Q3 2023 2seventy bio Inc Earnings Call
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Good day, and thank you for standing by walking through the 270 bio third quarter 2023 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising your hand this race.
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Like to hand, the conference over to your Speaker Elizabeth Chicken head of Investor Relations. Please go ahead.
Thank you operator. This morning, 270 bio issued a press release on our third quarter 2023 financial results. The press release can be found in the investors and media section of the company's website at 270 bio Dot com.
On the call today are Nick Leschly, Chief Privacy Officer Chip Baird, Chief Operating Officer, Steve Bernstein, Chief Medical Officer, Philip Gregory Chief Scientific Officer is also on the line for the Q&A session. As a reminder, today's discussion will include forward looking statements related to 275 current plans and expectations, which are subject.
Certain risks and uncertainties. These forward looking statements include statements regarding our strategic plans timelines and expectations and statements regarding our financial condition expectation and other future financial result, among others actual results may differ materially due to various risks uncertainties and other factors, including those described in the risk factors section.
Our most recent Form 10-K, 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.
At this time I would like to turn the call over to Nick Leschly.
Thank you Liz good morning, everyone and thank you for joining us as we discuss our third quarter results and business updates.
While this quarter was challenging for $2 70, and the broader biotech markets. We continued to take actions to best position the business and our science for future success.
In September we made the difficult, but necessary decision to reshape our organization to allow us to advance our pipeline and support our partners at BMS as they redoubled their commercialization efforts with tobacco chip will discuss in more detail.
We continue to support BMS in their efforts to return it back to growth and believe in the significant benefits it delivers for patients.
We also look forward to presenting important data at the upcoming American Society of Hematology meeting, Steve will walk through what we saw in the abstracts from Karma, three and Karma to see presentations.
In this environment, we have a sharp focus on the future determining how to best ensure our important therapies become available to patients in need and drive value for our shareholders and continue to do what's best for our employees. We are evaluating all options to achieve these objectives.
As always I would like to thank our 270 team I remain deeply grateful for our dedicated and talented employees, who continue to go above and beyond to advance our programs and deliver for patients.
Not be more proud of the culture and the talent that we built the $2 70.
I'll hand, it over to chip to talk more about it back in our Q3 results.
Thanks, Nick and thanks to everyone for joining the call. This morning.
As our partners at BMS shared last month scheduled manufacturing plant maintenance and the competitive dynamics have impacted performance in the background and.
In the third quarter, BMS reported $69 million and U S. Top line sales for background for a total of $302 million year to date.
As a reminder, we earned a 50 50 Coco with BMS for the U S tobacco business, our record collaboration arrangement revenue, which represents 50% of the operating profit in the U S business.
Quarter, ending September 32023, we recorded 500000 of collaboration revenue related to a background. The decline in collaboration revenue was primarily due to <unk> top line performance.
Nick mentioned this was a challenging quarter and we do expect competitive pressure for Beckman to continue in the fourth quarter.
That said, we and BMS continue to believe in the long term potential for our backbone to meaningfully impact the lives of patients with multiple myeloma, we're focused on supporting our partners at BMS and their efforts to get the program back on track, which include expanding our site footprint to enable more patients to access it backed by as.
As you can and physicians on the treatment of sequencing and the emerging data supporting the use of <unk> directed car Ts for other <unk> targeted therapies.
And competitively differentiate it back with real World safety and efficacy profile, Steve will discuss this in greater detail later on the call.
Nevertheless, the pressure on the back of a has had a meaningful downstream impact on $2 70 of the business.
As a result, we have taken actions to reshape our organization.
In September we announced a head count reduction of approximately 40% are streamed I'd approached our pipeline, including pausing divestment in our next generation AML program Acadian future investment in our <unk> 369 program.
The restructuring and cost savings actions are expected to achieve more than $130 million in cost savings in 2024 and 2025.
We also anticipate staying within our previously guided net cash spend range $180 million to $220 million in 2023, and we will continue to carefully manage our cash to preserve financial runway.
We believe the return to growth for it back and it will take some time and we're working closely with BMS on this effort in the meantime, we are continuing to closely manage our balance sheet operations and investments with a focus on doing what's best for the company and our stakeholders over the long term.
With that I'll hand, it over to Steve to provide some additional detail on data that we'll present at ash over to you Steve. Thanks.
