2Seventy Bio Inc (TSVT) 2023 Q3 法說會逐字稿

Good day, and thank you for standing by. Welcome to the 2seventy bio Third Quarter 2023 Earnings Conference Call. (Operator Instructions). Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker, Elizabeth Hickin, Head of Investor Relations. Please go ahead.

Thank you, operator. This morning, 2seventy bio issued a press release on our third quarter 2023 financial results. The press release can be found in the Investors and Media section of the company's website at 2seventybio.com.

Speaking on the call today are Nick Leschly, Chief Kairos Officer; Chip Baird, Chief Operating Officer; and Steve Bernstein, Chief Medical Officer. Philip Gregory, Chief Scientific Officer, is also on the line for the Q&A session.

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 conditions, 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 Form 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, Liz. Good morning, everyone, and thank you for joining us as we discuss our third quarter results and business updates. While this quarter was challenging for 2seventy and the broader biotech markets, we continue to take actions to best position the business and our science for future success.

In September, we made the difficult but necessary decision to reshape our organization to allow us to advance our pipeline and support our partners at BMS as they redouble their commercialization efforts with ABECMA. Chip will discuss in more detail. We continue to support BMS in their efforts to return ABECMA to growth, and believe in the significant benefits it delivers for patients.

We also look forward to presenting important data at the upcoming American Society of Hematology Meeting. Steve will walk through what we saw in the abstracts from KarMMa-3 and KarMMa-2c presentations. In this environment, we have a sharp focus on the future, determining how to best ensure our important therapies become available to patients in need, drive value for our shareholders and continue to do what's best for our employees. We are evaluating all options to achieve these objectives.

As always, I would like to thank our 2seventy team. I remain deeply grateful for our dedicated and talented employees who continue to go above and beyond to advance our programs and deliver for patients. I could not be more proud of the culture and the talent that we've built to 2seventy.

I will now hand it over to Chip to talk more about ABECMA and our Q3 results.

Thanks, Nick, and thanks to everyone for joining the call this morning. .

As our partners at BMS shared last month, the scheduled manufacturing plant maintenance and the competitive dynamics have impacted performance of ABECMA. In the third quarter, BMS reported $69 million in U.S. top line sales for ABECMA for a total of $302 million year-to-date.

As a reminder, we are in a 50-50 co-co with BMS for the U.S. ABECMA business, and record collaboration arrangement revenue, which represents 50% of the operating profit of the U.S. business.

For the quarter ending September 30, 2023, we recorded $500,000 of collaboration revenue related to ABECMA. The decline in collaboration revenue was primarily due to ABECMA's top line performance.

As Nick mentioned, this was a challenging quarter, and we do expect competitive pressure for ABECMA to continue in the fourth quarter. That said, we and BMS continue to believe in the long-term potential for ABECMA to meaningfully impact the lives of patients with multiple myeloma. We're focused on supporting our partners at BMS and their efforts to get program back on track, which include expanding the site footprint to enable more patients to access ABECMA, educated physicians on the treatment sequencing and the emerging data supporting the use of BCMA-directed CAR Ts before other BCMA-targeted therapies, and competitively differentiate ABECMA's real-world safety and efficacy profile. Steve will discuss this in greater detail later on the call.

Nevertheless, the pressure on ABECMA has had a meaningful downstream impact on 2seventy's business. As a result, we have taken actions to reshape our organization. In September, we announced a head count reduction of approximately 40% and a streamlined approach to our pipeline, including pausing investment in our next-generation AML program, and gaining future investment in our bbT369 program.

The restructuring and cost-saving actions are expected to achieve more than $130 million in cost savings in 2024 and 2025. We also anticipate staying within our previously guided net cash spend range of $180 million to $220 million in 2023, and we will continue to carefully manage our cash to preserve financial runway.

We believe the return to growth for ABECMA will take some time, and we are working closely with BMS on this effort. In the meantime, we're continuing to closely manage our balance sheet, operations and investments with a focus on doing what's best for the company and our stakeholders over the long term.

With that, I'll hand it over to Steve to provide some additional detail on data that we will present at ASH. Over to you, Steve.

Thanks, Chip, and good morning, everyone. Last week, abstracts for the ASH meeting went live, and I wanted to highlight 2 key ABECMA presentations that are scheduled for the meeting.

