bluebird bio Inc (BLUE) 2023 Q2 法說會逐字稿

Good day, and thank you for standing by. Welcome to the bluebird bio second quarter results and commercial launch progress call. (Operator Instructions) Please be advised that today's conference is being recorded.

I would now like to hand the conference over to Ms. Courtney O'Leary, Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining today's call. I'm Courtney O'Leary, Investor Relations at bluebird bio.

Before I begin, let me review our Safe harbor statement. Today's discussion contains statements that are forward-looking under the Private Securities Litigation Reform Act of 1995 including expectations regarding our future financial results and financial position in addition to statements about the company's plan, expectations or intentions regarding our business, regulatory progress and commercialization plan.

Such 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 most recent Form 10-Q and other filings with the SEC, which are available on the Investor Relations section of our website, www.bluebirdbio.com.

With me on the call is Andrew Obenshain, our CEO, who's going to provide some opening remarks on bluebird's strategic position and vision and then review our Q2 results. Then Tom Klima, Chief Commercial and Operating Officer will dive deeper into the positive momentum in our commercial launches and highlight the lovo-cel market opportunity ahead of us. They will then be joined by Chris Krawtschuk, Chief Financial Officer; and Rich Colvin, Chief Medical Officer, for Q&A.

With that, I will turn the call over to Andrew.

Thanks, Courtney, and good morning, everyone. I want to ground our call this morning and why we're here. A few weeks ago, we heard from a young adult with sickle cell disease who was treated in our HGB-206 study. This was a real privilege reflecting on life since gene therapy, she shared, it's amazing. My mind is open to the world of possibilities. So much is in front of me that I want to accomplish. There's so much more for me -- that one of my previous medical teams envision for me [and] themselves, and I'm excited about it.

And this is why we're here and what we mean when we talk about bringing patients and families more bluebird days. Over the past decade, bluebird has established ourselves as a gene therapy leader proving our clinical, regulatory, and commercial capabilities.

Clinically, we have the longest and most robust gene therapy program in the field, with over 180 patients treated across 8 clinical trials with up to 9 years of follow up and over a decade of gene therapy research. We have an established regulatory track record with 2 FDA gene therapies on market and the third BLA currently under priority review. And now we're making strides commercially, actively launching, achieving reimbursement and treating patients with 2 therapies today.

We occupy a unique strategic position in the gene and cell therapy industry. There are only a small handful of companies, all large cap, that currently have the commercial and cell gene capabilities that we do.

On the opposite side of the spectrum, there are more than 250 companies studying gene therapies pre-clinically or clinically, who lack a gene therapy infrastructure, with new companies being formed every month. We believe that with our unique capabilities, bluebird is in an attractive strategic position as one of the only stand-alone commercial gene and cell therapy companies. Our extensive platform for gene therapy expertise includes manufacturing experience, particularly with [viral] production and cell processing, more than a decade of R&D experience and an established commercial infrastructure.

Our strategic vision for future is clear, to evolve into an industry leading gene therapy company with opportunity for expansion and growth for years to come.

We have put in place the pieces that we need to be a successful biotechnology company. We are on a path to profitability in the near term and anticipate additional growth and scale in the next 5 years. We conservatively estimate a combined multi-billion dollar revenue opportunity in the U.S. for ZYNTEGLO and lovo-cel, if approved. We have a focused commercial footprint with the ability to cover U.S. transplant centers with a relatively modest, but effective field presence.

At scale, we estimate a gross margin of at least 70% as we invest in manufacturing quality capacity, and my comments pertain only to the U.S. There's also significant upside potential with wholly-owned global rights for all 3 therapies, particularly for ZYNTEGLO and lovo-cel.

I'll move now to how our business is performing today and the updates from the second quarter. I will summarize the highlights and additional details can be found in our Q2 release this morning and in our 10-Q.

First, it's incredibly exciting to be here, almost 1 year after the FDA approvals to ZYNTEGLO and SKYSONA. Initial traction we are seeing in these launches is a testament to the robust commercial viability of our platform. For ZYNTEGLO and SKYSONA, we have 16 patient starts to date. And assuming all of these collections resulted in infusions, this translates to a potential $45 million in gross revenue over time. We see that continue to accelerate quarter-over-quarter.

Our therapies are being covered by insurance, and there have been no ultimate denials from commercial or government payers for either therapy, and we've activated 15 QTCs, Qualified Treatment Centers, which is sufficient for the SKYSONA and ZYNTEGLO launches [where] we anticipate an aggressive ramp up to 40 to 50 QTCs by year-end to support the potential launch of lovo-cel next year.

