Q2 2024 2seventy bio Inc Earnings Call
Speaker Change: Good day and thank you for standing by. Welcome to the 2Seventy Bio second quarter 2024 earnings conference call.
Operator: for an 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. 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 from 2Seventy Bio. Please go ahead.
Speaker Change: At this time, all participants are in a listening mode.
Speaker Change: After the speaker's presentation, there will be a question and answer session.
Speaker Change: To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised.
Speaker Change: To withdraw your question, please press star 11 again. 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 Snyder: Thank you, Operator, and good morning, everyone. Thank you for joining us.
Jenn Snyder: Thank you, Operator, and good morning, everyone. Thank you for joining us. This morning, we issued a press release on our second quarter 2024 financial results.
Speaker Change: The press release can be found in the Investors and 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.
Jenn Snyder: This morning, we issued a press release on our second quarter 2024 financial results. The press release can be found in the Investors and Media section of the company's website at 270bio.com. As a reminder, today's discussion will include forward-looking statements related to 270bio's current plans and expectations, which are subject to certain risks and uncertainties. These forward-looking statements include statements regarding our strategic plans, timelines, and expectations with respect to sales, efficacy, and perceived therapeutic benefits of a BECMA, the timing and review of additional studies and regulatory applications for a BECMA, and statements regarding our financial condition, expectations, and future financial results, among others.
Speaker Change: These forward-looking statements include statements regarding our strategic plans.
Speaker Change: Timelines and Expectations with Respect to Sales, Efficacy, and Perceived Therapeutic Benefits of a Becma, the Timing and Review of Additional Studies and Regulatory Applications for a Becma, and Statements regarding our Financial Conditions, Expectations, and Future Financial Results, among others.
Speaker Change: 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.
Jenn Snyder: 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. We 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-Hartman, Chief Medical Officer, is also on the line for questions during the Q&A.
Speaker Change: 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. We 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.
Speaker Change: On today's call, we are joined by Chip Baird, Chief Executive Officer, and Vicki Eatwell, Chief Financial Officer. Anna Truppel-Hartman, 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.
Chip Baird: Thank you, Jenn, and thank you all for joining this morning. Today we disclosed our second quarter 2024 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. At the beginning of 2024, we took the strategic decision to focus 2Seventy exclusively on a backlot and a commercial business. While it was not an easy or risk-free decision, we continue to believe it was the right one given the situation.
Chip Baird: Thank you, Jenn, and thank you all for joining this morning.
Speaker Change: Today, we disclosed our second quarter 2024 financial results and recent business and operational updates.
Chip Baird: 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.
Chip Baird: At the beginning of 2024, we took the strategic decision to focus 2Seventy exclusively on a backlot and a commercial business.
Chip Baird: While it was not an easy or risk-free decision, we continue to believe it was the right one given the situation.
Chip Baird: This quarter, we're beginning to see the positive impact of this major strategic pivot. We're controlling what we can control and are accomplishing what we set out to do, strengthening our financial position, streamlining our cost structure, and dedicating our resources to driving growth for a better. We've succeeded in dramatically reducing our cost structure and have also strengthened the balance sheet in the second quarter with 43 million in proceeds from the sale of our oncology R&D business to Regeneron in April and the sale of our Hemophilia A program and related Megatel technology to Novo Nordisk in June.
Chip Baird: This quarter, we're beginning to see the positive impact of this major strategic pivot.
Chip Baird: The NOVO deal was another important strategic transaction in our effort to further streamline and focus. We are grateful to the 2Seventy team members who have since transitioned to Nova Nordisk and thank them for their incredible work. The changes that we have enacted enable us to focus 100% of our effort and energy on abecma.
Rebecca: We're controlling what we can control and are accomplishing what we set out to do, strengthening our financial position, streamlining our cost structure, and dedicating our resources to driving growth for Rebecca.
Rebecca: The NOVO deal was another important strategic transaction in our effort to further streamline and focus the business.
Rebecca: We are grateful to the 2Seventy team members who have since transitioned to Nova Nordisk and thank them for their incredible work.
Rebecca: The changes that we have enacted enable us to focus 100 percent of our effort and energy on abecma. And I'm pleased to report that abecma performance in the U.S. turned a corner in the second quarter following the FDA's approval to treat earlier live patients.
Chip Baird: And I'm pleased to report that abecma performance in the U.S. turned a corner in the second quarter following the FDA's approval to treat earlier live patients. As expected and as previously guided, we achieved modest growth in revenue in the second quarter as we initiated our third line launch. As we've previously shared, there's roughly a two-month lag between the time we enroll a patient and the time that patient receives a BECMA, and we recognize revenue.
