Blueprint Medicines Corp (BPMC) 2016 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Blueprint Medicines First Quarter 2016 Earnings Conference Call.

At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference is being recorded.

I will now turn the call over to your host, Kristin Williams with Blueprint Medicines. Please go ahead.

Thank you, operator. Good morning and welcome to the Blueprint Medicines First Quarter 2016 Conference Call. This morning, we issued a press release, which outlines the topics that we plan to discuss today. The release is available in the Investors section of our website at www.blueprintmedicines.com.

Today on our call, Jeff Albers, CEO, will discuss Blueprint Medicines' business and corporate highlights. Andy Boral, CMO, will provide an overview of our Phase 1 clinical programs. And Mike Landsittel, Vice President of Finance, will review our first quarter 2016 financial results. We will then open the call for your questions.

Before we begin, I would like to briefly remind everyone that statements we make on this conference call will include forward-looking statements. These may include statements about our strategy, business plans and focus, the potential success of our drug candidates, pre-clinical and clinical plans and development time lines, the scope or timing of clinical data or proof of concept for our drug candidates, and financial projections. Actual events or results could differ materially from those expressed or implied by any forward-looking statements as a result of various risks, uncertainties, and other factors including those set forth in the Risk Factor Section of our annual report on Form 10-K filed with the SEC and any other filings that we may make with the SEC.

In addition, any forward-looking statements made on this call represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

With that, let me pass the call over to Jeff. Jeff?

Thanks, Kristin. Good morning everyone. In addition to Andy and Mike, I'm also joined by Kate Haviland, our Chief Business Officer, and Christoph Lengauer, our Chief Scientific Officer, who will be available to answer questions at the end of the opening remarks.

So those of you on the call are well aware, Blueprint is a company with a singular focus on systematically and reproducibly crafting highly selective and potent kinase inhibitors for patients with genomically defined diseases. The first quarter is characterized by very nice progress on multiple fronts towards that stated mission. This morning, we'll focus on four components of the progress that highlight how we continue to efficiently execute against our strategic plan and goals for 2016.

The first strategic component is progress on our three ongoing Phase 1 clinical trials. As you know, our primary goal as a company is to develop transformative medicines for patients. In the first quarter, we initiated our third Phase 1 clinical trial enrolling the first cohort in the study evaluating BLU-285 for the treatment of advanced systemic mastocytosis.

As we look forward, we're on track with our plans to, A, share preliminary clinical data for each of the three Phase 1 clinical trials by the end of 2016; and, B, file an investigational new drug application for BLU-667, our RET program, by yearend. And Andy will provide more details on the clinical front in a few minutes.

The second component of our strategy is our continued focus on maximizing the value of our kinase platform. Early discovery efforts continue to be the driver of potential future value. And we strive to execute this objective by remaining committed to broadening and advancing our pipeline of novel kinase molecules both independently and through strategic collaborations.

In the first quarter, we entered into a worldwide collaboration with Roche in the field of cancer immunotherapy to discover, develop, and commercialize up to five small molecule therapeutics targeting immunokinases. Under the terms of the agreement, we've received a $45 million upfront payment during the first quarter and are eligible to receive contingent option fees and milestones that exceed $1 billion. Importantly when such milestones are in the upfront and certain cost sharing are combined, over 250 million of these payments occur prior to licensing and proof of concept in the Phase 1.

Longer term, we believe this collaboration is attractive as it allows us to expand our efforts in cancer immunotherapy, advance more programs simultaneously than we would have been able to do on our own, and maintain important U.S. commercial rights on up to two of the programs. All of this will also provide us with the expertise and financial support of an established partner like Roche. Two months into the collaboration, we're excited by the progress that the two teams have made already. Together, we started on two programs and plan to nominate a third by the end of this year.

As you also know, we have a strategic collaboration with Alexion that we began in March of 2015 for an undisclosed activated kinase target, which is the cause of a rare disease. Under terms of that agreement, we received the $15 million upfront payment and are eligible to receive over $250 million in contingent option fees and milestones. In addition, we are reimbursed for all of the research expenses we incur and are eligible to receive royalty payments upon commercialization. The Blueprint and Alexion teams have been working together for now over a year, and significant progress is being made to advance this program.

