Legend Biotech (NASDAQ: LEGN) has announced significant growth in its first-quarter financial results for 2024, driven by the approval and sales of its CARVYKTI treatment for multiple myeloma.
The FDA and European Commission's approval for CARVYKTI as a second-line treatment has led to a doubling of net trade sales to $157 million year-over-year. The company also plans to expand production capacity for CARVYKTI and has a strong cash balance to support these efforts.
Key Takeaways
- CARVYKTI sales reached $157 million, marking a 100% increase from the previous year.
- FDA and European Commission approved CARVYKTI for second-line relapsed or refractory multiple myeloma.
- Legend Biotech plans to double CARVYKTI production capacity by the end of 2024.
- The company holds a strong cash position of $1.3 billion.
- 72 U.S. hospitals are certified to treat patients with CARVYKTI, with outpatient treatment accounting for one-third of the volume.
- Legend Biotech published its inaugural ESG report, highlighting its commitment to corporate responsibility.
Company Outlook
- Legend Biotech expects to double its target doses by the end of 2025.
- Partnerships with outpatient players are being pursued to increase CARVYKTI usage.
- Ongoing trials in China for CAR-T therapies are being expanded for autoimmune disease indications.
- Expansion into the US market is being considered, with potential modifications to treatment dosages for autoimmune diseases.
Bearish Highlights
- The wider FDA approval for CARVYKTI may result in a 5-10% lower overall survival rate.
- Early data indicates a 5% decrease in overall survival post-approval.
- Outpatient administration of CAR-T therapy faces challenges due to patient conditions and resource allocation.
Bullish Highlights
- Legend Biotech anticipates a peak in CARVYKTI sales exceeding $5 billion, focusing on the second-line treatment market.
- The company has robust plans for manufacturing capacity expansion across multiple facilities.
- Positive trends in overall survival rates are being observed despite increased competition from bispecifics.
Misses
- There is variability in COGS due to ongoing investments in manufacturing capacity.
- Specific details on the number of certified treatment centers in Europe for CARVYKTI are not provided.
Q&A Highlights
- Legend Biotech is engaging with the FDA on the use of MRD as an endpoint for accelerated approval.
- The company is discussing reimbursement for second-line treatments with payers.
- A goal has been set to reduce vein-to-vein time for CARVYKTI to less than four weeks by the year's end.
Legend Biotech's first quarter of 2024 has shown promising growth, with the approval and successful sales of CARVYKTI. The company's strategic investments in production and its focus on outpatient treatment indicate a commitment to increasing the accessibility and efficiency of its therapies. While facing some challenges in the competitive landscape and variability in COGS, Legend Biotech's strong financial position and clear expansion plans position the company for potential growth in the coming years.
InvestingPro Insights
Legend Biotech's recent financial results have been bolstered by the strong performance of CARVYKTI, and the company's strategic moves are reflected in several key metrics. According to InvestingPro Data, Legend Biotech has a market capitalization of $7.87 billion USD, with a significant revenue growth of 143.7% over the last twelve months as of Q1 2023. However, the company is trading at a high Price / Book multiple of 6.25, suggesting a premium valuation compared to the book value of its assets.
InvestingPro Tips highlight that Legend Biotech holds more cash than debt, which supports its plans for scaling up CARVYKTI production. This financial stability is crucial for the company's expansion and operational strategies. Additionally, analysts expect sales growth in the current year, aligning with the company's positive outlook for CARVYKTI.
For readers interested in a deeper dive into Legend Biotech's financial health and future prospects, there are additional InvestingPro Tips available. These include insights on stock performance, profitability projections, and valuation multiples. To explore these further, visit https://www.investing.com/pro/LEGN and remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 12 more InvestingPro Tips available that could provide valuable context for investors considering Legend Biotech's potential.
Full transcript - Legend Biotech Corp (LEGN) Q1 2024:
Operator: Good day, ladies and gentlemen, thank you for standing by. Welcome to Legend Biotech First Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation there will be a question-and-answer session. [Operator Instructions] Please note that today's conference may be recorded. I will now hand the conference over to your speaker host, Jessie Yeung, Head of Investor Relations and Public Relations. Please go ahead.
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 first quarter 2024 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 their 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 Investor's Session of our company website. Thank you.
Ying Huang: Hello, everyone, and welcome to our first quarter earnings call. I am pleased that you could join us. As many of you on this call know, 2024 has been an eventful year for us. Obviously, our major news was the approval of CARVYKTI by the FDA and the European Commission for second-line relapsed or refractory multiple myeloma. These approvals have the potential to change the treatment paradigm for tens of thousands of patients in the United States and Europe. The feedback from key opinion leaders, oncologists, advocates, patients, and caregivers has been tremendous. On March 15th, we received international media attention when the FDA's Oncologic Drug Advisory Committee, or ODAC, meeting raised awareness about multiple myeloma and the positive benefit risk profile of CARVYKTI. ODAC's unanimous 11 to 0 recommendation in favor of CARVYKTI was independent and objective validation of its value proposition. We also added another noteworthy approval to our growing list. The Brazilian Health Regulatory Agency has approved CARVYKTI for second line multiple myeloma. I am pleased to report that CARVYKTI is now available by prescription in Brazil. Our patient-facing colleagues and those who work in manufacturing are energized and eager to share our transformative therapy with more patients around the world. As you will see on our addressable market slide, our second-line indication translates to an addressable patient population of 80,000 across three major markets. Turning to financial developments, CARVYKTI net trade sales for the first quarter were $157 million, which is 100% increase year-over-year. Sequentially, net sales decreased by $2 million from $159 million in the fourth quarter of last year. This was a result of phasing due to the timing of orders and when they were delivered and billed for, as well as manufacturing testing needed for the upcoming expansion. Importantly, there was growth in patient demand, and, obviously, that was before the recent second line approvals. So we do anticipate continued growth for CARVYKTI, particularly in the second half of the year, as we continue to add more slots and expand our capacity. Right now, there's no higher priority in the company than making more supply available to the market and reducing the vein-to-vein time. We're working to expand production from every angle. We are continually increasing production at our Raritan, New Jersey, where we have doubled cell processing capacity since the beginning of 2023. We are laser focused on completing physical expansion of our Raritan site this year. We plan to double CARVYKTI capacity by the end of 2024 compared to the end of 2023. Our production capacity will be augmented later in the year when our Obelisc facility in Ghent, Belgium is approved for commercial production. Clinical production already started back in January. With the second-line FDA approval, the specifications for manufacturing CARVYKTI were widened, which should give us greater yield going forward. Finally, Legend and J&J expanded a previous agreement with Novartis (SIX:NOVN) to perform commercial manufacturing for CARVYKTI through the end of 2029. The increases to our production capacity will help ensure we meet our target of annualized capacity of 10,000 patient slots by the end of 2025. Our cash balance now stands at $1.3 billion, which we believe provides us the resources needed to increase production and gives us financial runway into 2026 when we expect to begin to achieve an operating profit. In other developments, we continue to bring more hospitals online as authorized treatment centers. We have now a total of 72 U.S. hospitals certified to treat CARVYKTI patients. So our reach in the community is growing in parallel with the increase in eligible patients. Outpatient treatment comprises approximately one-third of our volume and remains an important differentiator for us. Due to the longer onset of CRS for CARVYKTI patients, this side effect can potentially be managed in the outpatient setting, which allows those hospital beds to be utilized for other patients who need them. Finally, since our last earnings call in March, we published our first ESG report. Not only does it summarize our achievements as responsible corporate citizens, the report provides a great overview of the company and transparency into how we conduct our business. To sum up, so far in 2024, we have achieved our significant regulatory goals and are working to execute with excellence to meet the growing demand for CARVYKTI. Now, I would like to turn the call over to Lori to walk you through the financials for the first quarter. Lori?
