bluebird bio Inc (BLUE) 2024 Q1 法說會逐字稿

Thank you for standing by, and welcome to the bluebird bio first quarter 2024 results call. All lines have been placed into listen-only mode. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Finally, your reminder that this conference is being recorded.

I would like to turn the call over to Courtney O'Leary from Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining our first quarter 2024 results call today. My name is Courtney O'Leary, Director of Investor Relations at bluebird bio.

Before we 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 of the company's plans, expectations, or intentions regarding regulatory progress, commercialization plans and business operations. 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 filings with the SEC, which are available on the Investor Relations section of our website, www.bluebirdbio.com.

On today's call, Andrew Obenshain, bluebird bio CEO, will provide opening remarks. Then Tom Klima, Chief Commercial and Operating Officer, will discuss progress on the commercial launches of LYFGENIA, ZYNTEGLO, and SKYSONA. And finally, Chris Krawtschuk, Chief Financial Officer, will provide a financial update before opening the call up for Q&A. With that, I will turn it over to Andrew.

Thanks, Courtney, and thank you, everyone, for joining the call this morning as we provide an update on our first quarter 2024 results and recent highlights. I'm thrilled to be here today on the heels of our first LYFGENIA commercial cell collection, which we announced earlier this week. Nearly a decade after we began clinical development for LYFGENIA for sickle cell disease, seeing a patient initiate commercial treatment for our gene therapy is a monumental milestone, both for bluebird, for the researchers and the clinicians who work tirelessly on this program, and also for the sickle cell community who have been our partners every step of the way.

Now with our first LYFGENIA patient start completed and with a strong established commercial foundation in place, bluebird is poised for accelerated growth throughout the rest of 2024. We look forward to sharing more updates as momentum builds.

I will now hand the call over to Tom to discuss the progress in our commercial launches in greater detail.

Thanks, Andrew, and good morning, everyone. This week we achieved yet another amazing milestone in our gene therapy journey at bluebird, with our first commercial patient start for LYFGENIA. Over the past year, we have pointed to the benefits of our commercial head start and the foundation we built with ZYNTEGLO for beta-thalassemia and SKYSONA for cerebral adrenoleukodystrophy. And today, we are seeing not only that momentum build for our first two launches, but also these synergies are coming to fruition for LYFGENIA.

As a reminder, our launches are focused on three core elements for success. First, establishing a robust network of qualified treatment centers or QTCs. These are transplant centers with significant experience in cell and gene therapy. Today, we have 64 activated QTCs, unparalleled compared to others in the field. Second, ensuring the value of our therapies is recognized and that patients have timely equitable access. And lastly, optimizing the patient and provider experience. Gene therapy requires a high-touch approach and transparency, collaboration and understanding the needs of patients, families and providers is paramount. Our deep understanding of the gene therapy process, our dedicated focus, and our experience over the last 18 months allow us to be a strong partner to our activated QTCs as we help them bring life-changing therapies to their patients.

We are extremely encouraged by the excitement in the sickle cell community and the number of patients preparing for treatment. As we sit here today, more than half of our LYFGENIA QTCs have communicated to us that they are actively evaluating patients for gene therapy initiation and one-quarter of our centers are in the prior authorization process for one or more patients. As a reminder, the journey to a patient start or cell collection takes time. While every patient is different, the typical path for a patient to first initiated consultation with a transplanter at a QTC, then to enroll in my bluebird support, and then often concurrently, the QTC will initiate reimbursement negotiations with the payer, while also taking steps to ensure clinical readiness, which includes a two-month washout period for hydroxyurea. These steps must be coordinated and the patient's health must be considered. With that in mind, we continue to anticipate starts for LYFGENIA to grow quarter over quarter, with the majority occurring in the second half of the year as momentum builds. And factoring in the time for drug product manufacturing once the patient's cells are collected, we anticipate that first revenues for LYFGENIA will be and reported in Q3.

