Blueprint Medicines Corp (BPMC) 2016 Q3 法說會逐字稿

Welcome to the Blueprint Medicines Corp Third Quarter 2016 Earnings conference call.

(Operator Instructions)

As a reminder, this conference is being recorded.

I would now like to hand the floor over to Kristin Williams, with Blueprint Medicines. Please go ahead.

This is Kristin Williams of Blueprint Medicines. And welcome to Blueprint Medicine's Third Quarter 2016 Financial and Operating Results conference call.

This morning, we issued a press release which outlines the topics that we plan to discuss today. The release is available on the investor's section of our website at www.blueprintmedicines.com.

Today on our call, Jeff Albers, CEO, will discuss Blueprint Medicine's business and corporate highlights; Dr. Andy Boral, Chief Medical Officer, will discuss clinical updates and Mike Landsittel, Vice President of Finance, will review our third quarter financial results. We will then open the call for your questions.

Here is our safe harbor statement. I would like to remind everyone that statements we make on this conference call will include forward-looking statements. 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 most recently quarterly report on form 10-Q 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.

Now, here's our CEO, Jeff Albers.

This is an important moment in time in the evolution of Blueprint Medicines. As we take the next steps towards achieving our goal of developing targeting and potent kinase inhibitors that result in potentially transformative new treatments for patients with genomically-defined diseases.

It's a true achievement to be able to present the first clinical data from all three of our ongoing clinical studies at medical meetings over the next month. And I want to acknowledge the dedication of the entire Blueprint Medicine's team, our external collaborators, as well as patients and their families who have made all of it possible for us to reach these consecutive and concurrent early-stage milestones.

Now, we fully appreciate we have a tremendous amount of work ahead of us. That said, we've come a long way in a short period of time. And we continue to move with a sense of urgency, given our appreciation of the needs we're trying to address.

I do want to point out that given the proximity of this call to the dates of our data releases over the next few weeks, we'll be limiting our clinical comments on this call to the execution of the trials and a review of significant medical need in each of the patient populations we're pursuing.

So let's start by taking a step back and looking at the progress we've made on the pillars of service, the foundation for Blueprint Medicine strategy, before turning to Andy, who will provide an update on our clinical programs, and then to Mike, who will go over the financials, leading up to taking your questions.

Our four areas of focus are, first, to progress and expand our clinical pipeline; second, to realize the full potential of this robust and one-of-a-kind kinase platform; third, to maintain a strong financial position and, fourth, to build a world-class Company with an exceptional team and collaborative culture. Focusing on these four pillars will position Blueprint Medicines for success and enable us to rapidly and effectively bring forward new treatment options to patients.

Our pipeline's unique both in its depth and scope for a company of our size and young age. We've made great progress in our ongoing Phase I clinical trials, for BLU-285 in patients with Gastrointestinal Stromal Tumors, or GIST, and Advanced Systemic Mastocytosis, and in our ongoing clinical trial of BLU-554, in patients with hepatocellular carcinoma or liver cancer. We couldn't be more pleased to be on the cusp of releasing early data from all three of our ongoing studies which have been selected for presentation at major medical meetings this year.

To remind you, the triple meeting in Munich, early data from the Phase I study of BLU-554 in liver cancer will be presented as a poster on November 29. And at that same conference, early data from the Phase I study BLU-285 in GIST will be presented in the oral late-breaker session on December 1. Also as we announced last week, early data from the Phase I study of BLU-285 in Advanced Systemic Mastocytosis will be presented during an oral session at the ASH Annual Meeting in San Diego on December 4.

Now, moving to the second pillar of our strategy, realizing the full potential of our kinase platform, we remain on track to file an IND for our third program, BLU-677, a RET inhibitor, by the end of this year. We also recently unveiled our newest therapeutic discovering program targeting PRKCA kinase fusions for the treatment of Fibrolamella Carcinoma, or FLC.

