2Seventy Bio Inc (TSVT) 2022 Q2 法說會逐字稿

Hello and welcome to 2seventy bio's second-quarter 2022 financial results conference call. (Operator Instructions). Please be advised that this call is being recorded. I would now like to turn the call over to Jenn Snyder, head of corporate affairs. You may begin.

Thank you, operator. This morning 2seventy bio issued a press release providing a business update in addition to second-quarter 2022 financial results. The press release can be found in the Investors & Media section of the company's website at 2seventybio.com. On the call today are Nick Leschly, Chief Kairos Officer; Chip Baird, Chief Financial Officer; and Steve Bernstein, Chief Medical Officer.

As a reminder, today's discussion will include forward-looking statements related to 2seventy bio's current plans and expectations which are subject to certain risks and uncertainties. These forward-looking statements include statements regarding our strategic plans, timelines and expectations and statements regarding our financial condition, expectations and other future financial results among others.

Actual results may differ materially due to various risks, uncertainties and other factors, including those described in the Risk Factors section of our most recent forms 10-Q, 10-K and other SEC filings. These forward-looking statements represent our views as of this call and should not be relied upon as representing our views as of any subsequent date.

You are cautioned not to place any undue reliance on these forward-looking statements and, except as required by law, we undertake no obligation to update or revise any forward-looking statements. At this time I would like to turn the call over to Nick Leschly. Nick?

Thank you, Jenn, and good morning, everyone. Thanks for joining us for an update on the second-quarter 2022 results. Last week 2seventy passed the 270-day milestone since the launch of our company. So, I'll spend a few minutes talking about the recent company highlights, including the fantastic news announced this morning with our partner BMS on the KarMMA-3 study. Then I'll hand it over to Steve and Chip for a bit more on the clinical and financial side of the house. After that we'll be sure to get to your questions.

We're off to a great start for the first half of this year. Our 2seventy team is gelling as we build upon several tracks. Our commercial business is growing with significant demand for ABECMA. We continue to treat as many patients as we can and, as previously stated, we're committed to capacity improvements which we've been able to achieve.

We're tracking towards the high-end of our anticipated 2022 revenues for ABECMA sales. And on our clinical side, our pipeline continues to progress with multiple clinical stage programs in both BMHL and AML, as well as an emerging set of programs in solid tumors in collaboration with Regeneron.

Zooming out, the mission of 2seventy is clear and powerful. Existing standards are good, but not good enough. The immunotherapies have opened the door to the immune system, but are also not yet good enough. 2seventy's ability to design next gen cell therapy product solutions, that both integrate novel technologies and also partner us across modalities, is unprecedented and exciting.

Perhaps George Yancopoulos from Regeneron recently publicly said that when you are layering and integrating modalities, we are on the trail to the Holy Grail. This is a statement we firmly agree with.

On the financial front, we took the time during the earlier part of this year to reshape our operating model and reduce our overhead costs. We continue to evolve to meet the needs of the growing ABECMA opportunity that BMS recently outlined in their earnings call, including exciting top-line growth.

On the cost side, this quarter we saw an increased investment in ABECMA ramp up activities and higher than anticipated vector costs. You will hear more detail from Chip on how this has impacted our near-term guidance. Importantly, we remain confident in our runway into 2025.

Shifting gears, we are extremely excited to share the great news regarding our earlier line study, Phase 3 study for ABECMA called KarMMA-3, studying patients with two to four prior lines of therapy. After performing at preplanned interim analysis and receiving the recommendation by the Data and Safety Monitoring Board, the study was unblinded and has met its primary endpoint of demonstrating a statistically significant improvement in progression free survival.

It's hard to overstate our excitement for patients with myeloma and, along with BMS, this news certainly increases our conviction of the potential of ABECMA over the long term. It is both exciting and humbling. With that I'll hand it over to Steve, our Chief Medical Officer, to give a bit more of the exciting news of today and clinical updates this quarter. Steve?

Thank you, Nick. Good morning, everybody. It is an incredibly exciting day indeed. So, to expand on the updates that Nick shared this morning, 2seventy and BMS issued a press release announcing positive top-line results from a prespecified interim analysis of KarMMA-3, which is a Phase 3 global, randomized, multicenter, open label study that evaluates ABECMA in relapsed and refractory multiple myeloma patients who have had two to four prior lines of therapy.

They must have been refractory to their last regimen, and have been previously exposed to a proteosome inhibitor, an IMiD and Daratumumab, so-called triple exposed. And the outcome of these patients was compared to that of standard combination regimens.

This makes ABECMA the first BCMA directed CAR T therapy to demonstrate clinical superiority versus standard regimens in a randomized controlled trial. Indeed these results came ahead of schedule compared to our original timing guidance of data in 2023, and we are so pleased for what these data could mean in terms of potential paths to treat earlier line patients.