So if you take the two first objectives together through collaborations like Roche and Alexion, we are well positioned to advance our three lead programs to clinical proof of concept as unencumbered assets while also continue to derive value from our platform for the longer term, which then ties nicely with our three third strategic area of focus, which is delivering value with a strong -- from a strong financial position.

With $191.5 million in cash and cash equivalents at the end of the first quarter, we continue to make meaningful progress with our portfolio while operating in a financially responsible manner. We expect that our cash will be at least $120 million at yearend, and we believe cash will be sufficient to enable us to fund operations until late 2017. Importantly, our financial position continues to allow us to manage our internal portfolio decisions and any potential future collaborations from a position of strength, and affords us with meaningful flexibility as we learn more about our ongoing programs in the coming quarters.

And then finally, the fourth component of our strategy is to foster continued success through our focus on corporate culture and building a strong team. At Blueprint, our aim is to build a company positioned to support our growing pipeline, expand our business development activity, and speed our research all with an eye towards building a fully integrated business within the next five years.

At the management team level in January, we announced the appointment of Kate Haviland as Chief Business Officer and the promotion of Dr. Andy Boral to Chief Medical Officer. In addition in January and April, respectively, Lonnel Coats, President and Chief Executive Officer of Lexicon Pharmaceuticals, and Dr. Lynn Seely, former Chief Medical Officer of Medivation joined the Blueprint Board of Directors. Their collective skills are well suited to Blueprint as we increasingly prepare for the potential of moving our programs to late stage clinical development and commercialization.

Taken in total, I have great confidence in the team of employees and advisors that have come together to work at Blueprint, and I look forward to updating you on the progress that we all together continue to achieve in the year ahead. With that, I'll pass it over to Andy to provide an overview of our clinical programs.

Thanks, Jeff. So we've made substantial progress over the first quarter advancing our two clinical programs, BLU-285 and BLU-554. I'll give a brief overview of each program and an update on the progress of each of the trials.

So I'll start with BLU-285, our highly selective and potent inhibitor Exon 17 mutant KIT and D842V mutant PDGFR alpha. BLU-285 is currently being studied in patients with metastatic treatment-resistant gastrointestinal stromal tumors, that I'll call GIST, and advanced systemic mastocytosis or SM. And we expect to share preliminary data from both trials by yearend.

First, I'll speak about our Phase 1 trial in GIST and then turn to SM. So although treatment options for patients with GIST have improved in the recent years, most patients will have disease progression during treatment with available therapies. Importantly, there is really no effective treatment for patients with GIST driven by D842V mutant PDGFR alpha or for patients with KIT driven disease that has acquired a mutation in Exon 17.

By inhibiting both D842V mutant PDGFR alpha and Exon 17 mutant KIT, BLU-285 has real potential to be an important treatment for patients with metastatic GIST. So our Phase 1 GIST study is a two-part design with a dose escalation part followed by an expansion part. Dose escalation began at a starting dose of 30 mg per day and follows a typical three plus three Phase 1 design.

We plan to escalate to maximum tolerance dose, the MTD, or a lower recommended dose supported by pharmacokinetic and pharmacodynamic data. We include patients with tumors that are known to have a D842V mutation PDGFR alpha or patients with Exon 17 mutant KIT, which is identified progression following therapy with imatinib and at least one other tyrosine kinase inhibitor. That's because after failure of two or more TKIs, more than 90% of GIST will require resistance mutations in Exon 17 of KIT. We're also retrospectively testing tumor samples to confirm that their PDGFR alpha and KIT mutational status is as we expect.

Once the MTD is reached or our recommended dose is established, we plan to open expansion cohorts for patients with D842V mutant PDGFR alpha and for patients with Exon 17 mutant KIT. In expansion, all patients will be treated at the same dose level either the MTD or lower recommended dose. This will give us the opportunity to assess response separately in these two genetic sub-types of GIST patients.