Rebecca: As expected and as previously guided, we achieved modest growth in revenue in the second quarter as we initiated our third line launch. As we've previously shared, there's roughly a two-month lag between the time we enroll a patient and the time that patient receives a Becma and we recognize revenue.
Chip Baird: While revenue growth was modest, we were encouraged by the double-digit growth in patients undergoing apheresis, the first step in the EMPACMAR process and a leading indicator of demand. We've also seen an increase in use among sites who have previously stopped prescribing EMPACMAR. Additionally, our commercial and launch messaging on the efficacy of the backlight and consistent safety profile has been well received by providers.
Rebecca: While revenue growth was modest, we were encouraged by the double-digit growth in patients undergoing apheresis, the first step in the abecma process and a leading indicator of demand. We've also seen an increase in use among sites who have previously stopped prescribing abecma.
Rebecca: Additionally, our commercial and launch messaging on the efficacy of the backlight and consistent safety profile has been well received by providers. Well, it is too soon to say what the shape of the curve is in terms of the return to growth.
Chip Baird: These indicators support our ongoing belief that abecma has an important role to play for patients living with myeloma. We've now entered the second half of the year and the BMS and 2Seventy teams remain focused on executing the third line launch of a back... Our launch is focused on clearly articulating the case for a backlash, namely a competitive efficacy profile that is reproduced in the real world setting, a well-established and manageable safety profile and a rapid manufacturing turnaround time with high rates of in-spec products, with Karma 3 data in the label and real-world evidence that continues to mature.
Rebecca: These indicators support our ongoing belief that a BACMA has an important role to play for patients living with myeloma.
Speaker Change: We've now entered the second half of the year, and the BMS and 270 teams remain focused on executing the third-line launch of Ibeka.
Speaker Change: Our launch is focused on clearly articulating the case for BACMA, namely, a competitive efficacy profile that is reproduced in the real-world setting, a well-established and manageable safety profile, and a rapid manufacturing turnaround time with high rates of in-spec product.
Speaker Change: With CARMA 3 data in the label and real-world evidence that continues to mature, we believe we have competitive profile in early airline, triple-class exposed patients, which is the population with high unmet need.
Chip Baird: We believe we have a competitive profile in early airline triple-clath exposed patients, which is a population with high unmet needs. We remain optimistic about AVECMA's return to growth in the month. We'll get to Q&A shortly, but for now, we'll turn it over to Vicki to talk further about the second quarter results.
Speaker Change: We remain optimistic about ABECMA's return to growth in the months to come.
Speaker Change: We'll get to Q&A shortly, but for now, we'll turn it over to Vicki to talk further about the second quarter results. Vicki.
Chip Baird: The second quarter of ECMA U.S. revenues, as reported by Bristol-Myers Squibb, were $54 million, which was in line with our expectations and reflects ongoing expansion into the third-line setting. In the second quarter, we reported collaboration revenue of $4.4 million related to our collaboration with BMS. Lastly, the income from the Novo transaction helped us achieve profitability for the quarter, with $24.9 million of GAAP net income.
Vicki Eatwell: Thanks, Jeff.
Vicki Eatwell: The second quarter of ECMA U.S. revenues, as reported by Bristol-Myers Squibb, were $54 million, which was in line with our expectations and reflects ongoing expansion into the third line setting.
Vicki Eatwell: As Chip stated, we are seeing a number of growth indicators, and we look forward to delivering a VECMA to an increased number of patients as we return to growth in the second half of the year.
Speaker Change: As a reminder, we share equally in the profits or losses of the U.S. Abecma business with BMS. And we record 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.
Speaker Change: In the second quarter, we reported collaboration revenue of $4.4 million related to our collaboration with BMS.
Speaker Change: Turning briefly to our cost structure, this quarter we achieved a $28 million or 43% reduction in GAAP operating expenses versus the first quarter of 2024, or a $48 million, 57% reduction versus the same quarter last year.
Speaker Change: Primarily driven by the completion of the sale of our oncology R&D business to Regeneron at the beginning of the quarter and the streamlining of our operations beginning in the second half of 2023.
Speaker Change: We expect operating expenses to continue to decline into 2025, as our small remaining team prioritizes identifying further efficiencies.
Speaker Change: We expect a revised net cash spend range of $40 to $60 million in 2024, which is a reduction from our previously guided net cash spend range of $80 to $100 million.
