Q3 2024 bluebird bio Inc Earnings Call
Okay.
Okay.
Speaker Change: Good morning, ladies and gentlemen, thank you for standing by welcome to Bluebird Bio's third quarter 'twenty 'twenty four.
Speaker Change: This 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 this session you will need to press star one one on your telephone you will then hear an automated message at Pfizer and Yohanan space.
Please note that today's conference is being recorded.
Speaker Change: Now I'll hand, the conference over to your host corneal <unk> director of Investor Relations. Please go ahead.
Speaker Change: Good morning, everyone and thank you for joining our third quarter 2024, our results call today.
Hillary: My name is Hillary director of Investor Relations at Bluebird bio.
Hillary: Before I begin let me review, our Safe Harbor statement.
Hillary: The discussion contains statements that are forward looking and other private Securities Litigation Reform Act of 1995.
Hillary: Expectations regarding our future financial results and financial position. In addition to statements of the company's plans expectations or intentions regarding regulatory progress commercialization plans and business operations.
Hillary: These statements are based on current expectations and assumptions that are subject to risks and uncertainties and involve a number of risk factors that could cause actual results to differ materially from projected results. A description of these risks is contained in our filings with the SEC, which are available on the Investor Relations section of our website Www Dot Bluebird bio dot com.
Speaker Change: With that I will turn it over to the Bluebird Bio's CEO Andrew LPG.
Thank you Courtney and thank you everyone for joining our call. This morning.
Speaker Change: That's a gene therapy pioneer the only standalone commercial stage gene therapy company in the market today, we have built what we believe to be an unparalleled foundation over the past two years since our first FDA approval, but they robust qualified treatment center network proven access to reimbursement and demonstrate demand for our therapies for both patients and providers.
Speaker Change: Today, we are seeing the results of those efforts since we reported our Q2 earnings in August we have more than doubled patient starts from 27 to 57 across our portfolio.
Speaker Change: We initiated steps to reduce our cash operating expenses by 20% in Q3, 2025, and we've laid out a roadmap to financial stability and cash flow breakeven in the second half next year should be accomplish our goal of securing additional cash resources.
Speaker Change: Today's call, Tom Klema, Chief commercial and operating officer will provide updates on our commercial launch it yourself with Kenya, since Halo and Sky solar.
Speaker Change: And I believe our CFO, James Stirling will provide an update and some comments on our recent proxy, though before opening the call for Q&A.
I will now hand, the call over to Tom.
Tom Klema: Thanks, Andrew and good morning, everyone.
Tom Klema: We continued to see strong growth in our commercial launches in the third quarter with clear and established past access for therapies and an industry, leading Q T. C network as Andrew noted we've more than doubled patient starts since our Q2 call to 57 from 27 in mid August.
Tom Klema: Today, we announced that 74 patient starts have been completed or scheduled to date in 2024 across our portfolio.
Tom Klema: Of that 70 457 patient starts have been completed with an additional 17 starts scheduled through the rest of the year.
Tom Klema: And we continue to see strong and sustained demand into the future with 30 patient starts already scheduled in 2025.
Trajectory continues to support the potential path to cash flow breakeven in the second half of 2025 as those starts to convert to deliveries and infusions remember as we have said it takes approximately two quarters between a patient starts and drug product delivery we.
Tom Klema: We are particularly encouraged that because of our extensive Q T. C networks patients have broad access to our therapies.
Tom Klema: To date patients have initiated on road for treatment across more than 30 unique Q T sees you work all the recall that Bluebird has more than 70 total Q tcs offering with junior and it's integral in the U S. Highlighting the significant upside potential to come as the remaining centers in our network to start their first patient we are.
Tom Klema: The manufacturing capacity, we need today.
Tom Klema: <unk> of our cash flow breakeven point, and we have plans to double capacity from Virginia in 2026 based on anticipated demand.
Tom Klema: This follows a similar launch dynamic is in tableau or we scaled capacity commensurate with demand.