The Phase 1 GIST trial began enrolling patients in the fourth quarter of last year and is now enrolling the fifth cohort. We expect to share preliminary data from the dose escalation part of the trial at the medical meeting by the end of 2016. These preliminary data will include safety and tolerability, pharmacokinetics, and pharmacodynamic measures such as changes in circulating KIT and PDGFR alpha allele burden across a range of dose levels.

We'll also share in the initial assessments of clinical activity that may be available based on radiologic tumor evaluations. I do want to point out, however, that the assessments and clinical activity will be early, and patients treated at higher dose levels will have shorter durations of therapy.

Now let me turn to BLU-285 in advanced SM. So SM is a hematologic disease characterized by excessive proliferation of immature mast cells, the immune system cells that mediate acute allergic inflammatory responses. In patients with advanced SM, mast cells accumulate in organs such as the bone marrow, liver, intestines and lungs resulting in life-threatening organ dysfunction and intense allergic and inflammatory symptoms. The D816V mutation, which is in Exon 17 of KIT, drives disease in about 95% of patients and there are no approved or targeted treatments for these patients. As a potent and selective inhibitor of D816V in KIT, BLU-285 has the potential to be a transformative medicine for patients with advanced SM.

So the design of our ongoing Phase 1 trial for advanced SM is similar to the GIST trial with the typical three plus three dose escalation part followed by an expansion part. Because approximately 95% of patients with advanced SM have disease driven by Exon 17 in KIT, all advanced SM patients are eligible regardless of prior treatment and no molecular selection is required.

The trial began enrolling in the first quarter of this year. We intentionally sequenced the SM trial after the GIST trial so we can incorporate FDA feedback on the GIST IND into the SM submission. This allows us to escalate with larger increments in the SM trial as long as we don't exceed the highest safe dose in the GIST trial.

We're currently enrolling the second cohort. Despite the delayed start relative to the GIST trial, we remain on track to share preliminary data from the dose escalation part of the trial by the end of 2016. However, the number of patients and duration of therapy for each patient will be less than for the GIST trial.

Similar to the GIST trial, we anticipate that this preliminary data will include safety and tolerability, pharmacokinetics, and pharmacodynamic measures such as changes in circulating KIT allele burden, again, across a range of dose levels. We also plan to share any initial assessments of clinical activity that may be available with a focus on serum tryptase levels, which is a measure of overall mast cell burden. So now let me turn to our drug candidate BLU-554, which is being developed for the treatment of advanced hepatocellular carcinoma or HCC that's dependent on an abnormal activation of the fibroblast growth factor receptor 4 pathway, which I'll call FGFR4.

Liver cancer is the second leading cause of cancer-related deaths worldwide. Patients with advanced disease have a dismal prognosis with a median survival of less than one year. Despite treatment with sorafenib, the only approved drug, there are no genomically targeted therapies. We estimate that up to 30% of the HCC patients may demonstrate abnormal FGFR4 pathway activation and could potentially benefit from the effective FGFR4 inhibitor.

Our ongoing Phase 1 trial of 554, BLU-554, uses a three plus three escalation design with a starting dose of 140 mg per day again followed by an expansion part. During the dose escalation part, FGFR4 pathway activation is not required for enrollment. However, tumors are tested retrospectively for pathway activation if a tumor sample is available.

In the first quarter of the year, we entered into a companion diagnostic partnership with Ventana, which now allows us to test patients perspectively for FGFR4 pathway activation enabling selection of patients as required for the expansion part of the trial. The trial began enrolling patients in the fourth quarter of last year and is now enrolling the fifth cohort.

As for the BLU-285 trial, we expect to share preliminary data from the dose escalation part of this study at a medical meeting by the end of 2016. These preliminary data will include safety and tolerability, pharmacokinetics, and pharmacodynamic measures such as circulating C4, a bile acid precursor, circulating FGF19, and total cholesterol again across a range of dose levels.

We will also share in the initial assessments of clinical activity that might be available based on radiologic tumor evaluations and measurements of circulating alpha-fetoprotein and HCC tumor marker. As is the case for the BLU-285 trials, these assessments of clinical activity will be early and patients treated at higher dose levels will have had shorter durations of therapy.