First is the final progression-free survival analysis from our KarMMa-3 study. As a reminder, KarMMa-3 is our registrational study comparing ABECMA to standard of care in triple-class exposed patients with relapsed and refractory multiple myeloma who received 2 to 4 prior lines of therapy. This is the first controlled study comparing a BCMA-targeted CAR T against standard of care. And last year, we announced that the study met its primary endpoint of progression-free survival.

The latest data to be presented today shows that with additional follow-up, there is a deepening of responses in the ABECMA arm. In addition, the significantly longer progression-free survival of patients treated with ABECMA compared to those treated with standard of care was maintained with further follow-up, with the risk of progression or death reduced by 51% in the ABECMA arm. Median PFS in the ABECMA arm was 15.7 months, compared to 4.4 months in the standard of care arm.

And finally, the safety profile of ABECMA remained consistent with previous reports, with no reported Parkinsonian toxicity or Guillain– Barré syndrome reported. An interim look at overall survival in this study will also be shared during the presentation of ASH.

In addition to the K3 data, we'll also be presenting updated data from our Phase II KarMMa-2 cohort 2c study of ABECMA. This is in clinically high-risk patients having an inadequate response to frontline autologous stem cell transplantation that's defined as patients having less than a very good PR to transplant.

In the updated data, ABECMA continued to demonstrate deep and durable responses with no new safety signals observed with extended follow-up. And importantly, none of the patients who received lenalidomide maintenance after ABECMA experienced disease progression. Indeed, these data are highly supportive of the registrational KarMMa-9 study in a similar patient population, which is currently open and enrolling.

These data, along with additional subanalyses presented on patient-reported outcomes and quality of life continue to reinforce the importance of ABECMA in the treatment armamentarium for patients with relapsed or refractory multiple myeloma and reinforce its manageable and well-understood safety profile as well as its potential to play an important role in earlier lines of therapy against this relentless insidious disease.

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

Thank you, Steve. We appreciate everyone's time. and we will close by saying, we remain committed to delivering for patients, our employees, our translational science and our shareholders.

Clearly, it has been a challenging period for our company and all our stakeholders. As I said at the outset of the call, we are focused on all options to deliver for our mission and for all stakeholders.

With that, operator, you may now open the line for questions.

(Operator Instructions) Our first question comes from the line of Yaron Werber with TD Cowen.

Maybe a couple of questions. Number one, I guess, Nick or Chip, whoever wants to take it. You mentioning that you're expecting, it will take some time to return to growth for ABECMA. Does that include the (inaudible) extension related to K3?

And then secondly, on the OpEx side and profitability for the ABECMA JV, now that K2 is open, and obviously, you're growing more manufacturing costs for the study. Are you expecting ABECMA to be profitable, let's say, in Q4 and then next year as well be back on the ABECMA JV?

It's a little bit of a choppy line that you're on there, but we'll do our best to get up to your questions. I think you had referenced that we have said it might take some time for ABECMA to restore. So I'll comment on that, and then hand it to Chip for additional, and then maybe you can speak to the profitability question.

So Yaron, I think it's just more of a generalized statement that's saying that those efforts at BMS and we're in support of, those take time to get hold, right? This is an education piece. This is a data-driven piece, but we do believe strongly in ABECMA's place in the ecosystem as it continues to evolve with the data, the real-world evidence as well as other factors that have to do with the safety profile balance with the ABECMA profile, which we think is certainly one that is -- has its place in that community.

And so that's also where BMS is at. But these things don't happen overnight. So that is what we're in the midst of, and we're just trying to be as clear ahead as we can about the timing that, that will take for it to settle more appropriately into the marketplace, in the commercial setting.

One of the key bits in that is certainly expansion of the centers and making sure that the availability is there and making sure the supply is there and we can deliver day in, day out.

So Yaron, all those things just take time, and that's what we're just indicating.

Chip, do you want to add to that? Feel free and then maybe address the second question.

Yes. No, I think you said it well in terms of those dynamics on the return to growth. With regard to profitability, really, this is going to be driven by patient volumes by continued focus on operating leverage, particularly with regard to the cost of goods sold. And there, we've seen good progress.

And then, of course, the clinical trial profile. So a number of the studies that were launched previously have -- are beginning to tail off. But at the same time, we -- as you know, we are setting up the KarMMa-9 study, and that will be a cost.