Thanks Chip and good morning, everyone last week abstract for the Ash meeting with live and I wanted to highlight two key beckman presentations that are scheduled for the meeting. The first is the final progression free survival analysis from our Karma three study as a reminder, <unk> our Registrational study comparing at Beckman to standard of care.
In Triple class exposed patients with relapsed and refractory multiple myeloma, who receive 2% to four prior lines of therapy is the first controlled study comparing our <unk> targeted car T against standard of care and last year, we announced that the study met its primary endpoint of progression free survival the latest data to be present.
The data shows that with additional follow up there is a deepening of responses in the back by arm. In addition to significantly longer progression free survival of patients treated with <unk> compared to those treated with standard of care was maintained with further follow up with the risk of progression or death reduced by 51% in the.
My arm median PFS in the back my arm was $15 seven months compared to four four months in the standard of care arm and finally, the safety profile of the backward remained consistent with previous reports with no reported parkinsonian toxicity or Guillain Barre syndrome reported.
An interim look at overall survival in this study will also be shared during the presentation at ash.
In addition to the <unk> three data will also be presenting updated data from our phase two karma to cohort two C study of it back but this is an clinically of high risk patients, having an inadequate response to frontline autologous stem cell transplantation that is defined as patients having less than a very.
Good PR to transplant and the updated data at Beckman continued to demonstrate deep and durable responses with no new safety signals observed with extended follow up and importantly, none of the patients who received lenalidomide maintenance after it back.
<unk> disease progression. Indeed, these data are a highly supportive of the Registrational Carmen nine study in a similar patient population, which is currently open and enrolling these data along with additional sub analyses presented on patient reported outcomes and quality of life continue to reinforce.
Or is the importance of it back more in the treatment armamentarium for patients with relapsed or refractory multiple myeloma and reinforce its manageable and well understood safety profile as well as potential to play an important role in earlier lines of therapy against this relentless insidious disease with that I'll turn it back.
Nick Thank you Steve we appreciate everyone's time, and we will close by saying we remain committed to delivering for patients our employees, our translational science and our shareholders clearly it has been a challenging period for our company and all our stakeholders.
I said at the outset of the call. We are focused on all options to deliver for our mission and for all stakeholders.
With that operator, you may now open the line for questions.
Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
To withdraw your question. Please press star one again.
We ask that you please limit yourself to one question.
Okay.
Our first question comes from the line of your own Barber with TD Cowen. Your line is now open.
Yeah.
Thanks for taking my question, maybe a couple of questions number one.
We will get some <unk> chip whoever wants to take it you mentioning that you're expecting it will take some time to return to growth for our bank.
Does that include the <unk>.
In Chile related to the case, three and then secondly on the Opex side and profitability could be back to the JV now that's great too is open and obviously a great more manufacturing cost of the study are you expecting a back from it can be profitable, let's say in Q4, and then next year as well deal with eczema JV. Thank you.
Yeah.
Thanks, Sean.
Bit of a choppy line that you're on there, but we'll do our best to get up to your questions. I think you had referenced we have said it might take some time for a backward of restore so I'll comment on that and then hand it to chip for additional and then maybe you can speak to the profitability question.
So Ron I think it's just more of a generalized statement that saying that those efforts at BMS and we're in support of those take time to get hold right. This is an education pieces of data driven piece, but we do believe strongly in the back most place in the ecosystem as it continues to evolve with the data that real world evidence as well as other factors that have to.
With the safety profile balanced with the Beckman profile, which we think is certainly one that is.
Its place.
That community and so that's also where BMS, but these things don't happen overnight. So that is what we're in the midst of and we're just trying to be as clear headed as we can about the timing that that will take for it to settle more appropriately into the marketplace in the commercial setting.
One of the key bits and that has certainly expansion of our centers and making sure that the availability is there and making sure. The supply is there and we can deliver day in day out so in all of those things just take time and that's what we're just indicating chip do you want to add to that feel free and then maybe address the second question. I think you said it well in terms of those dynamics on the return to growth.
Turning to profitability.
Really this is going to be driven.
By patient volumes by continued focus on.
Operating leverage.
Particularly with regard to the cost of goods sold and that we have.
<unk> good progress.
Then of course the <unk>.
Trial profile. So a number of studies that were launched.
Obviously have are beginning to tail off but at the same time, we as you know we are standing up the Carbonite study.
That will be a cost net net we expect backup.