Speaker Change: Lastly, the income from the Novo transaction has helped us achieve profitability for the quarter, with $24.9 million of GAAP net income.
Speaker Change: And while quarterly profitability is, for now, a one-time event, we continue to see a path to cash flow break-even and profitability as soon as 2025. With that, I'll turn it back to Chip.
Chip Baird: Thanks Vicki. As we close, I'll reiterate that we are encouraged by what we've accomplished so far this year and the setup for the second half of 24.
Speaker Change: We've turned the corner with the VAC line and continue to believe in its potential to make a meaningful impact for patients in the earlier line setting. We are singularly focused on delivering more time for every myeloma patient that we are able to serve, which, together with our partners at VMS, remains our top priority.
Speaker Change: We will continue to carefully manage investor capital. With a streamlined cost structure, we are focused on reaching break-even and profitability. Together with the rest of the 2Seventy team, we will stay focused on these priorities to drive shareholder value. With that, we're happy to take questions. Operator.
Speaker Change: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. We ask that you please limit yourself to one question.
Speaker Change: Please stand by while we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Daina Graybosch with Lee Rink. Your line is now open.
Dana Graybush: Hi, thanks for the question guys. I'd like to understand more of the nature of the type of patients or sites
Speaker Change: that are starting apheresis in the third line. Any color you can give for either of those that would help us understand the growth going forward would be great.
Speaker Change: Thank you, appreciate the question.
Speaker Change: In terms of the type of patients, it is a mix between third-line patients as well as
Speaker Change: later line, fourth, fifth line patients. It's hard for us to...
Speaker Change: separate those out for reasons having to do with HIPAA and other privacy concerns. We'll have better understanding of that as we move forward but we...
Speaker Change: Clearly believe we're seeing
Speaker Change: both late-line patients as well as starting to see the impact of these third-line patients.
Speaker Change: In terms of the sites, as we've said before, the major academic centers are the primary driver for us in terms of the business, in terms of the total patient volume, and there we've been encouraged to see some of the sites that had
Speaker Change: Previously gone a long time without writing an abacus script, coming back.
Speaker Change: to a VACMA to using that again. And again, I think that's a function of the broader label, the broader data set that we can detail against and the collective efforts of the BMS and 2Seventy teams.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Kelsey Goodwin with Guggenheim. Your line is now open.
Kelsey Goodwin: Oh hey, thanks for taking my question and congrats on the progress this quarter. Maybe could you just provide some more color on the strategies that you're using to differentiate safety and efficacy at these sites?
Speaker Change: And then maybe if I can get a quick follow-up, could you provide some more color on the sales assumptions that underlie how you think about breakeven for 2Seventy? Thanks so much.
Speaker Change: Sure Kelsey, thanks for the questions there. I'll ask Anna to comment on the first question in terms of how we're detailing and describing and kind of the key points on
Anna: Safety and Efficacy and how we present a backlash and then
Vicki Eatwell: Vicki, maybe you can comment on breakeven and what that could look like.
Vicki Eatwell: Anna, do you want to go ahead? Yes, thanks so much, Chip. Thanks so much, Kelsey.
Anna: So first of all, in Karma 3,
Speaker Change: A Beckman show a significant superiority over Center of Care with a very significant progression-free survival and all the other endpoints were
Ana: significance as well across all subpopulations that we included in Chroma 3.
Speaker Change: So we are clearly messaging on the consistent PFS benefit or efficacy benefit we have seen throughout all of our studies, including revered evidence that is very much consistent with what we are seeing in the clinical trials.
Speaker Change: Clinical Trial.
Speaker Change: Also, it is important to note that, and that was also part of the ODAC meeting, as you will remember, that bridging has gained much more importance over time, so that we are clearly messaging on the bridging therapy, how important it is to bridge patients prior to a Beckman infusion, because based on our Karma 3 data, we have seen greater outcomes or better outcomes influenced by
Speaker Change: decreased TBDD's burden at time of infusion, which is influenced by the bridging therapy, and those data were presented last IMS.
Speaker Change: that showed this. And we have even seen a median PFS of 20.7 months in those patients who had decreased disease burden.
Speaker Change: with post-bridging and prior ebecma. So that's the second message.
Speaker Change: Clearly messaging on efficacy that is further enhanced with optimized bridging therapy that is in the real world even easier because in an early line setting there are more options available for bridging.
Speaker Change: Last but not least is the safety profile. As seen in our USPI, but also in every single dataset we are publishing, the safety profile is well-manageable, consistent throughout, with low numbers and very, very low frequency of the infection.
