bluebird bio Inc (BLUE) 2021 Q2 法說會逐字稿

Good day and thank you for standing by. Welcome to the Bluebird Bio Second Quarter 2021 Earnings Conference Call. (Operator Instructions)

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

Now I would like to hand the conference over to your first speaker for today, Ms. Liz Pingpank. Please go ahead.

Good morning, everyone, and thank you for joining today's call to discuss our second quarter results and associated business updates. The press release announcing these updates can be found on the Investor Relations section of our website.

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 financial projections in addition to statements of the company's plans, expectations or intentions regarding development of our clinical programs. 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. While we may elect to update forward-looking statements in the future, we specifically disclaim any obligation to do so even if our expectations change, except as required by law. You should not rely on these forward-looking statements as representing our expectations of any date subsequent to today.

Today's agenda is as follows. Nick will make opening remarks, and then Andrew himself will review the updates associated with our severe genetic disease business. Then Chip will review oncology news and share an update on the planned business separation. They will then be joined for Q&A by several additional members of the management team.

With that, I'll turn it over to Nick.

Thanks, Liz, and thank you, everyone, for joining the call this morning.

As we outlined in the press release this morning, we look forward to sharing the incredible progress we've made over the last 7 months as we prepare to separate and launch 2 exciting companies early in the fourth quarter, bluebird and 2seventy.

We'll also talk with you more about the clinical hold the FDA has placed on our CALD studies and the safety event associated with that hold. One thing I'll say on the split is one of my biggest worries with the decision was the potential impact on our people and the unique bluebird culture. I'm happy to share that my worry has turned to excitement as the passion and commitment to the why has only gotten stronger as we focus and channel the teams into the bluebird and 2seventy missions. We may use different words going forward, but the deep blue DNA will continue to be a strong, humbling and inspiring force. Our intent with the separation is to ensure that we optimize each business from top to bottom in order to deliver on their respective missions.

In the next few minutes, I will share the progress we've made to ready ourselves for the approaching day 1. There are a few items of particular note.

During today's call, you will here from Andrew, our post-split bluebird CEO, that we made the hard but right call to focus our severe genetic disease business on the U.S. The current EU access and reimbursement environment is simply not ready to support and adopt onetime potentially curative, innovative medicines. Andrew will share more.

Next, the team will share the very recent emergence of an MDS diagnosis for a boy in our ALD study. Our hearts go out to this young man and his family.

The FDA, out of abundance of caution, placed the CALD program on a clinical hold. we have discussed this new information on the CALD program at length with the investigators, external experts and thought leaders. We all believe that the risk-benefit for patients with CALD remains positive. Pending resolution of the hold, we continue to plan to pursue a U.S. regulatory submission this year.

Importantly, we believe that this event does not reflect upon the field of lentiviral-based gene therapy broadly and will have no impact on our thal, sickle and oncology programs, including our planned thal and sickle BLA submissions.

Shifting gears. We are now 7 months into our separation efforts, and our confidence has grown significantly that it was the right strategic and operational move. Most importantly, and to the credit of an unbelievably resilient and committed team, our foundation has only gotten stronger as we execute our plans.

Our efforts have focused on 4 key areas that we know to be important to the task ahead: first, establish and tune the vision and strategy for each business; second, double down in every way on the products and R&D capabilities that will create the impact for patients and, over time, create value for all stakeholders; third, get the best people, leaders and culture in place to execute with conviction; finally, enable the businesses with a healthy financial runway and balance sheet. I'm pleased to say we've made huge progress on all 4 fronts, and we'll be ready to launch 2 highly innovative companies at the beginning of the fourth quarter.

On the vision and product front, we have made clear plans -- we have clear plans in place with several near-term milestones. The SGD business under Andrew's leadership has made great progress staying on track with the thal U.S. BLA filing and continuing to move forward CALD filing while making a tough but necessary call to focus the business in the U.S. 2seventy is shaping up even better than expected. The uptake of ABECMA has been tremendous, and our product engine efforts run deep with the first 2 next-gen INDs coming soon.

People and culture front. Teams are in place, fired up and ready to go. All 1,000 birds have been sorted to their future homes in oncology and the SGD businesses. We continue to add to the team that has unprecedented bench-to-bedside experience in an incredibly complicated field. The leadership teams are operating independently with several more key senior executives and Board members joining soon. So stay tuned to hear more news on that front.

Lastly, on the financial picture, we've been busy ensuring we have the right-sized operational plans as well as a strong starting cash positions. Chip will share more, but here are the take-homes.

We have systematically reshaped our cost structure over the last 12 months to eliminate approximately $400 million in cumulative expenses, unlocking runway. In the past 2 weeks, we've pulled some levers which further reshape and streamline our cost structure. Collectively, we expect these efforts and existing and emerging sources of revenue will allow us to launch each business with approximately 24 months, 2 years, of runway following the separation.

