Blueprint Medicines Corporation (NASDAQ:BPMC) Q3 2023 Earnings Call Transcript

Blueprint Medicines Corporation (NASDAQ:BPMC) Q3 2023 Earnings Call Transcript October 26, 2023

Blueprint Medicines Corporation beats earnings expectations. Reported EPS is $-2.2, expectations were $-2.39.

Operator: Good morning. My name is Elliot and I will be your conference operator today. At this time, I would like to welcome everyone to the Blueprint Medicines’ Third Quarter 2023 Financial Results Conference Call. All lines have been on placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] I’ll now turn it over to Jenna Cohen Vice President of Investor Relations.

Jenna Cohen: Thank you, Elliott and good morning everyone. Welcome to Blueprint Medicines’ third quarter 2023 financial and operating results conference call. This morning we issued a press release which outlines the topics we plan to discuss today. You can access the press release as well as the slides that we’ll be reviewing today by going to the Investors section of our website at www.blueprintmedicines.com. Joining me are Kate Haviland, Chief Executive Officer; Lena Lee, Chief Commercial Officer; Christy Rossi, Chief Operating Officer; and Mike Landsittel, Chief Financial Officer. Suad Namouni, President of Research and Development; and Becker Hewes, Chief Medical Officer will also be available for Q&A. Before we begin, I’d like to remind you that some of the statements made during the call today are forward-looking statements as outlined on Slide 3 and are subject to a number of risks and uncertainties.

These may cause our actual results to differ materially including those described in our reports filed with the SEC. You are cautioned not to place any undue reliance on these forward-looking statements and Blueprint disclaims any obligation to update such statements. I’ll now hand the call over to Kate.

Kate Haviland: Thank you, Jenna and good morning everyone. A little over two years ago, we first launched AYVAKIT in advanced systemic mastocytosis. And five months ago, we launched AYVAKIT’s for indolent systemic mastocytosis. It is clear from both our clinical data and real-world experience now that we’re getting with AYVAKIT that AYVAKIT makes a profound difference for patients allowing them to reclaim control of their lives. Everything we are learning today reinforces our belief that AYVAKIT and Blueprint are positioned to achieve long-term leadership with a blockbuster franchise in SM. Our third quarter results are impressive, characterized by 90% growth in revenues compared to last year and a strong and steady increase in the number of patients treated with AYVAKIT, now at approximately 800 patients at the end of the quarter.

We are also widening and deepening our prescriber base with strength in both new and repeat prescribers and achieving continued strong support from AYVAKIT from payers. While we remain early in the growth curve of this launch, the strong positive receptivity we are seeing broadly from the marketplace including from physicians, patients, and payers coupled with our early view on good durability for what we expect to be a chronic treatment for patients with ISM reinforces our confidence that AYVAKIT is a blockbuster opportunity in the US alone. Lena will provide more color on the launch shortly. AYVAKIT is more than just a transformational medicine in SM. It is the cornerstone of our foundational infrastructure and relationships in the allergy and inflammation therapeutic areas, paving the way for the broader leadership we are building in mast cell diseases.

We have additional assets in development that could meaningfully diversify and solidify our portfolio in this area including elenestinib and BLU-808. On today’s call, Christy will discuss our plan for building a durable SM leadership as the foundation for our larger mass cell disease franchise. Turning now to our pipeline. Over the course of 2023, we have made significant progress resulting in multiple data readouts from our early-stage clinical programs focused in breast cancer and lung cancer. As our Phase 1 development programs near completion of their dose escalation phases, we will be making data and opportunity-driven decisions on which molecules to prioritize for development going forward. Our bar to take compounds forward through mid- and late-stage development is very high.