Lori Macomber: Thank you, Ying. And good morning, everyone. As Ying mentioned, we generated approximately $157 million in total net sales for CARVYKTI during the first quarter, an increase of 118% year-over-year. Sequential growth was roughly flat due to the timing of orders and when they were delivered and billed for, as well as manufacturing testing needed for the upcoming expansions. As a reminder, we share equally in all profits and losses for CARVYKTI ex-China with our partner Janssen. Turning to revenue, total revenues for the first quarter were $94 million, consisting of $78.5 million of collaboration revenue from the sale of CARVYKTI and license revenue of $12.2 million from the recognition of deferred revenue in connection with our agreement with Novartis to develop, manufacture, and commercialize LB2102 and other potential CAR T therapies selectively targeting DLL3. Net loss for the quarter ending March 31, 2024, was $59.8 million, or a loss of $0.16 per share compared to net loss of $112.1 million, or a loss of $0.34 per share for the same period last year. Moving on to expenses, collaboration cost of revenue for the first quarter 2024 was $49.1 million, compared to $35.6 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 expansions. Additionally, cost of license and other revenue for the first quarter of 2024 was $5.6 million compared to no cost of license and other revenue for the first quarter of 2024. These cost are in connection with our agreement with Novartis to develop, manufacture and commercialize LB2102 and other potential CAR T therapies selectively targeting DLL3. Research and development expenses for the first quarter 2024 were $101 million compared to $84.9 million for the same period last year. The increase of $16.1 million for the three months and in March 31st, 2024, compared to three months and in March 31st, 2023, was due to primarily to research and development activities in cilta-cel, including higher patient enrollment for Phase 3 clinical trials and continued investment as well in our solid tumor programs, which includes two IND approvals that advanced into Phase 1 development. Administrative expenses for three months and in March 31, 2024, were $31.9 million, compared to $22.2 million for the same period last year. The increase of $9.7 million year-over-year is primarily due to the expansion of administrative functions and infrastructure to increase manufacturing capacity. Selling and distribution expense for three months and in March 31st, 2024, was $24.2 million compared to $18 million for the same period last year. The increase of $6.3 million year-over-year due to the cost associated with the commercialization of CARVYKTI, including the expansion of the salesforce and second line indication and launch preparations. To summarize, our spending remains on track and we continue to maintain a strong balance sheet. As of March 31st, we have $1.3 billion in cash and equivalents, deposits and investments. Additionally, we earned in April a milestone payment of $45 million in connection with the FDA's approval of CARVYKTI's label expansion to treat second-line multiple myeloma in accordance with the Janssen Agreement. Thus, we believe we have sufficient capital to fund our operating and capital expenditures into 2026, when we expect to begin to achieve an operating profit. Thank you. I will now pass it back to Ying for closing remarks.
Ying Huang: Thank you, Lori. To sum up, 2024 has already been a monumental year for Legend with a string of regulatory successes. CARVYKTI continues to be the fastest launched CAR T therapy, and now we have new opportunities to serve even more patients. I want to thank each of our 1,900 employees for their commitment and dedication that will ensure patients who need CARVYKTI are able to access it. And with that, we'd like to take your questions. Operator, we're ready for the first question.
Operator: Thank you. [Operator Instructions] Now first question coming from the line of Jessica Fye with JP Morgan (NYSE:JPM). Your line is open.
Jessica Fye: Hey guys, good morning. Thanks so much for taking my questions. I have two please, sort of related. First, I know 1Q was impacted by a number of non-revenue batches for comparability work. How should we think about the scale of that work in 2Q and beyond? And then second, when you talk about doubling capacity from the end of 2033 to the end of 2024, but I think you mentioned that the Obelisc commercial production was going to be kind of back half-weighted or back end- weighted. What does that mean for how we should think about revenue year-over-year in 2024 relative to 2023? Just trying to figure out kind of is it one-to-one on that doubling year-end -- from year-end to year-end of capacity or are there other factors we should think about when we're thinking about revenue this year? Thank you.
Ying Huang: Hey, good morning, Jess. Thanks for the questions. This is Ying. I'll help answer those two. So, first on the manufacturing investments, I would tell you that qualitatively in first quarter of this year, we did have a number of non-revenue generating rounds and that includes bringing up the CMO from Novartis and also bringing up a couple other additional notes, including our facilities in Ghent up for production including clinical and then in the future also for commercial production. So I cannot disclose exactly the number of the non-revenue generating rounds, but it is on a similar order of magnitude compared to, for example, clinical rounds. And we do expect that for the rest of the year in the next three quarters, that number will come down. The reason is, we are pretty much complete in terms of the work we're doing with Novartis. So we believe that Novartis is in a position to file IND very soon. And assuming the IND is cleared by the FDA, we expect Novartis to start clinical trial production in the third quarter and then followed by commercial production first quarter of next year. And then, of course, we also have two other facilities in Ghent. The first one, Phase 1 is called Obelisc and Obelisc is already producing for [indiscernible] as we speak. And we expect pending regulatory approval probably around late third quarter or early fourth quarter this year. Obelisc will start commercial production. And then followed by our much larger facility in Belgium called Tech Lane. Tech Lane right now is on track to complete physical construction and validation by end of this year. So we expect that facility to start clinical trial production early next year, followed by commercial production in the second half of 2025. So that’s kind of like the cadence. And then to address your second question, as I just mentioned, Obelisc is expected to start commercial production late 3Q or early 4Q this year. So in general, I think we have said that, we are looking at a roughly doubling of our capacity from 2023 to 2024. We don't provide guidance for the product itself, but I think the capacity expansion gives you a good idea of where the revenue would lie. Consistent with our policy to have similar or same disclosure from J&J, which does not provide product specific guidance. We cannot guide the product itself. But I think that doubling of expansion gives you a confidence that where the revenue would be in terms of growth year-over-year. Thank you.
