bluebird bio, Inc. (NASDAQ:BLUE) Q1 2024 Earnings Call Transcript

bluebird bio, Inc. (NASDAQ:BLUE) Q1 2024 Earnings Call Transcript May 9, 2024

bluebird bio, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Thank you for standing by, and welcome to the bluebird bio First Quarter 202 Results Call. [Operator Instructions] Finally, you are reminded that this conference is being recorded.

I would like to turn the call over to Courtney O’Leary from Investor Relations. Please go ahead.

Courtney O’Leary: Good morning, everyone, and thank you for joining our first quarter 2024 results call today. My name is Courtney O’Leary, Director of Investor Relations at bluebird bio.

Before we begin, let me review our safe harbor statement. Today’s discussion contains statements that are forward-looking under the Private Securities Litigation Reform Act of 1995, including expectations regarding our future financial results and financial position, in addition to statements of the company’s plans, expectations or intentions regarding regulatory progress, commercialization plans and business operations. Such statements are based on current expectations and assumptions that are subject to risks and uncertainties and involve a number of risk factors that could cause actual results to differ materially from projected results.

A description of these risks is contained in our filings with the SEC, which are available on the Investor Relations section of our website, www.bluebirdbio.com.

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Q&A Session

On today’s call, Andrew Obenshain, bluebird bio’s CEO, will provide opening remarks. Then Tom Klima, Chief Commercial and Operating Officer, will discuss progress on the commercial launches of LYFGENIA, ZYNTEGLO and SKYSONA. And finally, Chris Krawtschuk, Chief Financial Officer; will provide a financial update before opening the call up for Q&A.

With that, I will turn it over to Andrew.

Andrew Obenshain: Thanks, Courtney, and thank you, everyone, for joining the call this morning as we provide an update on our first quarter 2024 results and recent highlights.

I’m thrilled to be here today on the heels of our first LYFGENIA commercial sell collection, which we announced earlier this week, nearly a decade after we began clinical development for LYFGENIA for sickle cell disease, seeing a patient initiate commercial treatment for our gene therapy as a monumental milestone both for bluebird, for the researchers and the clinicians who worked tirelessly on this program, and also for the sickle cell community, who have been our partners every step of the way.

Now with our first LYFGENIA patients start completed and was a strong established commercial foundation in place, bluebird is poised for accelerated growth throughout the rest of 2024, and we look forward to sharing more updates as momentum builds.

I will now hand the call over to Tom to discuss the progress in our commercial launches in greater detail.

Thomas Klima: Thanks, Andrew, and good morning, everyone. This week, we achieved yet another amazing milestone between our gene therapy journey at bluebird with our first commercial patient start for LYFGENIA. Over the past year, we have appointed to the benefits of our commercial head start and the foundation we built with ZYNTEGLO for beta-thalassemia and SKYSONA for cerebral adrenoleukodystrophy. And today, we are seeing not only that momentum built for our first 2 launches, but also these synergies are coming to fruition for LYFGENIA.

As a reminder, our launches are focused on 3 core elements for success. First, establishing a robust network of qualified treatment centers or QTCs. These are transplant centers with significant experience in cell and gene therapy. Today, we have 64 activated QTCs, unparalleled compared to others in the field. Second, ensuring the value of our therapies is recognized and that patients have timely, equitable access. And lastly, optimizing the patient and provider experience.

Gene therapy requires a high-touch approach and transparency, collaboration and understanding the needs of patients, families and providers is paramount. Our deep understanding of the gene therapy process, our dedicated focus and our experience over the last 18 months allow us to be a strong partner to our activated QTCs as we help them bring life-changing therapies to their patients. We are extremely encouraged by the excitement in the sickle cell community and the number of patients preparing for treatment.

As we sit here today, more than half of our LYFGENIA and QTCs have communicated to us that they are actively evaluating patients for gene therapy initiation and 1/4 of our centers are in the prior authorization process for one or more patients.

As a reminder, the journey to a patient start or cell collection takes time. While every patient is different, the typical path for patients to first initiate a consultation with a transplanter at QTC then to enroll in my bluebird support and then often concurrently, the QTC will initiate reimbursement negotiations with the payer while also taking steps to ensure clinical readiness, which includes a 2-month washout period for hydroxyurea. These steps must be coordinated and the patient’s health must be considered.

With that in mind, we continue to anticipate starts of LYFGENIA to grow quarter-over-quarter with the majority occurring in the second half of the year as momentum builds. And factoring in the time for drug product manufacturing once the patient cells are collected, we anticipate that first revenues for LYFGENIA will be recorded — reported in Q3.

Moving to ZYNTEGLO, we continue to see strong linear growth with 11 patient starts since the beginning of 2024. As we previously shared in mid-2023, we initiated steps to increase drug product manufacturing capacity for ZYNTEGLO and SKYSONA commensurate with demand. Through our experience in the market, we have also determined the need to increase adherent factor supply, and we’ve initiated steps to bolster supply to meet the launch trajectory. Additionally, we have completed 3 patient starts for SKYSONA since the beginning of 2024.

