Q1 2024 2Seventy Bio Inc Earnings Call

Participants

Jenn Snyder; SVP, Corporate Affairs; 2Seventy Bio Inc

Chip Baird; CEO; 2Seventy Bio Inc

Vicki Eatwell; CFO; 2Seventy Bio Inc

Anna Truppel-Hartmann; Chief Medical Officer; 2Seventy Bio Inc

Kelsey Goodwin; Analyst; Guggenheim Securities

John Newman; Analyst; Canaccord Genuity

Presentation

Operator

Good day and thank you for standing by. Welcome to the 2Seventy Bio first quarter 2024 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your speaker today, Jenn Snyder with 2Seventy Bio. Please go ahead.

Jenn Snyder

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

Chip Baird

Thank you, Jenn, and thank you all for joining this morning. Today, we disclosed our first 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.
First quarter of 2024 was an eventful one. We completed a major strategic realignment to focus exclusively on Abecma to achieve this, we sold our oncology and auto immune R&D programs to Regeneron. As part of the sale, we transferred approximately 160 employees and approximately 67% of our real estate footprint to Regeneron.
We think this is an ideal outcome for the science and these programs, and we look forward to seeing what the team can achieve in years to come. We also took the tough but necessary decision to reduce headcount by an additional 14% as part of the strategic refocusing.
The end result is that we have emerged with a leaner cost structure, cash runway beyond 2027 and time to get it back on back on track commercially to that end, we have consistently said that the path to have excellent growth hinges on earlier line approval.
We traveled quite a journey on this front, including an ODAC meeting in March to advise FDA on our supplemental BLA. the 270 and BMS teams did an amazing job at the panel, and we were subsequently approved in earlier line setting, which opens a much larger addressable patient population.
So it's been a great start to the year, and we are now singularly focused on getting a back-to-back contract commercially. We are in the early days of launch and expect it will take into the second half before we see meaningful growth.
We've talked for some time now about known strength to our backlog, including strong efficacy. That is reproduced in the real-world setting a well-established and manageable safety profile and consistent manufacturing turnaround time and high rates of inspect product with commentary data in the label and real-world evidence that continues to mature. We believe we have a competitive profile in earlier line triple class exposed patients, which is a population with high unmet need.
To be clear, multiple myeloma is a competitive market space and a return to growth will take time. But we have a strong commercial organization and launch strategy that we believe in and we look forward to executing on the plan.
I'm happy to talk about our strategy in the Q&A, but for now, I will turn it over to our newly promoted CFO, Vicki Eatwell talk about first quarter results. Vicki?

Jenn Snyder

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

Chip Baird

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

Question and Answer Session

Operator

(Operator Instructions) Daina Graybosch, Leerink Partners.

Hi, this is Robert on for Daina. Thank you for the question or the question is related to backlog profitability, how should we think about a backlog, collaboration profitability going forward? Is there a threshold revenue above which the program will be consistently profitable given the flat sales over the last three quarters. What is driving this fluctuation in profitability and collaboration loss from quarter to quarter? And can we better anticipate these fluctuations in our model? And then there's a short follow up after that?

Chip Baird

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

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

Chip Baird

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

Operator

Salveen Richter, Goldman Sachs.

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

Chip Baird

Sure. I didn't catch the last part of your view of the three partners question there. Could you say the last part again?

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

Chip Baird

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

Vicki Eatwell

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

Operator

Kelsey Goodwin, Guggenheim Securities.

Kelsey Goodwin

Oh, hey, good morning. Thanks for taking my question first, I guess, can you provide any early commentary on what you're seeing and hearing kind of post label expansion with Karma three?
And then I guess maybe prior to the expansion in terms of the competition and the headwinds you were facing previously were or are you seeing that mainly from CAR-T competitors or bispecifics or a blend and just kind of the market in general, just trying to get a little more color there.

Chip Baird

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

Operator

Yaron Werber, TD Cowen.

Hi, this is Gina on for Yaron. Thanks for taking my questions. Two parter from me. So you're saying that the overall efficacy manufacturability are points of differentiation for Abecma. Can you remind us what your current manufacturing success rate out of spec rate over a Abecma.
Also vein-to-vein time and the second part is on the attack in March. The committee seemed a little bit concerned about PFS for a government not being durable. Student is going to hinder our Beckman uptake in earlier line settings. Thank you.

Chip Baird

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

Can I unmuted asking about durability of PFS and how it all right into the panel?

Chip Baird

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

Anna Truppel-Hartmann

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

Chip Baird

Thanks, Ana.

Operator

Samantha Synenco with Citi.

Hey, this is Eric on for Sam. Thanks for taking our questions. Can you speak to any utilization trends you're seeing across treatment centers where Abecma is the only BCMA CAR-T available versus those that offer carbon-free as well and are you seeing utilization across all activated treatment centers? Or is it clustered in a subset? And if so, can you characterize that subset?

Chip Baird

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

Operator

Vikram Purohit, Morgan Stanley.

Hi, this is Morgan on for Vikram. Thanks for taking your question. So I wanted to ask about your anticipation of the initial launch ramp curves and the third-line setting and how this might compare to late-line setting uptake. Thank you.

Chip Baird

Hi, Morgan. Thanks. So thanks for the question. On the fixed line launch was a different dynamic in the sense that there were patients with no treatment options. There was clearly a bolus of patients who had been waiting for that approval and capacity was limited.
And so that resulted in long lines in terms of wait times and just triage in the best that we could as a manufacturer and as a sponsor from today, until I'd say, very different dynamics on more treatment options for those patients, a much larger market.
We have, as Vicki highlighted earlier on, based on the present demand unlimited capacity. And so that I think sets us up well to expand into that market. But it's not the same kind of bolus effect. We expanded expected in the fifth line. So again, as we said early days here, it will be on return to growth. But we expect given the lag time between enrollments, if and then revenue kind of the revenue impact we don't expect to be able to show until we get into the second half of the year results, Q3, Q4 results.

Operator

John Newman, Canaccord Genuity.

John Newman

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

Chip Baird

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

Vicki Eatwell

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

Operator

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.

Chip Baird

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

Operator

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