In short, we're ready and excited for the approaching launch. Despite the challenges of the pandemic and the extra work in navigating separation, each business is not only delivering consistently on their respective products and pipelines but also now supported by a strong and enabling financial foundation.

With that, I will now pass it over to Andrew to share some more thoughts on bluebird/SGD front. Andrew?

Thank you, Nick.

This morning, we announced that we will focus the SGD business on the significant opportunity with the U.S. market and that we plan to initiate an orderly wind-down of our activities in Europe. Meanwhile, we are actively seeking strategic alternatives to provide access to our therapies for patients outside of the United States.

While we are super proud of the bluebird teams, who were able to successfully navigate the European regulatory path and prepare for commercialization, governments and payers have not yet recognized and appropriately priced the innovative value of our transformative gene therapies despite strong support from the patient and physician communities. This, unfortunately, makes untenable for us to bring ZYNTEGLO and SKYSONA to patients in Europe at this time. As a small, innovative company, we cannot afford to wait it out.

Turning to the U.S. There are a significant number of patients in need and a clear path to reimbursement. We are excited about directing our commercialization efforts to serve these patients in need. We believe that there are over 20,000 patients with sickle cell disease, beta thalassemia and cerebral adrenoleukodystrophy in the U.S. that may be eligible for our therapies at launch. And over time, we plan to reach additional patients with product improvements.

The majority of these U.S. patients have sickle cell, which is a devastating disease characterized by debilitating pain and frequent hospitalization. Through our clinical trials and extensive market preparation, we have a deep understanding of how to deliver our gene therapies to these patients. We know where the patients are and have 3-plus years partnering with qualified treatment centers that will serve the patients we plan to treat. We are actively building our U.S. commercial infrastructure to deliver a seamless customer experience for both physicians and patients. And we have prioritized patient access and are pleased with our ongoing engagement with U.S. payers.

Moving forward, we are on track to submit our data package for approval of our thalassemia therapy to the FDA in the next couple of months. And we will continue to invest in product improvements and next-generation technologies that we hope to address patients globally in the future.

To summarize, we've had to make some difficult decisions but have a laser focus on our major milestones ahead and have streamlined our business to tackle our largest opportunities to impact patients' lives.

Separately, we have an important eli-cel safety update. Today, we announced that a patient treated with eli-cel approximately 1 year ago in the Phase III ALD-104 study was diagnosed with myelodysplastic syndrome with single lineage dysplasia. Our thoughts are with this boy and his family. He remains under the care of his treating physician and continues to be followed in a bluebird bio-sponsored clinical trial of eli-cel. It has been determined that this case of MDS is likely mediated by Lenti-D lentiviral vector insertion.

As Nick mentioned, this information has been shared with the relevant stakeholders. And out of an abundance of caution, the FDA has placed this program on clinical hold. Pending resolution of the hold, we continue to push forward on the regulatory front, anticipating that we will complete the rolling BLA for eli-cel in 2021. We believe that this safety event and the clinical hold on the CALD studies do not have an impact on LVV gene therapy programs broadly or specifically on our LVV programs on sickle cell and thalassemia.

I'd like to turn it over to Philip to share some additional details regarding the safety update. Philip?

As Andrew stated, a patient in our ALD-104 study treated with eli-cel approximately 1 year ago has been diagnosed with MDS. This patient is one of 67 treated with eli-cel and 1 of 3 we have previously reported to regulatory authorities with a predominant clone, which is triggered when a given insertion site has a greater than 50% clonal contribution. Two of these 3 patients have presented with thrombocytopenia and dysplastic megakaryocytes in the bone marrow. And as announced today, one of these boys has developed MDS. All 3 patients are being closely monitored by their treating physicians.

While MDS can transform into leukemia, importantly this patient does not have tumor cells known as blast cells, indicating that he does not presently have leukemia. Without blast cells to evaluate, we cannot confirm Lenti-D LVV played in the emergence of MDS. However, due to the presence of this predominant clone, the site of integration in the MECOM locus, a locus previously associated with MDS, and due to the observed misregulation of gene expression at the MECOM locus and the peripheral blood of this patient, we believe this case of MDS is likely mediated by Lenti-D LVV insertion.

Nonetheless, in discussion with the investigators, with our external advisers and with several experts in gene and cell therapy, we believe the benefit-risk profile of eli-cel remains favorable in the context of the devastating consequences of CALD, the efficacy of eli-cel in preventing CALD progression as well as the limitations, morbidity and mortality associated with allogeneic stem cell transplant.

Indeed, across our eli-cel studies, we treated 67 patients with CALD, 90% of whom are alive and free of major functional disabilities, or MFDs, at the 2-year mark post treatment. Without treatment, this devastating neurological disease usually results in progressive neurological decline and death within 5 years.

