On January 6, the stock price of Legend Biotech (LEGN.US) experienced a sharp decline within the first five minutes of trading. Although a subsequent strong rebound pushed the intraday gain to over 6%, that initial drop set the stock's lowest point for 2026 at $20.21. Taking the intraday high of $45.29 on July 23, 2025, as the starting point, Legend Biotech's stock price has clearly been cut in half over the subsequent five and a half months, with a maximum decline of 55.38%. This performance has undoubtedly taken many investors by surprise. After all, just two days before the stock hit its 2025 peak on July 21, the company was featured prominently in major investment bank research reports. Out of 21 analysts, 20 issued "Buy" ratings, with an average target price of $76.42, implying a substantial upside potential of 83.74% from its closing price of $41.59 on July 18. Now, with the stock刷新ing a new阶段性 low, the market's valuation judgment has reached a previously unanticipated crossroads: has Legend Biotech lost its growth potential, or is this a golden opportunity being dug ever deeper?
Looking back at the nearly six-month decline in Legend Biotech's stock price through the lens of the Bollinger Bands (BOLL), a clear pattern emerges. After hitting a peak on July 23 last year, the stock entered a 14-day period of rapid decline, falling swiftly from the upper Bollinger Band to the lower band. This phase represented a typical technical correction following a significant prior rally. The accompanying trading volume, consistently below 2 million shares per day and significantly lower than during the preceding uptrend, indicated relatively stable sentiment among both existing and potential investors, making this pullback largely in line with market expectations.
Following this, two distinct phases with markedly different characteristics are observable: from August 11 to November 11, and from November 12 to the present. In the first phase, from August 11 to November 11, the technical picture showed the Bollinger Bands opening downward but gradually narrowing, guiding the stock price from a downtrend into a sideways consolidation pattern. During this period, the stock price oscillated mechanically between the middle and lower Bollinger Bands, with the overall trend characterized by a lack of volume. Even a mid-October attempt to challenge the upper Bollinger Band lacked significant volume support and failed to form a solid bullish candlestick breakout, constituting a technical "false breakout" before the price resumed its sideways movement until November 11. The persistently low daily trading volume during this stage signaled that potential buyers were adopting a wait-and-see approach, leading to a lack of market support and resulting in stagnant price action with thin volume.
However, on November 12, Legend Biotech's stock fell 2.67% on noticeably elevated volume compared to the preceding period. Subsequently, the Bollinger Bands began to widen their opening again, and the stock price commenced a rapid decline along the lower band. Although a tentative stabilization appeared on November 25, after just seven trading days, the stock closed down 7.15% on December 8, initiating a "nine consecutive losing sessions" that signaled a clear acceleration of the downtrend. In recent sessions, while the persistent decline along the lower Bollinger Band indicates a clear oversold signal, the weakness of the price rebounds and the low daily trading volumes both point to a continued lack of buying interest and a pronounced wait-and-see attitude among investors. Nevertheless, the stock's gain on January 6, coupled with a narrowing of the Bollinger Band opening, seems to suggest another potential stabilization trend.
The logic behind the two distinct downtrends following November 12 is actually different. On November 12, Legend Biotech released its Q3 2025 earnings. The bright spots, needless to say, came from the sales performance of its core product. The report showed that the company's core product, the BCMA CAR-T therapy Carvykti (cilta-cel), delivered an outstanding performance, with quarterly sales reaching $524 million, an 83% year-over-year increase, setting a new record since its launch. Driven by this record quarterly sales, Carvykti's sales for the first nine months of 2025 reached $1.332 billion, more than doubling with 112% year-over-year growth. It is expected to achieve profitability within the year, potentially helping the company reach its overall profitability target in 2026. However, these expected strong results failed to ignite investors' buying appetite; instead, another aspect of the quarterly report accelerated profit-taking by some existing shareholders.