Now let me give a brief overview of the RET program. So our drug candidate, RET or RET inhibitors drug candidate, BLU-667, is behaving as designed. In pre-clinical models, BLU-667 has demonstrated potent inhibition of wild-type RET kinase that's found in activating gene fusions as well as potent inhibition of RET-bearing activating mutations and mutations predicted to provide resistance to other RET inhibitors. These are typically point mutations in that case.

We're very excited about this program as RET kinase fusions and mutations have recently emerged as important drivers in a variety of cancers. RET kinase fusions found in about 1% to 2% of non-small cell lung cancer and RET activating mutations have been identified in about 50% of medullary thyroid cancers and about 10% of papillary thyroid cancers.

In addition, recent data indicate that activating RET mutations are found in small number, excuse me, activating RET fusions are found in small numbers of patients with various other solid tumors. We plan to file an IND by year end and we look forward to updating you as we progress BLU-667 toward a Phase 1 clinical trial.

So this has been an exciting year for Blueprint. We brought two drug candidates into the clinic and are preparing to file an IND for our third drug candidate by the end of the year. Our clinical trials in GIST, SM, and HCC are progressing as expected, and we remain on track to share preliminary data from each study by the end of the year.

So with that, I'll pass it over to Mike to review our financial results for the quarter, first quarter of 2016.

Great. Thanks, Andy. In this morning's press release, we reported cash, cash equivalents and investments totaling $191.5 million as of March 31, 2016, compared to $162 million as of December 31, 2015. This increase was primarily due to the $45 million upfront payment received in March 2016 under our collaboration with Roche as well as $1 million in milestone payments and $3.2 million in R&D services reimbursement received under our collaboration with Alexion; offset by cash used to fund operating activities during the first quarter.

Collaboration revenues for the first quarter of 2016 were $6.9 million compared to $0.7 million in the same period of 2015. Revenues were flat $4.2 million in R&D services and a $750,000 milestone payment burned under our collaboration with Alexion in the first quarter of 2016. We also recognize the portion of the $15 million upfront payment and a portion of a $1.8 million milestone payment previously received under the Alexion collaboration as well as a portion of the $45 million upfront payment under the Roche collaboration. All of which will be amortized over the period of the applicable research terms.

Research and development expenditures for the first quarter of 2016 were $17.6 million compared to $9.2 million for the same period in 2015. This increase was primarily attributable to increased expenses associated with clinical manufacturing activities, continuing to build Blueprint Medicines platform and advance our discovery pipeline, increased personnel expense, and increased expenses for external clinical activities associated with advancing our two lead programs into clinical trials.

General and administrative expenses in the first quarter of 2016 were $4.6 million compared to $2.8 million for the same period in 2015. The increase was largely due to increased headcount and other professional expenses to support growing operations.

Net loss for the first quarter of 2016 was $15.5 million or $0.57 per share compared to a net loss of $11.6 million or $8.23 per share for the same period in 2015. Finally as previously mentioned by Jeff, we expect to end the year with at least $120 million in cash, cash equivalents and investments, and based on our current operating plans, we continue to expect that our existing cash will be sufficient to enable us to fund operating expenses and capital expenditure requirements into late 2017.

With that, we would now like to open up the call for your questions. Operator?

Thank you. (Operator Instructions) Our first question comes from Mike King with JMP Securities. Your line is open.

Hey, guys. Good morning. Thanks for taking the question. A couple of quick ones, if I may. Just wondering on -- first on SM, you have mentioned that you're in the second dose cohort. So clearly that's taking more time than the GIST trial so just wondering, is that just paucity of patients or did the protocol open a little bit later? Maybe you can just give me some color on that please.

All right. Thanks, Mike. Andy, why don't you take that?

Yes. So, Mike, again, thanks for the question. [That is really on track] as I explained, we did intentionally open the SM cohort after GIST, and it just started the first quarter of this year and patients -- and the physicians are enthusiastic and very committed and patients have been available. I think it's just a matter of the later starting time.

Okay. And can you say anything about the screen failure rate and just sort of your expectations. I know that this is a small indication. So just wondering if there are -- if there's a reservoir of patients out there? Or is it going to be a process to get people onto the trial.

