2Seventy Bio Inc
NASDAQ:TSVT
Earnings Call Analysis
Q4-2023 Analysis
2Seventy Bio Inc
2seventy bio has taken a bold step in reshaping its organization to concentrate on its flagship cancer drug, Abecma. By divesting other research and development assets to Regeneron, the company has signaled its strong belief in Abecma's potential. The impending Regulatory discussions, notably the ODAC meeting, are poised to evaluate Abecma's expanded use, reflecting regulators' positive reception across different geographies such as Japan and Switzerland, sustaining hope for its approval in the U.S. for a broader patient base.
The fourth quarter witnessed U.S. revenues for Abecma totaling $56 million, with a noted decline attributed to increasing competition among BCMA-targeted therapies. Although the immediate commercial performance faces similar headwinds, 2seventy bio projects a meaningful growth in collaborative arrangement revenue post-label expansion. Importantly, careful restructuring has bolstered the company's financial health, forecasting a cash runway beyond 2027 and a potential breakeven by 2025, which might eliminate the necessity for external funding.
2seventy bio's leadership expresses gratitude towards its dedicated team for steadfastly tackling challenges and keeping a laser focus on the mission to serve myeloma patients. Anticipated milestones, such as closing the Regeneron agreement and the outcomes of regulatory meetings, are paving the path towards a significantly stronger market position, underpinning a strategic partnership with BMS in delivering Abecma to the market.
In the competitive landscape of myeloma treatment, Abecma benefits from its first-mover advantage. However, the company recognizes it's not a winner-takes-all market. With plans to grow its treatment site footprint and capitalize on emerging real-world evidence showcasing Abecma's efficacy and safety profile, 2seventy bio is confident in Abecma's long-term competitive standing and is committed to continuing to educate on its benefits.
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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.
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 & Media section of the company's website at 2seventybio.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 conditions, expectations and future financials, 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 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-Hartman, Head of Clinical Development, is also on the line for Q&A.
And now, I'll turn it over to Chip. Chip?
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 a benefit in the Abecma arm when adjusted for crossover. We believe these data support the case to approve 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 and Switzerland as well as a positive CHMP opinion in the EU, which gives us confidence in a potential approval here in the U.S. 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 a 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 other lines 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 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.
Thanks, Chip. As mentioned, fourth quarter Abecma U.S. 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 that 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 3 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 onetime 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 funding from the capital markets in the foreseeable future.
With that, I'll turn it back to Chip.
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 with the APA with Regeneron, ODAC and PDUFA soon thereafter, we feel we are well positioned to emerge for 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 Instructions] Our first question comes from the line of Daina Graybosch with Leerink Partners.
I'd like to ask a question about toxicity profile. I think you've often spoken in the past that the lack of delayed neurotoxicity, whether the more severe, the less severe forms of that are a potential advantage. But you're still not necessarily seeing that in the revenue numbers. And I wonder how your conversations with doctors in the field are going? And whether you expect toxicity to be a major point of discussion at the ODAC?
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 projective that the tox profile becomes increasingly important as we move towards earlier line settings when there are other treatment options available and when the kind of benefit risk profile, it just is inherently different. So I think that will be an important factor as we move into this third line plus setting.
But we'll turn it to Anna to comment from a clinical perspective and MD perspective. Anna?
Thank you, Chip. Thank you, Daina. It is also important to note that [ River ] experience is growing as well in the field, which also had an impact on to you. So with all the [ River ] evidence that has been published in the last month or so, last as there was a wealth of data, we can see that there is lots of delayed neurotoxicity such as Parkinsonism, for some other products, not as much for Abecma. And I think these kind of data will also influence how treaters see the toxicity profile for the product.
Our next question is from the line of Salveen Richter with Goldman Sachs.
This is [indiscernible] for Salveen. Just on the upcoming ODAC meeting, what key piece of data do you think best supports the overall survival data?
Yes. Anna, do you want to comment on that one?
Yes. Thank you very much for the question. So the overall survival data has a key confounding factor, which is a crossover. We have used a very patient-centric study design. And therefore, we haven't seen a difference between the standard of care of Abecma and the overall survival. But when adjusting for crossover, as mentioned by Chip before, then it really seems to favor Abecma. So this is kind of an important point when looking at overall survival data.