But to be a contributor to our business.
Over the coming years, but what that looks like the shape and how soon we see a return to growth I think is something that we're continuing to sort.
Thanks, Ron.
Thank you.
Our next question comes from the line of Kelsey Goodwin with Guggenheim Securities. Your line is now open.
Oh, Hey, good morning, Thanks for taking my question I guess first on.
On the back but keeping their I guess could you just remind us the status of Carbonite and then separately on the major four program I guess could you remind us what are the is there a specific solid tumors that are being enrolled in the China study and maybe thoughts around the activity signals, so far kind of mainly coming from Sanofi.
Sarcoma.
Yes, Jeff do you want to jump in on the first of all yes.
<unk> nine is.
That study has initiated and we are beginning the process of enrolling patients. So that's that's very exciting and again thats.
Targeted towards.
Our frontline label for patients for with a suboptimal response to transplant, we think thats, an important unmet need and that newly diagnosed population.
More to come on that one, but that one up and underway, which is obviously a big milestone.
Yeah on the major <unk>.
As you know we have a.
Collaboration with GW to put that into the clinic.
That's obviously on track still.
Cited to get that clinic found very shortly.
In terms of indications obviously this is a very target centric place.
Primary goal is to make sure that patients enrolled are major four positive.
Initially we don't have a.
Sort of singling out a particular indication to focus on the.
The initial studies so we're largely looking at this from a initial safety and efficacy or establishing the initial safety and efficacy of the <unk> program and.
To remind you this is not a naked TCR so to speak essentially a potency enhanced one that uses are.
Our approach to turning TGF beta signaling into a positive driver of T cell proliferation.
Just one comment on this is Nick more broadly I think the GW collaboration is one that we're super excited about and majors certainly the front runner also demonstrated what they can do in actually engaging in manufacturing and getting ready to translational deployed in China. So we can sort of understand this targets. So the proof of concept model is one that we're excited about we will be extending further.
Her into our relationship on the Regeneron front as well as our own sort of aspirations on other other targets. So that's something that from an execution point of view of timing and a cost point of view is very beneficial to the company and the mission that we're on just for a broader context.
Next question.
Our next question comes from the line of solving Richter with Goldman Sachs. Your line is now open.
Good morning. This is Amit on for <unk>. Thanks for taking our question just on of Beckman I guess, what gives you confidence at the same headwinds won't play out in the earlier line setting. Thank you.
So I'm not 100% clear on your question can you just clarify a little bit more detail about what what youre asking.
Or maybe you can't so what maybe you guys can help me understand whats the question well what makes us think that of Belo play. The same way. Yes go ahead, Oh, sorry, I was just I'm, sorry, I think my I call.
Cutoff I'm just I guess, what gives you confidence that when a bank was approved in the third line setting.
The bi specifics will come in to play there to be use ahead of beckman in that setting as well as just competitive Hudson from other be CMA car Ts.
Well I'll start with an overall and then I think Steve can jump in and provide a little bit on the clinical side first of all the myeloma market is huge it's never been a winner takes all market and Thats never really existed and also supply chain doesn't really support that in the sequencing of therapy doesn't support that so I think on a sort of first principles level.
That's not how we see it playing out it's also not in the interest of myeloma. This is still an incurable disease and no. One has been able to cure. So I think there is going to be room for a number of us number of car Ts as well as by specifics and others and over time, the clinical base as well as the data that will come out we'll figure out the best way to use these medicines has always been there.
Case, particularly in myeloma, given the number of therapies that are in there Steve can speak to that because I think that's part of what he has done in his first part of his career at this point in time, but that's why we are quite confident in the data that has been and continues to come out on our beckmann, how it delivers for patients in a consistent meaningful as well as safe predictable way. So Steve maybe you can add a little bit.
Color on where thoughts on our beckmann overtime.
Yes, I think as Nick mentioned with all of the different therapies a lot of emphasis has been on how do you optimally sequence. These.
And I think that the data to date is really supporting the fact that if you get a car after you've got a prior <unk> targeted therapy like a TCE or an ADC.
Do nearly as well as if you've got your <unk> car.
Before having such a <unk> targeted therapy and I think there's no reason to think that that paradigm is going to be different as you move to earlier lines of therapy. So I do think that there is an advantage in both clinical efficacy as well again as having rapid deep.