Jessica Fye: Can I just clarify, when you say doubling of capacity, there's other factors as it relates to revenue, whether it's kind of like in spec, out of spec, the amount going to clinical trials, the amount going to these comparability batches or what have you? So when you say doubling of capacity, is that just like total capacity inclusive of all these other things that may not generate revenue or is that commercial capacity?
Ying Huang: That is correct. When we talk about capacity, that includes the number of total slots from all nodes of production. That includes clinical production, that includes non-revenue manufacturing investment runs, that includes commercial production. And then when you think about commercial production, Jess, of course, you have to make assumption of the inspect success rate, right? I mean, we're encouraged by the trend so far this year because given what we're seeing in Q1 and now in Q2, that continues to improve. So then there's of course the net pricing. So all this will figure into the revenues. But when we talk about total capacity, we're talking about all the capacity, all the slots from different nodes. And that includes everything.
Operator: Thank you. And our next question coming from the line of Gena Wang with Barclays (LON:BARC). Your line is open.
Gena Wang: Thank you for taking my questions. Maybe I'll just follow Jessica's questions. So, should we still expect revenue growth in second quarter 2024, or should we wait until second half 2024 when Obelisc commercial production on board in 3Q, 4Q? And another related question is regarding CARTITUDE-5 and CARTITUDE-6, now mainly 6, you still have maybe roughly 700 patients that need to be enrolled. Where do you expect these 700 patient enrollment mainly at, would that be in New Jersey side or would that be in Beijing side?
Lori Macomber: Hi, Gena, this is Lori. I'll take your first question on revenue. We do expect to see some growth in Q2, but as we've talked about, we expect pronounced growth in the second half of the year. As Ying mentioned, we have different factors coming into play in the second half of the year. With the Raritan ramp, we expect a second capacity ramp coming on there. Our Ghent facility is the largest driver, with that coming online in order to do some commercial production. And then we do have a CMO that we anticipate clinical production can shift there, that'll free up some commercial capacity at Raritan. So in addition to that, as we start to get these additional notes that come online, we will have some multiple country launches we anticipate in the back half of the year. And as you know, with the complexity in cell therapy, some of the -- achieving those sales will depend upon how those launches sell. And you've seen in prior launches, we tend to get a lot of the acute patients first. So, we want to be conservative, but we do anticipate more pronounced growth in the second half of the year. Ying, do you want to take the CARTITUDE-5 and CARTITUDE-6 questions?
Ying Huang: Yes, Gena. So on CARTITUDE-5, we have completed all international enrollment already for CARTITUDE-5, and that's actually above our pre-planned number. Right now, we're just enrolling additional US-based patients so that we satisfy the minimum of the US patient representation by the FDA. So by now we have manufactured a significant portion of CARTITUDE-5 patients. Now on CARTITUDE-6, since we opened enrollment in October last year, right now it's enrolling really fast. It's actually faster than our plan. So in terms of where we're manufacturing for those trials, I can tell you that right now, Raritan, New Jersey is the main site of CARTITUDE-5 manufacturing. For CARTITUDE-6, right now actually, Ghent, our first facility called Obelisc is the main site for that trial now. And it will shift to other sources, but we're trying to really save the Raritan facility for commercial production for the rest of 2024. So that's where we're manufacturing for CARTITUDE-5 and CARTITUDE-6 for now.
Gena Wang: Thank you.
Operator: Thank you. One moment for next question. And our next question coming from the line of Kelly Shi with Jefferies. Your line is open.
Kelly Shi: Thank you. Congrats on achieving great milestone [indiscernible] approval. So for the launch in the US, could you talk about the current launch activities? Have you started treating patients in second to fourth line? And do you see switch from last line? And I also have follow up. Thank you.
Steve Gavel: Yes, why don't I take that question? This is Steve Gavel. So I think the question had to do with CARTITUDE-4, the status of it and patients and so forth and so on. One of the things I do want to just piggyback a little bit to Lori's response earlier concerning the second half component of this year, even though the product was approved in earlier lines in April, there's just a natural lag in the market, especially with CARTITUDE-4 launch where we are looking for getting patients referred into our institutions. So, I think this is some -- one of the key differences with the CARTITUDE-1 launch versus CARTITUDE-4, that there will be a natural lag in it just because of a referral piece of this. Now, also to Lori's point, there are a number of patients that meet the eligibility criteria today in our hospitals that are moving very quickly through the approval processes and so forth. So, again, we continue to move very quickly in terms of patient identification and aphoresis, but I did want to caution you all that it's just a natural phenomenon of referrals and manufacturing and ultimately to revenue recognition. That's why we're basing our assumption on a really strong second half.
Kelly Shi: Thanks. And also to reach the goal of 10,000 doses by year end for 2025, would need to consider to sign up for additional CDMO contract? Also, what percentage of the patients would be needed to treat it in all patient settings to reach the 10,000 doses goal? If we are assuming like on the hospital side, there's also capacity constraints. Thanks.
Ying Huang: So Kelly, let me take the first proper question and then I'll ask Steve to talk about the outpatient administration of CARVYKTI. So when we look at the goal of reaching 10,000 annualized capacity by end of 2025, we believe that with existing nodes, four nodes, right, that includes our one site in Raritan, New Jersey, our two sites in Ghent, Obelisc, and Tech Lane, plus on Novartis site here. That should be pretty much give us the reach to that number. Of course, we're continuing to evaluate the CDMO of other companies. That could potentially give us a boost as well. So stay tuned on that front. And then I'll ask Steve to talk about the outpatient administration of CARVYKTI.