Looking ahead, the lovo-cel for sickle cell disease, we have the opportunity to make a tremendous difference to change the lives of the more than 20,000 individuals living with severe sickle cell disease in the U.S. that may be appropriate for gene therapy.

In June, our BLA was accepted and granted priority review by the FDA for the treatment of patients 12 and over with a history of vaso-occlusive events, or VOEs. At this time, the FDA has not requested an advisory committee meeting. Keep in mind, this is the third LVV gene therapy they've reviewed from bluebird, which gives us great confidence. And we look forward to a decision from the FDA by the end of this year with a PDUFA date of December 20 and anticipated commercial launch in early 2024.

Additionally, the value of our therapy and need for rapid [accruable] access for patients is already being recognized. Just a few weeks ago, ICER reported that lovo-cel is cost-effective up to a price of $2.26 million. In fact, ICER rated lovo-cel's clinical effectiveness more favorably than direct competitors when compared to current standard of care. And financially, we are confident in our lean and efficient business model. We are focused on one mission and have the expertise and agility to deliver for patients and our business.

For the quarter, we reported $6.8 million combined product revenue for ZYNTEGLO and SKYSONA. As of June 30, we had $291 million in cash, cash equivalents, marketable securities and restricted cash. We remain on track with our full year 2023 cash burn guidance in the range of $270 million to $300 million and continue to prudently deploy capital to make investments to maximize stakeholder value as we launch ZYNTEGLO and SKYSONA and prepare for the launch of lovo-cel. We continue to estimate that we have a cash runway into the fourth quarter of 2024, including the restricted cash.

As previously disclosed, this estimate of cash runway includes approximately $45 million of restricted cash, which is currently unavailable for use. Without the release of our restricted cash, our runway is through the second quarter of 2024.

Now I would like to turn the call over to Tom to dive deeper into our commercial launch progress and the momentum in greater detail.

Thanks, Andrew, and good morning, everyone. Almost 1 year ago, we discussed our first commercial launch plans following the ZYNTEGLO approval. It's exciting to be here this morning to dive deeper into the progress we have made since then to bring our onetime treatments to patients.

We are forging the commercial model for ex-vivo gene therapy in the U.S. And this quarter, we continue to make great progress across the key pillars of our launch, including patient demand, Qualified Treatment Center, or QTC onboarding and access and reimbursement.

We want to give some additional insight into the launch dynamic for ZYNTEGLO and how the foundation we have built has laid the groundwork for commercial growth that is projected to accelerate quarter-over-quarter. In August 2022, we said we would launch ZYNTEGLO with 5 WAVE 1 QTCs, which we accomplished by the end of September.

Today, every one of those QTCs have started a patient, and in fact, most of these centers are treating their second, third or even their fourth patient. Our WAVE 2 QTCs or next 5 were activated by the end of last year, and we are excited to report that 40% of our WAVE 2 QTCs have started a patient with the rest on track to start a patient in the coming months.

We are currently activating our WAVE 3 QTCs. These centers have more recently been onboarded and are in the process of patient identification, enrollment and scheduling. We are building trust with our QTC network, and they are gaining incredibly valuable experience. They are understanding our process better, they are identifying interest of patients and have become more familiar with the reimbursement process.

This all led to an acceleration of our QTC activation, which is expected to bring the time to activation down for months for ZYNTEGLO to weeks for lovo-cel. And we remain on track to scale the bluebird QTC network to between 40 and 50 by the end of this year and will likely continue to expand into 2024 to ultimately reach more patients. The ZYNTEGLO launch is progressing exactly how we would expect an ex-vivo gene therapy commercial launch would, with trajectory, gradual and linear, and momentum continuing to build over time.

Now if we flash forward to early next year, these centers will be able to leverage their experience from administering ZYNTEGLO and are anticipated to be ready to treat individuals with sickle cell disease soon after the lovo-cel potential approval, further capitalizing on our 18-month headstart on the competition.

Delivering a consistent and reliable manufacturing process is a key part of delivering gene therapy and is essential for physicians, providers and for patients and their families. And as a reminder, a key element of ex-vivo gene therapy is that the transplant center is an integral part of the supply chain. We have built a strong reputation with these centers through our commitment to transparency and partnership throughout the entire process from QTC onboarding, all the way through patient infusion.

For ZYNTEGLO, post-cell collection, it takes on average 70 to 90 days to manufacture, test, release and then deliver the therapy back to the hospital. The infusion of ZYNTEGLO is driven primarily by patients, physicians and their schedules. And at this phase of our launch, we continue to focus on patient starts as the lead indicator with the expectation, as Andrew noted earlier, that starts translate to revenue as the treatment process and infusions are completed. And currently, bluebird recognizes revenue upon infusion. This process will largely be the same for lovo-cel and for other ex-vivo gene therapies in this space and is yet another example of where bluebird is leading the way.