You know what, it's been pretty gratifying again just with our -- as we ramped up investigators. We're continuing to bring more sites on-board and sites have patients available. So at the moment I'm not expecting enrollment to be a major limiting factor.

Okay. And then just regarding that, the quality of life questionnaire, is that being implemented in this part of the study? And how was that going?

Yes, I'm glad you brought that up. So, yes, we are like many on the call know, we've developed, or we're almost finished developing a patient-reported outcome tool, which is specific for patients with advanced systemic mastocytosis. This is a unique tool, no such -- nothing like this really exists. It's been the result of a lot of back and forth with collaborators as well as with the FDA. And it's moving along well. It will be ready for implementation during the expansion part of the studies, which is when it comes in.

Okay. But it's gone through the validation stages, just ready to go just --

Yes. It's essentially ready to go.

Yes.

It will be ready when needed.

When you go to the expansion phase? Okay, great. I got that. And then finally just on Roche Oncology, just from a standpoint of investor insight into progress there, what kind of metrics should we be looking for and when? I mean is it reasonable to think that something could emerge later on this year. It seems optimistic, but -- or would it be next year or is it just going to be quiet until Roche decides that it's in their interest to reveal anything.

All right. Thanks, Mike. A lot of options there (multiple speakers) --

Well, that could be full service. I like to give you the entire manual.

Yes. So, as you know, it's a early discovery collaboration. So it started with the identification of three targets. As we mentioned, two of those targets have now moved in the stage of being programs, and the teams from Roche and Blueprint are working on together. And we anticipate the third one will move from that target identification to a full-fledged program later this year. And then the subsequent two, we're working on to identify out of a pool what those targets ultimately will be and then at what stage they become programs, so sort of a ground you with where we are. In terms of updates, even if this was our program just on our own, we don't provide a lot of detail on programs at this stage. We want to advance them for competitive and strategic reasons. We want to derisk them so I wouldn't anticipate detailed science updates at any time this year.

Okay. But perhaps a business update to remind us of the what triggers other particularly on the milestones that trigger that that would be visible.

Yes. So as we have it, like we don't guide to, we don't budget or put in our base case the collaboration milestones, but we will announce them as they come out and when they hit the materiality threshold --

Okay, great.

-- to advise to when we expect them.

Now I get that. All right. Thanks, Jeff. Appreciate it and keep up the good work.

Thanks.

Our next question comes from Cristina Ghenoiu with Cowen and Company. Your line is open.

Hi. Good morning. Congratulations on the progress and thank you for taking my question. The first one, do you -- have you seen any surprises or differences in the PK/PD profile of these drugs in humans versus what you saw in animal models.

So I'll take that. It's Andy. So thanks for the question, Cristina. You know, the dose escalation of the -- I assume you're talking about both drugs, so both the 554 --

Yes.

-- and 285 Phase 1 so it continues on track and drug behaving is expected based on our clinical studies. You know, I do want to reiterate that we plan to share a full set of data -- of the available data at a medical meeting at the end of the year, and we really think it's important to present the clinical data including the pharmacokinetics, the pharmacodynamic, safety, et cetera, as a whole so the results can be evaluated in context.

Thank you. And in terms of the on target like possible defects, I know that's for BLU-554, inhibition of FGFR4 would increase the level of bile acid, are we just going to just see any bile acid diary in your pre-clinical work? And would you consider that an indicator of effective pathway inhibition?

So, again, I guess the data -- so we go back up. We have some very nice pharmacodynamic readouts for 554. The nice thing about that compound is the circulating bile acid precursors as well as actually circulating on FGF19, which will go up in response to inhibition of the pathway. If enough bile acid is consumed, cholesterol should also go down, which we can measure easily in circulation.

Again, as far as what we're observing renew, I really do want to put it together and present it as a whole in the medical meeting. Yes, I think our investigator should be part of that, and we wanted a setting where it can be discussed in the medical community carefully.

Yes, I appreciate that. But for the 285 program, can you remind us what may be an on-target effect for that.

What would be an on-target? So we do know that (multiple speakers) -- so we do know that if we -- that based on other inhibitors of KIT, if we fully inhibit wild-type KIT, we will -- and others with other compounds have seen reductions in hemoglobin, anemia, and changes in skin and hair pigmentation. I think those will be the most likely things that we'd expect. And that's consistent with what we see in high doses in our frequent, in our [tox] model.