So for those of you who may not be familiar with FLC, it's a rare and distinct type of liver cancer that primarily effects children and young adults and has no approved therapies. In conjunction with academic collaborators, the Blueprint team used our unique scientific approach, including our genomic insights to identify this kinase fusion which we estimate to be the driver disease in more than 90% of patients with FLC. A percentage that's often reflective of a driver of disease.

Given the work we're already doing in liver cancer with BLU-554, we can leverage our clinical experience and relationships to pursue this new target with the goal of developing a potential treatment for FLC. This program expands Blueprint Medicine's existing pipeline and is a perfect example of the power of our scientific platform which combines our genomics insights with the quality and breadth of our small molecule library allowing us to identify targeted kinase inhibitors.

Another way we look at our prolific scientific platform is through partnerships. Our collaborations with Alexion and Roche are examples of collaborations that have allowed us to explore treatments for a broader range of patients and accelerated our development efforts with teams that bring significant additional expertise in rare genetic diseases in the case of Alexion, and cancer immunotherapy in the case of Roche.

As we continue to progress our diverse pipeline, we're increasingly focused on evaluating opportunities to work with strategic partners that could add value to one of our more advanced programs in order to provide operational flexibility.

Our third area of focus is to maintain a strong financial position to support our R&D programs. We ended the third quarter with $152.5 million in cash, cash equivalence and investments, and based on current operating plans, we continue to expect that our cash will be sufficient to fund activities into early 2018. And as always, we'll continue to operate in a financially disciplined and responsible manner. You'll get more details on the balance sheet from Mike, shortly.

Finally, our fourth area of focus is on building a world-class Company that brings transformative medicines to patients. We expanded our exceptional team in September with our most recent senior level appointment, Tracey McCain, as Chief Legal Officer and Executive Vice President.

Tracey brings substantial experience in building leading companies that develop and commercialize medicines for patients with rare diseases. We're privileged to have Tracey join the team as we look to build Blueprint Medicines into a Company that discovers, develops, and delivers new targeted and transformative medicines to patients who have no treatment options or have run out of options.

We look forward to updating you on the progress in the very near term at the triple meeting and at ASH.

So now, I'll turn it over to our Chief Medical Officer, Andy Boral.

Our team is working diligently towards the announcements of the initial data from our three ongoing clinical trials at the upcoming triple and ASH meetings.

I want to echo what Jeff said about the significant progress we've made. We initiated three studies a year ago or less. And due to the exceptional execution of our team and the study investigators we are able to present preliminary data from each of them.

We're excited that our abstract for the Phase I study of BLU-285 in Advanced Systemic Mastocytosis was accepted as an oral presentation at ASH.

Probably many on the call don't know much about advanced systemic mastocytosis and what a devastating disease it is. Patients typically have a life expectancy of only three to five years and suffer from a wide variety of debilitating symptoms, including intense bone pain, rashes, extreme fatigue and diarrhea. These patients have to deal with daily uncertainties about their health.

For instance, we know of people who regularly have anaphylaxis to unknown triggers.

In one case it was believed to be caused by someone wearing perfume simply walking by. This randomness and unpredictability drives many patients to isolate themselves from others including quitting their jobs and sometimes becoming confined to their homes. Rather than addressing the disease itself, available treatments focus on supportive care, treating the many symptoms rather than the cause of the disease.

It's been gratifying to see that BLU-285 is well tolerated and already showing encouraging clinical activity -- even at the lowest dose level -- and we look forward to sharing additional clinical data at ASH. We believe that KIT Exon 17 D816V mutation drives diseases on 95% of patients giving BLU-285 the potential to be important medicine for patients with advanced systemic mastocytosis.

Now let's move to BLU-285 in GIST. GIST is the most common carcoma of the GI tract and about 80% of GIST cases are driven by KIT gene activation. After patients with KIT-driven disease have received tumor prior kinase inhibitors, we estimate approximately 90% have acquired an Exon 7 mutation which causes resistance to available therapies.

In addition, about 5% of advanced GIST cases are driven by PDGFR alpha gene activation. This is really important because patients with PDGFR alpha GIST have no approved treatment options. For patients with KIT-driven GIST, treatment options have improved significantly since the approval of Gleevec in 2001. However, most of these patients still do experience disease progression.