Transitioning to lovo-cel for sickle cell disease. Before I talk about our launch preparations and the commercial opportunity, I want to remind everyone of the transformative impact of the therapy seen in clinical trials. Our clinical data reflects the most robust data available with the longest follow-up across any gene therapy program for sickle cell disease.

More specifically, our BLA package includes efficacy data from 36 patients with a median of 32 months of follow-up and safety data from 50 patients treated across the entire lovo-cel program. From our August 2022 data cut, we showed 97% complete resolution of severe vaso-occlusive events through 24 months, and the majority of adverse events were attributed to underlying sickle cell disease or conditioning with busulfan. We continue to work with the FDA through the review of our package, and we look forward to our PDUFA on December 20 of this year.

Preparations are well underway for the commercial launch in early '24, if approved. The unmet need for these patients is great. Sickle cell is a devastating disease that has historically been ignored and its severity underappreciated. We have performed more than 7 years of market research with sickle cell treaters, transplanters and with patients, which has consistently demonstrated that lovo-cels have meaningful treatment options for patients, giving us great confidence in the significant opportunity ahead.

Starting on the left-hand side of the slide, we have consistently seen strong patient excitement for gene therapy, and we have found that more than 70% of patients would consider gene therapy if recommended by their doctor. Demand in eagerness for gene therapy is clearly there and continues to grow.

Moving to the middle. One of the greatest misperceptions is that patients and providers are partial to one modality over another. The research simply does not show it. In fact, market research shows that more than 70% of patients will make a treatment decision based on efficacy and based on long-term follow-up, but not based on modality. This is a key differentiating point for lovo-cel, which has the longest and most robust clinical and safety profile of any gene therapy for sickle cell disease.

And finally, through our market research over the years, we have seen lovo-cel capture between a 50% to a 65% market share against a direct competitor. This was established after respondents reviewed both product profiles and then were asked which one they would prefer if both were available on the market.

All of this market research is coupled with a decade-long partnership between bluebird and the sickle cell patient community. I talked earlier about our key pillars of our ZYNTEGLO launch, including patient demand, our QTC network and access and reimbursement, and I'm pleased that we're already making great progress on these pillars and finalizing the launch readiness for lovo-cel. We are excited about the clear patient and physician demand as evidenced by the research I just discussed, and we will continue to partner with the patient community to broaden education around gene therapy. Our QTC network is growing and continues to become more efficient, gaining experience and momentum.

And finally, access to gene therapy is critical for patients. Bluebird continues to lead the way on value demonstration and in working with government and private payers on our innovative payment models, and we're excited about continued positive feedback from target payers on clinical value for unmet medical need and on our outcomes-based approach. We are confident in our therapies, we are confident in our strategy, and we are confident in our team, and we're making a difference in the lives of patients today and laying the foundation for many more to come. Now back to Andrew.

Thanks, Tom. Before closing off the call, I want to spend a few minutes on SKYSONA. As I mentioned earlier, we completed 5 patient starts, activated 4 QTCs and received no ultimate denials from government or commercial payers to date for SKYSONA. It's critical to remember that cerebral adrenoleukodystrophy is a very different disease than our other disease areas.

While the financial impact of SKYSONA is not material to bluebird, the impact it can have on the lives of patients with families affected by CALD is. SKYSONA was approved based on a 24-month improvement in major functional disabilities for survival. These measures include the ability to communicate, the ability to see requirement of tube feeding, total incontinence, wheelchair dependence and the loss of voluntary movement.

You can imagine the profound impact the loss of these functions has on patients and their families. The label for SKYSONA includes a boxed warning for hematological malignancy as 3 boys treated in our clinical trial developed myelodysplastic syndrome, MDS, which is believed to be caused by insertion of the Lenti-D vector. In July, we reported 2 additional cases of MDS in patients who are treated in our clinical studies, bringing the total number to 5 cases. And given the known risk, we do anticipate additional cases may occur.

Nevertheless, we continue to believe that SKYSONA remains an important therapy for patients who have no other treatment options. And given the difference in the vectors, we do not believe this is any read-through into our broader LVV platform, including ZYNTEGLO or lovo-cel. The rest of 2023 at the beginning of 2024 are shaping up to be an exciting time for bluebird.

For ZYNTEGLO and lovo-cel, we continue to aim to scale the 45 to 50 QTCs by the end of 2023. And for SKYSONA, we continue to anticipate 5 to 10 patient starts this year. We also look forward to the lovo-cel PDUFA date that's December 20, 2023. And as Tom touched on, we are actively preparing for the commercial launch expected in early 2024, if approved.