A recent positive example of this prioritization is our BLU-222 program where the combined strength of the underlying science on the role of CDK2 in breast cancer, the medical need, and the emerging and compelling best-in-class clinical profile BLU-222 gives us confidence that this program has significant potential to be an important medicine for patients with breast cancer and other solid tumors and therefore, drive substantial value for Blueprint. Holding a high bar to drive the prioritization of our pipeline programs also enables our expense discipline. Blueprint has been uniquely productive in bringing novel molecules into development more than we can develop on our own. We will continue to leverage strategic business development to ensure the full promise of our programs are realized while allowing Blueprint to achieve sustainable growth.

As we sit here today, we see a clear path to financial sustainability through the combination of a strong revenue ramp and lower operating expenses resulting in a significant decrease in cash burn in 2024. This path will enable us to drive sustainable growth while enhancing long-term shareholder value through our focused investment in the most compelling product opportunities. We look forward to talking more about our portfolio priorities in early 2024 and Mike will share more details on our financial results and expectations at the end of the call. With our ongoing launch success and commitment to financial discipline, Blueprint has never been in a stronger position than we are today. Now, let me turn it over to Philina to discuss AYVAKIT performance in the quarter.

Philina?

Philina Lee: Thanks, Kate. Good morning, everyone. In the first full quarter of AYVAKIT’s ISM launch, we achieved net product revenues of $54.2 million including $49.1 million in the US, nearly doubling our revenue from the same time last year. These robust results reflect the medical need in ISM, the compelling clinical profile of AYVAKIT and the hard work and dedication of our team. We are systematically executing across our three strategic launch pillars to activate patients, engage providers and ensure consistent strong access. I’ll highlight progress across each of these pillars to give context for our third quarter performance and why we are confident in continued growth. First, we ended Q3 with approximately 800 patients on therapy in the US, a significant increase of more than 200 patients since last quarter, driven primarily by ISM.

Increasingly, we’re hearing from providers that patients are asking for AYVAKIT, which shows our targeted efforts to strengthen brand awareness are making headway. Second, we have rapidly expanded the breadth of prescribing with significant headroom to continue to grow prescriber breadth and depth. Breadth of prescribing has grown rapidly across all specialties and settings. An increasing number of Hem/Oncs and allergists are prescribing AYVAKIT for the first time and this adoption is happening in both the academic and community setting. Importantly, we’re gaining great traction with allergists who represent the majority of high-potential SM prescribers. Allergists accounted for one quarter of new SM starts in Q3 a four-fold increase. Most critically, we are driving breadth among the providers who see the most SM patients where we’re most likely to see depth from repeat prescribing.

With first positive experiences, we expect providers to put additional patients on therapy and we’re encouraged to see early signs of this repeat prescribing. In the words of one provider who started several ISM patients on therapy. People don’t realize how unwell they feel until they start AYVAKIT and remember what feeling well is. With these promising early results, there is significant headroom to grow and we expect continued growth in patients on therapy from both new and repeat prescribers. Third, AYVAKIT access remains strong. Approximately 95% of lives are now covered by payer policies consistent with our broad label with no step edits times to fill our rapid. Allergists are highly engaged with your Blueprint when they’re starting therapy for a new patient and they’re finding the access process very easy.

Securing such strong access is remarkable this early in the launch. We have exceeded expectations in our first full quarter of launch and we’re just getting started. One year ago at Investor Day, I outlined the path to a blockbuster opportunity for AYVAKIT by penetrating into about half of the 7500 already diagnosed prevalent patients with moderate to severe disease. Today, we are in the market and we are delivering with several leading indicators that make me even more confident we’re on the path to capture every bit if not more of this opportunity. We will drive further breadth and depth of prescribing among providers. We will encourage more and more patients to seek therapy. We expect to see the cumulative benefit of patients staying on therapy for chronic treatment.

Our strategy is working and executing on these steps alone gives us a clear path to a blockbuster opportunity. And we can further multiply the opportunity by broadening the adoption into a wider range of ISM patients increasing diagnosis rates to grow the market and expanding into additional geographies including our anticipated approval in the EU. In the words of one of our sales leaders with this first full quarter, we have planted the seeds. Each quarter strengthens our conviction that the SM opportunity exceeds $1.5 billion and that Blueprint Medicines is well on our way to capturing it. With that I’ll hand it to Christy to provide an update on our SM franchise vision.