Currently, Legend Biotech's revenue primarily consists of two parts: license revenue and collaboration revenue. The Q3 2025 report showed license revenue of only $10.5 million, compared to $17.1 million in the same period last year. Moreover, in the previous quarter, license revenue had already plummeted from $90.8 million a year earlier to $35.3 million. This indicates that as research and development progresses, Legend Biotech has not secured new license revenue inflows in the past two quarters, while the milestone payments obtained earlier are gradually being depleted. On the other hand, the collaboration revenue tied to Carvykti's end sales has not translated into profitability at the company level, despite the product's surging sales. The reason for this lies in the substantial capital expenditures and operational costs associated with the company's production expansion, which pushed total costs for the quarter to $113 million, a 116% year-over-year increase that outpaced revenue growth.
Ultimately, however, these financial issues are merely temporary manifestations during the global production ramp-up phase for Carvykti and do not undermine the fundamental logic of Legend Biotech's intrinsic value growth. This logic is based on Carvykti, as the first and only BCMA CAR-T therapy approved for second-line treatment of multiple myeloma, continuing to move earlier in the treatment pathway for this indication, ultimately becoming a cornerstone therapy for multiple myeloma and capturing substantial market benefits. Consequently, the market reaction was that the post-earnings decline was quickly halted. But just as the stock price began to rebound towards the middle Bollinger Band on December 5, a significant blow from its partner Johnson & Johnson seemed to strike at a critical point for Legend Biotech.
On December 9, Johnson & Johnson presented Phase 3 MajesTEC-3 clinical data for its in-house developed BCMA/CD3 bispecific antibody (Tecvayli) combined with the CD38 monoclonal antibody (Darzalex), known as the Tec-Dara regimen, at the ASH 2025 conference. For the primary endpoint, the Tec-Dara combination group achieved a 36-month Progression-Free Survival (PFS) rate of 83.4%, compared to 29.7% for the DPd/DVd control group. The median PFS for the control group was 18.1 months, while it had not yet been reached for the Tec-Dara group, with a Hazard Ratio (HR) of 0.17, indicating a significant reduction in disease progression. Notably, compared to Legend's BCMA CAR-T drug Carvykti, the similar CARTITUDE-4 study, with 34 months of long-term follow-up data released last year, reported a 30-month PFS rate of 59.4%, which is evidently lower than the data now shown for the Tec-Dara combination. Furthermore, compared to Carvykti's 34-month follow-up data, the Tec-Dara combination has surpassed its 84.6% Overall Response Rate (ORR) and 76.4% Overall Survival (OS) rate, while matching its rate of minimal residual disease negativity.
In this context, and considering that the Tec-Dara combination is an off-the-shelf product and a 100% J&J-owned asset, the market perceives a risk of J&J directing "interest-driven resource allocation" towards this combination therapy. This perception is a significant factor affecting Legend Biotech's valuation and contributing to its stock price plunge. It is easy to see that the market defaults to viewing the Tec-Dara combination and Carvykti as competitors. However, as both CAR-T and bispecific antibody therapies are used earlier in the treatment sequence, the question of the optimal sequence of administration becomes crucial. From an immunological perspective, continuous exposure to a bispecific antibody could lead to T-cell exhaustion, potentially impairing the efficacy of subsequent CAR-T therapy. Additionally, the potential for a "treatment-free interval" is a major advantage of CAR-T therapy.
On another front, Gilead has entered the multiple myeloma (MM) arena in partnership with Arcellx, and key Phase II clinical data for their product, anito-cel, has been read out. Although anito-cel's current clinical performance is far inferior to Carvykti, which has already completed the CARTITUDE-4 study for the earlier 2nd-4th line setting, making immediate competitive displacement unlikely, its promising safety profile still raises market concerns that Carvykti's future pricing power and market share in its indications could face competition, potentially eroding its exclusivity premium. However, considering the high cost of MM drugs and their long-term maintenance value, if J&J aims to maintain a leading position in the CAR-T treatment market for this indication, Carvykti remains its only current viable option. The emergence of the Tec-Dara combination can be seen as J&J placing another strategic bet in the MM market; the combination of both products could actually strengthen J&J's market dominance, and this does not necessarily imply a slowdown in efforts to maximize Carvykti's potential.
Following this logic, Legend Biotech, after the significant decline, now trades at a Price-to-Sales (P/S) ratio of only 4.26x, far below the industry average of 9.27x. For bullish investors, the attraction appears considerable.
Comments