TSVT (2024 - Q1)

Good day, and thank you for standing by. Welcome to the 2seventy bio First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jenn Snyder with 2seventy bio. Please go ahead. Jenn Sny

Thank you, Shannon, and good morning, everyone. Thank you for joining us. This morning, we issued a press release on our first quarter 2024 financial results. The press release can be found in the Investors & Media section of the company's website at 2seventybio.com. As a reminder, today's discussion will include forward-looking statements related to 2seventy bio's current plans and expectations, which are subject to certain risks and uncertainties. These forward-looking statements include statements regarding our strategic plans, time lines and expectations with respect to sales, efficacy and perceived therapeutic benefits of Abecma, the timing and review of additional studies and regulatory application for Abecma and statements regarding our financial condition, expectations and future financial results, among others. Actual results may differ materially due to various risks, uncertainties and other factors, including those described in the Risk Factors section of our most recent Form 10-K, quarterly reports and other SEC filings. These forward-looking statements represent our views as of this call and should not be relied upon as representing our views as of any subsequent date. You are cautioned not to place any undue reliance on these forward-looking statements, and except as required by law, we undertake no obligation to update or revise any forward-looking statements. On today's call, we are joined by Chip Baird, Chief Executive Officer; and Vicki Eatwell, Chief Financial Officer; Anna Truppel-Hartmann, Chief Medical Officer, is also on the line for questions during the Q&A. And now I will turn it over to Chip. Chip?

Thank you, Jenn, and thank you all for joining this morning. Today, we disclosed our first quarter 2021 financial results and recent business and operational updates. I'd like to walk through some of the business updates and then Vicki Eatwell, our Chief Financial Officer, will go into detail on our financials. First quarter of 2024 was an eventful one. We completed a major strategic realignment to focus exclusively on Abecma. To achieve this, we sold our Oncology and Autoimmune R&D programs to Regeneron. As part of the sale, we transferred approximately 160 employees and approximately 67% of our real estate footprint to Regeneron. We think this is an ideal outcome for the science and these programs, and we look forward to seeing what the team can achieve in years to come. We also took the tough but necessary decision to reduce headcount by an additional 14% as part of the strategic refocusing. The end result is that we have emerged with a leaner cost structure, cash runway beyond 2027 and time to get it Abecma back on track commercially. To that end, we have consistently said that the path to Abecma growth hinges on earlier line approval. We traveled quite a journey on this front, including an ODAC meeting in March to advise FDA on our supplemental BLA. The 2seventy and BMS teams did an amazing job at the panel and we were subsequently approved in the [ earlier line ] setting, which opens a much larger addressable patient population. So it's been a great start to the year, and we are now singularly focused on getting Abecma back on track commercially. We are in the early days of launch and expect that it will take into the second half before we see meaningful growth. We've talked for some time now about known strength for Abecma, including strong efficacy that is reproduced in the real-world setting, a well-established and manageable safety profile and consistent manufacturing turnaround time and high rates of in-spec product. With commentary data in the label and real-world evidence that continues to mature, we believe we have a competitive profile in earlier line triple class-exposed patients, which is a population with high unmet need. To be clear, multiple myeloma is a competitive market space and a return to growth will take time. But we have a strong commercial organization and a launch strategy that we believe in, and we look forward to executing on the plan. I'm happy to talk about our strategy in the Q&A. But for now, I'll turn it over to our newly promoted CFO, Vicki Eatwell to talk about the first quarter results. Vicki?