Steve Gavel: All right, thanks, Ying. So you're heard me at the top, talking about roughly about a third of outpatients now being treated in the outpatient setting. And that's grown quite a bit. I mean, that's to give you a comparator versus other CAR-Ts in the market that we compete with is right around 15%. So I think the question was, from an outpatient perspective, what would we need to see in order to achieve the target doses that you referenced earlier. We expect by the end of 2025 to be at least double to where we are today. And it's reflective in the growth in the outpatient sector that we are seeing today. So we are relatively confident that we are going to be there. I think the one wrinkle, and you're seeing now a number of our sites investigating this today, is the partnerships that they are going to be, and they're currently embarking with, with other outpatient players, whether it be in the community setting, I'm talking now pure community retail setting. And actually, if you haven't seen a good example of that is back in 2022, ACA Healthcare announced a partnership with McKesson (NYSE:MCK), which is US Oncology. And I know that they are very interested in leveraging assets outside of their own hospitals to bring these therapies out to as many patients that are eligible to receive them. So you'll see the definition of outpatient will change quite a bit over the next couple of years, not just hospital outpatient, but in the next few years you will start to see community administration of our program.
Kelly Shi: Terrific. Thanks.
Operator: Thank you. And our next question coming from the line of Jon Miller with Evercore ISI. Your line is open. Hi guys, this is Omar filling in for Jon. I don't have any single question on CARVYKTI today. And instead I want to focus on a very important area in CAR-T space, which I don't think has come up in Legend conversations. So you have this triple targeted CAR-T ongoing in China since March 2022, I think it's wrapping up now, that's CD19, CD20, CD22, unautologous. And separately, you have this LUCAR-G39P which is the dual targeting CD19, CD20 allo that I think you just started Phase 1. Both are these in China. My question is, shouldn't those trials have been in autoimmune and/or is that a plan that you're intending to do near term?
Ying Huang: Hey, Omar, good morning. I will ask our CSO Dr. Guowei Fang to answer your question.
Guowei Fang: Yes. Thanks, Jon, for the question. This is an important question, and our disease focus areas are both oncology and autoimmune diseases. For both assets, we have plans to develop those in autoimmune disease indications as well, and it's in process.
Omar Saad: And when would that start, Ying? And would it be a U.S. trial? I think that's the other very important question, obviously.
Guowei Fang: Currently, [indiscernible] is in the process of initiating autoimmune IIT study in China across multiple disease indications. For the US autoimmune diseases, as said, our current strategy is focusing on the allogeneic approach given some of the key challenges associated with autologous treatment options. For example, the requirement of liver depression and the requirement of manufacturing at the individual patient level, high cost, et cetera. We have assets in the process of initiating the U.S. R&D-enabled new study, and we will disclose additional information in the future. Thank you.
Omar Saad: And if I may clarify -- sorry, one last one. If I may just clarify, in that allo trial for US, I'm assuming that's your CD19, CD20 dual targeting, is it safe to assume that you would not need the flu-sci loading, the preconditioning for autoimmune?
Guowei Fang: That's an open question. And I think we will make a decision based on the clinical data we are collecting. In terms of targeting mechanism, we think that autoimmune disease cover a very broad spectrum of different diseases, and we want to have option and choice for patients. In terms of targeting mechanism, CD19, CD20 certainly are very targeted mechanism. I think the plasma cell may also play a major component in B-cell-driven disease pathology. So we're also considering the BCMA as additional talking opportunities.
Ying Huang: And Omar, I know you had a question about the disclosure and also moving to US IND. So I'll just add that, you see that we already initiated the triple specific CD19, CD20 clinic program and it will probably start dosing for autoimmune by end of this year. So based on that clinical data we will make the decision when and how to move assets into the US IND process. And of course, like Dr. Fang just mentioned, we are very interested in whether we can either bypass or lower the dose intensity for flu-sci lymphoid depletion regimen. That is one goal of our IIT trials in China. So is also the trial we're conducting for the dual targeting allo CD19, CD20 [indiscernible] program.
Omar Saad: Sounds great. Thank you very much. So Ying, it sounds like you could have some autoimmune data next year. Is that a reasonable conclusion from all of this?
Ying Huang: Without officially guiding, yes. There is a possibility.
Omar Saad: Excellent. Thank you so much for this.
Operator: Thank you. And our next question coming from the line of Yaron Werber with TD (TSX:TD) Cowen. Your line is open.
Yaron Werber: Great. Let me maybe just follow Omar's last question, and then I have a question on CARVYKTI. Can you just discuss a little bit the concept of autologous with a triple CD19, CD20, and CD22 versus with allo, it looks like you're doing dual targeting. Can you just help us understand, kind of get your thoughts, why not do triple and both, and then I have a follow-up on CARVYKTI.
Guowei Fang: So for triple targeting, it's -- the design principle is to drive deep response by targeting multiple B-cell biomarkers. So for that, we are currently initiating the IIT study and collecting clinical data. For allo, we are going to have different targeting mechanisms, and based on the IIT study, we will have additional insight in terms of which disease we should target among different autoimmune indications.
Yaron Werber: Okay, with the dual -- but you'll keep that as a dual, 19, 20 only, because you don't need to drive deeper responses. Is that the thinking? You just need to reset the immune system?
Guowei Fang: Yeah, so we are targeting both CD-19 and CD-20 as well as different assets targeting CD-19 and BCMA. Probably different aspects.
Yaron Werber: Okay, got it. Okay, maybe just to move back, I have a quick question on CARVYKTI. Can you give us a little bit of a sense now that second line is approved? Is the out of specs now different, pretty much an easier across the board, or is the FDA still keeping a certain bar sort of on fourth line onwards and a different bar in the second line?
Ying Huang: Yes, Yaron, good morning. This is the Ying. I’ll answer your question. So the answer is that, when we received FDA approval on April 5th for second line, we did receive one label with one spec. So as of today, right, if we treat any patient on label, the release spec is the same for second line patients versus the fifth line and beyond. And also, by the way, it is a wider release spec. So I know it's early days, but based on the data from the full month of March production, which we tested in April. So far we're seeing encouraging trend in OS so far based on either probably the wider release spec approved by the FDA and also potentially once we start to see more second-line patients rolling in the natural evolution of better baseline for those patients.