Before moving to Q&A, I want to summarize some key points. First, bluebird occupies a unique strategic position as a leading gene therapy company that's going to enable growth and expansion for years to come. Second, we have a strong competitive advantage, preparing to maximize our 18-month headstart against our next competitor with patient starts accelerating, QTC onboarding becoming more efficient and projected lovo-cel market share of 50% or more.

And finally, with commercial momentum, including 16 patient starts to date in the lovo-cel BLA under priority review, we are on a path to profitability in the near term, anticipate additional growth and scale over the next 5 years. Thank you for your continued support for bluebird and for the patients and families we aim to serve.

With that, I'd like to open it up for questions and invite Chris and Rich to join us. Operator?

(Operator Instructions) Your first question comes from the line of Dane Leone from RJS.

Congratulations on all the progress and momentum with the early launches of SKYSONA and ZYNTEGLO. Could you maybe just expand a little bit in terms of what you're seeing at the top of the funnel with referrals into the current QTC base that you've built up for ZYNTEGLO? And just -- what you're starting to find out now and more recent trends around that referral process then translating into patients that start to undergo the process for cell collection and ultimately, treatment?

I'm going to ask Tom to answer that question.

As we've talked about historically, all of our QTCs are a little bit different. In some cases, QTCs have their own tens of demand of patients who are excited about ZYNTEGLO. And so they're actually working through their internal patient load before they're starting to think about accepting referrals from outside the QTC. Other QTCs are both actively treating patients within their QTCs, but also taking referrals from outside the QTC. And as you can imagine, it's exciting for the QTCs to be offering first of [SKY] gene therapy, but also exciting for patients.

The process does take some time. It takes time to get through patient identification and then the medical workup and then to get enrolled into the program, but we're excited to see both the QTCs burning through their initial patient loads, but also starting to think about referrals from outside their QTCs.

Your next question is from the line of (inaudible) from Bank of America.

This is Jason. Can you talk about maybe the learning so far in the launch? What's been the biggest barriers as you go from collection to infusion? Like, are you losing any patients? And if so, why? And then have you guys discussed with payers the value-based model that you use with ZYNTEGLO and lovo-cel as it pertains to the sickle cell in market? I'm just kind of curious, given the larger end market in sickle, is that the preferred approach from payers?

Tom, again, you would take that question?

Yes. Just to start with the funnel, Jason, we aren't really seeing a lot of patients fall out of the funnel, so to speak. What we're seeing is that a lot of this will depend on both the physician schedule and the patient schedule because beta-thalassemia is not necessarily an acute disease that allows for some flexibility with scheduling. And so in most cases, when we see patients enter the funnel who are interested, they don't necessarily fall out. It just takes a little time for them to get through the treatment process. And in some cases, that happens relatively quickly.

In other cases, patients will schedule around a major event like a wedding or a dance or something like that, that they want to get through before they start treatment. So again, it's a small end. So we're not ready to make huge predictions on fall-out percentages. But right now, we're encouraged because we're not seeing a lot of patients fall out. They just take time to get through the treatment process.

Moving on to the value-based approach for sickle cell, we're extremely thrilled with how the process went for beta-thalassemia, and with ZYNTEGLO, and we've received a lot of positive feedback from payers, both government payers and private payers on our approach. However, the approach for ZYNTEGLO will not be the same approach that we're taking for sickle cell disease. We've done a lot of work with the same payers to understand what might work in a population that's a much larger population with different clinical expressions and different outcomes.

And we're excited to say that we finalized the details around what our outcomes-based agreement is going to look like for sickle cell. We, as you might understand, are not going to share those details at this time, but we'll show more details as we get closer to approval. But we believe that an outcomes-based agreement that fits the purpose for payers and for patients with sickle cell disease is absolutely necessary.

Can I just squeeze in a follow-up? The comment on gross margin, 70% or higher, I guess, I would have assumed that the pricing that you guys have, that maybe it might have been a little closer to 80%. Can you talk about the royalty stack on ZYNTEGLO and lovo-cel? I know there's like a number of different entities, low single-digit. So I wondered if you could sort of give us a sense of how much the royalty stacks are on those 2 products in cumulative?

Let me hand to Tom who will be [happy] to comment, then Chris.

Yes. Just to remind you that with ZYNTEGLO -- well, SKYSONA is pretty brief. With SKYSONA, we are not discounting or offering any outcomes-based agreement. There is a Medicaid discount of approximately 17% for pediatrics in SKYSONA. With ZYNTEGLO, we did offer an outcomes-based agreement that was tied to transfusion independence. It was a very simple outcomes-based agreement where, if a patient did not achieve transfusion independence or maintain transfusion independence, we would rebate up to 80% of the cost.