Tom Klema: Now moving moving to access and reimbursement.
Tom Klema: Our goal has always been timely equitable access to our therapies. We are extremely encouraged by the speed with which both commercial and many government payers are approving pathways to patient access.
Tom Klema: Focusing on Virginia more than half of all states have affirmed coverage through a preferred drug list or published coverage criteria.
Tom Klema: Additionally, nearly 50% of Medicaid insured individuals with sickle cell disease in the U S live in a state that has already completed prioritization approval for the use of <unk> for at least one patient.
Tom Klema: Commercially multiple outcomes based agreements had been published in our in place for Lyft, Kenya, representing more than 200 million U S lives.
Tom Klema: And timely access to lift journey at <unk> and Sky. So that has continued with zero ultimate denials to date for any of our therapies across both Medicaid and commercial now.
Tom Klema: Now I'd like to turn the call over to James to speak to our financials.
James Stirling: Thank you Tom and good morning, everyone.
James Stirling: I'm pleased this morning to confirm that we are now back on track with normal reporting time lines. Following in the restatement of our financials earlier this year.
James Stirling: In the third quarter, we reported $10 6 million and total revenue down from $16 1 million in Q2.
James Stirling: As we guided on our last earnings call. We anticipated this debt to be in Q3 revenues due to variation in manufacturing timelines.
James Stirling: We expect revenue will rebound nicely in the fourth quarter with net revenue of at least $25 million as more patients arent peers.
James Stirling: Importantly in the third quarter, we recognized our first lift Jennie O revenue following the completion of the first <unk> infusion well within our target timeline.
James Stirling: As previously guided in 2024, we continue to anticipate gross to net discounts in the range of 20% to 25%.
James Stirling: With fluctuations based on product and payer mix as well as utilization of our outcomes based agreements.
James Stirling: On the cost side SG&A expense was generally consistent with the prior year period, while R&D expense was down $36 1 million year over year as previous R&D expenses were shifted to inventory.
James Stirling: And cost of products revenue.
James Stirling: As of September 32024, we had $118 $7 million of cash on hand, which is inclusive of $48 million in restricted cash.
James Stirling: As we announced on our call in late September we've implemented significant changes to optimize our cost structure. These changes are anticipated to result in a 20% reduction.
James Stirling: And cash operating expenses when fully realized in Q3 of 2025.
James Stirling: And we continue to anticipate quarterly cash flow breakeven in the second half of 2025.
James Stirling: Assuming we scale up to approximately 40 drug product deliveries per quarter and obtain additional cash resources to extend our runway.
Speaker Change: As Tom noted, we already have 30 patients scheduled for cell collection in 2025, and we feel confident that we remain on pace with previous guidance of approximately 40 deliveries per quarter in the second half of next year.
Yeah.
We are engaging collaboratively with Hercules as we work to secure adequate cash runway to obtain additional financing and reach cash flow breakeven in the second half of next year.
Speaker Change: Based on our current forecasts, which assumes continued cost savings initiatives.
Speaker Change: Excessively renegotiating key contracts and continued collaborative engagement from Hercules, we expect our existing cash and cash equivalents will enable us to fund our operations into the first quarter of 2025.
Speaker Change: I wanted to provide a bit of color on our proxy vote last week.
Speaker Change: As you May have seen we had joined our meeting until December 4th to solicit additional votes to obtain approval of proposal four related to the reverse stock split.
Speaker Change: A vote in favor of proposal four will enable us to regain compliance with nasdaq's minimum bid price and increase the number of shares on a relative basis that we are authorized to issue a necessary step to enable flexibility with our financing options.
Speaker Change: We are very pleased with the votes. We've received so far and went to encourage every stockholder to vote in favor of proposal four if any of our shareholders have questions about this or we'd like to discuss it further please E mail us at Investor at Bluebird Bio Dot com.
Speaker Change: With that I will turn it back to Andrew.
Speaker Change: Thanks James.