Yaron Werber: And those release specs, how do they compare with Abecma and maybe Kymriah and Yescarta as far as you can tell?
Ying Huang: Without disclosing the number, I can tell you that based on latest data we have on out of spec, I think our success rate is approaching that of our competition at this point. Of course, like I said, it's very early days. We have only March production data. We have only a little bit partial of the April production data.
Yaron Werber: Okay. And maybe just final, I think you talked about 100 ATC target for the year. What's the gating kind of rate to open all of those? Is it capacity or are there other factors as well? Thank you.
Steve Gavel: Yes, Hi, it's Steve Gavel. The -- I mean, the gating element is really the site certification process. One thing to take note, and I've talked about this on previous calls is, as we add more and more sites you don't see nearly the volume that you see in our initial Phase 1 site. But we will continue to certify sites and our attendance will get between 90 to 100 this year. The key metric, just so you know what we look at, is because there's so much outpatient now administration of CARVYKTI in our facilities on a per site basis, we're seeing much more throughput per site versus what you would see, for example, with the BCMA. So I just wanted to make sure we're kind of viewing this the same way.
Operator: Thank you. And our next question coming from the line of Ziyi Chen with Goldman Sachs (NYSE:GS). Your line is open.
Ziyi Chen: Hey, thank you for taking my questions. Just two questions. One is on the EU launch. Well, I think the US has been down quarter-over-quarter, but EU has been increased 23%, which is still growing nicely. So could you share a bit more color on the Europe pricing and also how the reimbursement coverage in your countries? And also any updates on the commercial launch in UK and in Japan? And a small financial question is really regarding the DLL3 partnerships. So we understand that for the upfront payment, you just recognize about $12 million in the first quarter out of the $100 million upfront payment. So is that the specific accounting treatment for that is going to be spread out over the next few quarters. And secondly, there is a cost of license related in connection to that. So could you help me --help us to understand a bit more about where does this cost coming from? Thank you.
Ying Huang: Yes, we're going to try to unpack this, there a lot of things from that. Why don't I take the first European question. So I think folks on the line are aware of a partner is responsible for all ex-US promotional activities specifically in Europe. I can tell you, I think you're aware of this already, we have inter-partner in Germany and Austria in both CARTITUDE-1 and CARTITUDE-4. The other thing to take note from a global allocation, even though we are in those countries, the majority of the global slot allocation is coming into the United States. I think you had a question around pricing. Pricing has not been disclosed as of yet in Europe. So we can't unfortunately provide information around that until it becomes publicly disclosed. I'm trying to think of the other European questions that were out there [indiscernible] on the pricing reimbursement piece. [indiscernible] Yes, so we're not commenting -- again, we aren’t commenting yet. We have received approvals, obviously, in Japan, but we have yet to launch there. And again, I'm going to defer to my partner on that one because they have not disclosed their intention on timing there, nor as far as in the UK as well. So, Lori [indiscernible].
Lori Macomber: So, for GLL3, as you guys saw on how we recognize that on the P&L, there's actually three different locations of what we're recognizing there and then on our balance sheet. As you guys remember, and we disclosed, we received $100 million upfront payment. However, we have to defer the recognition of that $100 million over time for the activities that we're performing -- that we're obligated to perform as part of the collaboration agreement. So to your question of how will that spread out, yes, that will spread out over various quarters in the future as we continue to do our activities that we're obligated to perform for that study. Now we do have a pass-through. There are certain material costs that we will pass through those costs to our collaboration partner. So we recognize that as other income. So that is actually separated out. And then the cost of the license is the actual, what triggers that revenue recognition is the cost that we've incurred based upon those obligations that we have to perform. So that's the actual cost that we're incurring for the clinical study.
Ziyi Chen: Great. Thank you, Steve and Lori. Thank you.
Operator: Thank you. And our next question coming from the line of Leonid Timashev with RBC (TSX:RY) Capital Markets. Your line is open.
Leonid Timashev: Hey, guys. Thanks for taking my question. I wanted to maybe ask on the cadence of data that we should expect for the rest of the year, and specifically I'm curious on cohorts E&F. When we might see that data, what level of follow up, and what sort of efficacy measures we should be focusing on? And then, related to that, I guess, what in your mind is the PFS benchmark that we should be looking for there for CARTITUDE-5 as a whole? Thanks.
Ying Huang: Hi, Leo, this is Ying. So first, maybe I can give you a quick preview of ASCO. We expect to present some data from one cohort, cohort D. These are the patients who did not achieve optimal response to the standard care regimen in the front line. And then for cohort E&F, we enrolled and dosed a total of roughly 60 patients in newly diagnosed multiple myeloma. So right now, we're expecting to release and publish the data at a major medical meeting towards the end of the year. So that's roughly the timing for cohorts E&F. And in terms of the level of follow-up, I think you should expect to see a year of follow-up or maybe even longer than that. If you talk about the PFS benchmark, so for CARTITUDE-5, as you know, the standard of care regimen we used here is RVD or REVLIMID, Velcade, and dexamethasone. If you look at the registration study for that regimen in front line, the median PFS is about 34 months, 35 months and that is the benchmark we're looking at to beat, right? I just want to remind you that this is a superiority trial. And then for CARTITUDE-6, I think you've got the answer from the [PASUSE] (ph) trial that was presented at the ASH last year. That is a DRVD regimen in combination of stem cell transplant. So there you're looking at the four-year PFS rate of 84%. And that's the benchmark we're looking at, right? Again, we are looking at the superiority in PFS as a prime endpoint. Now, given the recent ODAC vote, we will be engaging with the agency to talk about potential of using MRD as endpoint to accelerate the approval timeline. So if you look at CARTITUDE-5, MRD inactivity is already a secondary endpoint. And then for CARTITUDE-6, if you look at our clinicaltrials.gov, actually the co-prime endpoint is PFS and MRD inactivity. So we will follow all the patients with MRD inactivity, and at the same time, we plan to engage the FDA and the EMA to talk about the potential of using MRD as endpoint as well.
Leonid Timashev: That's very helpful. Thank you.
Operator: Thank you. And our next question coming from the line of the Vikram Purohit from Morgan Stanley (NYSE:MS). Your line is open.