For comparison, treatment with an allogeneic stem cell transplant, the only other medical option, has approximately 76% MFD-free survival at 24 months and significant risk of debilitating graft-versus-host disease, including transplant-related mortality.

Based on all the available information and pending resolution of the clinical hold, we believe the safety and efficacy profile of this program supports our plan to complete the submission of the eli-cel BLA this year.

Furthermore, we believe that the safety event is isolated to the CALD program and that our other programs are not implicated. This is because each treatment is custom designed to address a specific severe genetic disease.

CALD is a neurodegenerative disease. Expression of a therapeutic ALD protein was therefore placed under the control of a viral promoter known as MNDU3, which was selected for its broad tissue activity that results in high expression of a therapeutic transgene in all cell types. To our knowledge, no other LVV HSC program employs this design. For bluebird, this means our thal and sickle clinical studies, which use a different vector called BB305, are open, and our plan to file the BLA for thal remains on track for Q3 2021.

Now let me turn the call back over to Andrew.

Thank you, Philip. Important updates, and we look forward to discussing more in depth in the Q&A and in the coming weeks as we engage with investors.

In closing, the SGD side of the house is -- excuse me, the SGD side of the house is in a strong position to deliver gene therapy to patients in the U.S. We didn't talk about it much on today's call, but our clinical data continues to show the tremendous potential benefit of these therapies. We plan to share an update on our sickle cell data in particular at the end of the year.

Our regulatory filings continue with our TDT BLA expected to be completed in Q3 of this year, the CALD BLA planned to be completed by the year-end -- by year-end 2021 pending resolution of the clinical hold and a planned update on the sickle cell regulatory path by end of the year.

And our business is focused. We have a strong management team in place with key hires to be disclosed in the coming weeks and a laser focus on getting our therapies to patients in the U.S. and working to expand our reach over time through scientific advancements of our products. I look forward to sharing more detail on the strategy and partnership with the SGD management team in the coming weeks and months.

And now I'll turn it to Chip to talk about oncology and 2seventy.

Thanks, Andrew. Now switching gears, I'll highlight key aspects of ABECMA's first quarter of commercial launch.

Recall we announced FDA approval on March 27 of this year. And from the start, we've been extremely pleased with how quickly the team was able to get treatment sites onboarded and up and running, which speaks both to the excellent launch prep as well as strong interest in ABECMA among physicians and patients. Demand has significantly exceeded our expectations and highlights the tremendous unmet need in patients with multiple myeloma, particularly in the later line settings.

We've been encouraged to see the unprecedented results from the KarMMa clinical study being translated into such strong demand, and we're working with our partners at BMS in deploying every available resource to continue to bring additional capacity online as quickly as possible.

On the reimbursement side, we've been able to get significant reimbursement coverage for patients and have not seen that as a barrier to treatment. We still have a lot of work to do to bring ABECMA to as many patients as possible, including advancing this therapy through our ongoing clinical studies in earlier lines, and look forward to continuing that work as ABECMA becomes a foundational piece of 2seventy bio.

Pivoting from the ABECMA launch, I wanted to share some of the strategic background to the Resilience collaboration we recently announced.

This deal is a true win-win outcome. We think the deal provides clear external validation of the suspension LVV expertise we've developed at blue. Resilience will be able to leverage the infrastructure and the highly skilled employee base we established in North Carolina to continue to support current and future vector needs for both bluebird and 2seventy. Resilience plans to retain all of our North Carolina employees.

Financially, we will receive $110 million at closing, which we anticipate occurring in the third quarter. The future cost savings is approximately $25 million per year and increases over time. We will have preferred access to the facility at preferential rates.

Importantly, we remain committed to manufacturing innovation for 2seventy. The strategic collaboration with Resilience is about much more than an asset sale of the bRT facility. We will be collaborating on the manufacturing of future pipeline products together, which we expect will increase the number of programs and the pace of development.

We also plan to invest in internal drug product manufacturing capability and capacities to support clinical trials and expect to share more details on that as we approach the separation. We believe that the ability to rapidly iterate in early clinical development will be a vital component of our ask-and-answer engine for designing new product candidates in oncology.

As we approach the planned separation in the fourth quarter and look towards the end of the year, we plan to continue to share information about each business. While internally, we remain focused, as always, on the important clinical and regulatory milestones.

Andrew highlighted the upcoming SGD milestones, and we are equally excited about the future on the 2seventy side. We plan to file 1 to 2 new INDs by the end of this year and anticipate delving into those INDs more deeply on an upcoming investor call. We're excited about the continued launch trajectory of ABECMA and the increased financial flexibility that it will provide over time. On both sides, we're also pleased with the progress that's been made on building our top-tier management teams and boards, and we'll share more about those key hires in the coming weeks and months. So more to come on a lot of fronts, and we look forward to sharing just some increased investor engagement as we head towards the separation.