At patient meetings over the past year, we've heard from numerous GIST patients with KIT driven disease who've been treated with Gleevec, sometimes for a number of years, who have then progressed rapidly through second and third line treatments and run out of options.

By inhibiting both Exon 17 mutant KIT and D842V mutant PDGFR alpha, our early preclinical work shows that the BLU-285 has the potential to be an important treatment option for people with GIST. Our phase I GIST study is designed with a 3+3 dose escalation followed by an expansion part.

During escalation, we include patients with tumors known to have a D842V mutation and PDGFR alpha regardless of line of therapy and also patients with KIT Exon 17 mutation selected by requiring progression following Gleevec and at least one other kinase inhibitor.

Importantly, in the third quarter, we signed a collaboration agreement with QIAGEN to develop a companion diagnostic for the PDGFR alpha D842V mutation that we would use in the expansion part of the trial. The study began enrolling patients in the fourth quarter of last year and as just mentioned we look forward to sharing preliminary data at the triple meeting.

Now, let's turn to the clinical trials BLU-554, our potent and selective inhibitor of FGFR4 in patients with advanced hepatocellular carcinoma. Liver cancer's the second leading cause of cancer deaths worldwide and there are no molecularly targeted therapeutics.

Currently, patients with advanced disease face a poor prognosis with immediate survival of less than a year. The standard first line treatment, Nexavar, has an overall response rate of just 2% and an overall survival rate of under a year. And the emerging second line therapy, Stivarga, offers less than four months on average of progression-free survival.

Our liver cancer trial is designed like the two BLU-285 trials already mentioned with a 3+3 dose escalation followed by an expansion part. A notable difference from our GIST mastocytosis studies is that during escalation we are enrolling unselected patients. Given that roughly 30% of HCC patients have abnormal FGF pathway activation, antitumor activity can only be evaluated in a subset of patients.

We do test for FGFR4 pathway activation retrospectively and we are developing a companion diagnostic in collaboration with Ventana that was recently implemented for prospective screening for pathway activation. The study began enrolling patients in the fourth quarter of last year and we look forward to sharing preliminary data from the dose escalation portion at the triple meeting.

And an additional important pipeline update. We're on track to file an IND this year for BLU-667, our potent selective inhibitor of RET fusions and mutations including predicted resistance mutations. We're very excited about this program because of the unique nature of BLU-667 which has demonstrated robust activity in preclinical models against wild type RET fusions, known activating mutations, and predicted resistance mutations.

Activating RET kinase fusion mutations have recently emerged as important drivers in a variety of cancers including non-small cell lung cancer and medullary and papillary thyroid cancers as well as many others. We believe BLU-667 could potentially be an important treatment option for patients with cancers that are driven by activation of the RET kinase.

As an oncologist, it's been tremendously rewarding to be part of the team working to bring these exciting new medicines to patients and I look forward to learning more as our clinical trials progress over the coming year.

Now, I'll pass it over to Mike to review our financial results.

Blueprint Medicines continues to maintain a very strong balance sheet which allows us to drive our lead programs and discovery platform forward toward key value inflection points. In this morning's release, we reported cash, cash equivalents, and investments totaling $152.5 million as of September 30, 2016, compared to $162.7 million as of December 31, 2015. This decrease reflects cash used in operating activities partially offset by the $45 million up front payment we received in March under our collaboration with Roche.

We continue to expect that our year end cash, cash equivalents, and investments will be at least $120 million, which will enable us to fund our operating expenses and capital expenditure requirements into early 2018.

Turning to the P&L, our collaboration revenues for the third quarter $6.2 million compared to $3.4 million last year. This increase was due to increased reimbursable R&D activity in our collaboration with Alexion as well as the amortization of the upfront payment from our collaboration with Roche.

R&D expenditures for the third quarter were $18.2 million compared to $11.7 million for the same period in 2015. The increase in year over year R&D spending was primarily due to increased manufacturing and clinical expenses associated with advancing BLU-285 and BLU-554 into clinical trials.