Vikram Purohit: Hi. Good morning. Thanks for taking our questions. We just had two on CARVYKTI. The first on the topic of future disclosures, Ying and team, do you anticipate providing kind of a split of patients by line of therapy or any directional sense of how kind of patient use in the quarters, trying to between earlier line versus later line in the coming quarters of performance data? And then secondly, I know you don't provide long-term guidance, but looking a couple years out, how do you expect CARVYKTI sales base to kind of print US versus ex-US. Thanks.
Ying Huang: So I'll ask Steve to take your first question.
Steve Gavel: Yeah, so thanks for that question. And it's an important metric, because it's -- your question around looking at line of therapy use. It's an important question, it's a very difficult question to track from. So just because of the available data that's in the public domain right now around that. So let me give you a way how we're thinking about this. So we're assuming in a year, year plus time, about 70% of our product use is going to be in earlier line therapies, earlier line treatments I should say. And that's going to increase over time. It's because the market is so large and obviously there's high demand to use this in patients that are doing quite well. But we will not be per se teasing that out by line of therapy. Not because we don't want to, but like I said, you get that data through different sources. One of the big sources is claims data, but the source information is a bit choppy. So now to answer your question directly, we will not be disclosing that by line. [indiscernible]
Ying Huang: Yeah, so Vikram, on your second question, I mean, again, we're not in a position to provide guidance for CARVYKTI. But as you know, typically when you launch a new indication, it takes about three years to get to that peak sales. And as of now, we are not changing the projection that CARVYKTI will peak at $5 billion plus. And by the way, that is really on stipulation that we will have a healthy market share in the second line, for which we already have received official approval from both FDA in the US and EMA in Europe. So we feel confident about the growth potential for CARVYKTI in the second line in the next few years.
Vikram Purohit: Got it. Thank you.
Operator: Thank you. One moment for our next question. And our next question coming from the line of Kostas Biliouris from BMO (TSX:BMO) Capital Markets. Your line is open.
Kostas Biliouris: Good morning, Ying. Thanks for taking our question. One question from us on the guidance around the 10,000 slots production by year end 2025. Can you maybe provide some color around the number of FDA approvals on manufacturing cap increase you will need to be able to manufacture these slots by year end 2025? Thank you.
Ying Huang: Good morning, Kostas. Thanks for the question. So let me just give you a little bit more details about how we think about all the different nodes, right? So obviously, right now, the only commercial production site is Raritan, New Jersey facility. And we are implementing an FDA approved increase as of now. And then we expect to have another increase towards the second half of the year. So that's what we're doing with Raritan. And then, meanwhile, we and our partner, Johnson & Johnson, are conducting a physical expansion of the Raritan facility. So that physical expansion should complete by end of this year. So over the course of next year, we are going to validate the equipment and then bring all the briefs up to the GMP facility standards. So sometime next year towards the second half, we expect that doubling of the manufacturing area in Raritan to start to contribute to additional capacity. So that's what we're doing for Raritan. And then for the two facilities in Ghent, the first one, Obelisc, right now is already manufacturing for clinical trial. And I just said in the call that towards probably late 3Q or early 4Q, we expect that facility to receive the regulatory approval for commercial production. The much larger Tech Lane facility in Ghent, right now we're on track to complete all the validation work by end of this year, so that we expect clinical trial production to start early next year in 2025. And in the second half of next year, that facility will also come online pending regulatory approval for commercial production. And then of course, we talked about Novartis as CMO. Again, we expect the commercial production to start early next year. So if you look at those four nodes, right, we're adding three additional nodes for commercial production starting second half of this year and then throughout 2025. That's how we can achieve the 10,000 dose capacity by end of next year, all these four nodes together. And I can tell you that without disclosing all the technical details, if we track, as of last Friday, we're on track to achieve that 10,000 total capacity by end of next year, given where we are in Raritan, where we are in the Ghent facilities, and where we are with Novartis.
Kostas Biliouris: Thank you. Very helpful.
Operator: Thank you. And our next question coming from the line of George Farmer with Scotiabank (TSX:BNS). Ilan is open.
George Farmer: Hi. Thanks for taking the question. Ying, can you comment a little bit about how this wider release spec approval may translate into top-line sales, number one? Number two, also recognizing that CARVYKTI is moving into second line primarily, at least in the relapsed/refractory, fourth line plus, can you talk a little bit about the dynamics between how CARVYKTI is being positioned against bispecifics? It looked like there was a bit of a surprise number from J&J when they reported. And then also, finally, can you go into a little bit more detail on how you get to your cash use spend out to 2026? Thanks.
Ying Huang: Good morning, George. I'll take the first question and then ask Steve and Lori to provide answers for the second and third one. So on the wider release spec granted by the FDA in April, I think what we have said previously is that, based on our modeling and also the data from CARTITUDE clinical program, we believe this widened spec should result in additionally 5 to 10 percentage points lower OS compared to before the wider release spec was approved by the FDA. So right now, like I said, it's still very early days, but based on what we are seeing so far, the OS is already coming down by roughly 5% last month. So that is very encouraging and we're going to have to have a little bit longer follow-up data to provide you with better confidence about where exactly the OS will be. But so far, things are trending very positively. Steve?
Steve Gavel: Yes, so why don't I take the question around how we're positioning the assets specifically for the CARTITUDE-4 launch and second line, and then I'll get into a little bit around later lines in bispecific. So it is our number one promotional focus to launch CARTITUDE-4 in the second line plus setting. There's clearly -- a clear differential there versus standard of care, and it's going to be basically a single-minded focus for my team. The other thing though, in terms of the bi-specific question because it's the appropriate one, in later lines of therapy, you heard Ying in the opening talk about speed. One of the things that is clearly apparent to us, and you mentioned I think a Janssen surprise around the bi-specifics. What's happening there and this is honestly something that we could foresee coming is that, one of the things that's a key focus for us you heard Ying talking about is, it not only generate more slots in the market, but get faster into the market. And that's extremely important in later-line disease where patients are progressing very rapidly. So that's where you saw the growth happening with the bi-specifics as the daratumumab hit the market and then was followed by [TALC] (ph). One of the things I do want to point out to you, and it's something we talked to our partner quite a bit about, is as now TALC has entered into the market in fifth line plus in the US, what you're starting to see is a shift in the dynamic in terms of what bi-specific is used in front of one another. What we're seeing, and it makes sense, is with TALC coming on board now, you're seeing a shift where TALC is actually being used first in front of tech. And the reason for that, and this is bearing out in research, is this is a very effective bridging strategy to also get the silt to sell. So in the past, with TALC not being around, obviously the market had no other option but to use daratumumab if they needed it to bridge a patient. The challenge there is you're also targeting the same BCMA target. We know there's efficacy there, but by using TALC instead, you're obviously targeting a different target. So they want to preserve the BCMA target to get the CARVYKTI. So maybe it's a little bit more than you had asked for, but I did want to just point that out to you that even though in this case TALC might be used with some of these quicker progressing patients, we anticipate them to get to [indiscernible] at a later point in time. Lori?
