Blueprint Medicines Corporation (NASDAQ:BPMC) Q4 2022 Earnings Call Transcript

Blueprint Medicines Corporation (NASDAQ:BPMC) Q4 2022 Earnings Call Transcript February 16, 2023

Operator: Good morning, and welcome to the Blueprint Medicines Conference Call. At this time, all participants are in listen-only-mode. Following the formal remarks, we will open the call up for your questions. Please be advised that this call is being recorded. At this time, I’d like to turn over to Jenna Cohen, Head of Investor Relations at Blueprint Medicines. Please proceed.

Jenna Cohen: Thank you, operator. Good morning, everyone. Welcome to Blueprint Medicines fourth quarter and full year 2022 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. Today on our call, Kate Haviland, our Chief Executive Officer, will provide a perspective on Blueprint’s 2022 accomplishments and how that positions us to continue to grow and drive value in 2023. Philina Lee, our Chief Commercial Officer, will review AYVAKIT’s performance and our upcoming opportunity to expand the label and treat many more patients with SM.

Christy Rossi, Chief Operating Officer, will provide a preview of how we will further our SM leadership at Quad AI as well as touch on portfolio milestones for the year; and Mike Landsittel, our Chief Financial Officer, will review our fourth quarter 2022 financial results and 2023 guidance. Fouad Namouni, President of Research and Development; and Becker Hewes, Chief Medical Officer, are also joining our call and will be available for Q&A. Before we get started, I would like to remind everyone that the statements me make on this conference call will include forward-looking statements. Actual events or results could differ materially from those expressed or implied by any forward-looking statements as a result of various risks, uncertainties and other factors, including those set forth in the Risk Factors section of SEC filings.

In addition, any forward-looking statement made on this call represents our views only as of today and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update or revise any forward-looking statements. I’ll now hand the call over to Kate.

Kate Haviland: Thank you, Jenna. Good morning, everyone, and thank you for joining the call today. In 2022, we significantly advanced our business, making important progress across our AYVAKIT launch in advanced systemic mastocytosis and research and development execution on our portfolio of precision therapies. As we kick off 2023, Blueprint offers a compelling value proposition and a unique profile. I would like to highlight three of the most important components of that position that suits us or positions us well for substantial growth this year and beyond. The first is our leadership in systemic mastocytosis. In 2022, our first full year of AYVAKIT launch in advanced SM, we doubled our net product revenue year-over-year.

The U.S. accounted for the majority of these product sales. And in 2023, we will see our international launches in advanced SM gaining momentum as we work through the access and reimbursement process in key countries. Importantly, through the launch of AYVAKIT advanced SM, we have built a strong team and a foundation of commercial capabilities and infrastructure. We are ready now to scale the impact of AYVAKIT with our potential label expansion in ISM. Philina will go into more detail on AYVAKIT’s performance in 2022 and preview how we plan to build what will become a blockbuster therapeutic category through our anticipated launch in ISM midyear. The second component is our clinical stage pipeline focused on best-in-class investigational therapies that address serious medical problems in large patient populations.

Our development efforts are focused in mast cell disorders, lung cancer and breast cancer. Within these areas, each of our programs have a strong mechanistic rationale and a development strategy to achieve a first or best-in-class position. In 2022, we worked to build the foundation for these programs through dose escalation and dose optimization. And we are poised this year to rapidly advance these programs into earlier lines of treatment, where we have the greatest opportunity to impact significant medical needs. We also continue to broaden our discovery efforts, expanding the range of high-value targets we can pursue as we aim to increase our already impressive research productivity, most recently demonstrated by the announcement of our new research program targeting wild-type kit for common mast cell diseases adjacent to systemic masocytosis, including chronic urticaria.

The third and last component is that we are operating from a position of financial strength. Our strong cash position and disciplined approach to capital allocation ensures that we are well positioned to execute on the range of opportunities we have in front of us, while driving towards a sustainable financial profile. Today, we have greater than $1 billion in cash on our balance sheet, and we are growing product revenue, which will continue to become a more significant portion of overall revenue this year. Mike will go into our financial performance in more depth later on in the call. At Blueprint, we have an incredible growth story right in front of us in 2023 and beyond. We call this precision at scale. This story starts with our existing commercial portfolio, which provides a certainty of value and a near-term opportunity to drive revenue acceleration.

