Q3 2024 2seventy bio Inc Earnings Call

Okay.

Good day, and thank you for standing by welcomed.

Welcome to the 270 bio third quarter 2024 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.

Speaker Change: You ask a question. During this session you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one again.

Speaker Change: Please be advised that today's conference is being recorded.

Speaker Change: I would now like to hand, the conference over to your Speaker today Morgan skills and corporate Communications. Please go ahead.

Speaker Change: Thank you operator.

Speaker Change: Everyone and thank you for joining us. This morning, we issued a press release on our third quarter 2024 financial results. The press release can be found in the investors and media section of the company's website at 270 bio dotcom either of them.

Speaker Change: Minder today's discussion will include forward looking statements related to 270, <unk> current plans and expectations, which are subject to certain risks and uncertainties. These forward looking statements include statements regarding our strategic plans.

Speaker Change: All lines and expectations with respect to sales efficacy and perceived therapeutic benefits of a Batman and statements regarding our financial condition 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. These forward looking statements represent our views as of this call and should not be relied upon as representing our views as of any subsidy.

Wendy.

Wendy: You are cautioned not to place.

Wendy: Any undue reliance on these forward looking statements, 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 Becky eat well Chief Financial Officer.

Speaker Change: Now I will turn it over to chip chip.

Chip Baird: Thank you Morgan and thank you all for joining today's call.

Chip Baird: It's hard to believe that we have six weeks left in 2024.

Chip Baird: Looking back we've navigated a tremendous amount of change at $2 70. This year. As a reminder, we ended 2023 with 277 employees a burn rate of $63 million in the fourth quarter of 2023 and uncertainty surrounding it backwards earlier line approval and returned to growth.

Chip Baird: 2024, we've accomplished a tremendous amount to improve this picture.

Chip Baird: We successfully completed the sale of our oncology and autoimmune R&D pipeline to regeneron, including about 160 employees. The majority of our real estate footprint for the next several years.

Chip Baird: We sold our hemophilia a program and related technology to Novo Nordisk for $40 million.

Chip Baird: We received FDA approval in the third line setting, making <unk> available to more patients living with multiple myeloma.

Chip Baird: We've achieved a significant return to growth for a background with third quarter U S revenues growing 42% over the prior quarter.

Chip Baird: The net result of these changes is that we have streamlined the company focusing the business exclusively on our back by continuing to make meaningful progress towards our goal of breakeven operations. Our burn rate was approximately $10 million. This quarter and we have 70 employees. The majority of whom are funded through the bank Makoko agreement with Bristol Myers Squibb.

Chip Baird: Looking ahead, we're going to focus on two key priorities for it background.

Chip Baird: First we're going to continue to completely.

Chip Baird: We're going to continue to compete commercially.

Chip Baird: In fact, <unk> has an important place in a growing car T market in third line myeloma recent real World evidence studies underscore the tobacco has a well established differentiated safety profile and has a competitive efficacy profile, particularly when patients receive effective bridging therapy prior to treatment.

Chip Baird: Second we are working on optimizing the cost structure of the document to increase the operating margin cash flow from the business the decision to discontinue enrollment in the carbon nine study is an example of the kind of financial discipline. We will continue to apply across the business together with BMS. We are looking carefully at ways to streamline expenses across clinical.

Chip Baird: <unk> and commercial.

Chip Baird: As we approach 2025, we are one step closer to breakeven and as we've said this creates strategic optionality for 270, what more to say when we get there, but our focus on delivering for patients and creating value for shareholders. We will remain our true north as we move forward.

Speaker Change: We will get to Q&A shortly but for now I'll turn it over to Vickie to talk further about the third quarter results Vicky.

Vickie: Thanks, Jeff third quarter Beckman U S revenue as reported by BNS were $77 million, which reflect ongoing expansion in the third line setting.

Chip Baird: Chip that this was a strong quarter for you us back more revenue growth and we look forward to continuing to deliver on this important therapy to even more patients living with multiple myeloma. We also acknowledged that the multiple myeloma market continues to be one that is dynamic and competitive.