General and administrative expenses in the third quarter of 2016 increased slightly to $4.9 million compared to $4.2 million in the prior year. This increase was largely due to increased personnel related expenses to support our growing operations. Finally, net loss for the quarter was $16.8 million or $0.62 per share compared to a net loss of $12.6 million or $0.47 per share for the same period in the prior year.

With that, I'd now like to turn the call back over to Jeff to wrap up.

As you've heard, we've made important progress in the third quarter as we work to realize our goal of developing transformative medicines for patients while maintaining a focus on our four pillars of execution. We're extremely pleased with the progress of our clinical programs as well as that within our increasingly robust pipeline. I'm confident we have the right team in place and the best strategic partners to continue advancing and growing all of our programs.

We'd now like to open up the call for questions.

(Operator instructions)

Chris Raymond, from Raymond James.

Good morning, this is Laura Chico in for Chris today. Just two quick questions. Well, first, congratulations on the progress, guys.

I guess everybody's very excited about the upcoming data and thinking ahead to 2017, how should we be thinking about the next updates to follow and what the communication plan would be for that across the board for -285 and GIST, in SM, -554, in HCC?

As you know, we're excited and we've been working towards these inflection point of sharing preliminary data later this year for quite some time. And what we'd like to do is share that data and then in due course come out of that and begin talking about what next steps are as well as thinking about goals for 2017 and beyond.

And really we've used two venues to do that historically. One is on these quarterly calls to provide updates or when it comes to clinical data sharing that at upcoming medical meetings over the course of '17 and beyond.

There've been reports in the literature as early as this week about patients emerging with hyper progressive disease following treatment with anti-PD1s. As we're thinking about your future programs and kind of the immuno-kinase targeted efforts, are there particular disease settings perhaps such as hyper progressors following PD1 treatment that immuno-kinase targeted therapies might have good application?

Yes, that's a fascinating area that we think about a lot, and we think one of the great opportunities of our collaboration on cancer immunotherapy with Roche is to get us into this area of looking at kinases that are important in immuno therapy.

We really do think that one of the huge advantages of taking a very selective approach to kinase inhibitor development that we have, is that it opens the opportunity for combination therapies, potentially with immune modulators and with other mechanisms, because with highly selective inhibitors, we expect it will have a more limited range of toxicities and probably a better opportunity to combine other therapies.

I think that area of the rapid progression following immuno therapies is a terrific example and something we're certainly interested in hypothetically.

Mike King from JMP Securities.

Hey, good morning, this is [Patrick] for Michael King. Congrats on your progress in third quarter. A quick question on -285, why do you think -285 had activity SM despite the low dose? Also have you been conducting further epidemiology research to gain better understanding of the size of the SM market?

So, I think whenever we start a phase I study, we are very confident in the data to finding the starting dose of the in terms of safety. And, we do our best to estimate where therapeutic activity will first be seen.

In the case of mastocytosis study, where the driver of the disease is the D816 gene mutation in KIT in 95%, roughly, of patients, we're hopeful that we would see activity early in that study because we know that is one of the particular KIT mutations that is most sensitive to BLU-285. However, of course we didn't know for sure and that's the whole purpose of the dose escalation part of the study.

So, at this point, all I can really say is that we are really gratified to see early activity; our scientists were not surprised because the D816 gene mutation. And we so look forward to continuing to escalate, because of course, as we get to higher exposures, we expect we might see more consistent activity or more durable activity and so it gives of a lot of enthusiasm to continue the study.

I think I'll let Jeff take your second question.

I think that's right. Any time you start a phase I study it's always encouraging to see activity on the lower end. So, with the data we've shared in the release two weeks ago I think that was a strong signal. We're looking forward to updating that at the conference or at ASH in a few weeks.

As for the epidemiology, that's something we've spent a lot of time focused on, because as Andy mentioned in the opening remarks, it's that it's a disease where the epidemiology is really poorly understood. So, one of the things that we are working on is a registry to help further understand the disease.

Not just in the advanced setting but also the indolent setting of systemic mastocytosis. And, that is something that we have an abstract at ASH that will share some of that data, but we'll be looking to provide updates going forward as well.

