Legend Biotech Corp. Sponsored ADR (LEGN.US): How did the stock price go from a 5-day increase of 40% to a single-day increase of over 40% within 2 months?

Following the violent 18.42% surge in stock price on April 20th of this year, Legend Biotech Corp. Sponsored ADR (LEGN.US) experienced another day of violent price surge on June 2nd, marking a "40cm" moment for its stock price and a reassessment of its value in the secondary market. From Oversold Rebound to "Violent Surge" On April 20th of this year, Gilead announced its acquisition of Kelonia for a total consideration of up to $7 billion, acquiring the company's core technology - iGPS, an in vivo CAR-T platform based on a modified lentiviral vector. This acquisition pushed the game of MNCs "sweeping" the in vivo CAR-T track to a new climax. Legend Biotech Corp. Sponsored ADR benefited from this news because Gilead invested $7 billion, placing more bets on Kelonia's in vivo CAR-T platform. It is reported that this platform theoretically can accommodate any CAR configuration, target any antigen, and cover any indication. The company's core product KLN-1010 released data on delivery efficiency, safety control, and efficacy durability in the form of a delayed oral presentation at last year's ASH annual meeting. Looking at this transaction, Gilead is betting more on Kelonia's in vivo CAR-T platform, focusing on solving the core bottlenecks of traditional CAR-T therapy in manufacturing, cost, and time, which is the key reason why all "off-the-shelf" CAR-T technologies are highly anticipated in the industry. However, this technology direction has not replaced traditional Ex vivo CAR-T because many drugs still face key obstacles in delivery efficiency, safety control, and efficacy durability. However, for Kelonia, the biggest drawback of its core product KLN-1010 is that it has only 3-month follow-up data for 4 patients. And Gilead's $7 billion is betting on this technology platform and product that still lacks long-term data and performance support. In this context, the overall market value of Legend Biotech Corp. Sponsored ADR was less than $4 billion, far from the $7 billion paid by Gilead. This also means that in the face of such market pricing, Legend Biotech Corp. Sponsored ADR, which has a mature commercial CAR-T system, was severely undervalued. This has led to the surge in the stock price of Legend Biotech Corp. Sponsored ADR around April 20th. From a short-term perspective, driven by company performance and market news, Legend Biotech Corp. Sponsored ADR's stock price surged over 40% in a short period. With the rise in stock price, the overall trading volume also increased, for example, the trading volume exceeded 3 million shares on April 16th, and reached 7.4065 million shares on April 20th, showing a pattern of rising prices with increasing volume in the stock. From a medium to long-term perspective, after experiencing a decline in stock price for more than half a year, starting from February this year, the stock price of Legend Biotech Corp. Sponsored ADR has been oscillating at a low level and the selling pressure in the market has decreased, leading to a noticeable reduction in overall daily trading volume compared to before. With the entry of main funds for accumulation and opening positions, after sufficient turnover of the chips, a clear bottom peak has formed on the chip distribution chart, indicating that the main funds have ample accumulation and high degree of control. The heavy rise in stock price on April 20th propelled Legend Biotech Corp. Sponsored ADR's stock price to break through the bottom peak smoothly, further confirming the dense single peak pattern, thereby indicating a medium to long-term entry signal on the technical side. It can be seen that after April 20th, the stock price of Legend Biotech Corp. Sponsored ADR continued to oscillate higher. The market sentiment was more positive from April 20th to May 26th, as the company's stock price fluctuated between the upper and middle lines of the BOLL line, and the trading volume performance during the interval trading days was significantly higher than before. Comparing the chip distribution charts of April 20th and June 1st, investors can easily find that although many funds entered the market for chasing high prices during this period, the bottom chip peak remained stable. The overlap between the 70% and 90% chip ranges was still as high as 86.55%, indicating that the main funds were still in control of the market, waiting