Again, it was just a onetime upfront payment, and then a rebate if an outcome was not achieved or maintained. Keep in mind that our clinical trial is approximately 90% of patients achieved transfusion independence, and of those who achieved it, 100% maintained it. So I'm giving you a little bit of background there because we don't expect there to be a huge impact on gross to net for ZYNTEGLO and for SKYSONA. And before I turn it over to Chris, it's too early to comment on sickle cell disease with lovo-cel. Chris?

As it relates to your question on royalties and milestones, I don't think that, that's going to be a material component from a go-forward basis. There will be commensurate milestones that you saw Q3 of '22. We had milestones associated with approval. The royalty drag on these products are not going to be significant as it relates to your modeling.

Your next question is from the line of Eric Joseph from JPMorgan.

I guess, just clarifying the -- I guess, the revenue breakdown for this quarter. Can you just kind of articulate how many patients are reflected in the $6 million to $8 million? And what, if any, latency there is between perhaps a patient being treated in revenue recognition this quarter?

And then, I guess, just tracking sort of the cadence of new patients coming into queue, it seems like you've added 4 new patients this past month since your prior corporate update. I'm just wondering whether we should expect this cadence of new patient adds to continue or accelerate perhaps going into the second half?

Let me take the second part of that question first, just quickly, and then I'll ask Chris to comment on the revenue. So we do expect to see a linear growth over time. We're not going to -- we're not forecasting out right now. We're not -- , but we do expect a linear growth as we had predicted for the -- this launch, and that's what we're seeing right now. Chris?

We're encouraged by the revenue that's recognized. However, I want to remind folks that the KPI for the company is really patient starts, and that's where we want to continue to focus your attention given where we are in the progress of our launches. So we see continued growth as it relates to our patient starts with both ZYNTEGLO and SKYSONA.

We're not going to report exact byproduct infusion numbers. And just as a reminder, certainly, as Andrew and Tom has touched on, patient starts will ultimately then translate into revenue at some point in time. And that's why the KPIs for the company that we're providing to the investor community is the patient starts.

Quick follow-up, if I could. Just give us the incremental color we've had on the eli-cel review cycle. I'm wondering if you've normally been notified about a potential AdCom for the lovo-cel? I guess, what's your expectation of AdCom as far as the current review cycle?

Yes. So at this time, the FDA has not requested an advisory committee meeting.

Your next question is from Gena Wang from Barclays.

Maybe I'll just follow-up also regarding the AdCom question. When was the last time you discussed with the FDA? And also, when will be the next time you will be talking to FDA? And then regarding -- I still wanted to understand the exact timing for the patient received the start forms until you see the drug product complete? Usually, how long does that take? You mentioned 70 to 90 days, that's test -- from test to completion of the manufacturing. But if we counted from the start form, how long does that -- roughly estimate that will be?

And then the third question quickly is SKYSONA. You did mention that there is a -- 5 patient [has] MDS events or the patient community well understood. This is a SKYSONA-specific risk, and there is no labor or anything come on the potential risk with ZYNTEGLO or hopefully, in the future, not in the label for lovo-cel as well?

Gena, let me break those down. On the first one, we're not going to comment on -- back and forth on the FDA. We just don't comment on when our cadence indication is there. All we can say is at this time, the FDA has not requested an advisory committee meeting. And then I'll hand it to Tom to talk about the time from the patient start forms to the drug product manufacturer, then I'll comment on SKYSONA. Go ahead, Tom.

Yes. What we're seeing is that the most predictable part is clearly the time from cell collection to the time of drug delivery back to the hospital, which is the 70 to 90 days on average. What we're seeing on the front end and on the back end is, there is some variability and some flexibility.

In some cases, we're seeing patients who are eager to be treated to move through that process very quickly. As part of that process, the qualified treatment center has to get a prior authorization from the insurance company to treat the patient on average that prior authorization or PA is taking about 2 weeks.

So the other pieces really depend on the patient's schedule and the schedule at the Qualified Treatment Center. And then the other part that's a little bit variable based on patients and physician schedules is after we deliver the drug product, it's up to the patient and the physician when they actually infuse ZYNTEGLO and SKYSONA. So there's a little bit of variability there.

However, what we're seeing is that they're motivated to infuse as soon as they can for a lot of reasons. Number one, they're usually scheduled to patients in advance. Number 2, they usually have a limited time where they get an approval from the insurance company. And then just -- I think everyone is motivated to get through the process. So again, the most predictable part is cell collection to drug delivery. The other parts, we will get more data as we mature through our launch. But right now, it's a little bit variable.

