for this growth [1]. Market Position - The report highlights that Legend Biotech's current stock price is undervalued, with market concerns over competitive products being deemed excessive [1]. - The company is positioned as a key recommendation in the pharmaceutical sector, reflecting confidence in its growth trajectory and market strategy [1].

Company Overview - The Fortune Teller is a team of two analysts with over 30 years of combined market experience [1] - One of the principals is a formerly licensed investment advisor with a background in asset management [1] - The team holds BAs in Accounting & Economics and Computer Sciences, as well as MBAs, which they use to inform their stock selections [1] Service Offerings - The Fortune Teller leads the investing group Wheel of Fortune, which provides actionable trading ideas across all asset classes, sectors, and industries [1] - The service aims to be a one-stop-shop for investment and portfolio ideas while educating subscribers [1] - Features include the Funds Macro Portfolio (ETFs and CEFs) for less active investors and the Single Macro Portfolio (single equity focused) for more active investors [1] - The service also offers educational content and a live chat room for discussions with like-minded investors and The Fortune Teller team [1]

Company Updates - Legend Biotech Corporation will present the latest company updates at the 43rd Annual J.P. Morgan Healthcare Conference on January 14, 2025, at 3:45 p.m. PT [1] - The presentation will be led by Ying Huang, Ph.D., the Chief Executive Officer of the company [1] Access Information - Investors and interested parties can access the live audio webcast through the Investor Relations section of Legend's website, with a replay available approximately 48 hours after the event [2] Company Overview - Legend Biotech is a global biotechnology company focused on treating and potentially curing life-threatening diseases, headquartered in Somerset, New Jersey [3] - The company is developing advanced cell therapies utilizing various technology platforms, including autologous and allogeneic chimeric antigen receptor T-cell, gammadelta T cell, and natural killer (NK) cell-based immunotherapy [3] - Legend Biotech operates three R&D sites globally to discover innovative therapeutics for patients [3]

Group 1 - The discussion in the biotech forum has focused on profitable buy-write or covered call strategies for selected biotech stocks over recent months [1] - Legend Biotech Corporation (NASDAQ: LEGN) is highlighted for the first time since January 2024, indicating a renewed interest in the company's commercialization efforts [2] - The investing group associated with the biotech forum offers a model portfolio featuring 12-20 high upside biotech stocks, along with live chat discussions and weekly research updates [2]

Investment Rating - The report assigns a "Buy" rating for the company with a target price of $56.29, indicating a potential upside of 32.9% from the current share price of $42.58 [1][3]. Core Insights - The company has shown significant revenue growth, with CARVYKTI revenue increasing by 88% year-over-year to $286 million in Q3 2024, and a total revenue of $160 million for the quarter, representing a 67% increase [1]. - CARVYKTI is the only therapy clinically proven to significantly extend overall survival in multiple myeloma (MM) patients compared to standard therapies, with a median overall survival (mOS) not reached versus 37.75 months, reducing the risk of death by 45% [1]. - The company has a strong cash position of $1.2 billion, which is expected to support operations until 2026, with plans to reach an annual production target of 10,000 doses by the end of 2025 [1]. Financial Summary - The company reported a revenue of $117 million for 2023, with projections of $285 million for 2024 and $632 million for 2025, reflecting a growth rate of 143.7% and 119.1% respectively [2][4]. - Gross margin is expected to improve, with projections of 59% in 2024 and 54% in 2025 [4]. - The company is projected to achieve a net profit of $62 million by 2026, with a significant reduction in losses expected in the coming years [4].