A lot of moving parts today, but we wanted to step back and summarize what it all means financially.

We've been focused on building both businesses having strong balance sheets and reshaped and rightsized operating plans to achieve value-creating milestones. And we've made important progress on this front. Since the beginning of 2020, as Nick highlighted, we've reduced our expenses by approximately $400 million from our original operating plan. And with the Resilience partnership and the planned wind-down of the European operations we announced today, we've further streamlined the future capital needs for each business. In short, we've taken the tough but necessary measures to ensure these companies launch from a position of strength.

We ended the second quarter with approximately $942 million in cash. Based on current cash position and the expected $110 million upfront payment from the Resilience collaboration, the company anticipates having a cash balance of approximately $900 million at the time of separation.

Together with the existing and emerging sources of revenue, we expect our cash balance will be sufficient to fund approximately 24 months of operations for bluebird and for 2seventy under their respective current business plans. And with this runway, we expect that will carry both organizations through significant value-creating milestones.

We'll have much more to say about the starting cash position and forward-looking financial guidance closer to the split, but we're reiterating the foundational principle that both businesses will start with equally strong balance sheet positions.

So with that, I'll turn it back to Nick for closing remarks.

Thanks, Chip, Philip and Andrew, for walking us through these updates. A lot to digest on this call, so we'll be happy to take Q&A and have several members of the management team on the line as well if you have any questions. So with that, let's go to the operator and see what questions we can field.

(Operator Instructions) Your first question comes from Salveen Richter of Goldman Sachs.

This is Sonya on for Salveen. For the case of MDS in the patient treated with eli-cel, can you leverage learnings from earlier this year to better understand it? And what design features of LVV are likely to have contributed to it? And then I have one more follow-up question.

Thanks, Sonya, for the question. I think that's probably best fielded by Philip.

Yes. Thanks for the question. Yes. Short answer is yes, the prior workup that we did in the case of sickle cell disease that, as you will recall, exonerated LVV in that case, essentially we will try and do the same thing. I'd like to remind you that at this point, we don't have tumor cells or leukemia to analyze at this point. That said, several features that I went through on the call, namely the site of integration and misregulation of gene expression at that site in peripheral blood make us believe that this is likely a Lenti-D LVV insertion-mediated event.

You sort of -- you also asked about other features of the vector that we can particularly point to. I just -- there are actually many differences between the sickle programs and the ALD program. But from a vector perspective, the promoter usage is quite distinct. As I said on the call, the promoter used in the ALD program was designed for broad tissue expression and high levels expression across all cell types. By contrast, the BB305 vector is designed for tissue-specific expression only in those cells that will drive towards red blood cells or the erythroid lineages. And that's a very important distinction between the 2 programs. Thanks a lot.

Oh, sorry. Could I ask another quick one or...

We're trying to limit to one. But if it's a quick follow-up, then yes.

Just a quick follow-up on the -- what experiments or assays would you be doing to better understand that?

Yes. So at this point, without tumor cells to analyze, we've completed the experiments that we can do at this time. Thank you.

Your next question comes from Mani Foroohar of SVB.

So we've seen a couple of [pop-outs] regarding the -- commercially in Europe, some challenges that come with doing novel science and developing complex therapies for pretty severe diseases. Let's talk a little bit about the commercial situation in the U.S. for the rare disease franchise. What can -- where can investors look for confidence that execution and realized reimbursement will be better in the U.S. given the challenges you've had in the EU? And to what extent will you be able to overcome any trepidation around the safety signals that may reasonably or not be read across into the sickle and beta thal programs?

This is Nick. I'll pass it over here to Andrew and Tom real quick.

Just on your last a little bit there, I think it's actually quite reasonable that there's no read-through to thal, to sickle or to the broader community, and we believe the regulators certainly have signaled that same with the approach that they're taking and the engagement. So that said, why don't I pass it over because we certainly have studied the U.S. versus European dynamics extensively and have a very strong belief there? But Andrew?

So just as a reminder, very different systems in Europe and the U.S. European systems have -- each have a single consolidated payer with the governments and negotiate prices for the entire country. The U.S. has free pricing overall in general, and it's many different parties, private payers and government payers that are negotiated with. So very, very different systems. But to comment more, I'd like to hand it to Tom Klima, who is the Chief Commercial Officer for the Severe Genetic Diseases.

And Tom, just before you go, Mani, can you just mute your line real quick? There's some background noise, if you don't mind.

Sure. Yes. Thanks for the question, Mani. I think we've been actively working both with our qualified treatment centers, QTCs, and our U.S. payers for over 3 years now and continue to get very positive feedback and dialogue about our path for securing both coverage and reimbursement. Access for our patients is one of our #1 priorities and we're working closely with all of the stakeholders to make sure that we can bring these potentially curative onetime therapies to patients.