And then going back to SKYSONA. SKYSONA uses a different vector than our other therapies. As a result, we don't believe there's any [read grow] to our broader LVV platform, including ZYNTEGLO or lovo-cel. Just a reminder, there have been no cases of insertional oncogenesis and other programs. The 2 therapies are manufactured using totally different lentiviral vectors. The different vectors are designed specifically for expression in different cell types that utilize different promoters. As a result, they have totally distinct safety profiles. This is well understood by clinicians and the FDA as well.

And your next question is from Jack Allen from Baird.

Just 2 quick ones from our end. I was wondering if you could step back and think about the AdCom dynamics as it relates to the FDA and provide some historical context? At this point in the cycle, did the FDA notify you of the ZYNTEGLO AdCom? Or I guess, do you have any historical context surrounding that interaction? And then briefly, more of a logistical question. On the restricted cash, can you just make us aware of what the restrictions are on unlocking that cash and extending the runway?

I'll take the first part of the question and then hand the second to Chris. On the AdCom, we had heard at this time point from SKYSONA and ZYNTEGLO about the advisory committee. We have not -- at the time, the FDA has not requested an advisory committee for lovo-cel. They always could, so that -- there's no time-bound requirement to the FDA for those patients. Chris, do you want to comment?

Sure. The restricted cash predominantly relates to letters of credit as it relates to some of our real estate that we occupy. The predominance of the restricted cash relates to an arrangement for a lease for 50 Binney property in Massachusetts. We leased that from Sanofi, that's approximately $41 million. We then subleased that to Meta. And in lieu of Meta going direct with Sanofi, which would release the restricted cash, we continue to collect sublease income on that sublease. That sublease income is recorded in other income in our financial statements.

Of course, the operating lease is recorded above the line in our operations. The release of the restricted cash is really dependent upon going direct and having [Medicaid] direct with Sanofi or getting clearance from Sanofi to release that restricted cash, but it's actually tied up until the remainder of that lease expires, absent any agreement that we've got from those 2 companies, which we are actively trying to pursue.

Your next question is from Salveen Richter from Goldman Sachs.

This is (inaudible) on for Salveen. Could you help us understand the cadence of QTC activation? Last quarter, you have announced around 13, and then this quarter at 15. I guess, is this pace in line with your expectations? And what are the gating factors to getting to that 40 to 50 by year-end?

And then I just have a second question on just the overall characteristics of the patients that have undergone cell collection. Do they -- are they more younger patients or are there also adults being treated?

Tom, go ahead and comment on the QTC activation, and then the patient ages.

It's a good question. So we -- our QTC network was designed -- Our onboarding process was designed, first, to establish our network for the launch of ZYNTEGLO mostly and then a few centers for SKYSONA. And then as we moved into our WAVE 3 and WAVE 4 activations, obviously, we looked at ZYNTEGLO, but the focus is really becoming -- preparation for the lovo-cel launch in sickle cell disease. So we're very pleased to have gotten to 15 QTCs.

If you look at the way we've structured the waves, we expect a bolus of QTC to come on -- in the coming quarter, and we still feel confident that we'll get to between 40 and 50 by the end of this year. I do believe that since the BLA has been accepted by the FDA, that QTCs are indeed more motivated and excited about the possibility of having a treatment for sickle cell disease. So we're seeing QTCs in general start to move faster. And again, we're excited to see that at least most -- all of the WAVE 1 and most -- a good portion of the WAVE 2 QTCs are already treating patients. So we feel good about the progress. It's going to plan, and we look forward to scaling to between 40 and 50 between now and the end of the year.

And then cell collection characteristics. I think the most interesting thing -- I'll just say it's too early to give common characteristics. We see a wide range of interest from younger patients to older patients, from many different states throughout the United States, from outside of the United States. So it's really difficult right now to say that there's 1 or 2 characteristics that we're seeing. When we see the interest for -- in the future, as we get bigger, and we might be able to nail down more specifics. But again, it's encouraging that we're seeing a wide range of interest from a wide range of patients.

Your next question is from the line of Yaron Werber from TD Cowen.

This is Brendan on for Yaron. Just a quick one from us. And sorry if I missed this earlier, but kind of looking ahead to lovo-cel launch. Really kind of just wanted to get your thoughts on maybe the initial stages of the launch itself? Are there may be certain patient subsets or centers or geographies that you think are particularly low-hanging fruit, specifically for gene therapy that could maybe kind of crack the door open to a broader uptake long term? Really just kind of trying to get a sense of what your initial sales strategy is for once you get the market there?