Moving to ZYNTEGLO, we continue to see strong linear growth, with 11 patient starts since the beginning of 2024. As we previously shared in mid 2023, we initiated steps to increase drug product manufacturing capacity for ZYNTEGLO and SKYSONA commensurate with demand. Through our experience in the market, we have also determined the need to increase adherent vector supply, and we've initiated steps to bolster supply to meet the launch trajectory.

Additionally, we have completed three patient starts for SKYSONA since the beginning of 2024. As a reminder, patient starts, which is when cell collection occurs, remain the key commercial metric to watch in the early stages of our launch, as this is the value-creating moment for the company, with revenue being recognized when the patient is infused. For modeling purposes, you can continue to expect that patients are infused one to two quarters following cell collection. In our experience, once a patient goes through cell collection, they continue on the treatment journey and are dedicated. To date, every patient who has started the process has completed or remained in the process, and we continue to expect between 85 and 105 patient starts across our commercial portfolio in 2024.

Now moving to access and reimbursement. Our validated strategy from our ZYNTEGLO and SKYSONA experience is driving favorable coverage for LYFGENIA. We are very pleased to have our cost effectiveness model for LYFGENIA peer reviewed and published in the Journal of Pharmacoeconomics in April. The publication offers significant insight into the potential lifetime impact that reducing or eliminating VOE- associated pain crises may have on patients' health and well-being, healthcare utilization, future earnings, and life opportunities. The publication found that LYFGENIA is cost-effective up to a price of $3.9 million. The value is being recognized and we are making great progress securing access for patients with sickle cell disease. Just five months post-launch, both commercial and Medicaid-insured patients had successfully obtained prior authorization for LYFGENIA. Additionally, we have multiple outcomes-based agreements signed for LYFGENIA with national commercial payer organizations and have published coverage policies in place for more than 200 million U.S. lives. Our goal has always been timely, equitable access to LYFGENIA, irrespective of a patient's insurance type. Discussions are ongoing with Medicaid agencies representing 80% of Medicaid insured individuals with sickle cell disease in the U.S. Additionally, timely access to ZYNTEGLO and SKYSONA has continued, with zero ultimate denials for either therapy across both Medicaid and commercial payers.

Moving to our QTC network, we have established a substantial QTC footprint very quickly following LYFGENIA's approval. Today, bluebird has activated 64 QTCs for LYFGENIA and ZYNTEGLO. We were able to quickly transition these centers for LYFGENIA, due to both the learned experience of setting up these centers for ZYNTEGLO and the strong relationships we've built with these centers during 2023. 11 QTCs have started their first patient for one of our products and the majority of sites who have started their first patient have started their second or third. While we anticipate we may bring on a handful of additional centers throughout 2024, our focus has shifted to patient pull-through at our 64 centers and deepening their experience with bluebird's gene therapy portfolio. Additionally, six centers in our network are also activated to administer SKYSONA for patients with CALD.

To recap, ZYNTEGLO and SKYSONA launches continue to progress as planned, and we anticipate strong linear growth for ZYNTEGLO in 2024, along with 5 to 10 patient starts for SKYSONA. We are extremely excited about the early progress in our LYFGENIA launch, building on our validated commercial platform, and most importantly, gene therapy is becoming a reality for patients in the United States. We look forward to updating you as our momentum builds in our launches and patient starts grow over the next few quarters.

And now I'd like to turn the call over to Chris.

Thanks, Tom, and good morning, everyone. In the first quarter, we reported $18.6 million in total revenue, driven by revenue from ZYNTEGLO. . As a reminder, we recognize revenue upon infusion of the drug product. As previously guided in 2024, we anticipate gross-to-net discounts in the range of 20% to 25% with fluctuations based on product mix, payer mix as well as utilization of our outcomes-based agreements.