Chip Baird: We expect U S tobacco revenues to be approximately $2 $40 million to $250 million for 2024 with the fourth quarter expected to be impacted by the continued competition and a reduction in car T infusion schedule during the U S holiday season.

As a reminder, we share equally in the profits or losses in the U S. It back in the business with BMO and we recorded collaboration arrangement revenue or loss each quarter, which largely represents our 50% share of revenue Cogs and selling expenses related to the U S business in the third quarter, we reported collaborative arrangement revenue of approximately $11 million related.

Chip Baird: Our collaboration with BMO.

Chip Baird: Turning briefly to our cost structure. This quarter, we achieved a $10 million or 24% reduction in GAAP operating expenses versus the prior quarter and up $140 million or 52% year to date reduction in GAAP operating expenses versus the same period last year, primarily driven by a reduction in R&D.

Chip Baird: As we said before we expect operating expenses to continue to decline in 2025 is our team prioritizes streamlining of our cost structure for both the backlog and are supporting corporate function. We continue to expect net cash spend in the range of $40 million to $60 million for 2024 and cash runway beyond two.

Chip Baird: 27.

Speaker Change: With that I'll turn it back to chip.

Chip Baird: Thanks, Vicki as we close I want to reiterate that we are encouraged by strong growth in tobacco sales. This quarter are proud to have executed on what we set out to do at the beginning of this year, bringing us one step closer to breakeven potentially as soon as 2025.

Speaker Change: We believe in the potential vivek to make a meaningful impact on the lives of patients and their families and plan to expand <unk> reach to as many multiple myeloma patients as possible.

Speaker Change: To the extend a heartfelt. Thank you to our people who are working hard to deliver on our mission to deliver more time to patients and their families.

Speaker Change: With that we're happy to take questions operator.

Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone away for your name to be announced to withdraw your question. Please press star one again.

Speaker Change: We ask that you please limit yourself to one question. Please stand by what we compile the Q&A roster.

Our first question comes from the line of Dana <unk> with Leerink Partners. Your line is now open.

Speaker Change: Hi, guys. Thanks for the question I Wonder now that we've been a couple quarters into this earlier.

Earlier align sales if you could tell us any of your reflections on the market.

Speaker Change: I guess specifically.

How it differs in terms of.

Speaker Change: Demand in total not just for our back month than you had anticipated.

Speaker Change: Any earlier line dynamics.

Speaker Change: That were surprises to you.

Speaker Change: Dana Thanks for the question.

Speaker Change: Yes, I would say.

Speaker Change: That demand is.

Speaker Change: What we expected.

Speaker Change: Different than the original launch in fourth line, plus where there was a bolus of patients I think this has been more of a steady build when you look at the overall car T class share.

Speaker Change: Between the two commercially approved products, we had a.

Speaker Change: Big step forward here in the third quarter, I think thats driven both by step ups in our combined manufacturing capacity as well as more sites coming online and being in a position to deliver car T to patients.

Speaker Change: As well as just continued awareness.

Speaker Change: Earlier lines third line setting.

Speaker Change: Of car T or the benefit of car T.

Speaker Change: Sequencing of car T relative to T cell engagement. So there is no one stock answer, but I think what we've been encouraged by is the steady growth and pick up in car T class share and again, our view with the backlogs that we.

Speaker Change: We need to and we will continue.

Speaker Change: To compete for our place in that share and I know you've written about that.

Speaker Change: We were pleased to see that particularly around recent news but.

We have <unk>.

Speaker Change: Sure there we have a differentiated safety profile we have.

Speaker Change: Patients for whom we think.

<unk> can be the right treatment option.

Speaker Change: And I think the last thing I would just comment is if you look at the exit trajectory from the third quarter.

We're still by our math less than 25% penetrated into the overall third line setting if you assume third line represent something like 16000 patients in the United States. So our view is that there is still plenty of room to grow and plenty of more patients to get to you and we're committed to try to do that.

Speaker Change: Thanks for the question.

Speaker Change: Thank you. Our next question comes from the line of solving Richter with Goldman Sachs. Your line is now open.

