Legend Biotech: Q2 Record Sales Masked by Losses, Undeveloped Pipeline - Rating Downgraded

Legend Biotech reported Q2 record sales but was undermined by losses and an immature pipeline. The company's investment overview highlights its commercial stage and cell therapy development partnership with Janssen, a subsidiary of Johnson & Johnson. Despite record sales, Legend Biotech's financial performance was negatively impacted by losses and a lack of a mature pipeline. As a result, its rating has been downgraded.

Legend Biotech (NASDAQ:LEGN), a commercial-stage pharmaceutical company based in Somerset, New Jersey, announced its Q2 earnings on Monday. The company, in partnership with Johnson & Johnson's Janssen, reported record sales of $439 million for its CAR-T cell therapy, Carvykti, which treats relapsed or refractory multiple myeloma (MM). Despite this significant revenue milestone, the company's financial performance was undermined by substantial losses and an immature pipeline, leading to a rating downgrade.

Carvykti's sales represented a 13% sequential growth and 114% annual growth in the US, and 59% outside the US, making it the highest-selling CAR-T therapy on the market. The company's collaboration revenues of $219.7 million, up from $93.3 million in the prior year quarter, reflect the 50/50 revenue split with Janssen in most territories, except for China, Hong Kong, Macau, and Taiwan, where Legend earns a 70% share.

However, Legend Biotech's financial performance was marred by a $10.1 million adjusted net loss and a $125.4 million GAAP net loss, compared to a $2.5 million adjusted net loss and a $78 million GAAP net loss in the prior year period. The company's accumulated deficit stood at $1.66 billion as of the end of 2024. The CEO, Ying Huang, indicated that the company aims to achieve operational breakeven for Carvykti by the end of 2025 and company-wide profitability in 2026, excluding unrealized foreign exchange gains or losses.

Legend Biotech's pipeline, while promising, is still in its early stages. The company is developing a DLL3-targeting candidate for small cell lung cancer and large-cell neuroendocrine carcinoma in partnership with Novartis, with up to $1 billion in milestone payments. Additionally, Legend is exploring cell therapies for autoimmune conditions using an autologous approach, which has not yet been approved in any indication. The company's in-vivo program, which involves no preconditioning, is also in its early stages.

The company's stock price has been volatile, reaching a high of $76 in July 2023 and sinking to $25 in May 2025. Despite the record sales, the stock price has fallen again, with Wall Street seemingly unmoved by Carvykti's performance. The current market cap valuation is $6.82 billion, and the company boasts a cash position of over $1 billion.

In conclusion, while Legend Biotech reported record sales for Carvykti in Q2, its financial performance was negatively impacted by substantial losses and an immature pipeline. The company's rating has been downgraded, and investors will need to closely monitor its progress towards profitability and pipeline development.

References:
[1] https://seekingalpha.com/article/4813740-legend-biotech-q2-record-sales-undermined-by-losses-immature-pipeline-rating-downgrade