In addition to that, we have had discussions around bridging therapies as well for the ITT population. And due to the impact of bridging therapies and the importance of bridging therapies, you've seen some imbalance in the early part of the [indiscernible] but overall, overall survival seems to be really favoring ide-cel when adjusting for the crossover.
Yes. And the only thing I'd add there is overall survival was a focus of, as we said before, the regulatory discussions and in Japan and in Europe and Swiss regulate -- regulatory authorities. So this is a topic that we've had experience talking to regulators about the team has been diligent and the prep for the meeting. And so we look forward to discussions next Friday.
Our next question comes from the line of Yaron Werber with TD Cowen.
This is [ Jana ] on for Yaron. You're always facing a lot of competition from Carvykti and bispecifics, -- but looking further out, 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 Novartis' [ C885 ]? Or do you think demand is going to be increasing enough as CAR-T move upstream for several CAR-Ts co-exists?
Yes. 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 therapy and a myriad of different ways. And again, as we expand from the current label to the expanded third line plus setting, the market opportunity is significant. It will be difficult for any one manufacturer to meet that demand.
And as Anna alluded to before, as we look at the real-world evidence and as we understand more and more about these therapies, 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 for the best patient population evolves. And we think that's going to play out over a very long time. I think the outside world has taken somewhat of a winner take all kind of mindset, and that's -- that's convenient and that's a -- but 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 the year.
Our next question comes from the line of Kelsey Goodwin with Guggenheim Securities.
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 are 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 out look?
Sure. Thanks, Kelsey. Maybe I'll take the site footprint question first, and then we can talk about the points of differentiation that are emerging in the real-world evidence and real world setting.
From a site footprint perspective, we've -- as we've described before, we continue to increase the number of sites where Abecma is available for patients in a large market like the U.S. that's really important for patients, particularly later line patients for whom extended travel is difficult. So again, we started in larger cities and larger academic centers where the catchment was just larger and that made a lot of sense. But as we've increase the footprint that's going to make Abecma available for more and more patients. And we have plans to continue to expand that footprint over time. So that's an important commercial driver. But I think the main one is going to be our ability to describe and articulate both the safety profile and the efficacy of -- the competitive efficacy profile of Abecma in the third line plus setting.
In terms of the what we're seeing and some of those competitive differentiators in real-world evidence, again, it's both safety and I think a closing of the gap from the efficacy perspective.
But, Anna, I think it would be best to comment on that.
Yes. Thank you, Chip. The [ River ] evidence data, it's wonderful to see that the bulk of data is increasing with Abecma being available now for a while commercially. And what we really can see is that we -- whatever data set that is looked at and the data are reproducible from the KarMMa pivotal study. So any data set has shown either the same efficacy or even better efficacy. And of note, many of those patients that are treated in real world wouldn't have been eligible for the pivotal study. So this is very encouraging to see that the [ River ] evidence data seems to be very beneficial for Abecma with regards to efficacy but also with regards to safety.
I do think there was also a lot of data around safety profile of the new agents approved in myeloma and also there, Abecma looks very good compared to the other profiles with regards to non-relapsed mortality or infections or delayed neurotoxicities, et cetera. So I do think we are very pleased to see how the body of evidence in the real world is showing positive results.
Our next question comes from the line of Samantha Semenkow with Citi.
I'm wondering if you're able to share any insights on Abecma's utilization trends over the last several months or quarters? What types of patients are receiving -- continuing to receive Abecma? How are physicians making the decision to utilize Abecma versus [indiscernible] of centers are you seeing Abecma use? Any insight you're able to provide would be helpful.
Sam, yes, thanks for the question. I would say it's really site-specific in terms of how it's being used. Again, we don't tend to think of Abecma being niched for a given type of patients. So really, I think it depends on the site in terms of whether it's Abecma only side, but it's Abecma and T-cell engager side or whether they have multiple CAR-Ts. Those are all different factors that I think impact how Abecma's being deployed. But certainly, as we think about both the fifth line and looking forward to the third line plus setting, we don't see Abecma niche to a given subset of patients.
But, Anna, anything from a clinical perspective to add?
No. Thank you.
Thank you. I'm showing no further questions at this time. I'd like to hand the call back over to Chip Baird for closing remarks.
Thank you, everyone, for making time for the call today. We look forward to sharing more updates and I'm sure we'll be talking again on side of the ODAC meeting this week. With that, I wish everyone a great day. Thank you.
This concludes today's conference call. Thank you for your patience. You may now disconnect.