Thanks, Chip. First quarter of Abecma U.S. revenues as reported by Bristol-Myers Squibb were $52 million, which was in line with our expectations and reflects ongoing competition in the late line setting. As Chip stated, we are in the midst of a commercial launch following the recent FDA approval of Abecma based on our KarMMa-3 study, which greatly increases the addressable patient population. We look forward to delivering Abecma to an increased number of patients and expect to see a return to growth in the second half of the year. As a reminder, we share equally in the profits or losses of the U.S. Abecma business with BMS, and we report collaboration arrangement revenue or loss each quarter, which largely represents our 50% share of revenue, cost of goods sold and selling expenses related to the U.S. business. In the first quarter, we reported share a collaboration loss of $1.2 million related to our collaboration with BMS, driven by decreased patient demand in the late line setting. Turning briefly to our cost structure. And as a reminder, the sale of our R&D pipeline to Regeneron combined with our cost-saving actions, is expected to achieve $150 million to $200 million of cost savings in 2024 and 2025, respectively. We anticipate staying within our previously guided net cash spend range of $80 million to $100 million in 2024, and we are committed to carefully managing our spend to preserve cash runway. As we reported last quarter, we expect our runway to go beyond 2027 and see a path to potential breakeven by 2025 as Abecma returns to growth. With that, I'll turn it back to Chip.

Thanks, Vicki. I'll close with 2 thoughts. First, we've been through a lot of change in the first quarter, but 1 thing that is unchanged is our patient focus. We believe in the potential of Abecma to make a meaningful impact for patients in the earlier line setting and are singularly focused on delivering more time for every myeloma patient we are able to serve. Together with our partners at BMS, this will be a top priority. Second, we're focused on being careful stewards of investor capital, staying focused on reaching breakeven and profitability and driving value for shareholders. Together with Vicki, Anna, Jess and the rest of the team, we will continue to focus on these priorities to drive value. And with that, we're happy to take questions. Operator?

[Operator Instructions] Our first question comes from the line of Daina Graybosch with Leerink Partners.

This is [ Rabib ] on for Daina. The question is related to backlog profitability. How should we think about Abecma collaboration profitability going forward? Is there a threshold revenue above which the program will be consistently profitable given the flat sales over the last 3 years? What is driving this fluctuation in profitability and collaboration loss from quarter-to-quarter? And can we better anticipate these fluctuations in our model? And then there's a short follow-up after that.

Sure. I'll comment briefly and then I'll ask Vicki to add color. But in this fifth line plus setting, we've been fairly flat on the revenue side for the last couple of quarters and hovering with a small collaboration revenue or very small share of collaboration loss that we saw in this quarter in that $50 million revenue run rate on a quarterly basis. So we're going to need to see that return to growth to see a consistent path towards collaboration revenue and profitability. And again, we think we have the plan to do that. I would note, too, that, that profitability as we increase revenues is helped by a better and better capacity utilization on the manufacturing side. We've -- as is typical CAR-T manufacturing in a high fixed cost structure. And so the more volume we can push through there, the better the margins will become. So more to come on that front, but certainly, we believe in that path. And at levels that we've achieved before, we believe this is a profitable business.

And then just on that manufacturing -- thanks, Chip, for going in that direction. How will the shift to suspension vector impact profitability? And when should we expect that transition from adherent to suspension play out in the collaboration profitability line?

Yes. So as we've shared, we've been approved for suspension, which is great news. And another important point of execution on the manufacturing side and that helps certainly from a capacity perspective as well as an overall cost to treat a patient. That transition from adherent to suspension in terms of the actual impact on cost will happen over time as we use remaining adherent vector and then make that code over to suspension. But from a technical risk perspective, we're past that, and we're approved for utilization there, which is great news.

Our next question comes from the line of Salveen Richter with Goldman Sachs.

This is Matt on for Salveen. You noted meaningful -- expectations for meaningful growth in the second half. Could you expand on that or maybe quantify in any way? And then could you speak to the current dynamics of the launch? And how much of it is competition from bispecifics for Carvykti versus supply constraints? And then just a follow-up question. Could you talk about expectations for OpEx spend in the rest of 2024 and then 2025?

Sure. I didn't catch the last part of your 3-part question there. Could you say the last part again?

The last part was just OpEx spend in 2024 and 2025.

Yes. Great. Yes. So in terms of the meaningful growth, we haven't gotten specific on that. But from these levels, again, it doesn't take a lot in what is a much larger market to be posting meaningful growth. As a reminder, we achieved over $100 million of revenue in the first and second quarter of last year and a much smaller fifth line plus market. So with the expanded label, we feel very excited about the market opportunity and about the data set that stands behind that and our ability to engage with treating physicians and educate on product profile, which is different and improved and we can get into. But that's what I would say in terms of the path to meaningful growth in the second half of the year. I'll turn it to Vicki to comment on OpEx.