Thank you. And the last one is on that. So for things like medullary thyroid cancer, cabozantinib is a pretty good RET inhibitor. What does the 667 -- how would that be differentiated, for example, in this indication from cabo?

Yes. This is Christoph. Thanks for the question. It's a common question, actually. And as you know, the inhibition of RET in cabo is somewhat controversial because it's not designed as a RET inhibitor. Its primary activities on other targets and how that actually plays out now on the RET is complicated to answer based on the current data. Of course, you're correct that cabozantinib has been used in patients with thyroid cancer and with that also with patients that have abnormalities of RET. However, the data package, they're not absolutely clear in terms of any effect on those patients is coming from inhibition of RET.

Okay, yes. Thank you.

(Operator Instructions) Our next question comes from Terence Flynn with Goldman Sachs. Your line is open.

Hi. This is Cameron in for Terence. Thank you for taking our questions. A couple of questions. First, how do the doses in the first and second cohorts of the SM trial compare to the five GIST cohorts? Then second, for BLU-285 present, could you remind us what you want to see in the efficacy front in order to expand into Phase 2? Thanks.

This is Andy. I'll take that. So in terms of the doses, we started at the same dose level, 30 mg a day, in both the GIST and the SM studies, and that's because both the INDs were submitted based on the same pre-clinical toxicology package so we didn't have any clinical data yet in GIST. And then the escalation scheme is similar with the advantage that in SM as long as we don't exceed the highest recognized safe dose for GIST as that certainly progresses, we can increase it in larger increments.

In the SM?

In the SM, thank you, in the SM setting. And that actually is very important because, as Mike brought up before, this is a relatively rare population. And so, at least in theory, it should let us get through more dose levels or get to higher dose levels with your patients in the long run.

And I'm sorry the second question. Yes, what was it? I lost track. Can you guys repeat it? What were --

Sure. For SM, could you remind us what you want to see in terms of efficacy in order to move forward with the trial in the Phase 2?

Yes. So for SM, it's the hematologic disorder and the kinds of evidence of clinical activity that we really would like to see. Well, two things, one is serum tryptase, is the circulating marker of mast cell burden. And if the drug is active, I would expect that to go down when we reach appropriate dose levels. And then the other main way that the disease is evaluated clinically from a response perspective is reduction of bone marrow infiltration by mast cells. So in the SM study including ours, we will have ongoing intermittent assessment by bone marrow biopsies. And finally, there are result -- the effects of organ infiltration by the mast cells are things like anemia, thrombocytopenia, bone marrow effects, spleen enlargement, we measure those and see if those will be seen over the course of the study of dose change. We'd like to see some degree of activity.

Okay. Thank you.

Our next question comes from Mike King with JMP Securities. Your line is open.

Sorry, the follow-up was answered. Thanks so much.

Thank you. I'm showing no further questions. I will now turn the call back over to Jeff Albers for closing remarks.

Great. Thank you, operator. So, in closing, I want to revisit the four strategic imperatives that we laid out at the beginning. The first one is to develop transformative medicines for patients, and we do this through our genomics focus. We strive to design trials that may generate signals of activity as Andy laid out as early as possible in our trials. The second piece is to continuously innovate, which allows us to efficiently move multiple programs through discovery at any given time. The third one is delivering value. As we continue to build an increasingly diversified portfolio of kinase inhibitors, we keep a constant focus on doing this in a finance or a fiscally responsible manner. And then the fourth one is fostering success for the long term by continuing to attract and retain motivated and talented employees and advisors.

So when we take all that together, we have an incredibly full slate of development and clinical activities planned for the remainder of the year as we continue to grow and advance our proprietary pipeline, and simultaneously work with our partners to expand the reach of our potentially transformative science. We're incredibly proud of the deep and rapidly advancing pipeline and look forward to updating you again as we continue to make progress.

With that, we'll close the call and thank you again for your time. Thanks.

Thank you. Ladies and gentlemen, that does conclude today's conference. You may all disconnect. And, everyone, have a great day.