LEGN Stock Q2 2026: Legend Biotech Earnings - $657M Of Drug, No Profit

Legend Biotech (LEGN) Q2 2026 — Q2 2026 (quarter ended June 30; the 6-K cleared EDGAR 07:53 ET Tuesday August 11, BEFORE the open, so August 11 IS the reaction session: closed +5.66 pct at USD21.83 on 1.6x volume, then gave all of it back - USD20.37 by Friday, 1.4 pct BELOW the pre-print close.) CARVYKTI sold USD657M worldwide in the June quarter, up 50 pct, and Legend printed its first operating profit at USD57.7M. But USD56.0M of that was a one-time Janssen milestone. Strip it and the CARVYKTI franchise contributed MINUS USD2.3M - USD190.1M of gross profit against USD192.4M of operating costs. THE CALL: HOLD (3/5, MEDIUM - AN UNSIGNED CHINA TAX DEAL AND AN INTERIM CEO SIT UNDER THE NUMBERS) — base-case value ~$20.21 vs ~$20.37 today. KEY METRICS: - CALL: HOLD, 3/5. Fair value USD20.21 per ADS vs the USD20.37 close, -0.8 pct. Ladder: CARVYKTI free cash flow 2026-2035 at 11.5 pct = USD2,172M, plus a USD406M terminal = USD2,578M franchise; plus USD965M cash, less USD156M owed to the partner, plus USD230M of risk-adjusted milestones and USD300M of pipeline = USD3,917M over 193.8M ADSs. - THE ANGLE - THE PROFIT IS A MILESTONE, NOT A MARGIN: operating income of USD57.7M decomposes exactly. Collaboration gross profit USD190.1M less Legend's own operating costs USD192.4M = MINUS USD2.3M from the CARVYKTI franchise; plus USD60.0M of net licence income, of which USD56.0M is one-time Janssen milestones. Ex-milestone, operating income is USD1.7M. - THE ADS TRAP: 1 ADS = 2 ordinary shares, proven by June's offering of 7,700,000 ADSs representing 15,400,000 ordinary shares. Legend reports EPS of USD0.09 - that is PER ORDINARY SHARE. Per ADS, the security that trades at USD20.37, the same USD33.2M is USD0.18 basic. Adjusted net income of USD63.1M is USD0.34 per ADS. Data vendors publish both bases and label neither. - THE HEADLINE WAS FOUR WEEKS OLD: Legend pre-released CARVYKTI net trade sales of approximately USD657M in a separate 6-K on July 15, 27 days before the print. US sales grew 32 pct to USD472M, everywhere else 128 pct to USD185M. J and J books the sale; Legend recognises a pro-rata 50 pct as collaboration revenue - USD328.5M less USD2.4M of currency = USD326.1M. - THE CASH DISAGREES: the profitable quarter used USD20.9M of operating cash, and the half used USD106.0M against six-month operating income of USD7.9M. Legend repaid USD170.9M of debt as the partner's interest-bearing advanced funding fell from USD319.1M to USD156.4M. June's raise - 7.7M ADSs at USD29.35 - substantially went to paying J and J back; the greenshoe expired unexercised. - THE MARGIN AND THE MULTIPLE: collaboration gross margin was 58.3 pct in June against 41.2 pct in March, and management guided September to the low-50s and December to the mid-50s - both BELOW what was just printed. On EV over annualised gross profit Legend costs 4.0x against a five-peer median of 13.3x, but its own opex of USD770M a year is 99 pct of that gross profit. Effective tax rate: 40.2 pct. What to watch: UP: a September quarter that holds the 58.3 pct margin instead of the guided low-50s, an operating profit with no milestone in it, or a permanent CEO. DOWN: bispecifics taking 2L-4L myeloma share, a margin print in the 40s, or a PRC tax assessment above the accrual. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.