In a recent earnings call, 2seventy bio (ticker not provided) reported significant growth and strategic advancements for the third quarter of 2024. The biotechnology company, which focuses on its CAR-T therapy Abecma for multiple myeloma, highlighted a 42% increase in U.S. revenues for the therapy, reaching $77 million. This growth is attributed to the expansion in the third-line treatment setting and FDA approval.
The company also announced a substantial reduction in operating expenses and a streamlined focus on Abecma, following the sale of other R&D pipelines. With a current burn rate of approximately $10 million, 2seventy bio is moving towards breakeven operations, potentially as early as 2025.
Key Takeaways
- 2seventy bio's third-quarter U.S. revenues for Abecma grew 42% over the previous quarter, reaching $77 million.
- FDA approval was granted for Abecma in the third-line treatment setting for multiple myeloma.
- The company significantly reduced its burn rate to approximately $10 million this quarter and reduced its workforce to 70 employees.
- Strategic sales of oncology and autoimmune R&D pipelines, including a hemophilia A program, were completed to focus exclusively on Abecma.
- 2seventy bio is working closely with Bristol-Myers Squibb (NYSE:BMY) to optimize Abecma's cost structure and improve operating margin cash flow.
Company Outlook
- The company aims to continue its competitive presence in the CAR-T market and increase Abecma's reach.
- Projected U.S. revenues for Abecma are estimated to be $240 million to $250 million for 2024.
- 2seventy bio anticipates further reduction in operating expenses and a cash runway extending beyond 2027.
Bearish Highlights
- The fourth quarter is expected to face challenges due to increased competition and reduced CAR-T infusion schedules during the U.S. holiday season.
Bullish Highlights
- The company has seen a steady build-up in demand and market share for Abecma since its earlier line approval.
- Abecma boasts a differentiated safety profile and competitive efficacy, particularly with effective bridging therapy.
- The company has achieved a 52% year-to-date reduction in GAAP operating expenses compared to the previous year.
Misses
- No specific misses were discussed in the earnings call.
Q&A Highlights
- Demand for Abecma is steady, with less than 25% market penetration in the third-line setting, indicating room for growth.
- Improvements in manufacturing processes have contributed to better profit margins for Abecma.
- The breakeven point for 2seventy bio is now closer to $300 million in total U.S. sales for Abecma, down from the previously estimated $400 million.
- Seasonality affects apheresis rates, particularly during the holiday season, but underlying demand remains strong.
In conclusion, 2seventy bio's third-quarter financial results reflect a period of robust growth and strategic realignment. The company's focus on its CAR-T therapy Abecma has resulted in significant revenue growth and operational efficiency improvements. With a clear path towards breakeven operations, 2seventy bio is poised for continued success in the competitive CAR-T market.
Full transcript - 2Seventy Bio Inc (TSVT) Q3 2024:
Operator: Good day and thank you for standing by. Welcome to the 2seventy bio Third Quarter 2024 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Morgan Shields in Corporate Communications. Please go ahead.
Morgan Shields: Thank you, operator. Good morning, everyone, and thank you for joining us. This morning, we issued a press release on our third quarter 2024 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 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, Chief Executive Officer; and Vicki Eatwell, Chief Financial Officer. And now I will turn it over to Chip. Chip?