Andrew LPG: Today, we are now in a period of accelerated growth and we have visibility to cash flow breakeven in the second half of next year as we work to obtain additional sources of capital and execute on our launches across our validated commercial gene therapy platform.
Andrew LPG: We look forward to continuing to update the investor community on our progress as we move towards changing first 10, seven hundreds of patients lives.
With that we'd like to open it up for questions operator.
Speaker Change: Ladies and gentlemen to ask a question you will need to press star one on your telephone and wait for your name to be announced.
Speaker Change: All your question simply press Star one again.
Speaker Change: Please stand by while we compile the Q&A roster.
Speaker Change: Now first question coming from the line of Jack Allen with Baird. Your line is now open.
Jack Allen: Great. Thanks for taking the questions and congrats to the team on the progress made in the quarter I.
Jack Allen: I guess my first one is on the revenues in the third quarter. It seems like there's incremental step down as compared to revenues announced in the second quarter and I wanted to ask.
Jack Allen: What are you seeing as it relates to the dynamics around <unk>.
Jack Allen: Ministration of the cells. After you deliver them to the treatment centers do you still see.
Speaker Change: 100% pull through in that regard are you seeing any kind of draw.
Speaker Change: Dropout from cell manufacturing to administration ourselves and then I had a quick follow up as well.
Speaker Change: Yes, good morning, Jack Thanks for the question for him to Tom to respond Hey, Jack Good morning, Yeah, we still see 100% pull through once we deliver cells to a patient being treated.
Speaker Change: As you know, there's just variability I think in terms of patient scheduling and then once we deliver the final drug product to the TTC.
Speaker Change: It's in the GTC and so it's a little bit out of our control once we deliver it back but once we deliver back we've seen 100% flow through.
Speaker Change: Got it got it great and then I guess, maybe I'll just dive in a lot of them or are you seeing a 100% manufacturing success rate and then my follow up was also.
Speaker Change: On the 2025 scheduling any color as it relates to how far out your scheduling slots into 2025 of those 30 slot.
Speaker Change: Yes, let me take the first one and then I'll hand, the second one to Tom So no. We do see re collections are a natural part of the process right. So we do sometimes have to collect more than once for a patient that is not a manufacturing failure that is that as a normal part of the process.
Tom Klema: And we've and once a patient starts to process nearly 100% of those patients go on to an eventual deliberate.
Tom Klema: Tom Go ahead, yes, just to reiterate although theres variability in terms of scheduling when the patients are being scheduled we're seeing patients being scheduled rescheduled one to two months out in many cases and we're really pleased that we already have over 30 patients scheduled in 2025.
Speaker Change: But as Andrew mentioned.
Speaker Change: There's just some variability in and re collections as part of the process, but we don't say, we do not see patients drop out because of that.
Speaker Change: Got it thanks, so much for the color and congrats again on the progress.
Speaker Change: Thanks Jack.
Speaker Change: Thank you.
Speaker Change: And our next question coming from the line of Gena Wang with Barclays. Your line is now open.
Thank you for taking my questions maybe.
Speaker Change: Regarding the 30 patients already scheduled 2025.
Speaker Change: In the first quarter and then for the left Gilenya.
Speaker Change: Cumulative.
Speaker Change: Is that complete.
Silk collection, what is the average cycle.
Speaker Change: The collection cycle for these patients.
Speaker Change: Quickly regarding the cash gap do you have a one quarter second quarter 25 cash cap what could be the strategy.
Speaker Change: In addition to Hercules.
Speaker Change: <unk> covered this quarter cash gap.
Speaker Change: Good morning, Gina Thanks for the question. So I'll take the question about that we'll take your question a little bit out of order I will answer the questions about that.
Speaker Change: Cycles for La Virginia, I'll ask Tom to talk about kind of how those patients are being scheduled out next year and then go to James for the cash in terms of number of cycles and that in our.
Speaker Change: Clinical trials for lip journey, we said that.
Speaker Change: 85% of patients either got done at about one or two cycles. We anticipate similar results for the commercial setting and is still relatively small so I can't really comment on.