Beyond SM, our discovery and clinical stage portfolios provide multiple opportunities for us to tackle increasingly large opportunities in oncology and beyond. This diversity of fundamental value drivers creates multiple avenues for growth and upside across all aspects of our business. As a fully integrated company, we have critical mass, including the expertise, the infrastructure and most importantly, the right people to deliver on these opportunities, creating extraordinary value for patients, the medical community and for our shareholders. Now let me turn it over to Philina to review AYVAKIT’s performance and provide a perspective on the upcoming ISM launch.

Philina Lee: Thanks, Kate. Good morning, everyone. Let’s start with AYVAKIT performance. In 2022, we doubled AYVAKIT net product revenue, achieving $111 million. Fourth quarter revenues were $30.1 million, with $26.3 million in the U.S. We have established AYVAKIT as the standard of care in advanced SM in the U.S., where we continue to grow the number of patients treated with AYVAKIT year-over-year. In 2022, we exited the year with nearly 500 patients on AYVAKIT. The percentage of patients on free drug remains stable. In Q4, AYVAKIT growth was driven by several important measures. We added nearly 50 new accounts, increasing the breadth of prescribing to approximately 400 accounts with AYVAKIT experience. AYVAKIT penetration increased across all subtypes of advanced SM.

Approximately 75% of patients who start AYVAKIT are treatment naive, which is a promising lead indicator as we focus on growing the treated advanced SM market. We are confident in our guidance of $130 million to $140 million in AYVAKIT net product revenue this year across GIST and advanced SM. I want to emphasize this guidance is specific to our current indication. The midpoint of this range represents a more than 20% increase in AYVAKIT revenues year-over-year, and we also expect to achieve additional revenue for AYVAKIT this year, above and beyond our base guidance due to our anticipated launch in ISM. Now let’s turn to ISM. Upon approval, AYVAKIT will be the first FDA-approved therapy for patients with ISM. Patients and providers have been waiting for this for a long time.

With our PDUFA date in hand, our team is laser-focused on building the market to deliver on this incredible opportunity to transform patients’ lives. AYVAKIT represents a blockbuster opportunity in FM, with an estimated $1.5 billion global annual peak, chances to make this kind of patient impact are rare in our industry, and this has enabled us to rapidly recruit talent as we’ve incrementally expanded our highly experienced field team. Our U.S. launch strategy focuses on 7,500 patients with moderate to severe ISM. These patients are actively seeking treatment, which is limited to symptom directed polypharmacy today. We expect early adoption of AYVAKIT in patients with severe symptom burden, followed by patients with moderate symptom burden over time.

To prepare for ISM launch, we’re focused on three key areas. First, we’re engaging a broader provider base who are managing ISM patients. Our field team is on the ground, engaging the heme/onc and allergist immunologists who are seeing the most ISM patients to understand their practices and to educate on SM. Our greatest focus is on the top 350 providers who are managing approximately 1,500 moderate to severe ISM patients today. From our field intelligence and primary market research, providers say about half of their patients are not well controlled on current therapy, which ties well to the 7,500 patients we can see in claims. Our second area of focus is activating patients to consider a new treatment option. Our patient and caregiver campaign, it’s something has now enrolled thousands of highly motivated prospective patients who suspect they may have SM.

And we know that an educated and motivated patient is a catalyst for treatment. Third, we’re focused on maintaining strong and rapid patient access to therapy. Today’s favorable access environment for AYVAKIT provides a strong foundation. All doses are currently on the market today with virtually no access challenges and industry-leading time to fill. Now let’s talk more about expectations for our initial launch ramp in ISM, which we expect to reflect our rare disease launch trajectory. We think the HAE market is a good example for how ISM can develop into a blockbuster market. We see several similarities. First, HAE is a rare disease treated by allergists. Multiple disease-modifying therapies are approved and reimbursed today with price points above AYVAKIT’s current list price.

Over the past 15 years, the introduction of these therapies catalyze development of the HAE market, enabling linear sales growth over this time frame. In 2021, global sales of prophylactic HAE therapies were approximately $1.5 billion and still growing. There are 7,500 diagnosed and treated HAE patients in the U.S. today, which is remarkably similar to the number of diagnosed and treated patients with moderate to severe ISM. So collectively, the HAE experience gives us confidence in the commercial launch trajectory for AYVAKIT in ISM. As you see with HAE, we expect a rare disease ramp. While we don’t expect an initial launch bolus, there are several factors that should accelerate the development of the SM market, including our efforts over the past several years to increase disease awareness and diagnosis rates, as well as our advanced patient identification capabilities, and this will further help to catalyze treatment and market growth.