Christy Rossi: Thanks Philina. A core component of our company strategy is extending our leadership position in SM and expanding it to other mast cell disorders. We are doing this by leveraging our deep understanding of disease biology to drive scientific innovation bringing that innovation to patients with our clinical and regulatory know-how and driving compelling top line revenue growth through commercial execution. Let’s start with our understanding of SM. We have amassed longitudinal data in hundreds of patients from our clinical trials worldwide as well as from large external real-world data sets. From these data, we know that SM is a complex disease spectrum rather than a group of distinct patient populations. We understand the clinical characteristics of patients across this spectrum the prognostic factors that impact how their disease could evolve and the long-term benefits and safety of treatment with AYVAKIT.

We know that optimizing outcomes for patients requires tailoring their treatment to their individual needs. There can be no one-size-fits-all approach to SM care. This is one of the reasons the clinical profile of AYVAKIT is so compelling. Today there are four AYVAKIT doses commercially available and accessible for SM enabling physicians to optimize treatment for the individual needs of the patient sitting in front of them. Physicians like this dose flexibility and we are seeing utilization of all dose strengths in the market today with most ISM patients starting at 25 milligrams and most advanced SM patients starting at 200 milligrams but with physicians prescribing all available doses as needed based on the clinical characteristics of the patients.

Regardless of a patient’s disease, severity or individual clinical profile there is a AYVAKIT option available to meet their needs. The feedback from patients and providers across doses has been very positive. This brings me to the second key driver of our leadership which is our unique ability to bring scientific innovation to patients by leveraging our clinical and regulatory know-how and track record of demonstrated success. We know that there is a clear bar for any therapy to successfully treat ISM. And that bar gets higher each and every day that AYVAKIT is on the market. Anyone who hopes to bring a new therapy forward will need to demonstrate broad symptom impact and a very well-tolerated safety profile that is meaningfully better than AYVAKITand find a way to overcome our significant head start.

We have invested years of work to successfully develop and validate the ISM-SAF and execute clinical studies culminating in the approval of AYVAKIT. And it is this track record of success that gives us confidence in our ability not just to drive innovation but to bring it to the market. AYVAKIT is the cornerstone of our SM franchise and our most important priority as we drive a successful ongoing launch. Beyond AYVAKIT we are leveraging the same know-how to develop elenestinib to expand and extend our franchise well into the next decade and beyond. Over the medium to long term we plan to develop it strategically building a compelling efficacy story across the spectrum of disease. We will present data from Part 1 of the HARBOR trial at ASH later this year.

You can expect those data to characterize the safety profile of elenestinib and give you confidence that we have a clinically active molecule to develop based on our unparalleled knowledge and understanding of the disease. And SM is just the tip of the iceberg. We are leveraging our scientific clinical and commercial capabilities and infrastructure to impact many more patients suffering from highly prevalent mast cell disorders such as chronic urticaria. BLU-808 has the potential to be both the first and best-in-class oral wild-type KIT inhibitor and we are working diligently to bring it to the clinic. This brings me to our final pillar of leadership, which is consistent, compelling top line revenue growth through commercial execution, not just over a few quarters, but over the long term.

We have established AYVAKIT as the standard of care in SM. We have established a leadership position that is impossible to catch with a growing body of long-term efficacy and safety data and market leadership in a chronic indication, where preference is sticky. And as Philina noted earlier, we are just getting started. Simply put we are in the best position to address any medical need in SM. And with AYVAKIT, elenestinib and BLU-808, we have the foundation for broad franchise leadership in allergy immunology for years to come. I’ll now turn it to Mike to discuss our financial results.