The study met the primary endpoint of progression free survival. The safety results were consistent with the well-established and predictable profile demonstrated in the pivotal KarMMa trial. We, along with Bristol-Myers Squibb, expect to present additional data from this study at a medical meeting in the future and discuss these findings with health authorities.

We also presented additional data for ABECMA in June at the 2022 ASCO annual meeting, including the largest data set to date for ABECMA patients treated in the commercial setting by the multiple myeloma cell therapy consortium of academic institutions. The data presented were consistent with what was seen in the pivotal KarMMa study, despite the fact that the overwhelming majority of such patients would not have met the eligibility criteria of KarMMa, reinforcing the efficacy and safety profile of ABECMA.

Looking forward, we expect to share proof of concept data for our KarMMa-2 study in high risk early stage multiple myeloma in 2022 that will further inform our earlier line development plans.

In addition, at ASCO 2022, we presented updates from our portfolio of oncology cell therapies, a trial in progress poster on CRC-403, a Phase 1/2 study of BBT-369 in patients with relapsed refractory B non-Hodgkin's lymphoma, and a trial in progress poster on PLAT-08, a Phase 1 study of SC-DARIC33 in relapsed refractory pediatric and young adult AML presented by Seattle Children's Therapeutics.

Overall this is a very exciting time for 2seventy as we move many years of efforts into translational stages supported by a significant ongoing ramp-up of our internal drug manufacturing throughput that's needed to drive our overarching strategy of moving rapidly into efficient and exhaustive proof of concept studies into the clinic. Quite a privilege and looking forward to sharing more. Now I'll turn the call over to Chip for a deeper dive on the second-quarter results. Chip?

Thanks, Steve, and good morning, everyone. During the second quarter, ABECMA generated $72 million in US commercial revenue, up 29% compared to the prior quarter. As a reminder, we share all profits and losses related to ABECMA equally with BMS for the development, manufacturing and commercialization of ABECMA in the US. We continue to see very strong demand for ABECMA and we are pleased with the growth trajectory there.

We remain on track to achieve the high-end of our 2022 US ABECMA revenue guidance of between $250 million and $300 million. We reported our share of collaboration loss of $4.3 million for the second quarter, which includes our share of gross profit less costs associated with commercialization of ABECMA in the US.

Given the strong demand for ABECMA, and our growing belief in the potential for this therapy to play an important role in earlier lines, we've been making significant investments to increase manufacturing capacity across the supply chain.

In addition to our manufacturing capacity investments, we have experienced costs per vector that were higher than anticipated. This does not affect our 2020 revenue target as we believe we have sufficient vector to achieve that target, and we are continuing to invest in increasing manufacturing capacity in the future. That said, we are partnering closely and supporting BMS in their efforts to lower vector manufacturing costs and continue to increase manufacturing capacity.

Between the capacity investments and the higher vector costs, we are increasing our 2022 guidance for net cash spend to $245 million to $265 million. We continue to forecast cash runway into 2025 based on our current operating plan. This runway is sufficient to achieve important milestones across our business. I'd now like to turn the call back to Nick for closing remarks. Nick?

Thank you, Chip, and thank you, Steve. As you can see, it has been a very productive and rewarding quarter. Much to be excited about here at 2seventy and I'm grateful to our team who have all demonstrated such tremendous dedication and focus over the past few months, if not the past few years.

In closing I'll just say that our mission as a company, what drives us every day is the concept of time. It's pretty simple but it's very powerful. Giving the people we serve more time by developing new therapies [at the rough] cancer treatment landscape is what 2seventy was designed to do and what we are all focused on. We look forward to sharing more updates in the coming months as we continue to advance this mission. With that, Kyle -- operator, we're ready for questions.

(Operator Instructions). Salveen Richter, Goldman Sachs.

Good morning and thanks for taking our question. This is Elizabeth on for Salveen. Just wondering if you could comment on the powering or how stringent the criteria was to stop at the prespecified interim analysis. And then if there's any comment on CR-8 that you could provide? And then a follow-up on vector supply for 2023 and how to think about that. Thank you.

Thank you. Just a heads up here, I'll pass it over to Steve, but, as you can imagine right now, where obviously the data is continuing to be crunched here and will be, as we said in the script, communicated later at a medical meeting. So, I'll pass it over to Steve to share what he can, but just a heads up, it'll be pretty limited. Steve?

Sure. Thanks, Nick, and thanks for your question. It was a prespecified analysis. This was our interim analysis for superiority, and the DSMB recommended that we unblind the study and it was a positive result. In terms of response rates, I can share that the secondary endpoint of overall response rate was met and was statistically significant. But at this time that's all that I can share.

And on the vector supply question, why don't we -- Chip, do you want to take that one?