As we drive towards the PDUFA date for ISM, AYVAKIT has all the harbingers of a strong launch, high medical need, first to market with a strong product profile and a highly motivated group of patients and providers who are waiting for an FDA-approved therapy. With our experience and our leadership in SM, we’re confident in our ability to capture the significant ISM opportunity ahead. With that, I’ll turn it over to Christy, who will speak to Blueprint’s leadership at Quad AI.

Christy Rossi: Thanks, Philina. Good morning, everyone. Next week at Quad AI, we are proud to share data across multiple presentations that further solidify our long-standing scientific leadership and commitment to SM. The PIONEER study definitively demonstrates that AYVAKIT potent and selective inhibition of KIT D816V, reduces mast cell burden, improve symptoms and therefore, transforms the quality of life of SM patients. Since presenting the top line data last August, we’ve met with a variety of health care providers who treat SM patients to understand what data is most meaningful to them. While the specific outcome measures that are most impactful will vary by physician and it tends by specialty as allergists have a different reference frame for clinical trials and are much more used to PROs, for example, than hematologists are.

Some themes have emerged consistently. The first is that safety is key. A clean safety profile lowers the hurdle for prescribers and patients to consider a disease-modifying therapy like AYVAKIT, shifting the conversation from why try a new therapy like AYVAKIT to why not. The second is that the totality of impact across symptoms and quality of life is paramount. Our primary endpoint of mean change in TSS captures the symptom benefit broadly. In addition, SM treaters are interested in the impact on patient’s most bothersome symptoms, which can motivate a patient to want to initiate therapy, as well as the impact of treatment across the specific symptoms captured in the TSS. Finally, prescribers are looking for symptom improvement to translate into impact on a patient’s quality of life, which is the ultimate goal of therapy.

Third, data on measures of mast cell burden helps to explain the biological rationale for the benefit that health care providers are seeing in their patients. Seeing meaningful and consistent impacts in these measures, increases prescriber confidence in a therapy’s potential to alter the course of disease. Finally, in a chronic lifelong disease like SM, prescribers are very interested in understanding the impact of treatment over time. We designed Part 3 of PIONEER specifically to assess and capture the benefit of treatment over the longer term. With that feedback in mind, we are looking forward to sharing more from PIONEER in 3 presentations at Quad AI. An oral presentation on Sunday, February 26, will detail the statistically significant and clinically meaningful results that AYVAKIT achieved across the primary and all key secondary endpoints in PIONEER.

We plan to show additional data on our primary and secondary endpoints, including information on individual symptom benefit, as well as data from the 48-week crossover portion of the study. We will also have two additional presentations that will focus on AYVAKIT’s effect on skin signs and symptoms and on quality of life. We are excited to share these important results in detail for the first time, demonstrating the disease-modifying benefits of AYVAKIT and showing how AYVAKIT empowers physicians to address the most important concerns of their ISM patients. Other presentations at the meeting will characterize the burden of disease and showcase new approaches to accelerate diagnostic rates and continue to grow the ISM market. We look forward to this important conference and to sharing more detail during our corporate call on Monday, February 27.

I’ll now turn briefly to our portfolio updates for this year. In January, we guided to a variety of milestones across our portfolio as we work to expand our impact on patients globally. We discussed tow important AYVAKIT milestones already this morning, the upcoming presentation of the PIONEER data at Quad AI, as well as our anticipated approval and launch in ISM by midyear. Today, we are also pleased to confirm that we have received EMA validation of our type 2 variation for AYVAKIT and ISM, bringing us a step closer to this important indication expansion and launch in Europe. We’re on track for our other corporate milestones for the year, including IND submission for BLU-525 and presentation of initial dose escalation data from both BLU-451 and BLU-222 in the first half of the year.

Last week, we announced that the FDA had issued a partial clinical hold on the VELA trial due to visual adverse events observed in a limited number of patients. Patients who are currently enrolled in the study are continuing to receive study drug, and we are working expeditiously with the FDA to resolve the partial hold and resume study enrollment. More broadly, we look forward to sharing additional data across our portfolio as we reach these milestones and make progress towards our 2027 Blueprint. With that, I’ll turn the call over to Mike to review our financial updates.