Lori Macomber: So I'll take the question on cash and the runway into 2026. As you guys know, we ended Q1 with $1.3 billion in cash. If we take a look over the next two to three, that'll be adequate cash to bridge us until we get to profitability from the BCMA program. But what I do want to say is, that doesn't preclude us from potentially looking at additional capital raises. And that's really going to be dependent upon pipeline advancement, if there's something that we want to do on a business development perspective, and also if there's a certain level of working capital that we want to maintain. So yes, we do see us having adequate cash to get to profitability, but there are other factors that will come into play if we decide that we do want to raise additional capital.
George Farmer: Okay. Thanks very much.
Operator: Thank you. And our next question coming from the line of Justin Zelin with BTIG. Your line is open.
Justin Zelin: Thanks for taking the question. And it's great to see the outpatient administration usage here pick up. Steve, can you talk about some of the factors that are constraining outpatient administration and just the dynamic that centers decide on whether to offer outpatient administration? Thanks.
Steve Gavel: Yes, sure. Thanks for that question. There's a number of different factors. The challenge in later-line disease is the fact that you're dealing with a very difficult to treat patient to begin with, right? So I think just from a patient perspective, it's a challenge. However, as we see in our trends, we're seeing almost 30% of the time, our facilities are working quite effectively to treat those very difficult to treat patients. What you're going to see though, in an earlier line, more mobile patients, often many of these patients are often working, is it becomes much easier for the sites and that's what we are projecting as well, right? So from a patient selection these are more mobile patients and some of the patient related issues that the sites were challenged with will get a bit easier for them. So that's the first thing. And the other thing that we keep an eye on is their intent to move forward. The question was asked earlier around capacity, right? So, the sites recognize this and they also want to use outpatient CAR-T administration as a strategy to reduce the amount of resources to treat the numbers of patients that are eligible for this therapy. So we just from a resource perspective, sites also look at this as a very effective strategy to do so. So we're very excited about this, and you heard me talk about a little bit on the back end of one of the questions around outpatient. You will see with this program a very different type of migration to full outpatient use. Our strategy, we've been very deliberate on how we went to market with this program. I think I'm proud in terms of what's gone in the marketplace in terms of introducing this into the hospitals, having the hospitals move into their outpatient clinics. And like I said, over time, our hospitals are looking at other third party partners on how to take this even further out to the community to ensure that these numbers that we talked about earlier, 10,000 doses, et cetera, we can meet that potential. So it's very exciting stuff.
Justin Zelin: Great. Thanks for taking the question.
Operator: Thank you. And our next question coming from the lineup Ash Verma with UBS. Your line is open.
Ashwani Verma: Hi, good morning. Thanks for taking our question. So in terms of this like double the capacity by year-end 2024 versus 2023, like what is the respective annualized dose goal for this? Just to make sure we understand the apples to apple comparison to your year-end 2025 goal of 10,000 doses capacity. And then second, I wanted to ask, like this [indiscernible] regimen adoption in the first line setting, eventually do you think that this delays or shrinks the second line pool of patients for CARVYKTI in the long run? Effectively, these patients can have several years of progression-free survival, which could arguably impact the downstream market opportunity for CARVYKTI. Thanks.
Ying Huang: Yes, so Ash, let me help with your first question. So yes, by end of 2025, we have this goal of reaching 10,000 annualized, those capacity, right? But that is when we exit 2025. So I just want to remind you that when we go into 2025, we are not going to be at the 10,000. But then because of the introduction of additional sites into the commercial production mode, we'll be able to end the year in 2025 with that capacity. And it doesn't stop there, because we'll continue to maximize the capacity from each of those nodes I mentioned. So we believe that we'll be able to actually get to a much higher number than that 10,000 dose once we complete all the expansion from the additional nodes with the investment here. So it's going to be hard for me to give you any quantitative distribution among the three -- sorry, the four different nodes we mentioned. But I can tell you that Raritan, New Jersey remains our biggest facility and in the foreseeable future, Raritan will be the most productive site in terms of total output, probably followed by our site in Tech Lane, Belgium. So that is how we think about the total peak capacity and then how we would plan to distribute the capacity among the different nodes. With regard to your second question, how the RVD getting to the front line would potentially affect the second line opportunity? I'll ask Steve to answer.
Steve Gavel: Yes. So thanks for the question. So we've modeled certain assumptions in terms of how -- in terms of eligible patient populations progressing on the quad. So I guess from an eligible patient population, it's been accounted for in our forecast. And that forecast then we've obviously communicated that with the manufacturing counterpart. So I guess from my perspective, again, we've accounted for that and we've accounted for it in our supply plan.
Ying Huang: And then Ash, maybe I'll just add to Steve's answer that, number one, you do have this 20%, 25% so-called patients with a high-risk cytokinetics mutation. And those patients unfortunately do not respond well, so they'll relapse and that is why we are releasing the data at ASCO for cohort D. These patients do not achieve a suboptimal or complete response from the RVD. They need a second line therapy, right? That is your early adoption market. And then obviously, we are conducting CARTITUDE-5 trial. If you look at clinicaltrials.gov disclosure, we expect the primary position in the year of 2026. So hopefully within a couple of years, we'll have the first line labeled and then obviously we are going to pivot from second line to front line when that happens.
Ashwani Verma: Thank you.
Operator: Thank you. And our next question coming from the line of Sean McCutcheon with Raymond James. Your line is open.
Sean McCutcheon: Hey, guys. Thanks for taking the question. Maybe to put a finer point on that MRD negativity outcome, what do you think are the implications here for, I guess, CARTITUDE-5 and CARTITUDE-6 timelines? And do you suppose the official draft guidelines will come in in time to be impactful there or a bit too late? And what's your view on what the details for that MRD negativity requirement could be? So in CARTITUDE-6, it's a 12-month sustained MRD negative CR. Do you think that's likely to be the bar, or do you think maybe an earlier landmark could be informative or acceptable? And then just as a follow-on to that, what do you think is the impact on the competitive dynamic for your earlier competitors if they're able to utilize MRD across different lines of therapy. Thanks.