Speaker Change: Delayed neurotoxicity such as Parkinsonism or GPS, we didn't see anything in Karma 3, and we do believe we have otherwise as well a very compelling safety profile with Abecma. So taking the efficacy and the safety together, we do believe we have a very strong profile.
Speaker Change: That's combined with a very reliable manufacturing process as well.
Vicki Eatwell: Well said. And then Vicki, over to you on the question around breakeven. Yeah, thanks, Kelsey, for your question.
Speaker Change: I don't know if anyone wants to add something to the messaging.
Speaker Change: Well said.
Speaker Change: And then, Vicki, over to you on the question around break-even.
Vicki Eatwell: Yeah, thanks, Kelsey, for your question. So, in terms of underlying sales assumptions for break-even, we've got it in the past, but...
Vicki Eatwell: We believe a total U.S. sales of less than $400 million makes us break even as a total company. So, obviously we're continuing to tighten 2Seventy internal OPEX as we head into the end of the year and then into 2025.
Vicki Eatwell: It doesn't take much for us to become break-even as a whole, given the amount of cost savings that we're delivering this year.
Operator: Thank you. Our next question comes from the line of Vikram Purohit with Morgan Stanley. Your line is now open.
Kelsey Goodwin: Thanks, Kelsey.
Speaker Change: Thank you. Our next question comes from the line of Vikram Purohit with Morgan Stanley . Your line is now open.
Speaker Change: Hi, good morning, and thank you for taking our question. This is Morgan on for Vikram.
Morgan: So, I wanted to understand a bit more context on the early experience for the 3L launch for Abecma, particularly with regards to volume of patients in this setting.
Vikram Purohit: that have been treated with a Beckman to date and how the slope of the 3L uptake curve compared to the later line launch curve you initially experienced. Thank you.
Morgan: that have been treated with a Beckman to date and how the slope of the 3L uptake curve compares to the later line launch curve you initially experienced. Thank you.
Morgan: Hi Morgan, thanks for the question there.
Speaker Change: You know, I think a little bit of the answer is going to be...
Speaker Change: Stay tuned, and when we're able to report third quarter results in October , late October when BMS has their earnings and our call shortly thereafter.
Speaker Change: We can get into it more, but certainly the...
Speaker Change: Growth and Apharesis that we saw in the second quarter.
Speaker Change: which is Meaningful Golf.
Speaker Change: Meaningful growth, double digit growth.
Speaker Change: We'll pull through into revenue growth here in the third quarter, so we'll be able to much better define the slope of that curve and how that curve
Speaker Change: should continue to change over time when we are on this same call three months from now. But, you know, I think the early experience, as we've characterized, has been
Speaker Change: a positive one, an encouraging one. You know, we have seen green shoots as measured by the growth in apes, the additional sites kind of coming back to a vecma, the interactions that we've had with treating physicians.
Speaker Change: Just a much broader data set to detail in a much larger patient population. And the last thing I'll say is that it is a different market.
Speaker Change: and plays to some of the beliefs that Vicki was just detailing in terms of it doesn't take much for us to break even or better with this larger third line label. So, more to come there, but I think the signs we've seen give us...
Vicki Eatwell: A lot of reason to be optimistic about the curve.
Speaker Change: Thank you. Our next question comes from the line of Salveen Richter with Goldman Sachs. Your line is now open.
Speaker Change: Hi, this is Srinathja on Facilite. Thank you so much for taking our questions.
Srinathja: Just in case you might have missed this early on the call, when might you start providing guidance around abecma sales and do you have any updates around the timing for the Regen Ron-LED pipeline assets and the next likely data readout there?
Speaker Change: Yeah, thanks for those questions. I can take those, you know, in terms of
Speaker Change: guidance, we haven't provided revenue guidance, you know, I think we want to get a couple quarters.
Speaker Change: into the launch before we start to guide specifically there. So, you know, stay tuned, but we're not guiding.
Speaker Change: on that one at this time. And then, you know, from a Regeneron oncology assets that went to the Regeneron cell medicines business, that's,
Speaker Change: That's that's more their their products now, so we don't have direct visibility or control over those anymore. We do have downstream participation in terms of commercial and late-stage milestones, but that's
Speaker Change: not going to be a factor for us.
Speaker Change: and certainly the next couple of quarters.
Speaker Change: You know, really the story there was moving those assets, those people.
Speaker Change: Those real estate into fertile soil with Regeneron and the longer-term capital base that they have.
Speaker Change: That's what we've done, and again, as we said at the top of the call, that streamlines our approach so we can focus exclusively on unlocking value with the back-bottom.
