2seventy bio, Inc. (NASDAQ:TSVT) Q4 2023 Earnings Call Transcript

2seventy bio, Inc. (NASDAQ:TSVT) Q4 2023 Earnings Call Transcript March 5, 2024

2seventy bio, Inc. beats earnings expectations. Reported EPS is $-1.11, expectations were $-1.22. TSVT isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day, and thank you for standing by. Welcome to the 2seventy bio fourth-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.

Elizabeth Hickin: Thank you, operator, and good morning, everyone. Thank you for joining us. This morning, we issued a press release on our fourth-quarter and full-year 2023 financial results. The press release can be found in the Investors and Media section of the company’s website at 2seventy bio.com. 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 with respect to sales, efficacy, and perceived therapeutic benefits of ABECMA, the timing and review of additional studies and regulatory applications for ABECMA, and statements regarding our financial condition.

expectations. and 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, quarterly reports, 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. On today’s call, we are joined by Chip Baird, Incoming Chief Executive Officer; and Vicki Eatwell, Incoming Chief Financial Officer.

Anna Truppel-Hartmann, Head of Clinical Development, is also on the line for Q&A. And now I will turn it over to Chip. Chip?

Chip Baird: Thank you, Liz, and thank you all for joining us. This morning, we disclosed our fourth-quarter and full-year 2023 financial results and recent business and operational updates. I’d like to walk through some of the business updates and then Vicki Eatwell, our Incoming Chief Financial Officer, will go into detail on the financials. First, as we announced in January, we have embarked on a new strategic path forward as an organization that will be wholly focused on ABECMA. As part of this new path forward, we entered into an asset purchase agreement with Regeneron to acquire our research and development pipeline. I’m pleased to share that we’ve made good progress on the agreement and continue to believe we are on track to close within the first half of the year.

Turning to ABECMA, we’re looking forward to discussing our sBLA in the third-line at the upcoming ODAC meeting next week. As we’ve shared, FDA has said they are focused on the overall survival data from the KarMMA-3 study, which was presented at ASH and importantly showed benefit in the ABECMA arm when adjusted for crossover. We believe these data support the case to prove ABECMA in this triple-class exposed patient population. We’re pleased to see regulators across other geographies respond positively with third-line plus approvals in Japan, Switzerland as well as a positive CHMP opinion in the EU, which gives us confidence in a potential approval here in the US. Our clinical and regulatory teams at 2seventy and at BMS have been diligent and thorough in our preparation for the ODAC and we look forward to the meeting next week.

From commercial perspective, the approval in the third-line-plus setting is a key catalyst for ABECMA returning to return to growth. To that end, we and BMS are prepared to meet the anticipated demand in and importantly, to continue to deliver ABECMA on time and inspect for patients in need. These efforts are in addition to other ongoing efforts to expand site footprint and competitively differentiate ABECMA’s safety and efficacy profile with real world data. We look forward to educating the communities together with BMS on these data, and we remain excited about the potential for ABECMA to transform the lives of patients living with myeloma. With these efforts and our extended cash runway, we believe 2seventy is strongly positioned to see ABECMA return to growth this year and deliver for patients in need.

Before I close, I’d like to turn the call to Vicki to walk through some of our financials. Vicki, over to you?

Vicki Eatwell: Thanks, Chip. As mentioned, fourth quarter ABECMA US revenues as reported by Bristol-Myers Squibb were $56 million. The decline in fourth-quarter sales was due to ongoing competition from other BCMA targeted therapies. We anticipate the commercial performance for the first part of 2024 will continue to be impacted by competitive dynamics until the potential expansion of the label to the third-line plus setting, which will increase the addressable patient population. In the fourth quarter, 2seventy bio reported collaborative arrangement revenue of $2 million related to its collaboration with BMS for the three months ended December 31, 2023, and collaborative arrangement revenue of $50 million related to its collaboration with BMS for the 12 months ended December 31, 2023.

We anticipate collaborative arrangement revenue to grow meaningfully as we see ABECMA return to commercial growth. We ended the year with $221.8 million of cash, cash equivalents, and marketable securities. With the changes to the cost structure resulting from restructuring measures and following the close of the asset purchase agreement with Regeneron, we expect annual savings of approximately $150 million in 2024 and approximately $200 million in 2025, inclusive of the one-time cash restructuring costs of approximately $8 million to $10 million. We now expect our cash runway to go beyond 2027 and see a path to potential breakeven by 2025, obviating the need to seek funding from the capital market in the foreseeable future. With that, I’ll turn it back to Chip.