As a reminder, patient starts, which is when cell collection occurs, remain the key commercial metric to watch in the early stages of our launch as this is the value-creating moment for the company with revenue being recognized when the patient is infused. For modeling purposes, you can continue to expect that patients are infused 1 to 2 quarters following cell collection.

In our experience, once the patient goes through cell collection, they continue on the treatment journey and are dedicated. To date, every patient who started the process has completed or remained in the process. and we continue to expect between 85 and 105 patient starts across our commercial portfolio in 2024.

Now moving to access reimbursement. Our validated strategy from our ZYNTEGLO and SKYSONA experience is driving favorable coverage for LYFGENIA. We are very pleased to have our cost-effectiveness model for LYFGENIA, peer-reviewed and published in the Journal of PharmacoEconomics in April. The publication offers significant insight into the potential lifetime impact that reducing or eliminating DOE associated pain crisis may have on patients’ health and well-being, health care utilization, future earnings and life opportunities. The publication found that LYFGENIA is cost effective up to a price of $3.9 million. The value is being recognized, and we are making great progress securing access for patients with sickle cell disease.

Just 5 months post launch, both commercial and Medicaid insured patients has successfully obtained prior authorization for LYFGENIA. Additionally, we have multiple outcomes-based agreements signed for LYFGENIA with national commercial payer organizations and have published coverage policies in place for more than 200 million U.S. lives.

Our goal is always been timely, equitable access to LYFGENIA irrespective of patient’s insurance type. Discussions are ongoing with Medicaid agencies, representing 80% of Medicaid insured individuals with sickle cell disease in the U.S. Additionally, timely access to ZYNTEGLO and SKYSONA has continued with 0 ultimate denials for either therapy across both Medicaid and commercial payers.

Moving to our QTC network. We have established a substantial QTC footprint very quickly following Genie’s approval. Today, bluebird has activated 64 QTCs for LYFGENIA and ZYNTEGLO. We were able to quickly transition these centers for LYFGENIA due to both the learned experience of setting up these centers for ZYNTEGLO and the strong relationships we’ve built with these centers during 2023. 11 QTCs have started their first patient for one of our products and the majority of the sites who have started their first patient, have started their second or third.

While we anticipate we may bring on a handful of additional centers throughout 2024, our focus has shifted to patient pull-through at our 64 centers and deepening their experience with bluebird’s gene therapy portfolio. Additionally, 6 centers in our network are also activated to administer SKYSONA for patients with CALD.

To recap, ZYNTEGLO and SKYSONA launches continue to progress as planned, and we anticipate strong linear growth for ZYNTEGLO in 2024, along with 5 to 10 patient starts for SKYSONA. We are extremely excited about the early progress in our LYFGENIA launch, building on our validated commercial platform, and most importantly, gene therapy is becoming a reality for patients in the United States. We look forward to updating you as our momentum builds in our launches and patient starts to grow over the next few quarters.

And now I’d like to turn the call over to Chris.

Christopher Krawtschuk: Thanks, Tom and good morning, everyone. In the first quarter, we reported $18.6 million in total revenue, driven by revenue from ZYNTEGLO. As a reminder, we recognize revenue upon infusion of the drug product. As previously guided, in 2024, we anticipate gross to net discounts in the range of 20% to 25%, with fluctuations based on product mix, payer mix as well as utilization of our outcomes-based agreements.

As of March 31, 2024, we had $264 million in cash on hand, inclusive of $52 million in restricted cash. Based on our current business plans, including our ability to achieve certain commercial revenue milestones, we have a cash runway through Q1 of 2026. This runway includes our current cash equivalents and also assumes that we receive the 2 remaining tranches totaling $50 million from our term loan facility. Additionally, we continue to work expeditiously to complete our restatement and file our 2023 10-K and Q1 2024 10-Q.

I want to personally thank and recognize the tremendous work and unwavering dedication of the bluebird finance and accounting teams that are finalizing the restatement. Importantly, and as a reminder, the restatement is not expected to impact our cash position or our revenue.

With that, I’ll turn it back over to Andrew.

Andrew Obenshain: Thanks, Chris. As we highlighted today, is an exciting time for bluebird. We stand in the midst of a monumental year with the potential for growth from the near-term horizon.

And with that, I’d like to open it up for questions.

Operator: [Operator Instructions] And your first question comes from the line of Jason Gerberry from Bank of America.

Jason Gerberry: I guess, I’ll ask a question about the — just the update on the Medicaid reimbursement work that’s ongoing. And curious, I think we asked this question last quarter, but I just wanted to make sure that it’s not a rate-limiting factor at all to new patient starts for LYFGENIA as you build up the Medicaid reimbursement coverage. And just trying to put that in context relative to your competitors’ update on their new starts. I guess the question is one of, are they looking faster in the U.S.? Or is there a new patient start number more just a function of a broader geographical reach?

Andrew Obenshain: Jason, I’ll hand it over to Tom. Why don’t we take those in order of kind of reverse order. When we talk about the patient starts first and then talk about the Medicaid as well. Go ahead.

