Incident: On March 16, Legend Biotech announced that CARVYKTI was recommended by the US FDA Oncology Drug Advisory Committee (ODAC) for early treatment of patients with recurrent or refractory multiple myeloma. The positive recommendation was made by the committee after evaluating the efficacy and safety data of the Phase 3 study CARTITUDE-4. The ODAC voted unanimously in favour of CARVYKTI (11 votes to 0), believing that its risk-benefit assessment of the proposed indications was good. Complementary bioproduct licensing applications supported by CARTITUDE-4 are being reviewed by the FDA, and the PDUFA target date is April 5, 2024.
CARVYKTI continues to increase market penetration rate, expand frontline indications and increase production capacity rapidly.
In 2023, CARVYKTI achieved global sales of 500 million US dollars, an increase of 273% over the previous year. Legendary Biotech continues to invest in research and development to promote CARVYKTI's frontline treatment for multiple myeloma. Currently, it has received positive opinions from the FDA ODAC and EMA CHMP for frontline treatment. The company expects the extension of the CARVYKTI label to frontline treatment in 2024 to obtain FDA and EMA approval. In terms of production capacity, clinical production has begun at the new plant in Ghent, Belgium. CMO partner Novartis expects 24H1 to produce clinical trial drugs, and Johnson & Johnson's lentivirus facility has also been approved to expand from 20L cans to 50L cans, and lentivirus production will more than double; it is expected to achieve an annual production capacity of 10,000 people by the end of 2025. In addition, LEGENDARY BIOLOGY and Novartis are collaborating exclusively on CAR-T targeting DLL3 in phase I clinical trials to treat small cell lung cancer and large cell neuroendocrine cancer. The company has received an advance payment of 100 million US dollars, and the total number of future milestone payments is as high as 1.01 billion US dollars.
The life science business is growing steadily, and the slowdown in investment and financing puts pressure on the short-term development of Booming Biotech. Kingsley Biotech achieved revenue of US$840 million in 2023, an increase of 34.2% year-on-year, and the Group's net loss narrowed to US$355 million. Among them, revenue from life science services and products was US$413 million, up 14.5% year on year, and gross margin remained stable; Booming Biotech's revenue was US$110 million, down 12.4% year on year. Adjusted gross margin fell to 18.1% from 34.2% last year, mainly due to a decline in demand due to the slowdown in investment and financing. Antibody protein revenue accounts for 60% of booming organisms, supports 17 CMC and beyond projects throughout the year, and signs the first 2000L large-scale production order; cell and gene therapy supports 32 CMC projects throughout the year. BoboBio will continue to expand global production capacity to serve customers. It is expected to have 16,000 L of antibody commercialization phase 1 production capacity in 2024, and the US GMP plasmid workshop is expected to be put into operation in 24Q3. After removing the influence of exchange rates, Baisjie's core enzyme business revenue increased by 22.6%, and synthetic biological products, sweeteners and lactoferrin are expected to be launched one after another in 2024 and 2025.
2024 guidance: The company expects revenue from the life sciences business to increase by 15%-20% in 2024, with an adjusted gross profit margin of about 55%, and operating profit growth will exceed revenue growth; booming biological revenue is the same as in 2023; and the Baishige enzyme formulation business will grow by 20-30%, with an adjusted gross profit margin of about 39%.
Investment advice: As a bioscience platform company, CARVYKTI continues to accelerate its release. We expect the company's net profit to be -0.76/0.40/301 million US dollars in 2024-2026, respectively, and EPS of -0.04/0.02/0.14 US dollars, respectively, maintaining the “recommended” rating.
Risk warning: risk of order delivery falling short of expectations, risk of R&D failure, risk of falling demand, risk of exchange profit and loss, industry policy risk, etc.