Chip Baird: Thank you, Morgan, and thank you all for joining today's call. It's hard to believe that we have six weeks left in 2024. Looking back, we've navigated a tremendous amount of change at 2seventy this year. As a reminder, we ended 2023 with 277 employees, a burn rate of $63 million in the fourth quarter of 2023 and uncertainty surrounding Abecma's earlier line approval and return to growth. In 2024, we've accomplished a tremendous amount to improve this picture. We've successfully completed the sale of our oncology and autoimmune R&D pipeline to Regeneron (NASDAQ:REGN), including about 160 employees in the majority of our real estate footprint for the next several years. We sold our hemophilia A program and related technology to Novo Nordisk (NYSE:NVO) for $40 million. We received FDA approval in the third-line setting, making Abecma available to more patients living with multiple myeloma, and we've achieved a significant return to growth for Abecma, with third quarter U.S. revenues growing 42% over the prior quarter. The net result of these changes is that we have streamlined the company, focusing the business exclusively on Abecma and continuing to make meaningful progress towards our goal of breakeven operations. Our burn rate was approximately $10 million this quarter, and we have 70 employees, the majority of whom are funded through the Abecma Co-Co agreement with Bristol-Myers Squibb. Looking ahead, we're going to focus on two key priorities for Abecma. First, we are going to continue to compete commercially. Abecma has an important place in a growing CAR-T market in third-line myeloma. Recent real-world evidence studies underscore that Abecma has a well-established and differentiated safety profile and has a competitive efficacy profile, particularly when patients receive effective bridging therapy prior to treatment. Second, we are working on optimizing the cost structure of Abecma to increase the operating margin cash flow from the business. The decision to discontinue enrollment in the KarMMa-9 study is an example of the kind of financial discipline we will continue to apply across the business. Together with BMS, we are looking carefully at ways to streamline expenses across clinical, manufacturing and commercial. As we approach 2025, we are one step closer to breaking even and, as we've said, this creates strategic optionality for 2seventy. We'll have more to say when we get there, but our focus on delivering for patients and creating value for shareholders will remain our true north as we move forward. We'll get to Q&A shortly, but for now, I'll turn it over to Vicki to talk further about the third quarter results. Vicki?
Vicki Eatwell: Thanks, Chip. Third quarter Abecma U.S. revenues as reported by BMS were $77 million, which reflects ongoing expansion in the third-line setting. As Chip said, this was a strong quarter for U.S. Abecma revenue growth, and we look forward to continuing to deliver this important therapy to even more patients living with multiple myeloma. We also acknowledge that the multiple myloma market continues to be one that is dynamic and competitive. We expect U.S. Abecma revenues to be approximately $240 million to $250 million for 2024, with the fourth quarter expected to be impacted by the continued competition and a reduction in CAR-T infusion scheduled during the U.S. holiday season. As a reminder, we share equally in the profits or losses of the U.S. Abecma business with BMS, and we record collaboration arrangement revenue or loss each quarter, which largely represents our 50% share of revenue, COGS and selling expenses related to the U.S. business. In the third quarter, we reported collaborative arrangement revenue of approximately $11 million related to our collaboration with BMS. Turning briefly to our cost structure. This quarter, we achieved a $10 million or 24% reduction in GAAP operating expenses versus the prior quarter and a $140 million or 52% year-to-date reduction in GAAP operating expenses versus the same period last year, primarily driven by a reduction in R&D expenses. As we said before, we expect operating expenses to continue to decline in 2025 as our team prioritizes streamlining of our cost structure for both Abecma and our supporting corporate function. We continue to expect net cash spend in the range of $40 million to $60 million for 2024 and cash runway beyond 2027. With that, I'll turn it back to Chip.
Chip Baird: Thanks, Vicki. As we close, I want to reiterate that we are encouraged by strong growth in Abecma sales this quarter and are proud to have executed on what we set out to do at the beginning of this year, bringing us one step closer to breakeven, potentially as soon as 2025. We believe in the potential of Abecma to make a meaningful impact on the lives of patients and their families and plan to expand Abecma's reach to as many multiple myeloma patients as possible. I want to extend a heartfelt thank you to our people who are working hard to deliver on our mission to deliver more time to patients and their families. With that, we're happy to take questions. Operator?
Operator: Thank you. [Operator Instructions] Our first question comes from the line of Daina Graybosch with Leerink Partners. Your line is now open.
Daina Graybosch: Good morning guys. Thanks for the question. I wonder now that we've been a couple quarters into this earlier line sales. If you could tell us any of your reflections on the market. I guess specifically, how it differs in terms of demand in total, not just for Abecma than you had anticipated, and any earlier line dynamics that were surprises to you?