Net-net, we expect ABECMA to be a contributor to our business over the coming years. But what that looks like, the shape and how soon we see a return to growth, I think, is something that we're continuing to sort.

Our next question comes from the line of Kelsey Goodwin with Guggenheim Securities.

I guess, first on ABECMA keeping there, I guess, could you just remind us the status of KarMMa-9? And then separately, on the MAGE-A4 program, I guess, could you remind us what are the -- is there specific solid tumors that are being enrolled in the China study, and maybe thoughts around the activity signal so far, kind of mainly coming from Synovial sarcoma?

Just Chip, you want to jump in on the first one?

Yes, KarMMa-9, that study has initiated and we're beginning the process of enrolling patients. So that's very exciting. And again, that's targeted towards a frontline label for patients for the suboptimal response to transplant. We think that's an important unmet need in that newly diagnosed population. And more to come on that one, but that one's up and underway, which is a big milestone.

On the MAGE-A4 stuff, so as you know, we have a collaboration with JW to (inaudible). That's obviously on track still. So we're excited to get that clinic bound very shortly.

In terms of indications, obviously, this is a very target-centric place or the primary goal is to make sure that patients enrolled are MAGE-A4 positive. And at least initially, we don't have a -- we're not sort of singling out a particular indication to focus on in the initial studies. So we're largely looking at this from an initial safety and efficacy or establishing the initial safety and efficacy of the MAGE-A4 program.

To remind you, this is not a naked TCR, so to speak. It's actually a potency enhanced one that uses our approach to turning TGF-beta signaling into a positive driver of T-cell proliferation.

Just 1 comment on that. This is Nick. More broadly, I think the JW collaboration is one that we're super excited about, and MAGE is certainly the front runner, also demonstrated what they can do in actually engaging in manufacturing and getting ready to translationally deploy in China so we can sort of understand this target.

So the proof-of-concept model is one that we're excited about. We will be extending further into our relationship on the Regeneron front as well as our own sort of aspirations on other targets. So that's something that, from an execution point of view, a timing and a cost point of view, is very beneficial to the company and the mission that we're on, just for a broader context.

Our next question comes from the line of Salveen Richter with Goldman Sachs.

This is (inaudible) on for Salveen. Just on ABECMA. I guess, what gives you confidence that the same headwinds won't play out in the earlier line setting?

So I'm not 100% clear on your question. Can you just clarify a little bit more detail about what you're asking? Or maybe you can't. So maybe you guys can help me understand what's the question? What makes us think that ABECMA won't play the same way?

Sorry, I was just -- sorry, I think I -- I got cut off. I'm just -- I guess, what gives you confidence that when ABECMA's approved in the third-line setting, the bispecifics won't come in to play there to be used ahead of ABECMA in that setting as well as just competitive headwinds from other BCMA CAR Ts.

Well, I'll start with an overrun. Then, I think Steve can jump in and provide a little bit on the clinical side.

First of all, the myeloma market is huge. It's never been a winner takes all market, and that's never really existed. And also the supply chain doesn't really support that and the sequencing of therapy doesn't support that.

So I think on a sort of first principles level, that's not how we see it playing out. It's also not in the interest of myeloma, this is still an incurable disease, and no one has been able to cure it. So I think there's going to be room for a number of us, a number of CAR Ts as well as bispecifics and others. And over time, the clinical base as well as the data that will come out.

We'll figure out the best way to use these medicines. This has always been the case, particularly in myeloma, given the number of therapies that are in there. Steve can speak to that because I think that's part of what he's done in his first part of his career at this point in time. But that's why we are quite confident in the data that has been and continues to come out on ABECMA on how it delivers for patients in a consistent, meaningful, as well as safe, predictable way.

So Steve, maybe you can add a little bit of color on -- what thoughts on ABECMA over time?

Yes. I think as Nick mentioned, with all the different therapies, a lot of emphasis has been on how do you optimally sequence these. And I think that the data to date is really supporting the fact that if you get a CAR after you got a prior BCMA-targeted therapy like a TCE or an ADC, you don't do nearly as well as if you got your BCMA CAR before having such a BCMA targeted therapy. And I think there's no reason to think that, that paradigm is going to be different as you move to earlier lines of therapy.

So I do think that there is an advantage in both clinical efficacy as well again as having rapid, deep responses with a single therapy that's going to make the BCMA CAR, i.e., ABECMA preferable to a BCMA TCE in earlier lines of therapy as the initial treatment of choice.