Thanks. And just to address the question on supply constraints, we are not supply constrained. We have enough capacity to meet our existing label. And further, we have the ability to expand capacity within our existing manufacturing infrastructure. Just to turn to your question on OpEx. When we think about spend in 2024, just excluding noncash OpEx, we're characterizing 2024 as being about half of what 2023 spend was. And as we turn to 2025, I would guide that spend would be about 1/3 of what we would have expect -- of what we experienced in 2023. So I would use that from a modeling perspective.

Our next question comes from the line of Kelsey Goodwin with Guggenheim Securities.

First, I guess, can you provide any early commentary on what you're seeing and hearing kind of post label expansion with KarMMa-3? And then, I guess, maybe prior to the expansion, in terms of the competition and the headwinds you were facing previously, were you seeing that mainly from CAR-T competitors or bispecifics or a blend in just kind of the market in general? Just trying to get a little more color there.

Kelsey, yes, thanks. Good questions. I'll take the second 1 first, which is -- from a competitive perspective, as we've said, it's -- myeloma is a competitive field. And I think CAR-T competition as well as bispecs are all at play in the kind of where we've been, which is fifth line plus setting. I think it is a bit of a reset as we move into the third line setting. Today, bispecs are not present there. And again, I think our focus commercially is articulating the Abecma story and the data set that we have there. And again, I think asking and engaging with treating physicians to look at their own patients and the experience with the product across dimensions of efficacy, safety, manufacturing, reliability, all of that. So we -- we've got a strong belief set there. We had a terrific launch meeting with the BMS team last month and I would say it's early days. So ask me the question on commentary again in a month or 2, but we're certainly fired up and ready to go and out engaging with the treating physician community.

Our next question comes from the line of Yaron Werber with TD Cowen.

This is Gina on for Yaron. 2-parter from me. So you're saying that the overall efficacy may affect the ability or points of differentiation for Abecma. Can you remind us what your current manufacturing success rate in out-of-spec rate there for Abecma, also [ the intervene ] time? And then the second part is, on the ODAC in March, the committee seemed a little bit concerned about PFS for Abecma not being durable. You think it's going to hinder Abecma uptake in earlier line settings?

Yes, thanks for the question. On manufacturing success rates, we're north of 90% manufacturing in spec, and that's been consistent for quite some time now. So always looking to do even better for every patient and as we move into earlier lines, with cells that are -- have seen less lines of therapy, we're optimistic that, that could get even better. And then from a turnaround time, we've been consistently just a little bit under 30 days turnaround time. Sorry, can you remind me of the other questions? Gina, are you still there?

Am I unmuted? I was asking about durability of PFS? And how it's...

Right, for the panel. Yes, sorry. Thank you. Yes, from -- we -- I think the panel took a study that was focused on PFS and I think really go deep on overall survival and the confounding factors of that study, but 13 months of PFS versus the standard of care, which demonstrated about 4 months. We felt that was a statistically significant difference on the prespecified primary endpoint. So we feel good about those data. And as you get into subgroup analysis, we believe it looks even better. Anna can -- I'm sorry, Anna is not in the same room with us. Could you comment further on that one?

Yes, thank you so much. And thank you for the good question. As it was discussed at the ODAC and also commented by the biostatistician, it is to be noted that the PFS analysis has a certain data cut with also certain data maturity and with more follow-up, of course, there is more sensoring in the curve. And it was clearly noted also at the ODAC, there was some [ centering ] before the end. So it is definitely not a mature curve. That's one. Second, we have 2 PFS data cuts that are in the public domain. If you look at the second PFS data cut, it is -- it seems to be really going apart a bit better. And finally, I'd like to also mention we're speaking about multiple myeloma patients who unfortunately still do not have a cure at this point in time. So therefore, we would expect that at some time of time, patients relapse and they need to go to the next therapy. So that's all from my end on the PFS discussion at ODAC.