Speaker Change: That yet.
Speaker Change: But maybe comments you could comment on whether those initiatives scheduled first quarter, Yes, Hey, Janet good morning, we're really pleased with the sustained demand that we're seeing and we're really excited that 30 patients are already scheduled for next year.
Speaker Change: The vast majority of those are in Q1, although some are into Q2 as well and we're really not commenting on the breakdown between the <unk> and <unk>, but just seeing an exciting marker of the demand that continues to exist.
James Stirling: Alright, and then James if you could comment on the cash gap and plans to fill that yeah, Hi, Gena and you asked about Hercules in particular, so Hercules has been a great partner for us through this and we're in regular contact with them.
Premature for me to expand on specifics.
James Stirling: The nature of those conversations but.
James Stirling: Strategy to extend the runway include.
Renegotiating key contracts and other cost initiatives.
Our partnership with Hercules is key in helping move thus far.
Speaker Change: Thank you.
And our next question coming from the line of <unk>.
Jason <unk> with Bank of America. Your line is now open.
Speaker Change: Hey, guys.
Speaker Change: Thanks for taking my questions.
Speaker Change: On that.
Speaker Change: Scheduled new start disclosure just wondering whats your internal assumption on conversion rate of that actually being coming a patient that gets their self collected.
Speaker Change: And.
Speaker Change: I guess the other question that I had was just with the new starts new starts on a scheduled new starts for <unk>. Specifically are these concentrated in a few centers or do you feel like the.
Speaker Change: Where the start activities occurring is pretty broadly dispersed amongst center so far.
Tom Klema: Go ahead, Tom Hey, good morning, Jason in terms of a patient being scheduled and converting to a start.
Tom Hey: Obviously, we don't want to get too excited about small ends, but so far it's very high it's virtually it's essentially 100% are converting to a start.
Tom Hey: The only variable is just the time in some cases, they reschedule because of an event.
Tom Hey: 100% of time have come back on the schedule. So that the conversion rate is high and we were pleased to see the excitement for gene therapy.
Speaker Change: As far as remind me the second part of the question.
Speaker Change: We see broad based sort of Jennie O.
Speaker Change: I think it's exciting because we have over 70 <unk>.
Speaker Change: Approximately 30 key Tcs have initiated for one of our therapies, which is pretty well spread out but I think the most exciting part of that is we have about 40 <unk> that are looking to start their first patient. So I think it's a nice indicator of growth.
Speaker Change: <unk> ahead.
Speaker Change: Okay. Thank you.
Speaker Change: Thanks, Jason.
Thank you.
Speaker Change: And our next question coming from the line of Manny <unk> with Leerink partners. Your line is now open.
Speaker Change: Hi, Good morning. This is CJ on firm Mani Thanks for taking my question.
Speaker Change: Mine is just regarding previously shared that time from cell collection to completion of manufacturing testing was taking like a month.
Speaker Change: Longer than expected.
How do you figure out how to accelerate this process when you expect to fully realize this thank you.
Speaker Change: Thanks for the question I'm not sure that that's what we've actually reported that before we have we are seeing pretty consistent timelines. There is some variability.
Speaker Change: We'd say 70 90 days for us in TEG low 90 to 105 days for the Virginia, There's a bell curve around that so some of our slower summer faster, but in general have been very pleased with the.
Speaker Change: The quality of our manufacturing timeline that I'll point out that for the Virginia that first patient that we actually have delivery extra under that within that.
Speaker Change: In that timeframe.
Speaker Change: Kenya, So in general we're very pleased with our with that reduction.
Speaker Change: Okay. Thank you if I could quickly add other words like to what degree is your manufacturing capacity limit your ability to ramp patient starts.
Speaker Change: And to achieve that 40 drug delivery per quarter that year.
Speaker Change: Second half next year.
Speaker Change: Yes, so our current capacity is adequate to get to the projections that we've been talking about and able to support us getting to 40 drug product deliveries per quarter. It ultimately the cash flow breakeven that we've been talking about.