Mike Landsittel: Thanks, Christy. Earlier this morning, we reported detailed financial results in our press release. For today’s call, I’ll touch on a few highlights. In the third quarter, total revenues were $56.6 million, including $54.2 million in net product revenues from sales of AYVAKIT and $2.4 million in collaboration and license revenue. As Philina noted, we are seeing steady growth in patients on AVICIT which will continue to fuel the ramp in our commercial revenues. Our total operating expenses were $182.8 million for the third quarter, which includes $23.1 million in noncash stock-based compensation expense. We have always been good stewards of our capital and have managed the business to maintain a strong balance sheet.

Cash management continues to be a priority area of focus for us and our approach focuses both on growing revenue and containing expenses. First, revenue. We’re confident in the opportunity that AYVAKIT provides and we are committed to managing the business as we see AYVAKIT revenues ramp. We plan to provide 2024 revenue guidance inclusive of ISM on our Q4 earnings call and are confident that our early launch trajectory positions us squarely on track to achieve sustainable revenue growth with a line of sight to profitability. Second, operating expenses. Our year-to-date R&D expenses have declined by approximately $30 million versus 2022. And further, we expect to be able to reduce operating expenses into 2024. This will be achieved by sharpening our focus and allocating capital to programs with the highest potential to drive long-term shareholder value.

And as Kate mentioned at the beginning of this call, we plan to share more details on our capital allocation strategy in early 2024. We are laser-focused on our revenue and operating expense forecasting, as we work towards profitability and have never been more confident in our ability to get there. We would like to point out that today’s external consensus figures do not reflect our demonstrated ability to reduce our spend. For example, the consensus for 2024 costs and operating expenses, excluding stock-based compensation is approximately $700 million. We anticipate that our 2024 spend will be approximately $100 million lower than this based on our current plans. Pulling this all together, as revenues continue to ramp and our operating expenses decline, our net cash burn will also decline.

We expect this decline in cash burn will be even more significant in 2024 compared to where we end in 2023. Finally, our ability to achieve a sustainable profile by managing expenses as revenues ramp does not require a return to the capital markets. With that, I will now turn the call over to the operator for questions. Operator?

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Q&A Session

Operator: Thank you. [Operator Instructions] First question comes from Dane Leone with Raymond James. Your line is open.

Dane Leone: Thank you for taking the questions and congratulations on a very strong quarter with momentum behind the AYVAKIT launch. I’m sure my colleagues will ask some subsequent questions a lot around the details of the AYVAKIT launch. But I just want to ask from a higher level strategy question. And I think, it’s going to be a big focus of a lot of investors today. Across the presentation you just gave, you’re obviously very excited about penetration into the allergist community building up a commercial team to tackle the sales and adoption of AYVAKIT within ISM. You talked about BLUE-808, which would be a CKIT inhibitor and you’ve highlighted maybe some portfolio goals and strategy updates in the early part of next year with the reduction of operating burn.

So putting this together the natural question I think for a lot of us this morning is are we looking at maybe a change in what Blueprint will be focused on and allocate capital to really build out around the current launch of AYVAKIT? And maybe with reductions around the current burn either by reducing internal allocation or partnering out some of the current oncology portfolio, we could really see the focus shift to a positive margin operating profile based upon more of an autoimmune allergist type of strategy going forward for the company overall. Is that fair? Or could you expand on how you see the totality of the organization strategy really shifting into 2024? I know we’re jumping the gun but I think you’re going to get this question a lot today.

Kate Haviland: Thanks, Dave for the question. We appreciate it. So I think from where we sit today, we are exceptionally pleased with the incredibly strong launch. And we are – we have a compelling medicine in AYVAKIT. We are building a market and we’re just seeing tremendous results from that. As you well know, when you think about science and innovation, you plant seeds and they kind of come along over time, right? And so what I think where we’ve been is we’ve been leveraging our expertise in KIT biology. We’ve been leveraging the relationships we’re building as we brought ISM forward starting five years ago in the clinic. And now we have this really exciting portfolio of programs that are focused on that allergy immunology space.