Sure, thanks, Nick. Good question. Yes, we've continued to make step-ups throughout this year in terms of our weekly capacity in terms of patients that we can provide drug product to. We continue to work with the regulators to make additional step-ups and we have plans to make step-ups later this year and in 2023 as well. So, that is a picture that month-to-month, quarter-to-quarter continues to improve. And we should have more to share in terms of our outlook for 2023 as we get closer to the end of this year.

Awesome. Thanks so much and congrats on the update.

Daina Graybosch, SEB Securities.

A couple follow-ups on the previous ones. Can you just remind us the statistical design for KarMMA-3, in particular what triggered the events that triggered this interim? And what were the primary and secondary? And if you will, since you said the OR is secondary, how far down the secondary hierarchy you were able to get?

And then on cost, could you help break down this -- the net cash spend you expect, the $245 million to $265 million, Chip? Can you help us understand how much of that is on discovery on your early clinical programs, and then on ABECMA programs? And then how much is being spent, as you said, on supporting scale up and manufacturing for ABECMA? Thank you.

So first question here, I'll pass that off again to Steve, but maybe he can go through to top line some of the design questions. But we're not dancing down the chart. The data that we've given so far is what was driven, that was PFS and OR, both of which were statistically significant. So, that's the extent of the data we'll be sharing at this point. But if you zoom out I'm sure Steve has a few comments and then we'll go over to Chip. Steve?

Yes, as Nick mentioned, the primary endpoint was PFS and that was the primary endpoint for which the interim analysis statistics were driven. The key secondary endpoints were response rate and, as we mentioned, we can say that both the PFS and the overall response rate was significantly improved. Overall survival is a key secondary endpoint and the follow-up for overall survival remains ongoing. I'm not sure if there were any other, Daina, questions that --.

If you could talk about what specifically was the three specified triggers to do the PFS analysis.

Yes, I'm honestly not sure how much I could really get into that to be very truthful.

But it was preplanned, it's preplanned (multiple speakers).

Yeah. It was preplanned in terms of events. So, it was an event driven preplanned analysis.

Great and, Chip, do you want to cover off a little bit of the breakdown of the net?

Yes, so -- Daina, it's a good question and there is disclosure in our 10-Q that can give you an even better feel for how the investments across programs meter out. From a development perspective, ide-cel remains our biggest investment with the various KarMMa studies and investments in manufacturing scale up. 369 is the next largest, and DARIC-33 also a clinical stage program. The balance is earlier stage research programs, collaborations with Regeneron and other partners there.

On the manufacturing side, I can just comment we've invested both on the drug product side together with BMS in terms of scaling that capacity, and then, as I mentioned, continuing to work on vector supply and increasing scale there.

And one thing I might just add there, one of the things we've been working on, and Chip referenced it in his script -- or we both did -- which was as we spun the company, we continue to make sure we're fit for purpose across the business. And as we level in on that, that's something that's still certainly ongoing and we're making good progress on.

But we feel pretty good about the team we have for the purpose that we have, that is not just ABECMA but is also very much believing in the future of the technology and approach that we have, and that's what I was referring to a little bit there. So, a pretty aggressive investment in that side as well as research and what we call Horizon S is certainly ongoing in there. But the bigger driver certainly for the burn and the burn increase has to do with ABECMA.

Yaron Werber, Cowen.

Congrats on the data. I know you can't say a lot, but I wanted to just probe a little bit. When you're thinking about second to fourth line, you can have doublet or you really have triplet therapies here. It could be again -- did you expect some patients to get Darzalex again, or are they typically getting another IMiD and sort of another PI?

And if you can, what do you think is a comp in terms of prior data with respect to PFS and ORR? These are obviously triple exposed, so the question is what they were getting at that point.

And then secondly for Chip, we're beginning to see a little bit of a range for you now for the collaboration with Bristol on OpEx. And I know this is going to be, obviously, variable depending on spending and clinical supply, etc. But can you give us some brackets to where you are on -- toward profitability and sustainability? Because it sounds like the clinical spend is now getting a lot more manageable and predictable? You only have essentially one big study and one small study ongoing. Thank you.

Excellent questions on that. So, let me kick that over to Steve because I think those are an important set of questions to make sure we understand the triplet and the expectations thereof. So, Steve, why don't you cover off on that and we'll jump to Chip after?

Yes, sure. No, that is an excellent question. So, let me reply in two -- make two points in that regard. The first point is that the standard of care arm in the randomization was the choice of five approved combination therapies and the investigators chose which combination therapy that they would use if patients were randomized to that arm and it's a regimen that they could not have had before so that it increases the potential likelihood of benefit.

In terms of your question what, would be expected, I think that is an important question. Because these patients are: one, have been refractory to their last line of therapy, which means that they have progressed within 90 days of their last line of therapy; and second, as you alluded to, they were triple exposed.