Speaker Change: We are working on expanding our capacity for lids Junior we announced that we would double capacity in 2026 and Thats based on our belief that the demand will continue to grow for both Ginny and sickle cell disease, but right now we have adequate manufacturing capacity to hit our projections.
Speaker Change: Okay, great. Thank you so much.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: And our next question coming from the line of Robin Victor with Goldman Sachs. Your line is now open.
Speaker Change: Hi, This is lidia on for Shelby and thanks, So much for taking my question I guess, just going off the last one can you speak to what drives your confidence in scaling to that 40 product deliveries per quarter by the second half of 2025, and how you expect this to evolve and ramp over the next few quarters. Thanks, so much.
Tom Hey: Go ahead, Tom Yes, sure good morning.
Tom: It's really a couple of things number one we continue to see strong and steady demand for us in tableau.
Tom: We did expand our capacity this year for.
Tom: Our manufacturing capacity outlines if was integral in sky sooner and we continue to see strong growth there and demand is not slowing down.
Tom: Number two when you look at the ramp for La <unk>, We always said that it would ramp in the second half of the year and continue into 2025.
Tom: It is.
Tom: As we look at them more than the 30 patients that are already scheduled for next year and as you look at our <unk> network of over 70 <unk>.
Tom: 40 of which are looking to start their first patient.
Tom: We see nothing but strong signals of demand in the market. So we're pleased with our growth, but more importantly, there is a lot of unmet need and people living with sickle cell disease.
Speaker Change: Thank you.
Speaker Change: And our next question coming from the line of.
Speaker Change: Eric Smith with Cantor Fitzgerald. Your line is now open.
Speaker Change: Good morning, and thanks for taking my question, one for James and the shareholder vote.
Speaker Change: And against you at the last stage can you speak to how many shares are currently authorized to be issued and how many additional shares you're asking for.
Speaker Change: Go ahead, Dave.
Dave: About 194 million shares.
Speaker Change: So it is authorized to issue about 35 million shares available right now.
Tissue.
Under current authority.
Speaker Change: And the required for how many yet.
Speaker Change: So the request came in the form of.
Reverse stock split which has the effect of.
Speaker Change: Increasing the number of authorized shares on a relative basis I don't have the number in front of me and that is that going to depend on so the board will be authorized to do a stock split in the range of 15 to 20 it depends on how what number that board chooses the board chooses the exited $193 million or <unk> 97 million outstanding will shrink down and therefore that remaining.
Speaker Change: <unk> 35 will be issuable, and I'll, just speak to kind of what how that stock shrinks down 30.
Speaker Change: <unk> $35 million would be fixed.
Speaker Change: And then maybe one quick one for Tom in terms of drop outs along the process.
Speaker Change: Can you speak to how many total patients who've lost from the time.
Speaker Change: Scheduling collection, all the way through.
Speaker Change: Yes.
Speaker Change: Good question, Eric So we're actually seeing a higher.
And then anticipated pull through rate.
Speaker Change: What we're seeing is if a patient comes off the schedule for any reason they ultimately end up for the most of our back on the schedule. So we're not seeing a high dropout rate and I'll give you. Some examples we did have 14 patients this year, who came off the schedule forward for different reasons.
Speaker Change: Seven of them more hurricane related they lived in the area that was impacted by hurricane So.
Speaker Change: So they came off the schedule, but so far all of those patients have come back on the schedule. So again, it's small and so it's early to give out those predictors, but we're really pleased with the pull through rate that we're seeing and then if I can comment on that from collection to actually delivery.
We have that.
Speaker Change: Once a patient gets collected is essentially 100% the exception would be that for occasionally for free for a sick patient versus sky solar.
Speaker Change: We add where we need to accelerate the process and not terribly collection, we might give that product.
For free for Sky Solar OLED.
Speaker Change: And so that would be the only example of a patient not converting to revenue.