As of March 31st, 2024, we had $264 million in cash on hand, inclusive of $52 million in restricted cash. Based on our current business plans, including our ability to achieve certain commercial revenue milestones, we have a cash runway through Q1 of 2026. This runway includes our current cash equivalents and also assumes that we receive the two remaining tranches totaling $50 million from our term loan facility. Additionally, we continue to work expeditiously to complete our restatement and file our 2023 10-K and Q1 2024 10-Q. I want to personally thank and recognize the tremendous work and unwavering dedication of the Bluebird finance and accounting teams that are finalizing the restatement. Importantly, and as a reminder, the restatement is not expected to impact our cash position or our revenue.

With that, I'll turn it back over to Andrew.

Thanks, Chris. As we highlighted today, it is an exciting time for bluebird. We stand in the midst of a monumental year with the potential for growth on the near term horizon.

And with that, I'd like to open it up for questions. Operator?

Thank you. (Operator Instructions) In the interest of time and to ensure we cover as many participants as possible, we do request a limit of one question and one follow-up per person. And your first question comes from the line of Jason Gerberry from Bank of America. Your line is open.

Morning. Thanks for taking my question, guys. I guess I'll ask a question about just the update on the Medicaid reimbursement work that's ongoing. And curious, I think we asked this question last quarter, but just wanted to make sure that it's not a rate-limiting factor at all to new patient starts for LYFGENIA, as you build up the Medicaid reimbursement coverage. And just trying to put that in context relative to your competitors' update on their new starts. I guess the question is one of are they launching faster in the U.S. or is their new patient start number more just a function of a broader geographical reach?

Yes, morning, Jason. I'll hand that over to Tom. Why don't we take those in order -- kind of reverse order. Why don't we talk about the patient starts first and then talk about the Medicaid as well. Go ahead.

Yes, good morning, Jason. We're extremely pleased with what we're seeing in terms of the starts. Obviously we have a tremendous head start with ZYNTEGLO and a lot of progress there. But when you look at LYFGENIA, we have multiple patients in multiple QTCs going through the initiation process for gene therapy, and very excited about the first collection. Really not going to comment about what the competitor is doing, but more so I think we feel really good about what we're seeing with LYFGENIA.

As far as Medicaid, it's not a rate-limiting factor. Obviously, we've done work with Medicaid for many, many years now on making sure they understand and recognize the value of a onetime potentially curative therapy, also offering our outcomes-based agreement and tying that to the value of our therapy. And in the meantime, until they have coverage policies or sign up for an outcomes-based agreement, they can always have access. Basically patients can have access to the medical [inceptions] process. So it's really not a barrier for patients.

Thank you.

Your next question comes from the line of Jack Allen from Baird. Please go ahead.

Thank you so much for taking my question. I guess to start, I wanted to ask about your thoughts as it relates to starting LYFGENIA in younger patients. Do you have a study ongoing, and how are things progressing as it relates to expanding access as it relates to age for LYFGENIA?

Thanks for question, Jack. So we have a trial on HGB-210 ongoing in pediatric patients. That enrollment's ongoing. We anticipate to complete that by Q4 2024, and that's going to evaluate patients 2 to 12 for LYFGENIA. As a reminder, for ZYNTEGLO, we have an indication down to age of two.

Great. And then I'll give it a shot here. I'm not sure what kind of reception I'll get on this, but how many patients are in the bluebird support system as it relates to LYFGENIA? Do you have any idea about the pull-through of those patients based on your ZYNTEGLO experience? Is there anything to read through there as it relates to people starting that aspect of the process?

Yes, good question, Jack. We've learned a lot through our ZYNTEGLO experience. We're not going to comment individually on the pull-through, because I think when you look at beta-thalassemia, it's a lot different than patients who have sickle cell disease and it's kind of early in the process right now with obviously a small n for LYFGENIA. So we really don't want to comment on that. But I will tell you that there are a lot of patients who are very excited for gene therapy. As I said, there are multiple patients across multiple QTCs initiating the process, and usually once they start the process, they're committed and continue through the process. So we're just excited with the momentum we're seeing and we look forward to getting more data as the year progresses.