Investment Rating - Maintains a **Buy** rating with a target price of $76.00, implying a potential upside of 89.1% from the current price of $40.18 [1][3][5] Core Views - **3Q24 Performance Exceeds Expectations**: Revenue grew 67% YoY to $160 million, driven by a 88% increase in collaboration revenue to $143 million Carvykti sales surged 54% QoQ and 88% YoY to $286 million, with expectations of continued growth in 4Q24 due to strong demand for second-line treatment, market share expansion, and capacity ramp-up [1] - **Competition Concerns Overblown**: Despite Arcellx's anito-cel data at ASH, Carvykti's competitive position remains strong due to differences in patient baseline characteristics, higher sCR rates (83% vs anito-cel), and reduced neurotoxicity risks with extended follow-up in CARTITUDE-1 and CARTITUDE-4 studies [2] - **Operational Improvements**: Outpatient administration rate increased to 48% (vs 45% in 2Q24 and 35% in 1Q24), reflecting better safety profile Gross margin improved to 63% (vs 37% in 2Q24 and 51% in 1Q24) [1] Financial Model Updates - **Revenue Forecasts**: 2024E revenue remains unchanged at $630 million, with 2025E and 2026E forecasts also steady at $1,051 million and $1,382 million respectively [4] - **Profitability Adjustments**: Gross margin assumptions raised to 58.0% for 2024E (vs 48.0% previously), 60.0% for 2025E (vs 53.0%), and 63.0% for 2026E (vs 60.0%) Net loss for 2024E revised to $276 million (vs $264 million previously), with breakeven expected in 2026E [4] - **Sales Expense Increase**: Sales expenses surged 110% YoY in 3Q24 due to expanded marketing efforts and team growth following 2-4L MM approval [1] Industry Context - **CAR-T Market Dynamics**: Carvykti's rapid adoption in frontline therapy is expected to limit opportunities for competitors in later-line treatments, reinforcing its market leadership [2] - **Peer Comparisons**: Among covered biotech companies, Legend Biotech (LEGN US) has the highest potential upside at 89.1%, followed by Genscript Biotech (1548 HK) at 163.3% and Novotech (6996 HK) at 487.2% [8]

Financial Data and Key Metrics - CARVYKTI net trade sales in Q3 2024 were approximately $286 million, representing an 87.6% year-over-year increase and a 53.2% quarter-over-quarter increase [13] - Total revenues for Q3 2024 were $160 million, consisting of $143 million in collaboration revenue and $17 million in license revenue [23] - Net loss for Q3 2024 was $125 million, or $0.34 per share, compared to a net loss of $62 million, or $0.17 per share, in the same period last year [24] - Unrealized foreign exchange losses of $63 million were incurred in Q3 2024, primarily due to intercompany transactions between U S and non-U S legal entities [24] Business Line Data and Key Metrics - CARVYKTI achieved a 45% reduction in the risk of death compared to standard therapies after a three-year follow-up period, marking a significant milestone in multiple myeloma treatment [8] - CARVYKTI maintained significant improvement in progression-free survival compared to standard of care [9] - Over 4,000 patients have been treated with CARVYKTI, with a very low incidence of parkinsonism [10] - CARVYKTI received approval from China's National Medical Products Administration for fourth-line plus treatment [11] Market Data and Key Metrics - CARVYKTI is commercially available in Switzerland, the United States, Germany, Austria, and Brazil [15] - Outpatient treatment now comprises up to 48% of CARVYKTI volume, representing a significant growth opportunity [16] - CARVYKTI has achieved nearly 90% market share in the BCMA CAR-T class of sales in the U S and Germany [16] - OUS sales increased over 100% year-over-year and 35% quarter-over-quarter, driven by capacity expansion and launch efforts [14] Company Strategy and Industry Competition - The company is focusing on expanding CARVYKTI's market share in earlier lines of treatment, with expectations that the majority of patients will be treated in the CARTITUDE-4 population by next year [51] - A new research facility in Philadelphia is being built to expedite innovative cell therapy research, with operations expected to begin in summer 2025 [20] - The company is prioritizing markets such as the U S and Europe over China due to supply constraints and availability of lentiviral vector [103] - CARVYKTI's delayed CRS onset profile allows for extensive outpatient administration, providing a competitive advantage [16][73] Management Commentary on Operating Environment and Future Outlook - Management expects sequential growth in Q4 2024, driven by continued demand and manufacturing efficiencies [14] - The company plans to submit CARTITUDE-4 overall survival results to regulatory authorities in the U S and Europe to update the label [10] - Management highlighted the importance of outpatient treatment as a key differentiator for CARVYKTI, especially as the number of patients increases [16] - The company believes it has sufficient capital to fund operating and capital expenditures into 2026, when it expects to achieve operating profitability [31] Other Important Information - The company appointed Alan Bash as President of the CARVYKTI business unit to oversee its continued growth [17] - Enrollment for the CARTITUDE-5 trial is complete, and enrollment for CARTITUDE-6 is expected to be completed next year [19] - The company is exploring the use of MRD negativity as a potential endpoint for CARTITUDE-6, with plans to discuss this with the FDA [91] - The company is actively engaging with patient advocacy groups and community DPOs to expand CARVYKTI's reach in the outpatient setting [121] Q&A Session Summary Question: What are the key data points to focus on for the upcoming ASH update? - The company emphasized the importance of durability and progression-free survival (PFS) in evaluating CARVYKTI's efficacy, with nearly three years of PFS demonstrated in the CARTITUDE-1 trial [38] - Safety data, particularly the low incidence of neurotoxicity and parkinsonism, was highlighted as a key focus area [39] Question: How should we think about quarter-over-quarter growth in Q4 2024? - Management confirmed expectations of sequential growth in Q4 2024, driven by continued demand and manufacturing efficiencies [46] Question: What are the drivers of outpatient adoption for CARVYKTI? - Outpatient adoption is driven by the delayed CRS onset profile of CARVYKTI, which allows for remote monitoring and reduces hospital burden [55][73] Question: What are the expectations for Europe following the approval of commercial production in Belgium? - Europe's adoption of CAR-T therapies has been slower due to pricing negotiations, but the company expects growth in key markets like Germany [83][84] Question: What is the timeline for updates on CARTITUDE-2 cohorts E and F? - Longer follow-up is needed for CARTITUDE-2 cohorts E and F, as these patients typically have prolonged courses, including extensive PFS [90][111] Question: How is the company managing neurotoxicity concerns in earlier lines of treatment? - The company is exploring the use of steroids and ALC monitoring to mitigate neurotoxicity, with plans to incorporate these strategies into future trials [94][99] Question: What are the company's plans for the China launch? - The company is prioritizing U S and European markets due to supply constraints, with ongoing discussions with Johnson & Johnson regarding the China launch [103] Question: What are the implications of the FDA reconsidering black box warnings on CAR-T products? - The company has not had specific discussions with the FDA regarding secondary primary malignancies but noted that the incidence rate is similar to standard therapies [107][108] Question: What are the drivers of the accelerated approval for commercial production in Belgium? - The approval was driven by the quality of the manufacturing operation at the Obelisc facility, with no additional regulatory requirements needed for commercial production in Europe [116][117]