So just additional comments. This is Nick again, is that I do think, just broadly speaking, we and BMS believe that sort of the data convergence is happening and is happening in the real world, evidence as we'll see it over time from an efficacy point of view. And we remain, as Steve mentioned earlier, very confident around the safety profile of ABECMA, which does bode well as you get into earlier lines.

Last thing I'd say, I think you're also going to see a subsetting of patient populations over time in the practical use of this as you start to also overlay supply chain capabilities and scale, that will also take a number of years to get into its full, let's say, capacity setup, which we certainly are not at, us and anyone else in the space.

So overall, we think ABECMA has a place, and it needs to sort of get back on track as it relates to that. And BMS, we know is certainly committed to that, and we are as well.

Our next question comes from the line of Daina Graybosch with Leerink Partners.

If you, guys, could talk more about the competitive profile that you're seeing. You're talking a lot about T-cell engagers. You're not mentioning the other competing CAR T by name. And the other competing CAR T hasn't seen a decline in their sales.

So I guess the question is, why do you think it's the T-cell engagers taking away share versus a choice at the limited center to date going for the competing CAR T? And could you help us understand the share insights where both CAR Ts are available versus the share insight where only ABECMA is available versus T-cell engagers.

This is Nick. I can comment, and then Chip will jump in.

We have no problem saying Carvykti by name, just to be clear, because it is a very important medicine that is making a major difference for myeloma. Our only comment here is that, the CAR dynamic is also being interfaced with the T-cell engager dynamic when you have a line out the door. And that was what we were commenting on, which is that's what comes in, and it perhaps has settled into a place where it's not necessarily data-driven. At that point, it was more practicality driven, which is if you have a patient and you believe there's no supply available, then you do what you got to do if you're a clinician, and they should do that. That is what we're saying we'll evolve and settle, and has not yet settled.

We do see that ABECMA will continue to -- there are many sites where ABECMA is alone, if you will, Carvykti is still ramping up. It's not surprising to me that their sales quote aren't down, but also they're in a ramp-up phase. You recall, we've been out in the marketplace for considerably longer than they have, et cetera.

So I think we've spoken to that. And I don't think today's dynamic is necessarily going to be the dynamic 6 to 12 months from now. That's our view, that's BMS' view, and that's what we're settled into, and we're going to go deliver in the marketplace. And we believe the real-world data as well as over time, the earlier line data will support that and a shared utilization of those medicines across myeloma.

Any additional comments, Chip?

No. I think it's well said. I think commercially, we think about competition from 2 angles. Certainly from the T-cell engagers and that utilization of the community setting was probable, and particularly when CAR Ts are more constrained in terms of the capacity relative to the label.

Today, as CAR T capacity increases, we think, and the evidence from a clinical perspective suggest, that using a BCMA-directed CAR T before a T-cell engager ensures the optimal outcome for patients. So that's an important message with regard to that side of the competition.

With regard to other CAR Ts, for a long time, we were -- and BMS was in more of a constrained environment. Now that that's less true, they're out there doing commercial things. And I think that is talking about the profile from an efficacy perspective. Importantly, a safety perspective and important differences there in terms of neurotox, and then a manufacturing perspective in terms of turnaround time, and how the spec rates and things of that sort.

So all of those things go into it, all of those things that were out there with the message in the field. But those opinions and perceptions and beliefs can take time to change.

And one other thing that I think is sort of lost on some people is, this is not a market that is saturated. This is not a market where there's full education and utilization throughout the myeloma market. Our estimates and BMS' estimates is that there's pretty close to 50% are not getting an advanced treatment at this point in time.

So there's a huge opportunity for ABECMA, Carvykti and the T-cell engagers to make sure that we access everyone who can benefit from this. And that's the bigger picture in here. And then you can sit and compare us versus Carvykti in a very specific way. I actually think that's missing the point over the long term. And where it will settle in ultimately to be part of that own term. And we think our data and the development plan will support that. And that's hence where the -- I think the additional centers that we're standing up and BMS is charging at is quite impressive and certainly exceeds the other drug you were mentioning, if you will.

But at that point in time, that's where we can actually start to have the real conversations, have the supply to deliver and let it settle over time. But that's what Chip mentioned earlier in his script. It will take some time to actually settle in.