And that has been the work over multiple years here at Blueprint Medicines following the science and thinking about where we can add tremendous value to patients, as well as leverage our expertise in infrastructure. What we know is having a portfolio of programs require that leverage. And for us to be able to operate efficiently and we need to see that. And I think you also see that in our OpEx results. As Mike said, over the last six quarters, we’ve been flat to down in OpEx in a moment when we are launching a big new medicine and bringing multiple programs through early clinical development. And so I think that’s a tremendous testament to the team and how we think about priorities. And I think where we sit today is we’re starting to harvest that data out of those Phase I studies and we’re going to make and hold very high bars on to where do we think we’re going to be able to invest to drive the longest or the most compelling long-term value for our patients and our physicians and our shareholders.

And we look forward to talking about that in early 2024. But we’re really pleased to see this portfolio come together that Christie really just outlined in mast cell-driven disorders. And we’ll continue to make sure we leverage our scientific knowledge, our clinical expertise and now our commercial infrastructure and relationships as we drive what is going to be really exciting growth for the company forward.

Operator: Our next question comes from Marc Frahm with TD Cowen. Your line is open.

Unidentified Analyst: Hi. This is Alex on for Mark. Congrats on a really strong Q3. Thanks for taking my question. Just curious if you’re already seeing impact of the ISM launch an overall diagnosis rate, are physicians seeing an increase in growth patients identified a number of care. And also if you could just comment on the ongoing efforts to improve patient identification.

Kate Haviland: Thank you so much for that question. And I’ll just make one comment before handing to Philina. We’ve really been seeing an impact in ISM diagnosis since we have been in the field in really developing AYVAKIT in ISM. If you remember back in 2019, we put out that about 11,000 patients in the US have been diagnosed with SM. And now we’re well above 17,000 or 18,000 at this point. And so I think that’s the result of both the development of AYVAKIT over the last number of years and now also the commercialization where we’re going to continue to see patients being diagnosed with this disease. We actually think the opportunity is probably bigger than anyone had expected. Philina, do you want to take some of that.

Lena Lee: Yes. Thanks, Alex for the question. We’re so proud of our results in the third quarter and we’re just getting started. I think Kate addressed some of our efforts to increase diagnosis rates over the past several years frankly and we’ve seen that continue to increase. I think the most important point is that the already diagnosed prevalent patients represent a blockbuster opportunity. And so our efforts are primarily focused on converting those already diagnosed not well-controlled patients. I think our results this quarter and the breadth of very positive leading indicators make us very confident that there’s significant headroom to grow within this patient population alone. Increasing the diagnosis rate further increases the upside above this opportunity. And we are more than confident we’ll get there.

Marc Frahm: Thanks.

Operator: Our next question comes from Eun Yang with Jefferies. Your line is open.

Eun Yang: Thank you. Great quarter, congrats. So you added more than 200 patients in third quarter compared to second quarter. So is it fair to say, that you are adding about 100 new ISM patients per month now? And are you seeing growth from there. Thank you.

Kate Haviland: Lena, would you like to add anything?

Lena Lee: Yeah. Thanks for the question, Eun. And we are very pleased to have added over 200 patients on therapy in the prior quarter. To your question, I would say, we are very confident in continued strong and steady growth. Every time we see an opportunity we see multiple opportunities behind that as we had a chance to get out in the field and I personally have had a chance to engage hundreds of customers alongside our field teams. And so we see significant headroom to be able to grow. It’s important to also remember that this is a rare disease launch, where we are building a market one patient at a time and that’s certainly what our teams continue to be focused on.

Eun Yang: So you mentioned on the second quarter call, in June you added about 35 ISM patients and the trend was continuing through July. So it seems like uptake in patients in August and September must have been pretty significant.