Speaker Change: Hey, Thanks, This is Matt on for Sterling.

Speaker Change: I was hoping you could speak to what drove the better margins for the get back from a profit share and then separately is $400 million back most of the estimated breakeven point for the overall business.

And then finally kind of given what you've guided to now for <unk>. How do you think you're positioned heading into 2025. Thank you.

Speaker Change: Matt Thanks for those questions.

Speaker Change: I'll ask vickie to comment on margin and breakeven.

Speaker Change: Yes.

Speaker Change: In terms of positioning heading into 2025, we've guided here, we expect to end.

Speaker Change: <unk> for the $2 $40 million to $50 million range for.

Speaker Change: Total backed by U S sales.

Speaker Change: Not yet guiding for 2025.

Speaker Change: As I said on the prior question, we certainly have been encouraged by car.

Speaker Change: Car T cost share growth in <unk>.

Speaker Change: Leaning into.

Speaker Change: Continue to participate in our share of that but.

Speaker Change: Vic do you want to comment on margin.

Speaker Change: Third quarter margin and then briefly breakeven yes.

Vic: Yes. Thanks for the question I would say on the margin as we continue throughout this year, we've really continued to make steady progress on improving those margin is largely driven by demand. So obviously, a strong sales quarter pulls through to from a margin perspective, given the high fixed cost nature of the business I will say too that we continue.

Vic: With our partners at BMS make manufacturing improvements. So we see really strong manufacturing success rate north of 95% and so that obviously helps as you translate that into margin on the breakeven question. That's a good one in the past.

As you noted, Matt we've guided to about $400 million being the breakeven sales point for total U S sales for $2 70, as a whole we think it is closer to $300 million as we sit here today.

Vic: But we're very much in process of evaluating what we think for 2025 and so we'll be able to comment more on that on that later, but closer to 300 is what I would guide.

Speaker Change: Thanks, Matt.

Speaker Change: Thank you as a reminder to ask a question at this time. Please press star one one Oreo touchstone telephone.

Speaker Change: Our next question comes from the line of Samantha Tobacco with Citi. Your line is now open.

Speaker Change: Hi, good morning, Thanks, very much for taking my question. Chris go ahead replenishment core guidance.

Seasonality.

Speaker Change: Part of that Im wondering with mix with Jefferies. Please go a little bit on the acreage that's great. Good luck.

Bar Mcorp, Joe and how that's Macquarie group.

Speaker Change: Thank you.

Sure.

Speaker Change: That.

Speaker Change: Trajectory carrying over into 2025, thank you very much.

Speaker Change: Yeah, Hi, Sam Thanks for the call I would expect a call. Thanks for the question thanks for being a part of our call.

Speaker Change: <unk>.

Speaker Change: Yes, the <unk> rates.

Speaker Change: That's something that we track on.

Speaker Change: A weekly basis and again, we were very encouraged to see the growth in <unk> in the third quarter.

As we sit here in the fourth quarter again, I would say to the comments on the call. You know there is seasonality that occurs.

Speaker Change: Particularly I think about as people think about.

Speaker Change: Where theyre going to be where when they receive those cells and they head into Thanksgiving and Christmas those times.

Speaker Change: That can be the intensive part of the car T treatment journey for patients and so.

Speaker Change: Yeah.

Speaker Change: I think thats.

Speaker Change: We do see that.

Speaker Change: That being said I think the underlying demand in the kind of uptick we've seen since.

Speaker Change: The third line approval back in March has been a real one and Thats one that together with BMS.

Speaker Change: We are.

Speaker Change: You mean everything.

Speaker Change: We can be doing we should be doing to support commercially so.

Speaker Change: Again, I think we'll have more to say about 2025 at a later date, but.

Speaker Change: Certainly <unk> been encouraged.

Speaker Change: Really happy with the growth you've seen here in the third quarter.

Speaker Change: Thank you 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.

Speaker Change: Yes.

Chip Baird: Thanks, Thanks, operator, and thanks to everyone for participating on the call today.

Chip Baird: I appreciate the time and.

Chip Baird: Have a great day.

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

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Hum.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].