Ying Huang: Hey, [Mitch] (ph). Thanks for all the questions about MRD. So, first of all, we have all along worked with the MRD endpoint, right? If you look at all the CARTITUDE program trials, everyone has MRD measurement in the trial built in. Like I mentioned just on the call today, in CARTITUDE-6, we actually have already designed the trial with MRD inactivity as a co-prime endpoint with all this in our mind. So if you look at the ODAC recommendation, the ODAC voted to recommend a 12-month MRD inactivity as a potential endpoint. Right now, we don't expect FDA to publish official guidance documents, but we do plan to engage with the agency to talk about the endpoints for CARTITUDE-5 and CARTITUDE-6 trials. And for CARTITUDE-5, it probably would make a small difference, because anyway, we expect the readout to be in 2026. Now for CARTITUDE-6, it could make a big difference because if you look at our disclosure on clinicaltrials.gov, primary completion is estimated at 2033. Now if FDA does agree upon the 12-month MRD inactivity in combination, for example, with CR or any other endpoint as a potential endpoint for accelerated approval, then we can make that much, much faster in terms of the process, right? Because if we can complete all the enrollments for CARTITUDE-6 by end of next year, which is end of 2025, then if the 12-month MRD inactivity is amenable at the endpoint, that means potentially by end of 2026 we could have that kind of readout, right? So it does help a lot for frontline trials. Now, if you look at competition, I mean, I think in second line, based on our experience, it doesn't change too much, right? Because the median PFS for our control arm was about 12 months. So once you complete the enrollment, the readout shouldn't take that much longer. So I don't think there's a huge difference if you look at the second line or third line. But for front line, it does make a significant difference here. In terms of the bar, I don't think there is a quantitative bar here that the regulators have already determined at this point, but you can follow our disclosure from CARTITUDE-4, CARTITUDE-2, CARTITUDE-1 trial. In general, we achieve a very high MRD inactivity rate. In fact, at ASH last year, we even published the data from CARTITUDE-1. If you look at patients who achieved six, 12 months, or even longer than 12 months MRD inactivity in combination of CR, those patients tend to have very good prognosis in terms of longer-term PFS and survival. So we do have data from the CARTITUDE program to show that if a patient can achieve complete response in combination with some sort of longer-term MRD activity, that is a very good predict marker for long-term outcome here. Thank you.
Operator: Thank you. And our next question coming from the line of Mitchell Kapoor with H.C. Wainwright. Your line is open.
Mitchell Kapoor: Hey, everyone. Thanks for taking the questions. I have two. The first one I wanted to ask a bit on the second line launch and the payer discussions. Can you just talk about kind of the color of payer discussions in the second line population? And how did those second line reimbursement discussions compare to those that you've had previously for later line reimbursement discussions? And then the second question is on COGS. Could you just talk about the trend in COGS and any impacting factors or levers that could influence the COGS in the future?
Steve Gavel: Yes, it's Steve. So why don't I -- why don't I take the first question around payer and contrast, CARTITUDE-4 versus CARTITUDE-1. So it all comes down with these payer conversations around the value proposition associated with treatment-free interval. Obviously the CARTITUDE-4 data is significant in terms of our fear of death improvement. So payers, the net of this, in an earlier line setting, payers love a product like cilta-cel in terms of the benefit that we are able to give, not only from a financial perspective, but also from a patient perspective in terms of the patient-related metrics. So all systems are a go in terms of early line approvals, in terms of from a reimbursement perspective, we have had no issues at all. As a matter of fact, the payers, the privates in particular, are one of our biggest advocates out there. Go ahead, Lori.
Lori Macomber: I'll take the COGS actually. So as you move into the second line and the pair structure changes, to your question where you're going to see that is in the gross to net adjustment. On the COGS line, the reason that you see variability actually has to do with the manufacturing capacity investments that we're making. So you will continue to see the COGS variability as we start to bring these in -- finalize the capital investments and bring these nodes online in 2024 and actually 2025. So you will continue to see that noise. It's the revenue line and the growth net where you'll see the impact for the second line launch.
Steve Gavel: Lori, mind if I come back to that first point because it just occurred to me. One more thing around the payers piece of this. It ties back into the issue around outpatient administration as well. I mean, other than the treatment for the interval component of this, as you can imagine, private insurers love the fact of a now CAR-T therapy that can be given by hospitals very safely in the outpatient setting, just purely from a cost reduction as opposed to admitting these patients, keeping them in sometimes for weeks to reduce costs and continue to maintain these patients safely and then also benefit from that long-term treatment free interval is a very good and very compelling story to private insurers.
Mitchell Kapoor: Great. Thank you for taking the questions.
Operator: Thank you. And our next question coming from the line of Rick Bienkowski with Cantor Fitzgerald. Your line is open.
Rick Bienkowski: Hey, good morning, everyone, and thanks for taking our questions. For the CARVYKTI launch in Europe, could you comment on the number of certified treatment centers that are open in Germany and Austria and how many are expected to be certified by the end of the year? And as a second question, Ying, I was hoping you could expand on the prepared comments around reducing the CARVYKTI vein-to-vein time. Could you talk about the work that's being done here and if there are any internal targets for how much this could be improved?
Steve Gavel: Why don't I take the first question around Germany around sites. Unfortunately, I cannot get into the details around sites and the rollout plan in Germany. I know it's -- I can tell you this, it's very robust. And I could also tell you the fact that in any country, the site certification process is often somewhat lengthy. So I'm bringing that up because I know our partners are working very hard to bring more and more sites on board, but I can't unfortunately get into specific around numbers of sites.
Ying Huang: Okay, so on the question about vein-to-vein, I can tell you that our goal is to get to a median of less than four weeks by end of this year, and also we have a new metric to measure, which is P90. That means 90% of all the sellbacks we shipped out will fall into the what we call a freezes to receipt to less than five weeks. So that is our goal by end of this year. That means average four weeks or shorter, and then pretty much all the patients will be able to receive that within five weeks. That is our goal here.
Rick Bienkowski: Great. Thanks for taking the questions.
Operator: Thank you. I'm showing no further questions at this time. Ladies and gentlemen, this concludes today's teleconference. Thank you for your participation, and you may now disconnect.
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