Terence Flynn from Goldman Sachs.

Maybe, first, Jeff, you mentioned a strategic partnership is something that you guys are starting to think about. Maybe you could just help frame for us how you think about preference for structure, retaining U.S. rights, or other things you are considering in those potential discussions.

And, then was just wondering if you can give us any sense of how many cohorts of data we can expect from each of the trials at each of the upcoming conferences?

On the first one in terms of strategic partnerships -- that's always been a foundational element of the way we are building blueprint medicines, is to look at opportunities to take programs forward on our own as well as using collaboration where we think a potential partner brings an expertise or reach that we may not have other wise have. And, as I noted in the earlier remarks, Alexion and Roche are both very nice examples of that.

As we look forward, the notion that we have full global rights on our three lead programs -- BLU-285, BLU-554 and BLU667 - there's realization that doing that effectively on a global scale would be challenging for a Company our size. And so we'll look to a potential partnership where it will accelerate or expand reach, both from a geographical perspective, but perhaps also as a range of trials ongoing.

So, if you think about moving into earlier lines of therapy or combination therapies, it's that blend of reach. In terms of the actual structure, I think it's too early to speculate on that. I think it depends a lot on who that partner is and where their expertise lie.

And then the second component in terms of cohorts, again, from the opening remarks, we wanted to limit this update to the data we've shared before. And given the proximity of the conferences in two weeks, we'll just leave it to that time to provide the update. But as Andy has mentioned on prior calls, all three trials continue to enroll and progress quite nicely in a manner consistent with what we saw on the first half of the year when we last provided a detailed update.

Do you think you are going to have all of the data you need by the end of the year to make decisions on advancing into potential expansion cohorts of each of the programs?

This is of course a continuum; there is not one moment in time where that everything comes together on three different trials. What we've always said is that we will push each of these trials to a maximum tolerated dose or recommended part two dose.

And, it would be surprising if all three of them arrived at that moment in time simultaneously. But because these are open label, we are constantly evaluating what the next steps are and so as we move into early 2017, we will certainly be in a position to provide more detail about where we are going, both in terms of expansion cohorts and also potentially additional studies that we may want to initiate.

Joseph Thome from Cowen and Company.

My first question is just on enrollment for each of the three trials. Have you maybe found that one is a little bit hard to enroll or is everything kind of going as planned? Is any enrolling quicker than anticipated?

I think Andy's commented on this in the past as well. But the GIST study is probably the most as we would have predicted. We've consistently been able to identify through our investigators who are very actively engaged to identify subsequent cohorts of patients.

We've also indicated that perhaps the PDGFRL as a subset of that trial is a bit over representative. Early on we would've hoped, if you just think about actual percentages of patients to have a couple of patients, but we certainly have more than that in the dose escalation phase of this study.

In systemic mastocytosis, as you know, we started that trial later than the other two trials. And that one, I think we've been encouraged as new sites have activated that we've been able to enroll that as of August. And as you saw in the abstract, there were two cohorts and we've continued to enroll additional patients to share data on at the ASH conference.

And then BLU-554 with HCC, that's perhaps maybe the one we're the most pleasantly surprised. Given the devastating nature of the disease, you can't line up patients, per se, and the investigators have really done a nice job of finding those patients. So, as we noted in the second quarter, we were in the fifth cohort and we've continued to enroll quite nicely in that study.

And then one actually on the FLC developing candidate. Just to think about the mechanism of inhibition is there, is there something specifically that you're investigating, is it the Exon on protein kinase A that maybe is involved in the disease that you're focusing on?

So, what we know -- and I think has now been published by a few groups -- is that the target is activated in essentially all patients with FLC and we think is likely a dominant driver of the disease. So we're taking an approach similar to our approach with our other compounds to develop a highly selective and potent kinase inhibitor that will block the pathway.

I think it's a pretty straightforward concept of inhibiting a dominant driver in the disease.

David Nierengarten from Wedbush Securities.