Helpful. Thank you.
Speaker Change: Thanks, Eric.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: And our next question coming from the line of Lukas <unk> with RBC capital. Your line is now open.
Speaker Change: Oh, great. Thanks, so much for taking our question with MS. Lisa one for Luka.
Speaker Change: Just one on gross margins you know the cost of goods continue to remain higher than the revenue coming in so I'm wondering if you can help us understand you know.
Speaker Change: Which component is driving the high cost of goods business, the lentivirus production or the release assay and what levers can you pull to reduce the expense here.
Speaker Change: Okay.
Speaker Change: So it's the manufacturing for the most part and they are high fixed costs associated with leases.
Speaker Change: Our manufacturing contract providers.
Speaker Change: Ftes associated with the work.
Speaker Change: And so youre seeing high cost.
Speaker Change: And negative margins at the moment as a result of the relatively low volumes in these early quarters of commercialization.
We do expect that to change meaningfully as volumes increase now.
Speaker Change: Including going going positive in.
Speaker Change: <unk> 25 on the gross gross profit.
Speaker Change: So there is of course high costs associated with.
Speaker Change: Yes.
Speaker Change: Victor manufacturing as well.
The manufacturing and testing.
Got it and then.
Speaker Change: Just a follow up.
Speaker Change: Is that.
Speaker Change: There are more of sickle cell patients getting treated with <unk> with Janney.
Speaker Change: Cost of goods come down if I recall I believe with Jennie O uses a slightly.
Speaker Change: Slightly different manufacturing protocol versus when Peglow, so any color here would be helpful. Thanks.
Speaker Change: Yes, that's correct our suspension.
Victor with Jennie O.
It's lower cost and then.
Speaker Change: Since I was so.
Speaker Change: There is an advantage there and we expect to be able to adopt those savings over to <unk>.
Speaker Change: As we as we switched out.
Speaker Change: Thank you.
And our next question coming from the lineup.
Amy Corwin with William Blair. Your line is now open.
Good morning, Thank you for taking my question.
Speaker Change: So last year, you saw a dip in revenue in Q4 due to some patients delaying Darren.
Speaker Change: After the holidays. So I guess I was curious how much line of sight you have into infusion timing and what gives you confidence in hitting that $25 million in Q4.
Speaker Change: And then the second question is that how you kind of expect access and revenue to change with Cms's gene and cell therapy, Asquith model being rolled out to the states next year and if that might supersede any of the negotiations are you then please thank you.
Speaker Change: Got it yes, sure Hey, good morning Savi.
Savi: Obviously, we're tracking very closely the number of infusions that have already happened in Q4, along with the infusions that are scheduled right now that gives us the confidence in getting to the $25 million.
Savi: What we're projecting.
Savi: Okay.
Speaker Change: Part of your question was can you repeat that for us.
Speaker Change: Yes.
Speaker Change: Back to access new revenue to change with CMS is gene and cell therapy access model being rolled out to the states next year and if that that might supersede haneda negotiations you already have in place.
Speaker Change: Yes. So we are I mean, we are we have said before we are we.
Speaker Change: We are collaborating with CMS on the theme of my program, we would expect to hear some time in early December about that.
Speaker Change: It is a national program, where they were.
Speaker Change: Where they were.
Speaker Change: Provide acts will provide a framework that states could access we of course already have direct access with the states and I have been having conversations with them as well. So it is more of an accelerator I would call it than anything one replacing the other.
Speaker Change: Great. Thank you.
Speaker Change: Thank you.
Speaker Change: And I'm showing no further questions at this time I will now turn the call back over to Mr. Andrew I'll Minsheng for any closing remarks.
So thank you very much everyone for joining the call today.
Speaker Change: Look forward to updating you in the first quarter next year.
Speaker Change: Ladies and gentlemen that does conclude our conference for today. Thank you for your participation and 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: Okay.
Speaker Change: Sure.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Yeah.
No.
Speaker Change: Hum.
Speaker Change: [music].