<unk> with a single therapy, that's going to make the CMA car I E.
Preferable to be CMA TCE in earlier lines of therapy as the initial treatment of choice.
So just.
<unk> comments. This is Nick again is that I do think just broadly speaking, we and BMS believe that sort of the data convergence is happening and is happening in the real world evidence as we will see it over time from an efficacy point of view and we remain.
As Steve mentioned earlier very confident around the safety profile of our backlog, which does bode well as you get into earlier lines last thing I'd say I think youre also going to see a subset of patient populations over time in the practical use of this as you start to also overlay supply chain.
Abilities and scale that also taken a number of years to get into its full let's say capacity setup, which we certainly are not at us and anyone else in the space. So overall, we think of Beckman has a place and it needs to sort of get back on track as it relates to that in BMS. We know certainly committed to that and we are as well.
Thank you for your questions.
Our next question comes from the line of Dana <unk> with Leerink Partners. Your line is now open.
Hi, Thanks for the question.
If I could talk more about the competitive profile that youre seeing youre talking a lot about T cell engagement.
Turning to other competing car T by name and all the other competing car T hasn't seen a decline in their sales. So I guess the question is.
Why do you think it's the T cell engaged or is taking share versus a choice at the limited center today going forward the competing car T and could you help us understand this share insight where both parties are available versus this sharon.
We're only at documents available for T cell engagement.
Thanks.
This is Nick I can comment and then chip will jump in and we have no problem, saying corrected by name just to be clear because it is a very important medicine that is making a major difference for myeloma are only comment here is that the car dynamic is also being interface with the T. Sand gauge your dynamic when you have a line out the door and that was what we were commenting on which is that's what comes.
In an it perhaps has settled into a place where it's not necessarily data driven at that point. There was more practicality driven which is if you have a patient and you believe there is no supply available then you do what you Gotta do if you're a clinician and they should do that that is what we're saying, we'll evolve and settle and has not yet settled.
We do see that our backlog will continue to do that and there are many sites, where a beckman as alone. If you will correct you still ramping up it's not surprising to me that their sales quote arent down but also they are in ramp up phase you recall, we've been out in the marketplace for considerably longer than they have et cetera. So I think we've spoken to that and I don't think today's dynamic is necessarily going to be the dining.
Six to 12 months from now that's our view, that's Bms's view and Thats what were settled into and we're going to deliver in the marketplace and we believe the real world data as well as over time. The earlier line data will support that and a shared utilization of those medicines across myeloma.
Any additional comments Jim.
No I think Thats, well said I think commercially we.
We think about competition from two angles for certainly for the T cell engages in that utilization of accumulated setting was.
Probable and particularly when car Ts are more constrained in terms of the capacity relative to the label.
Today is a car T capacity increases, we think and the.
Evidence from a clinical perspective suggests that using a <unk> directed car T.
<unk> T cell engage your insurers the optimal outcome for patients. So that's an important message.
Regard to that side of the competition with regard to other car Ts.
For a long time, we were in BMS was in more of a.
Constrained environment now that that's less true out there doing commercial things that I think that is talking about the profile from an efficacy perspective, and importantly, a safety perspective and important differences there in terms of neuro Tox neuro tox.
And then a manufacturing perspective in terms of turnaround time.
And out of stock rates and things of that sort. So all of those things go into it all of those things that were out there with the message in the field.
But those appear.
Opinions and perceptions and beliefs can take time to change and one of the thing that I think is sort of lost on some people is this is not a market that is saturated there's not a market where there is full education in utilization throughout the myeloma market. Our estimates and BMS is estimates is that theres pretty close to 50% or not getting an advanced treatment at this point in time. So there is a.
Huge opportunity for <unk> and the T cell engages to make sure that we access everyone, who can benefit from this and that that's the bigger picture in here and then you can sit and compare auspicious carb baked in a very specific way I actually think that's missing the point over the long term and where it will settle and ultimately to be part of that armamentarium, and we think our data in the development plan will support.
And that's hence where the I think the additional centers that we're standing up and BMS is charging that is quite impressive and certainly exceeds the the other drug you were mentioning if you will but at that point in time, that's that's where we can actually start to have the real conversations have the supply to deliver and let it settle over time, but that's what you had mentioned earlier in his script.
We will take some time to actually settle in.
Yes.
Next question.
Our next question comes from the line of Samantha <unk> with Citi. Your line is now open.