Andy, you mentioned as patients progress on the study, et cetera, et cetera, have you had patients progress in the early cohorts yet for mastocytosis or any of the other trials that you didn't tell us?

And then, second part of the questions is, mastocytosis is kind of a more nebulous disease, shall we say, less well defined. Do you have any commentary on your criteria for the expansion cohorts when you get there, when you get to a dosage you feel is this right for that?

I think as Jeff mentioned, we really want to hold off for the meeting when we present the data as a whole to talk about what's happened since beyond what's in the abstract. But we certainly will give a full overview of where patients stand and cohorts and how long patients have been on, et cetera.

In terms of the second part, so the expansion part of the study -- for the mastocytosis study, we're talking about now - has three groups. The goal of that is to valuate BLU- 285 across the phenotypic range of advanced systemic mastocytosis. We divide that into three categories. One are patients with aggressive systemic mastocytosis, sometimes called ASM.

A second group of systemic mastocytosis with an associate hematologic malignancy, and that can be CMML or leukemia -- a variety of other things that come in patients with mastocytosis.

And the third is a relatively rare group of patients with mass-cell leukemia, which is an aggressive subset of AML. We think it's going to be really important to evaluate the drug across that range because they tend to have different prognoses, they tend to have different underlying mutational spectrums. Besides KIT, they all do the D816V gene mutation, but other underlying things as well.

And an important of the expansion part of the study will in fact, to be to look at BLU-285, particularly from a efficacy perspective in those three categories that understand anti-tumor activity, durability, et cetera. And that, I think will be an important part of going into next and the following.

(Operator instructions).

Arlinda Lee, from Canaccord.

I was curious if you could help maybe frame what kind of evidence or data you guys are looking for, to decide whether to go into the expansion and-or would you maybe go talk to regulators about opening up a registrational type of expansion and-or trial?

As I think Jeff already has discussed, studies are ongoing and all three are designed - that's -285 and GIST -- -285 in mastocytosis and -554 in HCC -- they're all designed to escalate to a maximum tolerated dose or potentially a lower recommended phase II dose, if there are reasons not to go to the MGD. And we do plan to continue with those to that point.

In particular, I want to comment a little bit about -285 in that study. We do know that as we get to higher exposures with BLU-285 the compound has the ability to inhibit a broader range. It's still very selective for KIT, but it has the ability to inhibit a broader range of KIT mutations.

And we think that might have real opportunity in combinations in earlier lines of therapy of GIST. So, again, both for optimizing activity and durability, we'll plan to go to the MGD and that will -- as Jeff mentioned -- that may not be identified at the same time for each drug, but we are getting in the range.

We talk a lot at the management team level about what do we really need see to proceed into expansion? For the study designs themselves, it's really driven by a tolerable toxicity profile, but certainly, we will pull all the data together and consider both safety, dosage achieved, pharmacokinetics, and potential signals of activity as we make that decision down the road.

As far as your question about regulatory authorities, I think it's premature for us to really talk about that. Of course it's something we think about and we are developing a plan.

David Nierengarten from Wedbush.

I did have another question on the GIST study. There's a presentation from another company right near yours and I was just wondering if you could comment maybe on some of the differences or similarities between theirs, if you have any ideas on their positioning?

I think as a blanket comment in any case, commenting on data from other companies prior to it being shared is always difficult. So, we'll wait to see what they have. But, if you go to the general approach that we're taking to developing kinase inhibitors, is that fundamental to that is the notion that with very selective compounds, will have the opportunity to potentially combine on down the road with other active agents.

And given how challenging curing cancer is, we think there's plenty of room in any of these diseases; not just GIST. But it can be HCC or systemic mastocytosis for multiple active medicines and we'll evaluate each of those as data's shared, and look at where are there opportunities to either combine or compare our data to that of others.

And that concludes our question and answer session for today. I would like to turn the conference back over to Jeff Albers for any closing comments.

So we look forward to updating again in the weeks and months ahead and to hopefully see some of you at the triple meeting or at ASH and we really appreciate your support and interest. And thank you for your time. Have a great day.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may now disconnect. Everyone, have a great day.