Chip Baird: Daina, thanks for the question. Yes, I would say that the demand is what we expected, different than the original launch in fourth line plus, where there was a bolus of patients. I think this has been more of a steady build when you look at the overall CAR-T class share between the two commercially approved products. We had a big step forward here in the third quarter. I think that's driven both by step-ups in combined manufacturing capacity as well as more sites coming online and being in a position to deliver CAR-T to patients as well as just continued awareness in earlier lines third-line setting of CAR-T or the benefit of CAR-T – sequencing of CAR-T relative to T cell engagers. So, there is no one stock answer, but I think what we've been encouraged by the steady growth and pickup in CAR-T class share. And again, our view with Abecma is that we need to and will continue to compete for our place in that share. And I know you've written about that, and we were pleased to see that, particularly around recent news. But we have a meaningful share there, we have a differentiated safety profile, we have patients for whom we think Abecma can be the right treatment option and I think the last thing I would just comment is if you look at the exit trajectory from the third quarter, we're still, by our math, less than 25% penetrated in the overall third line setting if you assume third line represents something like 16,000 patients in the United States. So, our view is that there's still plenty of room to grow and plenty of more patients to get to, and we're committed to trying to do that. Thanks for the question.
Operator: Thank you. Our next question comes from the line of Salveen Richter with Goldman Sachs (NYSE:GS). Your line is now open.
Unidentified Analyst: Hey, thanks. This is Matt [ph] on for Salveen. I was hoping you could speak to what drove the better margins for the Abecma profit share. And then separately, is $400 million in Abecma still estimated breakeven point for the overall business? And then finally, kind of given what you've guided to now for 4Q, how do you think you're positioned heading into 2025?
Chip Baird: Matt, thanks for those questions. I will ask Vicki to comment on margin and breakeven. In terms of positioning, heading into 2025, we've guided here, we expect to end 2024 in the $240 million to $250 million range for total Abecma U.S. sales. Not yet guiding for 2025. But as I said in the prior question, we certainly have been encouraged by CAR-T class share growth and leaning into continue to participate in our share of that. But Vicki, do you want to comment on margin and – third quarter margin and then breakeven?
Vicki Eatwell: Yes. Thanks Matt for the question. I would say on the margins, we continue – throughout this year, we've really continued to make steady progress on improving those margins. It’s largely driven by demand, so obviously, a strong sales quarter pulls through to from a margin perspective, given the high fixed cost nature of the business. I will say, too, that we've continued to – with our partners at BMS make manufacturing improvements. So, we see really strong manufacturing success rate north of 95%. And so that obviously helps as you translate that into margin. On the breakeven question, that's a good one. In the past, as you noted, Matt, we've guided to about $400 million being the breakeven sales point for a total U.S. sales for $270 million as a whole. We think it's closer to $300 million as we sit here today. But we're very much in process of evaluating what we think for 2025. And so, we'll be able to comment more on that later, but closer to $300 million is what I would guide. Thanks, Matt.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Samantha Semenkow with Citi. Your line is now open.
Samantha Semenkow: Hi, good morning. Thanks very much for taking the question. I appreciate the 2024 guidance and that seasonality is a big part of that. I am wondering if you could just speak a little bit on the apheresis rates that you've seen thus far in 4Q and how they compare to the increase you go in 3Q and how we should think about that trajectory carrying over into 2025. Thanks very much.
Chip Baird: Hi, Sam, thanks for the question. Thanks for being a part of our call. Yes, the aphe rates, that's something that we track on a weekly basis. And again, we were very encouraged to see the growth in aphes in the third quarter. As we sit here in the fourth quarter, again, I would say to the comments on the call, there is seasonality that occurs, particularly as people think about where they're going to be when they receive those cells and they head into Thanksgiving, Christmas, those times, that can be the intensive part of the CAR-T treatment journey for patients. And so I think that's – we do see that. That being said, I think the underlying demand and the kind of uptick we've seen since the third-line approval back in March has been a real one, and that’s one that together with BMS, we are doing everything we can be doing, we should be doing to support commercially. Again, I think we will have more to say about 2025 at a later date, but certainly have been encouraged, and we are happy with the growth we've seen here in the third quarter.
Operator: Thank you. And I'm currently showing no further questions at this time. I'd like to hand the call back over to Chip Baird for closing remarks.
Chip Baird: Thanks, operator. And thanks, everyone, for participating in the call today. We appreciate the time, and have a great day.
Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
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