Great, thanks so much for taking the questions.

Your next question comes from the line of Danielle Brill from Raymond James. Please go ahead.

Morning. This is Daniel on for Danielle. We have a question on the QTC is qualified for both CASGEVY and LYFGENIA. Any particular reason for the patient chose to pursue the treatment with LYFGENIA? Have you seen any like push and pull from payers deciding either therapy? Thank you.

Yes, thanks for the question. Tom, go ahead.

Yes, good morning, Daniel. As far as offering both therapies, we have a head start, obviously, with 64 qualified treatment centers. However, it is our expectation that most qualified treatment centers will offer both therapies, LYFGENIA and the other gene therapy. We haven't seen many centers saying they're going to offer one or the other or exclude one or the other. I think most centers believe that choices for patients are good and if they have both onboarded already, which is only a small handful, then they present both to the patient and it becomes a patient choice.

Thank you.

Your next question comes from the line of Gena Wang from Barclays. Please go ahead.

Thank you for taking my questions. Maybe also asking about the 64 QTC. Out of these, how many of these actually were active for LYFGENIA? And also for the first patient, I don't know if you can share that detail, how many cycles of cells collection in order to start the manufacturing?

Morning, Gena. And actually, I think I'll take the second part of that first and hand it over to Tom for the first part. That was the first collection for the patient. We reported their first collection. So we haven't reported how many collections we'll need. That manufacturing is ongoing right now. So we can't comment on that. Tom, go ahead.

Yes, hi, Gena. The 64 centers, we're really excited about that. Centers really do not want to go through the process of getting onboarded if they don't have patients to treat. So we believe that the 64 centers that we have will evaluate patients for LYFGENIA and/or ZYNTEGLO as we go forward. And if you look at the dynamics of how we build out the qualified treatment center, almost half of the qualified treatment centers have come on board just since approval in December. So the momentum continues to build and as you look at the patients going through the centers, we're really excited that 64 centers are now on board and many of them already starting the process of evaluating patients.

I'm sorry if I can make clear, I think last quarter was 49 out of 62 received referral for LYFGENIA. So just wanted to know now, 64 out of 64, how many of these receive referral for LYFGENIA?

It's about 50 of the 64, and we anticipate that almost all of them will be onboard very soon. It's just a matter of completing some final steps and in some cases you won't see all of them on our website because some of them chose not to be listed in our website.

Okay, great. Thank you.

Your next question comes from the line of Eric Joseph from JPMorgan. Please go ahead.

Thanks. Good morning. The added color that you're providing here on sort of product collections within the QTC network is pretty interesting. Can you talk a little bit more about sort of what separates the initial 11 QTCs that have treated patients so far versus the balance? And I wonder whether it's perhaps bed capacity or patient demand or something in the preauthorization process that has the first group kind of moving a little more swiftly.

And then a follow-up to this Times article featuring your first patient collection with LYFGENIA. The article notes that Children's National has a capacity to do about 10 gene therapy treatments a year. Can you talk about how representative that capacity is across your QTC network? Do you anticipate any efforts to kind of expand that in a way that would support uptake? Thank you.

Go ahead, Tom.

Yes, good morning, Eric. Two great questions. The first question is -- probably I can answer that two different ways. I think if you consider the dynamics of when we brought on the QTCs, we really focused on the first 10 to 15 for the most -- the first half of last year, and then we rapidly accelerated into the end of last year and the start of this year. So if you look at those initial 10 to 15, now you're seeing roughly 11 are treating at least one patient or going on to treat their second and third patient.

The second component is just time. If you look at the sickle cell, the patient journey for sickle cell disease, it just takes time from the initial consultation and going back and discussing it with their family, going through the process of getting the prior authorization and then being medically ready, making sure they're stopping their hydroxyurea for two months and going through transfusions. I would say the early adopters kind of saw this in advance, and we're thinking about patients and patients who were already calling in prior to approval. And that's why you're seeing some QTCs get off to a faster start.

