The latest: Legend Biotech Corp. (LEGN.US), a cell therapy subsidiary of Genscript Biotech Corp. (1548.HK), has terminated its Phase 1 Clinical Trial under the Investigational New Drug (IND) application for LB1901, due to the lack of clinical benefit from a similar product candidate.

Looking up: Terminating clinical trials of new drug that lacks clinical benefit can allow the company to prioritize its limited R&D resources to other product candidates in the pipeline.

Take Note: Dropping any product in a drug company’s pipeline is always a setback because it means the company will lose a potential future revenue stream.

Digging Deeper: Until the end of last year, Legend Biotech had no sales revenue and had been “burning money” on R&D projects, dragging down the parent company’s earnings performance. However, with the new product Cilta-cel, which was approved by the U.S. Food and Drug Administration (FDA) in the first quarter of this year, it is expected to make a significant revenue contribution in the future. In addition, although the company terminated the clinical trial of LB1901, it never intended to market the drug to the general public, as the company’s prospectus for the 2020 IPO indicated that the planned Phase I clinical trial of LB1901 would enroll patients with relapsed or refractory T-cell lymphoma, which is a fairly rare disease.

Market Reaction: Legend Biotech was down 1.4% at $56.08 in New York on Wednesday, but still near its previous 52-week high.

Translation by Jony Ho

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