Next question comes from Yaron Werber of Cowen.

I got a question on ABSEMA -- ABECMA. Off to a great launch in the quarter. The question is more about supply. Can you give us a little bit of a sense? I understand there's a -- the rate-limiting step here is actually vector production, and I think there's been some confusion. At some point, I believe Bristol said they can get to as many as 100 patients per month in August, but it's not clear that, that's really going to be the run rate from this point onwards. So can you just give us a sense so we can better understand what the supply could be and we can model it appropriately?

Yaron, this is Nick. I think it's a fair comment. I think both BMS and us, one thing I can say is we are

completely focused on this Because the importance of this medicine clearly is to the patient community, as evidenced by the uptake. And so both on the vector and the drug product side of the equation, we're running at the exact numbers, and the evolution of that is something that we are working on with the FDA and actually have made great progress since approval and so forth.

Exactly where we'll be by when is something that we're working on with BMS and haven't fully disclosed, right? We're certainly optimistic that we're going to be able to meet as much of this demand between now and end of the year as we continue to ramp capabilities on both sides of the house, meaning drug product and vector. I don't know, Chip, if you want to add any more details to that.

No, Nick, I think that was well said. A reminder, vector today is produced actually at a third-party CMO. And as the year had set in, we're also pushing towards bringing suspension vector online at a future date. But today, the focus amongst the teams is on increasing vector production and increasing the weekly and monthly number of drug products we can produce, downstream testing and release testing, you name it. There's focus on every aspect of that supply chain to deliver for as many patients as quickly as we can. And we certainly expect between here and the end of the year that capacity will be increasing. But I think we're going to stop short of kind of giving month-by-month numbers in terms of the expectations just yet.

And Yaron, the exciting part here is that there certainly doesn't seem to be demand constraint, right? One question was what is the interest in this type of therapy for the later lines, and that clearly has been answered. And so whether it's Giovanni or Chris, well, the various folks over at BMS, I can tell you, on a weekly basis are completely engaged.

Next question comes from Difei Yang of Mizuho securities.

So on ABECMA, how quickly do you think you can move into earlier lines of treatment? And when should we be expecting to see initial data? Then a quick question on the CALD part. Just curious if you are still thinking about adding additional pipeline on the rare disease side. And if that is the case, with what's happening with CALD, would that limit your choices?

This is Nick. I'll take the earlier lines question. And Andrew, maybe you can speak to the CALD question.

Earlier lines, there to continues be a broad and comprehensive development plan in collaboration with BMS, everything from third line to second line and so forth. So that is something that we are working on with them. The data will continue to emerge throughout sort of this year more likely and the next year and the year after, as one would expect with those studies. So still a very broad-spectrum commitment to that as we have certainly seen the interest in ABECMA and the therapy. And we believe that over time, it'll be shown that this medicine also can work as well, if not better, in earlier lines of therapy. So that commitment and investment continues. Now let me just pass it over for the ALD question.

Yes, absolutely. So the short answer is we're focused right now on our 3 products that we're going to bring to patients in the U.S., including CALD because we do believe the risk-benefit there is positive.

We do have an active research into in vivo LVV right now, and we remain confident that we know how to design vectors safely. That is something that we have the capability to do, so it'll not limit our approach to using LVV for future indications.

And part of the benefit also, I think, here in that question is the move here to focus on the U.S. allows you to invest not only in those products but also the improvement of those products and then also the future by limiting the sleeve, if you will, where we can invest and deploy capital, which is, I think, a benefit of the decision taken today. Good question. Thank you.

Next question comes from Mr. Matthew Harrison of Morgan Stanley.

This is Charlie Yang for Matthew. Do you have a time line for the European operations in terms of winding down? And what kind of saving can we kind of expect it -- on that wind down? Maybe just another one is, would you expect to be able to find a marketing partner this year? Or is it more like a separate kind of items?

Why don't we start? Andrew, you take the first part of the question about sort of the timing and the details of the wind down. Maybe Chip, you can comment on the implications financially.

We expect the majority of the wind-down to be completed by the end of the year. We will be treating patients that are in the pipeline through the end of the year. But after that, the operations will either be pushed, sized or will be taken over by a partner or wound down.

Yes. In terms of the cost side, Europe was a meaningful piece of our overall SG&A cost structure. We are moving through a consultation period with European employees, as mandated by governments in Europe, and so that will take some time. So I think we're a little short of giving precise guidance there.

I think importantly, too, we will maintain the value of those assets in terms of longer-term extension studies and regulatory submissions or whatever. But the infrastructure will largely be coming down. We think there'll be meaningful savings as we look to the future, and I think we'll have more to say as we get through the process of winding it down.