And if you look in the literature and across the studies, there's not an awful lot of large databases on the outcome of patients who are triple exposed, but the totality of the data suggests that if you fail daratumumab, your overall response and your performance status both were extremely poor.

So, we had some ideas of what this might look like and really built our study upon that. But what we were very encouraged was in this study that ABECMA really had a statistically significant -- what we believe is a clinically significant improvement over the poor response rate and poor performance that is seen in patients who had failed daratumumab.

Thanks, Yaron. Good questions. Sorry, we forgot to skip over to Chip here. Let him out of jail. Chip?

Thanks for that Nick. Yaron, good question. In terms of how to think about the ABECMA spend, you're right on the noncommercial side, those OpEx related to the clinical studies are in a more predictable range. For the existing studies there we would predict that that glide path continues, although I would refer you to the quote in today's press release saying, I think we are thinking together with BMS about future investments in ABECMA.

And you'll hear more from us on that throughout the second half of this year as those plants develop. But these data today I think give us increasing conviction in the long-term role of ABECMA in the treatment of myeloma.

And then on the path to sustained ability, profitability, I think what you're seeing in this quarter's results is increased investment on the manufacturing side. And I think our priority is getting to all of the patients that we can, making those investments to make those ramps in terms of monthly and quarterly capacity. And that is going to have an impact in the short term hearing from us today in terms of that path to profitability.

But we think that trade-off is justified given the patients who continue to queue and wait for this therapy. So, longer-term as we head into 2023 and beyond, we think that picture is attractive and it's an attractive commercial business. But in the short-term we're making the right investments to maximize the ABECMA potential.

Thanks, Chip. And Yaron, you and I have talked about this a couple times. But I think as you zoom back out, there are a lot of questions around the myeloma market opportunity for CAR T broadly. And I think that's been dispelled, the interest is there. Then there is where does ABECMA fit relative to [siltasalin], is there room for both, etc., etc. I think that also is becoming quite clear in our opinion saying there is ample room here to service an unfortunately big market opportunity with these patients who are just desperate for help.

And now as we start thinking about earlier lines, I think we have that growing conviction and excitement. So, pretty much on every turn that we've taken we get more excited. But you're absolutely right, it's still bouncy -- a lot less bouncy than it was 6 to 12 months ago, still a little bouncy right now as far as the execution side and being able to level that off.

But as we get into 2023 here, we feel a high degree of confidence along with BMS. And that -- we're very pleased with BMS and they are paying attention frankly like -- I couldn't even possibly have imagined a better partner in this regard. And I think they're certainly very committed to the cell therapy space in that regard. So, hopefully, Yaron, that helps.

Matthew Harrison, Morgan Stanley.

So, maybe just one follow-up question on the KarMMA-3 interim analysis. So, I'm just wondering whether you can comment on -- because you mentioned this is a planned interim analysis. So, I'm just wondering whether you can comment on whether -- how many interim analyses you have planned in total for the PFS.

And then my second question is on the 369 and the DARIC33 program. So, you mentioned that you'll have a data readout for these two programs later this year. So, can you discuss what kind of safety data we could get for this year for these two programs? Thanks.

Yeah, I'll pass that off to Steve. I don't think we've outlined the specifics of a statistical plan here. But, Steve, do you want to comment on that and then I can take the high level 369 and DARIC question?

Yes, I mean this was our first interim analysis for superiority.

Yes. So, I'm just wondering whether -- I mean just whether you will have any additional interim analysis or this will be the only one analysis on PFS? I know you'll have other interim analysis on OS.

Well, we're following for OS and we're planning on presenting all of the data hopefully at a meeting later this year.

(multiple speakers).

Just to be clear, if I'm getting you right, though, we met our primary employee, right?

So, that's the key bit, primary endpoint was met, it was meant early. And that's something we're excited about just because we were not anticipating this, because you expect the full length of the study. So, we were excited to certainly see that.

On the 369, DARIC33, that obviously depends on enrollment as we go towards the end of this year and the beginning of next. And I think we've consistently said first half of next year is when you're going to start seeing more substantive data. But in the beginning it's safety, how are we looking at getting into these patients. And then you start seeing how -- hopefully the impact that it has.

But a lot of this and the timing of this is something we're looking at very much depends on how the dosing and how the safety goes, etc. But beyond that, that should be a rough expectation, end of this year and first half of next, to get good visibility into both those programs.

Okay, thank you.

Operator, next question?

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

Just want to thank everybody, and apologies for the quick turnaround on this. So, appreciate you guys making the time and effort to jump on the call with us here. If anyone has additional questions or anything they'd like to dig more into, please follow up with us directly, get in touch with our investor group and we're more than happy to follow up. Thank you, everybody, and have a great day.

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