Speaker Change: Thank you. Our next question comes from the line of Yaron Werber with Cowen. Your line is now open.
Speaker Change: Hi, this is Jaina on 4YourOwn. Thanks for taking our questions.
Jayna: To follow up on the previous question asking about the types of patients that started atheresis in Q2, are you hearing from physicians that there are any specific subsets of multiple myeloma patients that would preferentially receive a BECMAR, WebM, CARBIC, or a bispecific? Thanks.
Speaker Change: Thanks for the question, Daina. I think it's a broad spectrum, as you said, it's third line patients, it's later line patients.
Chip Baird: I, you know, one of the things that We have a differentiated safety profile, and so that's one that we hear about. But again, I think it's early days there, and we'll start to understand better the split of patients and the third line or the later line as we move through the launch. But I'll ask Ana to see if there's anything to add there in terms of what we're hearing from treating physicians.
Speaker Change: I think is something we're hearing about is just safety, candidly, and I think the risk or the specter of...
Speaker Change: Some of the more severe neurotox, you know, the risk of Parkinsonism is something that weighs heavily, particularly for sites that have experienced one of those cases. And so, you know, again, there I think
Speaker Change: We have a differentiated safety profile, and so that's one that we hear about. But, again, I think it's early days there.
Speaker Change: We'll start to understand better
Speaker Change: more that the split of patients and, you know, the third line or the later line as we move through the launch, but I'll have to see if there's anything to add there in terms of what we're hearing from treating physicians.
Anna Truppel-Hartman: I would like to repeat again that all patients in our clinical trials, as well as in real-world evidence, benefit from the use of a VECMA. Hence, there is no subgroup that has shown a better outcome or a worse outcome.
Ana: I would like to repeat again that all patients in our clinical trials, as well as in real world evidence, benefit from the use of a VECMA, so there is no subgroup that has shown a better outcome or a worse outcome. That's why every patient can benefit. So that's also something to keep in mind.
Anna Truppel-Hartman: That's why every patient can benefit, so that's also something to keep in mind. There is also the fact that, also in previous conferences, it was clearly recommended to use CAR-T prior to TCEs. And so whenever a patient can access and can receive a CAR-T, a CAR-T is given prior to a TCE. And that's kind of what we are hearing throughout all of CARES and all of the conferences where the sequencing questions, et cetera, are being discussed.
Ana: And so whenever a patient can access and can receive a CAR-T, a CAR-T is given prior to a TCE. And that's kind of what we are hearing throughout all of the CARES and all of the conferences that are, where the sequencing questions, etc., are being discussed.
Ana: and finally it's also a patient's choice and safety matters a lot especially in earlier lines as Chip already mentioned the low very low frequency of parkinsonism
Speaker Change: and also the well-manageable safety profile is compelling for many physicians and patients, which also guides decision-making.
Operator: Our next question is from the line of Daina Graybosch with Lerink. Your line is now open.
Speaker Change: Thank you. Thank you.
Speaker Change: Our next question is from the line of Daina Graybosch with Lerink. Your line is now open.
Daina Graybosch: Hi, thanks for the follow-up. We were talking a lot about safety and I wonder, this question is for Anna, as we've seen more data with ABECMA in the real world and with other CARD-Q programs,
Speaker Change: And is it just Parkinsonianism or the other of the neurotox, the lower grade that doctors are talking about, and are those meaningful to their choice to a VECMA as well? I'm wondering which one specifically.
Anna: day after day. And so we are always assessing everything that is published and everything that comes in and looking at that. In addition to that, of course, we are looking at our own safety database where we are collecting all the adverse events. And we are also collecting, of course, those events specifically and looking at that.
Anna: It's specifically to debate neurotoxicities, which also includes cerebral palsy, et cetera.
Anna: And it's also a fact of, the terminology is a bit of a confusing fact, and you're right there, that there needs to be more correct, better characterization, which events you're really talking about, but in general, everything that is non-ICANN neurotoxicity,
Anna: That is it for your question, Daina.
Anna: Thank you. And I'm showing no further questions at this time. I'd like to hand the call back over to Chip Baird for closing remarks.
Chip Baird: Thank you and thanks everyone for making time for the call today. We continue to focus on execution and returning to Beckman of growth. We're available for follow-up with analysts and investors throughout the day and we look forward to seeing everyone again on our third quarter earnings call and sharing the latest results there for Beckman. Have a great day.
Speaker Change: This concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: www.youtube.com or www.youtube.com or www.youtube.com www.youtube.com