Hi, good morning, Thanks for taking our questions just two for me. So at Ash you noticed you noted youre expecting to present the interim.
Survival data for Carlyle.
We head into the accounting for Beckman can.
Can you share whether the FDA has requested the OS data as a part of that review and assuming we get approval next month for third line.
Myeloma, how quickly can you on BMS began providing treatments to patients that fall under the extended label. Thank you.
Thanks, Good question and I'll kick it over to Steve here in a second but just so you know given the closeness and the engagement with the FDA, we don't comment on sort of the ongoing producer conversation as it relates to that but we certainly can speak to what we anticipate to see it at ash.
At a high level, where I think maybe you can speak to that Steve what we'll be presenting.
Yes, I don't want to say anything more than the abstract obviously to preclude the presentation.
There isn't a lot in the abstract on overall survival, except that we are going to present data with that.
So youll see the data there remember it's important to keep in mind that the design of this study was a patient centric design. So that it did allow for patients who did progress on standard of care to go ahead and get it back and there were 56% of patients that actually crossed over from.
The standard of care arm to the bank my arm.
And obviously that always will confound the survival data, but.
I encourage you to go to the presentation at Ash and you'll see more detail on the survival data. Thanks, Steve It's always awkward.
Yes.
Next question please.
Our next question comes from the line of John Newman with Canaccord Genuity. Your line is now open.
Hi, guys. Thanks for taking the question.
It's interesting listening to the comments that you've made on the call today regarding the competitive dynamic.
I can't help but think that we are still in a market, where all car Ts are still constrained by supply to some extent.
And.
I'm curious about is if you could talk about the transition that I think youre still planning to make to suspension vector, which I believe you said will happen early in 2024.
And just how that might play into.
Increasing the supplier sort of exactly where you see that benefiting at beckman.
Sure.
This is Nick good question I think chip will comment on this as well, but I think the constraint is less around the vector side of the equation I think as we move to our suspension, which you're right is the plan that will perhaps help us and certainly will help us in cost of goods and also over time make sure that we never have a constraint as it relates to vector, but where the constraint traditionally has been.
As in the drug product and that is where at BMS has gone after and maybe chip can comment on a pretty significant increase to make sure that as we get access to more patients and we open up more sites that we can deliver.
On all of the demand that we believe is out there for car Ts in this setting <unk> chip if you have anything extra to add as it relates to that.
No, it's pretty well set especially to help us with <unk>.
Cost of treating basis cost of goods sold well.
We will take factor largely off the table as a potential future supply constraint, but really.
To the market and the growth of the market will be governed by how how quickly we and others in the field can can ramp the drug product capacity and there. We've made good progress both in terms of the capacity as well as continued high level performance on turnaround time in and inspect manufacturer rates all of those contribute ultimately to the.
The true capacity that you can deliver to the field and just on that I think as supply is certainly important and I think that keeps let's say more players in the game more consistently because when you're dealing with a patient that doesn't have a lot of time and you want to intervene then youre going to make the choices as a provider that you need you to get the patient help but I think it's going to rapidly get more complicated or it is is what.
The safety profile, what's the specific of this patient right. What is what are the things like can they travel can they not travel there is a lot of factors when I order it to actually get it consistently right can I predict the safety profile and we're already seeing that on a sort of a center by center basis and in some cases, it's gone from being a back my users to correct to users to the other way.
Around going from <unk> users to a back my users and we're going to anticipate to see that as people get used to both medicines in which populations there either comfortable due to their own personal experiences and maybe an institutional experience. So that we're seeing on the ground, if we well and that's just beginning and I'll come back to the point that we've made earlier, which is there is still a huge way to go to tap into this entire.
Population, that's eligible over time and that is going to settle but thats not going to settle until we get more centers spread out over the country up and running across all of these medicines and then I think each of US will have I think.
Certainly our share if you will and a contribution to hopefully getting myeloma beat into the cure category.
Okay.
Thank you and I'm currently showing no further questions at this time I'd like to turn the call back over to Nick Leslie for closing remarks.
Thank you very much I appreciate everyone, taking the time and if you have any sort of more detailed questions or anything. We said was was not clear then please feel free to follow up with Liz or are folks here and then we'll be happy to get back to you. Thank you very much have a great day.
This concludes today's conference call. Thank you for participating you may now disconnect.
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