Our next question comes from the line of Samantha Semenkow with Citi.

Just 2 for me. So at ASH, you noticed -- you noted you're expecting to present the interim overall survival data for KarMMa-3. As we head into the upcoming PDUFA for ABECMA, can you share whether the FDA has requested to see the OS data as a part of their review? And assuming we get approval next month for third-line myeloma, how quickly can you and BMS begin providing treatment slots to patients that fall under the expanded label?

Good question, and I'll kick it over to Steve here in a second. But just so you know, given the closeness and the engagement with the FDA, we don't comment on sort of the ongoing PDUFA conversation as it relates to that, but we certainly can speak to what we anticipate to see at ASH at a high level, where I think. Maybe you can speak to that, Steve, what we'll be presenting?

Yes, I don't want to say anything more than the abstract, obviously, to preclude the presentation. There isn't a lot in the abstract on overall survival, except that we are going to present data with that. So you'll see the data there.

Remember, it's important to keep in mind that the design of the study was a patient-centric design so that it did allow for patients who did progress on standard of care to go ahead and get ABECMA, and there were 56% of patients that actually crossed over from the standard of care arm to the ABECMA arm. And obviously, that always will confound the survival data.

But I encourage you to go to the presentation at ASH, and you'll see more detail on the survival data.

Thanks, Steve. It's always awkward.

Our next question comes from the line of John Newman with Canaccord Genuity.

It's interesting listening to the comments that you've made on the call today regarding the competitive dynamic. I can't help but think that we are still in a market where all CAR Ts are still constrained by supply to some extent.

And what I'm curious about is if you could talk about the transition that I think you're still planning to make to suspension vector, which I believe you said will happen early in 2024. And just how that might play into increasing the supply or sort of exactly where you see that benefiting ABECMA.

This is Nick. Good question. I think Chip will comment on this as well. But I think the constraint is less around the vector side of the equation. I think, as we move towards suspension, which you're right, is the plan, that will perhaps help us and certainly will help us in cost of goods. And also, over time, make sure that we never have a constraint as it relates to vector.

But where the constraint to this has been is in the drug product. And that is where BMS has gone after. Maybe Chip can comment on a pretty significant increase to make sure that as we get access to more patients and we open up more sites, that we can deliver on all the demand that we believe is out there for CAR Ts in this setting.

I'll let Chip, if you have anything extra to add as it relates to that.

No, that's pretty well said. Suspension will help us with cost of treating patients, cost of goods sold. We'll take factor largely off the table as a potential future supply constraint. But really, the market and the growth in the market will be governed by how quickly we and others in the field can ramp the drug product capacity. And there, we've made good progress, both in terms of capacity as well as continued high-level performance on turnaround time and inspect manufacturing rates. All of those contribute ultimately to the true capacity that you can deliver to the field.

And just on that, I think supply is certainly important, and I think that keeps, let's say, more players in the game more consistently because when you're dealing with a patient that doesn't have a lot of time, and you want to intervene, then you're going to make the choice as a provider that you need to get the patient help.

But I think it's going to rapidly get more complicated than it already is, is what's the safety profile? What's the specific of this patient, right? What is -- what are the things like, can they travel? Can they not travel.

There is a lot of factors. When I order it, do I actually get it consistently, right? Can I predict the safety profile.

We're already seeing that on a sort of a center-by-center basis, and in some cases, gone from being ABECMA users to Carvykti users to the other way around, going from Carvykti users to ABECMA users.

And we're going to anticipate to see that as people get used to both medicines and which populations they're either comfortable due to their own personal experiences and maybe an institutional experience.

So that, we're seeing on the ground, if we will. And that's just beginning, and I'll come back to the point that we've made earlier, which is there's still a huge way to go to tap into this entire population that's eligible over time. And that is going to settle, but that's not going to settle until we get more centers spread out over the country up and running across all these medicines.

And then I think each of us will have, I think, certainly a share, if you will, and a contribution to hopefully getting myeloma beat into the cure category.

And I'm currently showing no further questions at this time. I'd like to turn the call back over to Nick Leschly for closing remarks.

Thank you very much. I appreciate everyone taking the time. And if you have any sort of more detailed questions or anything we said was not clear, then please feel free to follow up with Liz or our folks here, and then we'll be happy to get back to you. Thank you very much. Have a great day.

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