And the other part of your question there, I'll just mention, was on the partnering side, there's no specific comments on that, but we certainly are optimistic that there are a number of different players that will engage with us on that front and are engaging with us on that front. Exactly where that lands, we'll have to see because we do think it is an important set of products to get to patients if not right now over time and certainly as we lean towards the sickle product, including Europe.

Next question comes from Dane Leone of Raymond James.

In your disclosure, it's -- I'm not sure in the script you addressed it, but you mentioned that the hope is post split, you have about 24 months of runway for both businesses on a cash basis for operations. I know you might get into it a little bit later, but can you just clarify a little bit more for our models how that's going to work versus the current operating burn that we see on a consolidated basis, maybe with an adjustment for less spend in Europe? But there is going to be a degree of dis-synergy post the split. So any color you can give us just in terms of what we might see in additional rationalization on R&D or SG&A for the post-split businesses, I think, would be helpful.

Good question. Why don't I pass that right on over to Chip?

Yes. No, thanks. I would say yes, we are continuing to rationalize the cost structure, and those effects won't be fully realized until next year between the transition of the bRT manufacturing plant to Resilience and then this decision in Europe. So those are 2 pretty big levers. At the same time, we see ABECMA continuing to ramp, which provides an important tailwind for the 2seventy or the oncology business.

In terms of the pipeline for SGD, the focus is going to be squarely on bringing those 3 late-stage products to patients and particularly those patients in the United States. And then for 2seventy, it's going to be the focus on the IND engine.

So as we alluded to, there's a cost side of that, which is largely in our control, and a commitment to managing the business to within that 24-month runway. And there's also revenue side of the equation, which is existing sources of revenue in ABECMA, emerging sources of revenue on the SGD side as products are approved here in the United States next year, and then I think we see a number of strategic levers that we can continue to exercise on the revenue side. So more to say there as we move forward, but we feel good about our ability to operate these businesses for the next 2 years.

Next question comes from Gena Wang of Barclays.

I have one question regarding the Lenti-D. Just wondering, what kind of experiments of data you need to submit to the FDA to show that the reason for this MDS is because of MNDU3 promoter, not due to the other components? Just want to make sure the backbone for Lenti-D versus LentiGlobin, there's no other differences, including locus control region and also the 3 (inaudible) that you removed the insulator element.

I think I'll pass that one over to Philip.

Thanks, Gena. So it's difficult, obviously, to do these experiments in retrospect. That said, there are substantial differences between the vectors that you're alluding to. However, we believe that the critical component is the choice of promoter and specifically the choice of the promoter in the case of Lenti-D, which was necessary for broad tissue expression versus one that's much more restricted and tissue specific. We think that's the major difference that's playing a role here.

I want to make it clear that by itself, an integration into a particular locus is -- we don't think that's sufficient, right? So that by itself is not enough. That said, we think that's sort of the first hit, if you will, and there may be other things that are necessary. So that's an important component. But from a difference between the globin promoter that's used in BB305 and the CALD Lenti-D with the MNDU3 promoter, we think that's the significant difference.

One thing that we do expect and appreciate, certainly this will come down to an engagement with the agency as well that will go through this process fairly expeditiously given the risk-benefit assessment that people believe around this program to make sure that we can continue on our path towards filing. But we'll provide more updates on that front as we have. Thank you, Gena.

Your next question comes from Jason Gerberry of Bank of America.

Just wanted to come back to the European decision. And just curious, how much of this is really predicated on -- one of your key markets was Southern -- based in Southern Europe for LentiGlobin at least with beta-thal, and not a market that you typically can capture great pricing in versus, say, Germany. So wondering if there was anything specific to the market opportunities for LentiGlobin in Europe that sort of drove this decision. Because I imagine, investors would look at a product like Zolgensma, which captured pretty good value as a onetime therapy in Europe, and perhaps maybe that comes down to availability of different alternatives and prognosis for the patient ultimately that can drive value. But just wondering, as the postscript gets written here on EU LentiGlobin, how some of these factors played into the decision.

Yes. So there wasn't -- I can take this. This is Andrew. The -- there wasn't 1 smoking done from 1 country, right? There was multiple conversations going on across Europe. And we had gotten far enough in multiple countries to see that the value that we were achieving and -- value recognition we were achieving in those countries was not going to be sufficient overall. So Italy -- it wasn't particularly Italy. It wasn't particularly Germany. It wasn't particularly any one country. I think you make a good point about the comparator in terms of what -- the costs that are being relieved. Unfortunately, the European governments have really, -- in some cases, do not recognize the unmet need in thalassemia. Some did, some did not. In other cases, they we're not willing to provide a premium over standard of care. In some cases, they were. And in some cases, were not recognizing duration of therapy. So it was a mixed bag of issues. So very difficult to parse out a single one. The net result, though, was that the price levels that we were seeing were not sufficient for us to move forward in Europe.