And the second part of your question around the New York Times article, very inspiring to see that patient go through the start of the process. I would say if you've seen one qualified treatment center, you've seen one qualified treatment center. So I wouldn't say that that's necessarily representative, but I would say that most of the large QTCs are building out large capacities for cell and gene therapy.

Okay, thanks. I'll give you just a quick follow-up to that. Has Children's National treated any patients with ZYNTEGLO?

We are not going to comment individually by QTC by QTC on that information, but there are obviously one of the 11 that's treated patients, and many of those QTCs have now gone on to their second and third. I'll say it that way.

Okay. Thank you very much.

Your next question comes from the line of Eric Schmidt from Cantor Fitzgerald. Please go ahead.

Thanks for taking my questions. In terms of the new start guidance for 2024, just want to maybe put a finer point on how you're quantifying a new start or qualifying a new start. It is from the time a patient's first collection has been completed? Does that make them a new start?

Go ahead, Tom.

Yes, good morning, Eric. So we've been pretty consistent in how we've defined new patient starts since the beginning. We really believe that the metric to watch is the first unique cell collection, when the cell collection is complete. We believe that once a patient goes through that process, that it's highly likely that they'll go through the entire journey and ultimately get treated and infused at the end of the day. So we define it by that unique first cell collection being completed.

Thanks for that information. Maybe for Chris, we're kind of flying into uncharted waters with regard to the restatement. Is there anything you can say on how COGS are trending, OpEx, cash burn in Q1? I guess I'm struggling with being able to understand your financial state right now.

Go ahead, Chris.

First, I'll say that the restatement will not have an impact on cash, nor it will have an impact on the key metrics of the company, such as patient starts, et cetera. That's why we continue to make that message. I'm not going to comment on the other elements or the lines of the P&L associated with where we're trending, just because we're in the process of the restatement and it's not fair or appropriate to comment on that.

Do you have a better sense of when we'll see those numbers?

We have disclosed that we're working expeditiously to complete the restatement. We're not providing a timeline associated with when that will occur.

Thank you.

Your next question comes from the line of Mani Foroohar from Leerink. Please go ahead.

Hey, guys, this is Ryan on for Mani. Thanks for taking our question. Kind of a two-parter one, we were just wondering how should we think about the pace of cell collections for LYFGENIA as we go through the year? Are we going to start to reach a steady state at some point? Do we see this accelerating into the end of the year? And then kind of to dovetail off of that, can you guys talk about what specific actions your field team is taking to kind of help accelerate the LYFGENIA launch, whether it's through QTC support, engaging with physicians et cetera? Thanks.

Go ahead, Tom.

Yes, good morning, Ryan. We really have -- we've said all along, we expect the trajectory of our starts to really accelerate and ramp into the end of the year and in Q3 and Q4. And the field team has shifted their focus completely from bringing new qualified treatment centers onboard to now focusing on supporting qualified treatment centers in pulling through patients and making sure that they're ready to pull through patients. So we're completely shifting gears. Our field team has built great relationships with the qualified treatment centers over the last year and a half, a lot of credibility and rapport, but now completely focused on supporting patient pull-through.

Awesome. Thank you.

Your next question comes from the line of Yanan Zhu from Wells Fargo. Please go ahead.

Hi. Thanks for taking our question. This is [Kwan] on for Yanan. So first, a quick question on LYFGENIA. So any colors on how many patients have started their hydroxyurea washout?

So I think the question is how many patients have started the hydroxyurea washout.

It varies. We aren't going to really give guidance on that. It varies by not only patient, but by qualified treatment center. Some patients are on hydroxyurea, some patients are not. Some qualified treatment centers have different SOPs in terms of when they start that washout period. Obviously, they want to start some of the [medical arrays] concurrently with some of the prior authorization work that they need to do, and that's pretty consistent. But we aren't giving guidance on kind of some of the precursors before the cell collection.