Chip Baird: Thanks, Vicki. Before we close, I’d like to thank the team at 2seventy for continuing to navigate these challenging waters and not losing sight of the mission and the clear task at hand. With key milestones coming in the near term, close of the APA with Regeneron, ODAC, and soon thereafter, we feel we are well positioned to emerge from the first quarter in a much stronger position. We look forward to continuing to support our partners at BMS as they bring ABECMA to myeloma patients in need. With that, we’re happy to take your questions. Operator, over to you.

Operator: [Operator Instructions]. Our first question comes from the line of Daina Graybosch with Leerink Partners.

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Q&A Session

Daina Graybosch: Yeah, I’d like to ask a question of the [Technical Difficulty] toxicity profile. And it keeps often spoken in the past that the lack of delayed neurotoxicity, whether the more severe or the less severe forms of that are potential advantage [indiscernible] not necessarily seeing that in the revenue numbers. And I can wonder — I wonder how your conversations with doctors in the field are going, and whether you expect toxicity to be a major planned discussion at the ODAC.

Chip Baird: Okay. Thanks, Daina. It’s a good question and that’s one that’s been known and on the label for some time. I would comment broadly at a commercial perspective that the tox profile becomes increasingly important as we move towards earlier-line settings when there are other treatment options available and when the benefit risk profile just is inherently different. So I think that will be an important factor as we move into this third-line plus setting. But we will turn it to Anna to comment from a clinical perspective and MD perspective. Anna?

Anna Truppel-Hartmann: Thank you, Chip, and thank you, Daina. It is also important to note that experience is growing as well in the field, which also has an impact onto you. So with all the revered evidence that has been published in the last month or so, at last ASH, there was a wealth of data. We can see that there is lots of delayed neurotoxicity such as Parkinsonism for some other products, not for — not as much for ABECMA. And I think these data will also influence how to see the toxicity profile for the product.

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

Tommie Reerink: Hi. This is Tommie Reerink on for Salveen. Thanks so much for taking our question. Just on the upcoming ODAC meeting, what key piece of data do you think best supports the overall survival data? Thanks so much.

Chip Baird: Yeah, Anna, do you want to comment on that one?

Anna Truppel-Hartmann: Yes, thank you very much for the question. So the overall survival data has a key confounding factor, which is the crossover. We have used a very patient-centric study design and therefore, we haven’t seen a difference between the center of care of an ABECMA in the overall survival. But when adjusting for crossover, as mentioned by Chip before, then it really seems to favor ABECMA. So this is an important point when looking at overall survival data. In addition to that, we have had discussions around bridging therapies as well for the ITP population and due to the impact of bridging therapies and the importance of bridging therapies; we’ve seen some imbalance in the early part of the Kaplan-Meier curve. But overall survival seems to be favoring ide-cel when adjusting for the crossover.

Chip Baird: Yeah, and the other thing I’d add there is overall survival was a focus of, as we said before, the regulatory discussions in Japan and in Europe and the Swiss regulatory authority. So this is a topic that we’ve had experience talking to regulators about the team has been diligent [indiscernible] for the meeting, and so we look forward to discussions next Friday.

Operator: Our next question comes from the line of Yaron Werber with TD Cowen.

Unidentified Analyst: Hi, this is Jana on for Yaron. Thanks for taking our question. You’re always facing a lot of competition from [indiscernible] and bispecifics. But looking further ahead, do you think that ABECMA’s lead to market is going to be sufficient to be competitive even with newer CAR Ts and development like, [indiscernible] or do you think demand is going to be increasing in other CAR T and upstream to make room for several CAR Ts to coexist?

Chip Baird: Yeah, thanks for the question. I think the history of myeloma has always been never a winner-take-all scenario. This is a huge market. It’s a complex market. Patients progress through different lines of therapies in myriad of different ways. And again, as we expand from the current label to this expanded third-line plus setting, the market opportunity is significant. It will be difficult for anyone manufacturer to meet that demand. And as Anna alluded to you before, as we look at the real-world evidence and as we understand more and more about this therapy, is not outside the strict confines and controlled setting of a clinical study, but actually in their use and application in the real world. Differences emerge and our understanding of what’s the best product to offer for this patient population has evolved.

And we think that’s going to play out over a very long time. I think at the outside world has taken somewhat of a winner-take-all mindset and that’s convenient. And that’s a — we think it’s a simple — it’s an oversimplification of the nuance between these different products. And as we said, we like the benefit risk profile of ABECMA, we like the safety and efficacy profile. We think it’s competitive and we look forward to educating on that in the third-line plus setting throughout the balance of this year.

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

Kelsey Goodwin: Hey, good morning. Thank you for taking my question. I guess on the real-world evidence that’s being generated, could you just remind us what are the major key areas of differentiation for ABECMA that’s arising with the real-world data. And then maybe quickly a follow-up on increasing the site footprint. Could you maybe just expand a bit there, I guess, are these sites that already have existing CAR T infrastructure? And how will that build outlook? Thank you so much.