And the one thing I'd add to that, I think it's an important question, is that there is an element of the European system that's frankly broken for situations like this. And so the question is, over time, will this gets sorted? I think Andrew and myself, Tom and others are actually quite optimistic on that. But as we look back on the experience that Andrew just described and what we have at this moment in time, it's not ready to be able to think from a value basis for a medicine of this nature. So that's unfortunate, but it's a reality where -- we live in today. And that's something that we hope to fix over time together with the European system. But at this point, we had to make this move for the company.

Next question comes from Matthew Luchini of BMO Capital.

So on the U.S. for severe genetic disease, the U.S. reimbursement, is the goal or the company strategy still aiming for the 5-year value-based reimbursement? Is that still the strategy? And does your kind of current discussion support that approach? Or at this point, has the philosophy or the strategy shifted a little bit and now it's really just about trying to get the product paid for even as a onetime, I guess, sort of recognizing the fragmented nature of the U.S. market relative to the consolidated nature in Europe?

Fair question. Why don't we have -- Tom, why don't you comment on that? And Andrew, if you have something to add?

Yes, sure. It's a good question. Our main priority, as I said, is securing access for patients, and we're looking at all different options to achieve access. And so in the case of payment over time, certainly if a payer was going to consider that and adopt that, then we would implement payment over time. So in short, I think we're going to offer numerous different strategic tactics to secure access, and it will depend on kind of the willingness and the flexibility for each payer and how they adopt it.

Yes. Thank you, Tom. I think that's right, we're taking an approach that's trying to make sure we take into consideration what the payers want, right? And we're willing to be flexible around that -- those issues.

Okay. Great. And quickly, just on CALD, recognizing that there's the absence of blast cells, it sounds like the possible tests that can be done without said blast fells have been done. So how do we think about basically the path to hold resolution from here since it seems like sort of progress has stalled in the absence of sort of meeting these blast cells? So where do we go from here?

Go ahead, Philip.

Yes. I wouldn't -- I don't think that's how we view it. We have 67 patients, as I said, treated with eli-cel. We have extensive durability data in that trial. I think that dataset is sufficient for the agency to understand the risk-benefit, as I said. And our view and the view of the experts we've spoken to, the treating physicians, we all view that the risk of an insertional event in CALD is low based on the data that we have and actually a much better outcome than would be obtained with allied (sic) [allogeneic] transplant. So we think, based on that dataset, we should be able to progress forward to filing the eli-cel application.

Next question comes from Mark Breidenbach with Oppenheimer.

Just wanted to clarify, the CALD patient who developed myelodysplastic syndrome is distinct from the one who previously showed evidence of nonmalignant clonal expansion at EBMT last year? And can you just remind us if we've seen any evidence of nonmalignant clonal expansion in any of the sickle cell or thalassemia trials to date?

I'll pass that over to Rich.

Yes. Great. Thank you. Yes, this is one of 2 patients that we had talked about previously who had clonal expansion. There have been no other patients with sickle cell or thal who've had any nonmalignant clonal or any clonal expansion at all.

Next question comes from Raju Prasad of William Blair.

I just wanted to revisit the vector production for ABECMA. Can you just remind us how it's currently being produced? And is it under an adherent process? And then as we think about the Resilience partnership and move in suspension, I know initially, it was to meet the (inaudible) demand. But maybe talk a little bit about how suspension process may help support the oncology pipeline as you move forward.

Yes. So you're correct. This is Nick. It is made through an adherent process at this time, and we do plan through the suspension production process that is at bRT facility that is now, over time, going to be part of the Resilience network. That certainly is a commitment they have, and BMS is very much engaged with that as well. So that's something we're moving to as expeditiously as we can on the vector front, which should help on a bunch of fronts. One is capacity; two, also cost of goods; and so forth. And we plan to -- through the relationship with Resilience over time, is -- as they better utilize the breadth of that facility down there and most likely expand it for other clients, that's something that they also would be able to make use of as the Resilience, and that's certainly something that bluebird in this context would participate in.

So I don't know, Chip, if you had anything else to add on that.

No, Nick, I think you hit that well. I think suspension will be key for the long-term continued ramp of ABECMA. And access at bRT will be key for both businesses on the pipeline side and the extent we've got preferred access there. So that was an

important part of the structure of that deal.

Next question comes from Luca Issi of RBC.

Perfect. This is Lisa on for Luca. Just more broadly, given you now have some direct evidence suggesting LVV insertion cause oncogenesis and CALD, could we maybe expect to see some more focus on developing therapies with your other pipeline technologies like the megaTAL gene editing platform?

This is Nick. I'm not sure you can make that connection there. But I'll kick it over to Philip to provide a contextualized answer.