Got it. Thank you. And one quick question on manufacturing. So what's your current capacity at CDMO for LYFGENIA? Is there any additional investment needed if you want to increase the capacity in the future?

So I'll take the question about capacity for LYFGENIA and I think maybe just probably talk about drug product capacity. So we do have a separate supply chain for LYFGENIA than ZYNTEGLO and SKYSONA. We do have more robust supply on the LYFGENIA side in anticipation of a higher volume. We also have the ability to increase that supply as we see demand come in. So we've always said we're going to match how we bring on new capacity with how we see the demand come in. So it is close to lock-step as possible.

Got it. Thank you so much.

Your next question comes from the line of Luca Issi from RBC. Please go ahead.

Great. Thanks for taking our question. This is Lisa on for Luca. Just wondering if you can talk about whether you are reconsidering launching in ex-U.S. geographies? For instance, your competitor seems really excited about the Middle Eastern market, stating there are potentially 23,000 eligible patients in that region. So wondering if you are reconsidering an ex-U.S. launch, either solo, with a partner, or utilizing a distributor? Any thoughts there? Much appreciated and congrats on all the progress. Thanks.

Yes, thanks very much. So right now, we are entirely focused on the U.S. and we will remain focused on the U.S. for the very -- at least near and probably mid-term future. We are watching the ex-U.S. geographies. We go there, we will most likely go with a partner and not do it alone.

Thanks. Got it.

Your next question comes from the line of Sami Corwin from William Blair. Please go ahead.

Hi, this is Brooke Schuster on for Sami. Thank you for taking our question. So with a total of 64 QTC centers activated, I guess what would you say is the biggest bottleneck to the initiation of patient starts? And we are also wondering in some of the ZYNTEGLO patients that had cells collected in Q4, if all of them had been treated already.

Go, Tom.

Yes, hi. Good morning. So I wouldn't call it a bottleneck. I would just characterize it as time. It just takes time for patients to go through the process. If you look at sickle cell disease, one big difference from sickle cell to beta-thalassemia, with beta-thalassemia patients are already basically medically ready. They're going through regular red blood cell transfusions and you know, are identifiable and mostly ready to go for treatment. When it comes to sickle cell disease, many of these patients are not already in a QTC. Many of them are not doing transfusions currently, and some of them are on hydroxyurea. So from a medical readiness perspective, it just takes a little longer for a patient to be ready to go through the treatment process for LYFGENIA. The insurance process obviously takes a little bit of time as well, and that starts with the first patient and the first patient usually takes a little bit longer until the QTCs get into a cadence and the payers start to understand more about the cadence with the QTCs. So it's really not a bottleneck per se. It just takes time.

And your next question comes from the line of Salveen Richter from Goldman Sachs. Please go ahead.

Hi, this is Lydia on for Salveen. Thanks so much for taking our question. Could you just discuss your confidence in achieving the patient start guidance this year? And do you still intend for roughly half of these patients to come from LYFGENIA? Thanks so much.

Go ahead, Tom.

We're pleased with how the launches are going. Obviously a lot of momentum building within ZYNTEGLO. We feel that there is consistency with what we're seeing with SKYSONA. And then with 64 qualified treatment centers, we're hearing a lot of positive experience in terms of patients excited about gene therapy and patients ready for gene therapy. So based on not only what we did kind of prelaunch in the numbers that we were running, but also based on what we're hearing in the field today, we remain confident in the 85 to 105 starts this year and obviously, that will ramp in the second half of the year as the treatment centers get through the process.

And this does conclude our Q&A session for today. I would like to hand the call back over to Andrew for closing remarks.

Thank you. Thanks, everyone, for joining our call this morning and for your questions. Our management team is available for follow-up calls today and please reach out to Courtney if you would like to connect. Thank you.

This concludes today's conference call. Enjoy the rest of your day. You may now disconnect.