Yes. We're excited about the lovo-cel launch. We've been really looking at what the launch will look like as we study kind of not only geographically where patients who have sickle cell disease live and where our treatment centers are going to be activated.

Certainly, within those treatment centers, anecdotally, there's a huge unmet need. In some cases, they -- some of these QTCs are doing clinical trials, and they have so many patients that can't even -- they have a backlog just for the clinical trial. So they're really excited about having another option available commercially as soon as something is FDA approved, and we look forward to lovo-cel's potential FDA approval. We look at a number of things, including probably most importantly where high patient population for sickle cell disease throughout the United States is present.

And then we look at QTCs who are willing and set up to treat sickle cell disease and they understand sickle cell disease, so they need at least a baseline expertise because sickle cell is different than some of the other transplants and other therapies that they've used historically. And then we look at their commercial liability. And in some cases, some of the QTCs want to remain clinical trial sites.

In other cases, they're pretty savvy when it comes to commercial launch. And so we plan to have a broad network across the country. Our goal is to ultimately provide access to any patient in the United States who need to be treated and the 40 to 50 gets us into a close proximity of about 95% of the patient population.

Your next question is from Luca Issi from RBC Capital.

Just 2 quick one here. Maybe on sickle cell disease. What are your expectations for the label? In particular, do you anticipate that the label will include patients between 12 and 18 years of age? The reason why I'm asking, I believe your competitor does not have patients in that subgroup for the primary efficacy set, at least from the data at EHA. So wondering if it's plausible that you'll get a broader label than your competitor? And if so, what are the implications for the launch?

And then maybe for the runway, can you just remind me if you do get approved for sickle cell disease, will you receive the PRV? And if so, are you planning to monetize it?

So I'm going to [shed] it to Rich on the first part, and Chris the second. Go ahead, Rich.

Yes, we submitted the BLA for the treatment of patients who are between 12 and 18 and over in that matter. We included patients between 12 and 18, both in our study, HGB-206 Group C as well as in study 210. So for that reason, we have patients who are in that age range and have seen the results from those patients. And I'll turn it back over to Chris.

As it relates to the PRV and given Rich's comments, it's possible we could receive a PRV since lovo-cel BLA was accepted for priority review for patients 12 and over. However, as it relates to whether or not we'd monetize it, we of course, would look at the market, evaluate the opportunities in the market and then make a decision based upon what we see there. I don't want to comment today on whether or not -- we monetize it or not until we know whether or not we get a fair price for it. And just as a reminder, the PRV is not factored. Any potential PRV is not factored into our cash runway.

Your next question is from Jeff Hung from Morgan Stanley.

This is [Katherine] on for Jeff. We just want to ask if there are any learnings from ZYNTEGLO or SKYSONA or other gene therapy launches that you plan to apply to lovo-cel launch either in terms of strategy or from an operation or a commercial standpoint?

Yes. We -- obviously, one of the big advantages that we feel that we have right now is we have almost 1 year now with ZYNTEGLO. So we've certainly learned a lot over the last year. Many of those learnings, we believe we can apply to make a more efficient operational process for lovo-cel. I'm not going to get into all the details on this call today. But as I mentioned before, not only is bluebird becoming more efficient and nimble, the QTCs that we're working with are becoming obviously value partners and more efficient and nimble.

Looking at how we design the QTC network, obviously, that was a strategic move on our part to design a QTC network that serve both ZYNTEGLO and lovo-cel synergistically. And probably one of the most important learnings is our -- how we thought about our value-based approach to setting the price for ZYNTEGLO. We'll follow that same value-based approach when we think about the price of lovo-cel and translating that into access for patients.

And we learned a lot through the process as we got ready for ZYNTEGLO about what an innovative payment model could look like. We've taken some of that momentum and applied some of those same partnerships to learn about what an outcomes-based agreement for lovo-cel and sickle cell could look like. So it won't be the same, but we did use a lot of the learnings from our first launch and feel that we've gained great momentum -- obviously, with the patient community, a great momentum with our QTCs, and then feel very confident in the way we're thinking about pricing and outcomes-based agreements for lovo-cel.

Your next question is from the line of Mani Foroohar from Leerink.

This is Lili on for Mani. Just maybe a follow-up question on the restricted cash linked to the property lease. Would you mind reminding us the remainder of time on the lease? And would you expect that to fall within the 2024 kind of guidance for cash runway?

I'm going to ask you to repeat the second question. Let me answer the first, because I couldn't exactly hear you on the second part of the question. As it relates to the first, it's a 10-year lease and the remainder is approximately 7 to 8 years. Can you repeat the second question -- second part of your question?