Thanks, Anna.

Our next question comes from the line of Samantha Semenkow with Citi.

This is Eric on for Sam. Can you speak to any utilization trends you're seeing across treatment centers where Abecma is the only BMA CAR-T available versus those that offer Carvykti as well? And are you seeing utilization across all activated treatment centers? Or is it clustered in a subset? And if so, can you characterize that subset?

Yes. Thanks for the question. We track obviously the utilization data across all of the centers where we're activated. And those trends can vary over time. And again, we have centers that are -- have higher rates of utilization and ones that are less so. I would say the academic centers, the major centers tend to drive a lot of the overall utilization. But from a growth perspective, expanding the overall footprint to more geographically remote places in the United States, is helpful for those patients were travel time to receive their CAR-T and the follow-up involved matters. And so we think site expansion is an important part of the overall commercial strategy. And again, we're engaging right now with every one of those centers, highlighting the KarMMa-3 data, the data that are on the label, the real-world evidence and everything else that we're able to do compliantly in a commercial setting. So more to come on that. But again, as we've said it before, we're excited to get back out there with the new and expanded data set.

Our next question comes from the line of Vikram Purohit with Morgan Stanley.

This is Morgan on for Vikram. So I wanted to ask about your anticipation of the initial launch ramp curve and the third line setting and how this might compare to late line setting uptake?

Morgan, thanks for the question. The fifth line launch was a different dynamic in the sense that there were patients with no treatment options. There was clearly a bolus of patients who had been waiting for that approval and capacity was limited. And so that resulted in long lines in terms of lead times and just triaging the best that we could as a manufacturer and as a sponsor. Today, and [ the setting ] very different dynamics, more treatment options for those patients. A much larger market. We have, as Vicki highlighted earlier, based on present [indiscernible]. And so that I think it sets us up well to expand into that market. But it's not the same kind of bolus effect we expected in the fifth line. So again, as we said, early days here, it will be return to growth, but we expect, given the lag time between enrollments, [ AF ] and then revenue, kind of the revenue impact, we don't expect to be able to show until we get into second half of the year results, third quarter, fourth quarter results.

Our next question comes from the line of John Newman with Canaccord Genuity.

Congrats on the really great work that was done for the FDA panel, that was a tough one, but I could tell that you were very well prepared. Just had a question. We've been hearing from some of the physicians at academic centers that they are devoting more resources over time to the apheresis portion of treatment and some of them have sort of suggested that maybe in the future in conjunction with some of the companies, perhaps some of that apheresis could be done off-site and not in the academic centers. Just wanted to get your thoughts on that and whether it's something that you're sort of considering in conjunction with Bristol as we go forward?

Yes. John, thanks for the question and the comments from FDA, we're certainly excited as we said, with the team's performance there. Look, it's -- any time you solve a bottleneck a new ones created in the supply chain as complex as CAR-T therapy. And so I think with the approval of suspension vector with the amount of capacity that we've been able to establish consistently on the drug product side. You start to think about other bottlenecks and that could be the number of beds in the clinic, that could be apheresis capacity. These are all things that collectively as an industry we're thinking about. And to the extent that we can influence. We are -- those are ultimately decisions that are made by the academic centers and hospitals, et cetera. But it's all part of the broader ecosystem. We've been playing a leading role there for some time. And we're going to continue to work to make access and availability for as many patients who can benefit here as we can. And we think that's a big number, and we're going to be at it for quite some time. Anna, I don't know if you have any additional thoughts on that one?

Thank you, Chip. I think you answered that very well.

And I'm currently showing no further questions at this time. I'd like to hand the call back over to Chip Baird for closing remarks.

Thank you all for calling in today. If you have questions, we're happy to follow up further and look forward to continuing to get after the return to growth for Abecma here throughout the balance of the year. Thanks, everyone. Have a great day.

This concludes today's conference call. Thank you for your participation. You may now disconnect.