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. For the full year, total revenues were $204 million, including $111 million in net product revenues from sales of AYVAKIT and $93 million in collaborations and license revenues, exceeding the high end of our 2022 total revenue guidance of $200 million. Of these full year revenues, $30.1 million of AYVAKIT net product revenues and $8.7 million in collaboration revenues were recorded in the fourth quarter. As Philina noted for AYVAKIT, we saw continued growth in advanced SM patient starts and product revenue. Our total operating expenses were $723.7 million for the full year and $183.7 million for the fourth quarter.

Our Q4 operating expenses showed a quarter-over-quarter decline from Q3 as we continue to leverage operating efficiencies across our businesses. In 2023, we anticipate that we will achieve $130 million to $140 million in AYVAKIT net product revenues for advanced SM and GIST. We also anticipate full year collaboration revenues of $40 million to $50 million from existing collaborations. This guidance highlights our expectations for both the continued diversity of revenue and a continued but more moderate growth of AYVAKIT product revenue in advanced SM and GIST. I want to reemphasize that this guidance is specific to our existing AYVAKIT indications, and it does not include growth from our anticipated label expansion into ISM. We expect our operating expenses to grow moderately in the first quarter of 2023, and this will be driven by our preparations for the launch of ISM, including the impact of our incremental field force expansion, as well as planned manufacturing investments to support the continued progress of our clinical programs.

We then anticipate operating expense growth will flatten in the second half of the year as we recognize economies of scale across our portfolio. As we enter 2023, we are in an exceptionally strong financial position with nearly $1.1 billion in cash that will fuel our 2027 Blueprint to achieve precision at scale and create transformative value for patients and shareholders. With that, I’ll now turn the call over to the operator for questions. Operator?

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Q&A Session

Operator: Thank you. We will now start today’s Q&A session. Our first question today comes from Dane Leone from Raymond James. Your line is now open.

Dane Leone: Hi. Thank you for taking the questions and congratulations on all the progress. I think for the guidance that you’ve outlined this morning, we have a number of questions coming in that are pretty similar from investors that are kind of focused around when you look at the current prescriber base of AYVAKIT and ASM, what the overlap is at those centers with patients you identified as being ISM patients who could be eligible for treatment once you get the approval? And I think the genesis of that is trying to help people of once you get the approval, where the launch could be initially focused and kind of what percentage of the target population would be representative of your current prescriber base? Thank you.

Kate Haviland: Thanks for that question. And Philina do you – can you weigh in on that?

Philina Lee: Yes. Thanks very much for that question. So as you know, our teams are in the market on the ground today, engaging with top volume prescribers of AYVAKIT, as well as the top volume providers who are treating ISM patients. And in fact, we do see some overlap. And so within those top 350 high-volume prescribers, they are treating nearly 400 moderate to severe ISM patients today who are potential candidates to start AYVAKIT rapidly upon approval.

Dane Leone: Thank you.

Operator: Our next question today comes from Marc Frahm from Cowen and Co. Your line is now open.

Ernie Rodriguez: Hi, guys. This is Ernie Rodriguez for Mark. Thanks for taking my call and congrats on the quarter. So you mentioned the most bothersome symptoms that will be presented with a PIONEER data later this month. So this endpoint obviously focuses more on symptom with more severe impact on any given patient. Do you think that gives you a bigger range to show symptom benefit versus the overall composite? And how do you see the threshold of clinical meaningfulness differs from the limited domains on the TSS score? Thanks.

Kate Haviland: So Ernie, sorry, I think you’re breaking up a little bit. We appreciate the question. I believe what you’re asking is how are we thinking about the breadth of impact across various symptoms in the PIONEER data versus kind of the interaction with the most bothersome symptom. I believe that was your question. So maybe what we can – is that correct? Okay. So I think what Christy was – great. So I think what Christy was laying out is really that we have – in PIONEER, we have demonstrated statistically important and clinically meaningful benefits to patients across a range of ways of looking at treatment impact. And that includes the impact of pathological mast cells from our quantitative measures, it includes the impact on both the overall symptom burden of patient experiences as measured by the TSS as well as impacts across all the individual symptoms and domains.

And so we really look forward at Quad AI to be able to put that data out to show those that impact the broad and kind of impact that AYVA has. And I think importantly, it is that the early impacts we see as well as the deepening over time that is going to be important to prescribers as we have talked about.