Core Insights - Legend Biotech Corporation reported $160.21 million in revenue for Q3 2024, a year-over-year increase of 66.9% [1] - The EPS for the same period was -$0.34, compared to -$0.17 a year ago, indicating a decline in profitability [1] - The revenue exceeded the Zacks Consensus Estimate of $144.7 million by 10.72%, while the EPS surprise was +39.29% against the consensus estimate of -$0.56 [1] Revenue Breakdown - Collaboration revenues were $142.83 million, surpassing the average estimate of $132.16 million from seven analysts [3] - License revenues reached $17.10 million, exceeding the average estimate of $13.90 million from five analysts [3] - Other revenues were $0.28 million, falling short of the estimated $2.46 million from two analysts [3] Stock Performance - Over the past month, Legend Biotech's shares have returned -19.4%, contrasting with the Zacks S&P 500 composite's +3.3% change [4] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential for outperformance in the near term [4]

Revenue Performance - Total revenue for the nine months ended September 30, 2024, was $440.72 million, a 114% increase from $205.68 million in the same period of 2023[14] - License revenue reached $120.12 million, up from $35.17 million year-over-year, representing a 241% increase[14] - Collaboration revenue increased to $314.56 million, compared to $170.37 million in the prior year, marking an 84% growth[14] - Total revenue for the nine months ended September 30, 2024, was $440.7 million, a significant increase of $235.0 million compared to $205.7 million for the same period in 2023[69] - License revenue increased to $120.1 million for the nine months ended September 30, 2024, up from $35.2 million in 2023, driven by $40.0 million from milestones under the Janssen Agreement and $45.0 million from the Novartis License Agreement[70][71] - Collaboration revenue rose to $314.6 million in 2024, compared to $170.4 million in 2023, primarily due to increased sales of CARVYKTI under the Janssen Agreement[72] Financial Loss and Improvement - The loss for the period was $203.31 million, a significant improvement from a loss of $373.44 million in the same period of 2023[14] - Basic and diluted loss per share improved to $0.56 from $1.07 year-over-year[14] - The loss for the nine months ended September 30, 2024, is $203.3 million, compared to a loss of $373.4 million for the same period in 2023, representing a 45.6% improvement[23] - Net loss for the period was $203.3 million, or ($0.56) per share, compared to a net loss of $373.4 million, or ($1.07) per share, for the same period in 2023, indicating improved financial performance[84] Assets and Liabilities - Total assets as of September 30, 2024, were $1.74 billion, down from $1.85 billion at the end of 2023[16] - Total liabilities increased to $619.72 million from $597.24 million at the end of 2023[16] - Total equity as of September 30, 2024, is $1,116.1 million, a decrease from $1,339.6 million as of September 30, 2023[19] - Cash and cash equivalents decreased to $459.28 million from $1.28 billion at the end of 2023[16] - Cash and cash equivalents as of September 30, 2024, totaled approximately $0.46 billion, with time deposits of approximately $0.76 billion, providing liquidity to fund operations into 2026[87][85] Cash Flow and Investment Activities - Cash used in operating activities for the nine months ended September 30, 2024, is $61.96 million, significantly reduced from $297.63 million in 2023[25] - Net cash used in investing activities for the nine months ended September 30, 2024, is $762.70 million, compared to $314.72 million in 2023, indicating increased investment activity[25] - Net cash provided by financing activities for the nine months ended September 30, 2024, was $6.0 million, a decrease from $790.6 million in 2023, reflecting reduced capital raising activities[95][96] Expenses - Research and development expenses rose to $309.11 million, compared to $276.54 million in the prior year, reflecting a 12% increase[14] - Administrative expenses increased to $102.58 million from $78.06 million year-over-year, a 31% rise[14] - The company recognized equity-settled share-based compensation expense of $55.55 million for the nine months ended September 30, 2024, compared to $35.09 million in 2023, reflecting increased compensation costs[25] - Research and development expenses for the nine months ended September 30, 2024, were $309.1 million, an increase of $32.6 million from $276.5 million in 2023, reflecting ongoing investment in cilta-cel and solid tumor programs[76] Inventory and Receivables - The company experienced a decrease in trade receivables of $99.34 million in the nine months ended September 30, 2024, compared to a minimal change in 2023[23] - The company reported a provision for inventory reserve of $6.83 million for the nine months ended September 30, 2024, compared to $1.34 million in 2023, indicating increased inventory risk management[23] - The reserve for inventory increased to $15.8 million as of September 30, 2024, compared to $8.9 million at the end of 2023, indicating higher expired materials[47] Shareholder and Financing Activities - The company issued ordinary shares resulting in a total increase in equity of $234.41 million from private placements and $349.28 million from registered direct offerings during the nine months ended September 30, 2023[19] - The weighted average number of ordinary shares in issue increased to 365,268,372 for the nine months ended September 30, 2024, from 348,293,363 in the prior year[40] - The company issued and fully paid 366,901,007 ordinary shares as of September 30, 2024, an increase from 363,822,069 shares as of December 31, 2023[55] Future Outlook and Plans - The company expects to incur significant capital expenditures in the coming years to ramp up manufacturing capabilities for CARVYKTI and advance clinical development programs[85] - The company expects expenses to increase due to ongoing research and development, clinical trials, and commercialization efforts for CARVYKTI, necessitating substantial additional funding[97] - Existing cash and cash equivalents are projected to fund operating expenses and capital expenditures for at least the next 12 months, despite potential fluctuations in cash requirements[98] - The company has a broad portfolio of earlier-stage product candidates, but may not generate necessary data for marketing approval, requiring continued reliance on additional financing[99] - Financing needs will be met through equity offerings, debt financings, collaborations, and licensing arrangements, which may dilute existing shareholders[100] Regulatory and Market Developments - The company received China's NMPA approval for CARVYKTI for the treatment of fourth-line plus multiple myeloma[66] - The company initiated commercial production at the Obelisc facility in Ghent, Belgium, and launched CARVYKTI in Switzerland during the third quarter[66] - The Novartis License Agreement, effective December 28, 2023, includes an upfront payment of $100 million and potential milestone payments of up to $1.01 billion[36] Economic and Risk Factors - The company has not experienced material impacts on its supply chain due to inflation and rising interest rates, maintaining robust sourcing strategies[67] - Inflation has not materially affected the company's financial condition or results of operations during the nine months ended September 30, 2024 and 2023[105] - The company does not believe it is exposed to any material foreign currency exchange rate risk[106]

Core Viewpoint - Shares of Legend Biotech Corporation (LEGN) have recently declined by 9.8% over the past week, but the formation of a hammer chart pattern suggests a potential trend reversal as buying interest may be emerging to counteract selling pressure [1] Group 1: Technical Analysis - The hammer chart pattern indicates that the stock may have found support, signaling a possible bottom and a reversal in trend [1] - A hammer pattern forms when there is a small candle body with a long lower wick, suggesting that bears may be losing control over the price during a downtrend [2] - This pattern can occur across various timeframes and is utilized by both short-term and long-term investors, although it should be used alongside other bullish indicators for confirmation [2] Group 2: Fundamental Analysis - Recent upward revisions in earnings estimates for LEGN serve as a bullish indicator, with the consensus EPS estimate increasing by 1.9% over the last 30 days, reflecting analysts' agreement on the company's improved earnings potential [3] - LEGN holds a Zacks Rank of 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks, which typically outperform the market [3] - The Zacks Rank is recognized as an effective timing indicator, suggesting that LEGN's prospects are beginning to improve, further supporting the case for a potential turnaround [3]