That also answers the second part.

Your next question is from the line of Yanan Zhu from Wells Fargo.

So of the 11 patient starts for ZYNTEGLO, how many of them are from the WAVE 2 QTCs? And I also wanted to ask about the linear trajectory comment. I think last quarter, as of May 9, you had 7 patient starts for ZYNTEGLO. This quarter is 11. Could we infer from the linear trajectory comments next quarter, it might be another 4 and so on?

And then a question on the lovo-cel pricing. You made a comment about the ICER suggested price. I was just curious when you make the decision for pricing, is it more to be on par with ZYNTEGLO or would you target a lower price to accommodate the larger patient population?

Yes. I'll take the second part of the question first and hand Tom the first part. Lovo-cel pricing, we're just not going to comment yet, it's way too early, and that will be around launch when we'll be discussing our pricing. Go ahead, Tom.

Yes. And maybe to add to that, obviously, we're going through the process right now. We're going to base our pricing decision on the profound benefits that we believe lovo-cel has in sickle cell disease. Obviously, it's a devastating disease, and we're looking at the process similarly that we looked at to the process for ZYNTEGLO. So we're in a good place. But again, we're not going to comment on the final price.

As far as the launch, we've said all along that it will be kind of linear and gradual. The thing that I'll add to that is it's tied to QTC activations. And I'm not going to give the breakdown of the number of patients coming from WAVE 1 versus WAVE 2. But the way to think about it is that WAVE 1 QTCs are now most of them onto their second, third, fourth patients, whereas the WAVE 2 QTCs are getting through their first patients, but we would expect that to be kind of a build over time. Whereas new waves of QTCs come on, they're finding new patients, while the QTCs that have been on for a while are getting through not only the patients that are in the QTC but also starting to accept the referrals from outside the QTC. So we're excited about the demand that we're seeing, and we're excited about the momentum that is starting to build.

If I may squeeze one question about payer mix. If we look at the $6.8 million revenue, could you comment on -- these patients are paid by government or commercial or a mix of both?

Go ahead, Chris.

Look, the current payer mix, as we've seen it today, really ties to the -- what I would say, the onboarding of the QTCs and the function of the patients that they were providing. So currently, we're seeing a little bit higher indexing towards Medicaid, but we continue to believe the stats and the characteristics on the payer mix that Tom has described earlier in his comments.

And I will just add one thing to that. We've seen patients go through the process and receive -- and QTCs receiving reimbursement from both private payers and from Medicaid payers. So we're encouraged to see progress on the private payers but with Medicaid.

Your next question is from the line of Sami Corwin from William Blair.

This is Brooke Schuster on for Sami. So given that lovo-cel and ZYNTEGLO follow a slightly different manufacturing process, how do you see this affecting the potential launch of lovo-cel, if any? And do you predict a similar vein to vein time? And are there any other ways you expect to execute the launch of lovo-cel differently than the first 2 products?

Yes. I'll start with kind of the last part of your question and then work my way backwards. The biggest difference with the lovo-cel launch will be how you think about QTC activation. And again, starting from scratch or starting with the baseline, it takes months to onboard a QTC. And a lot of that process includes a legal agreement between us and the QTC and a quality agreement between us and the QTC. So that takes time.

What we've done strategically with ZYNTEGLO, as we've designed our agreements so that they apply to both ZYNTEGLO and lovo-cel. So the reason we're trying to get to between 40 and 50 QTCs this year is to both maximize the opportunity for ZYNTEGLO, but to make it a smoother transition and set things up for success with lovo-cel. Meaning that the time to get a QTC activated for lovo-cel will be weeks, whereas it was months for ZYNTEGLO. So that's probably the first big difference in [the 2] that you'll see.

Operationally, QTCs have learned a lot through the process by administering ZYNTEGLO. Many of those learnings will apply directly to how they think about lovo-cel, everything from cell collection through infusion. And then finally, I will just say that, we believe that the vein time that you asked about or the time from cell collection to drug-delivery of between 70 and 90 days will roughly be the same for lovo-cel and for any other ex-vivo gene therapy in this space. That's a part that's going to be standard and hard to change for a little while.

There are no further questions at this time. I would now like to turn the conference back to our speakers for closing remarks.

Thank you, everyone, for joining this morning. And just to reiterate, we have a -- we've made really good progress on our launch to date. We're looking forward to bringing lovo-cel to patients as well. And bluebird continues to build its position as really a unique leading gene therapy company in the industry. And we look forward to giving you more updates as we progress. Thank you.

This concludes today's conference call. Thank you all for attending. You may now disconnect. Have a great day.