Yes. I mean the first thing I'd say is that what we've seen is, we believe, restricted to CALD, right? So this is a Lenti-D LVV insertion. And we think that's -- it's critical that it was the Lenti-D vector involved in this particular case. We don't think that's more broadly applicable in large part, as you've described, because of vector differences between -- not just between our own programs in thal and sickle but also more broadly in the field.

In terms of the megaTAL technology, yes, we have -- obviously, we have a gene editing technology. We're applying that. So we're excited about the application of that. We have -- as you know, we have collaborations in vivo with Novo around hemophilia. And we have a T cell product that's heading towards IND as well. So we are using that technology, and we'll continue to look for opportunities to use that technology in other products in the future.

Good question, Lisa. Thank you.

Next question comes from Michael Schmidt of Guggenheim.

I had another one regarding the upcoming business split. Just from a balance sheet perspective, will the current cash balance be split evenly between 2seventy and legacy bluebird? Or will it be a different ratio? And perhaps relative to Street consensus, I suppose what ABECMA ramp have you built into this 2-year cash run rate guidance?

Good question here. Chip, do you want to jump in on that?

Yes. Happy to. In terms of the split, we would expect the cash to be apportioned fairly evenly between the 2. The businesses don't have the kind of exact same burn rate. So again, the solve is for an equal amount of runway on both sides. And again, as we look at the math, we see roughly 2 years or 24 months of runway for each with a balance of $900 million approximately to -- split between the 2 businesses.

And yes, ABECMA is an important piece of the runway component on the oncology side of the house. Again, $24 million of total U.S. revenue here in the first quarter of commercial launch and, again, very strong demand that we're seeing. So that provides a tailwind for 2seventy and help support investment in the earlier aspects of the pipeline. So again, we'll provide more detailed guidance with the public filing of our Form 10 and other documents as we move into the fourth quarter moment of separation.

The only thing I might add there because -- I think, also just without being specific on the number because I think it's difficult, but we do anticipate this year and next year to be really a capacity game as it relates to ABECMA, right? Given the interest there to be able to maximize out and treat as many patients as we can even with the advancements of other possible approvals in that same time frame, we are expecting that to be more about sort of meeting demand as opposed to sharing demand in that regard. So that's, I think, a good news. That's also certainly baked into our thinking as we think about the forecast and how to best and most appropriately launch both businesses with the right runway.

Your next question comes from Yanan Zhu of Wells Fargo.

So I have a question on the Lenti-D and the MDS case and read-through to other programs. I think I heard Philip mention that the integration site is the MECOM locus. And I also think there might seem to be some disregulation at this locus due to the vector and perhaps probably the promoter. So what gene is affected? And what percentage of the clones or overall clones is due to -- happened at the MECOM locus? And more importantly, for the LentiGlobin program, what is the rate of integration into this locus? And could there be any chance that integration alone could disrupt the gene that is regulated?

So I'll pass it over to Philip here in a second. The one thing I'll just say on the regulatory side of the equation is that this is a hold on the ALD program, and that's an intentional decision made by the regulators and so forth. Much like in the prior situation we had fairly recently, it was a hold specifically on the thal and sickle program, not on the ALD program. So it's a -- the read-through from a scientific and medical point of view and a regulatory point of view is very clear. There is no read-through, and that's how we're planning, and that's why we believe we're moving forward with all the other programs. And actually, not just us but also the field. And that's -- the ecosystem has evolved, I think, in a very healthy way to understand the nuances of how vectors are different. So with that as context, why don't I pass it over to Philip?

Yes. It's a good question. The -- in the CALD boy that we've been analyzing, this is -- the integration at the MECOM locus is -- it reached -- it, at least at one point, reached our predominant clone criteria, which is 50% or so. And as I've said, we don't have blasts or tumor cells to analyze, so as -- a proxy has been the peripheral blood. And the peripheral blood, we've seen a misregulation of the MECOM locus. What that means is an increase in the expression of a gene called ED1. So that's the gene that gets misregulated.

Integrations into MECOM are quite common in the ALD program, and they're quite common in general. And we see this across all antiviral therapies independent of the indication. And that's why it was important to recognize that the design of a vector is critical in what happens after that integration. So -- but -- and as we've described in the ALD case, we have -- a MECOM integration has become a dominant clone. And Rich said earlier, in the context of thal and sickle, we don't see dominant clones in those studies at all.

So with that, I think we are going to close. We certainly anticipate speaking more with you, and we're excited to continue to keep updating as we lean towards the launch of these 2 businesses, both bluebird and 2seventy here, and, very importantly, the substance behind it, which is we got the U.S. filings as well as the oncology INDs and others that we look forward to sharing with you in more detail as these companies prepare themselves by early fourth quarter.

So with that, thank you for your time, and we'll speak with you soon again.

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