Thomas Klima: Good morning, Jason. We’re extremely pleased with what we’re seeing in terms of starts. Obviously, we have a tremendous head start with ZYNTEGLO and a lot of progress there. But when you look at LYFGENIA, we have multiple patients in multiple QTCs going through the initiation process for gene therapy and very excited about the first collection. We’re really not going to comment about what the competitor is doing, but more so, I think we feel really good about what we’re seeing with LYFGENIA.

As far as Medicaid, it’s not a rate-limiting factor. Obviously, we’ve been working with Medicaid for many, many years now on making sure they understand and recognize the value of a onetime potentially curative therapy, also offering our outcomes-based agreement and tying that to the value of our therapy. And in the meantime, until they have coverage policies or sign up for outcomes-based agreement, they can always have access — patients can have access to the medical exceptions process. So it’s really not a barrier for patients.

Operator: Your next question comes from the line of Jack Allen from Baird.

Jack Allen: I guess to start, I wanted to ask about your thoughts as it relates to studying LYFGENIA in younger patients. Do you have a study ongoing and how are things progressing as it relates to expanding access as it relates to age with LYFGENIA?

Andrew Obenshain: Thanks for the question, Jack. So we have a trial in HGB-210 ongoing pediatric patients. That enrollment is ongoing. We anticipate to complete that by Q4 to 2024, and that’s going to evaluate patients 2 to 12 for LYFGENIA. As a reminder, for ZYNTEGLO, we have an indication down to the age of 2.

Jack Allen: Got it. Great. And then I’ll give it a shot here. I’m not sure kind of reception I’ll get on this, but how many patients are in the bluebird support system as it relates to LYFGENIA. Do you have any idea about the pull-through of those patients based on your ZYNTEGLO experience? Is there anything to read through there as it relates to people starting that aspect of the process?

Thomas Klima: Yes. Good question, Jack. We’ve learned a lot through our ZYNTEGLO experience. We’re not going to comment individually on the pull-through because I think when you look at beta-thalassemia, it’s a lot different than patients who have sickle cell disease. It’s kind of early in the process right now with obviously a small end for LYFGENIA. So we really don’t want to comment on that. But I will tell you that, there are a lot of patients who are very excited for gene therapy. As I said, there are multiple patients across multiple QTCs initiating the process. And usually, once they start the process, they’re committed and continue through the process. So we’re just excited with the momentum we’re seeing, and we look forward to getting more data as the year progresses.

Operator: Your next question comes from the line of Danielle Brill from Raymond James.

Unknown Analyst: This is Daniel on for Danielle. We had a question on the QTC is caused for both Casgevy and LYFGENIA. Any particular reason for the patient chose to pursue the treatment with LYFGENIA? And have you seen any like push and pull from payers deciding either therapy?

Andrew Obenshain: Thanks for the question. Tom, go ahead.

Thomas Klima: Daniel, as far as offering both therapies, we have a head start, obviously, with 64 qualified treatment centers. However, it is our expectation that most qualified treatment centers will offer both therapies, LYFGENIA and the other gene therapy. We haven’t seen many centers saying they’re going to offer one or the other or exclude one or the other. I think most centers believe that choices for patients are good. And they — if they have both onboarded already, which is only a small handful, then they present both to the patient and becomes a patient choice.

Operator: Your next question comes from the line of Gena Wang from Barclays.

Huidong Wang: Maybe also asking about the 64 QTC. Out of these, how many of these actually were active for LYFGENIA? And also for the first patient, I don’t know if you can share that detail, how many cycles of cells collection in order to start the manufacturing?

Andrew Obenshain: Gena, and actually, I think the — I’ll take the second part of that first, and hand it over to Tom, for the first part. That was the first collection for the patient. We reported their first collection. So we haven’t reported whether they — how many collections will need that, that manufacturing is ongoing right now. So we can’t comment on that. Tom, go ahead.

Thomas Klima: Yes. Gena, the 64 centers, we’re really excited about that. Centers really do not want to go through the process of getting onboarded if they don’t have patients to treat. So we believe that the 64 centers that we have will evaluate patients for LYFGENIA and/or ZYNTEGLO as we go forward. And if you look at the dynamics of how we build out the qualified treatment center, almost half of the qualified treatment centers have come on board just since approval in December. So the momentum continues to build and as you look at the patients going through the centers we’re really excited that 64 centers are now on board and many of them already starting the process of the following patients.

Huidong Wang: I’m sorry, if I can make it clear. I think last quarter was 49 out of 62 received referral for LYFGENIA. So just wanted to know now 64 out of 64, how many of these receive referral full LYFGENIA?

Thomas Klima: Yes. It’s about 50 of the 64, and we anticipate that almost all of them will be on board very soon. It’s just a matter of completing some final steps. And in some cases, you will see all of them on our website, some of them have chosen not to be listed on our website.

Operator: Your next question comes from the line of Eric Joseph from JPMorgan.

Eric Joseph: The added color that you’re providing here on sort of the product collections within the QTC network is pretty interesting. Can you talk a little bit more about sort of what separates the initial 11 QTCs that have treated patients so far versus the balance? And I wonder whether it’s perhaps bed capacity or patient demand or something in the pre-authorization process that has the first group kind of moving a little more strictly?