for profit-taking. On June 2nd, the stock price of Legend Biotech Corp. Sponsored ADR violently surged by "40cm", closing up by 42.22%, giving an opportunity for the main funds to sell after the surge. Will the same in vivo CAR-T technology have the same valuation? On June 2nd, Legend Biotech Corp. Sponsored ADR announced that it will present its latest breakthrough in the in vivo CD19/CD20 dual-target CAR-T cell therapy LB2501 for the first time in the form of an oral presentation at the European Hematology Association (EHA) conference to be held from June 11th to 14th, disclosing preliminary clinical data in patients with relapsed/refractory B-cell non-Hodgkin's lymphoma (R/R B-NHL). LB2501 is based on the TaVec platform, a proprietary lentiviral vector that has been genetically engineered to enhance T-cell specificity, transduction efficiency, and safety, while limiting non-T cell transduction in the in vivo CD19/CD20 dual-target CAR-T therapy. An ongoing Phase I clinical study evaluates the efficacy of LB2501 in patients with relapsed/refractory B-cell non-Hodgkin's lymphoma (R/R B-NHL), with data from 12 patients from two dose groups providing early clinical evidence supporting the potential of in vivo CAR-T therapy in the treatment of B-cell malignancies. According to the company's latest Phase 1 data: in terms of efficacy, the ORR in NHL patients reached 100% (6/6), and CR reached 83.3% (5/6); in terms of safety, no serious adverse events (SAE) were observed, and no dose-limiting toxicity (DLT) was observed; in terms of pharmacokinetics, strong in vivo CAR-T cell expansion was observed, with the longest duration reaching 116 days. The reason why this data is significant for a "40cm stock price performance" is that, despite being early clinical data, in the NHL CAR-T field, it is already at a top level. Compared to marketed products for the same indication, Yescarta has an ORR of 83%/CR of 58%, and Tecartus has an ORR of 71%/CR of 54%. With better efficacy data of LB2501, it is also an in vivo CAR-T. The company emphasizes in the disclosed information that it aims to directly generate CAR-T cells in patients' bodies through a single intravenous infusion, without the need for cell preparation and lymphocyte depletion. However, this does not mean that Legend Biotech Corp. Sponsored ADR can secure the top spot in the global in vivo CAR-T arena, as early clinical data for LB2501 still has limitations such as small sample size, short follow-up time, and lack of 6-month PFS and MRD data. It is understood that Caribou announced the results of the first human clinical trial in May 2022, showing positive effects of its off-the-shelf CAR-T therapy CB-010 in a Phase 1 clinical trial for treating relapsed/refractory B-cell non-Hodgkin's lymphoma. Among the 5 evaluable patients, ORR reached 100%, and CR reached 80%. However, less than a month after the release of this clinical data, Caribou announced on June 10th that patients treated with the above CAR-T cell therapy relapsed within 6 months after treatment. This news directly raised doubts in the industry and market about the durability of its off-the-shelf CAR-T therapy, leading to a short-term plunge in its stock price by more than 20%. Therefore, for Legend Biotech Corp. Sponsored ADR to secure the valuation increment brought by in vivo CAR-T, the key next step lies in the completion of longer-term clinical data for LB2501. However, this does not affect the reassessment of the value of Legend Biotech Corp. Sponsored ADR in the market. Because compared to other in vivo CAR-T peers, Legend Biotech Corp. Sponsored ADR also holds the title of the best-selling CAR-T therapy Carvykti with annual sales of $1.887 billion by 2025. In addition, even though this is only early clinical data disclosure for LB2501, this breaks the market's stereotype that Legend Biotech Corp. Sponsored ADR's valuation relies solely on Carvykti. For the company, breaking the valuation ceiling is more important than the short-term stock price surge. In terms of market performance, after June 2nd, Legend Biotech Corp. Sponsored ADR's stock price declined for 2 consecutive days, falling by 0.83% and 4.85% respectively. Although the daily declines in stock price widened, the trend of shrinking volume was also noticeable. The proportion of bottom chips below $20 remains significant, perhaps indicating that for these long-term funds, the "40cm" stock price surge is just the beginning of the valuation repair for Legend Biotech Corp. Sponsored ADR.