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spk05: Good morning, and thank you for standing by. Welcome to the Bluebird Bio conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you need to press star 1 on your telephone. I would now like to hand the conference over to your speaker today, Courtney O'Leary, Investment Relations. Please go ahead.
spk08: Good morning, everyone, and thank you for joining today's call to discuss this morning's restructuring announcement. The press release announcing these updates can be found on the investor relations section of our website. 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 our statements regarding potential cost savings from restructuring and the expected impacts on our operating expenses and cash runway. 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. While we may elect to update forward-looking statements in the future, we specifically disclaim any obligation to do so if our expectations change, except as required by law. You should not rely on these forward-looking statements as representing our expectations of any subsequent date to today. Today's agenda is as follows. Andrew Obenshain, our Chief Executive Officer, is going to provide some opening remarks and then Jason Cole, our Chief Strategy and Financial Officer, is going to discuss the restructuring announcement in greater detail. They will then be joined for Q&A by Tom Klima, our Chief Commercial Officer. Thank you for joining, and I will now turn it over to Andrew.
spk03: Thank you, Courtney, and good morning, everyone. I want to start and acknowledge that today is a tough yet important day for Bluebird. As announced this morning, we've initiated a comprehensive restructuring of our company, to focus on our near-term critical milestones. Making this decision was not easy. However, following a thorough review, we've concluded that our mission of ultimately bringing potentially curative gene therapies to patients and their families in the U.S. means that we need to think differently about our business and our strategy for the future. Going forward, we plan to focus on the near-term delivery of our three potential first-in-class therapies for beta thalassemia, for cerebral adrenal leukodystrophy, and for sickle cell disease. With this restructuring, we're taking action that is expected to extend our runway into the first half of 2023 and put ourselves in a stronger position to execute on our near-term priorities. Our focus is on a significant number of near-term catalysts to advance our three therapies through the anticipated approvals and into the commercial setting. Combined, the three programs, Betacel for beta thalassemia, LSL for cerebral adrenal leukodystrophy, and lovacil for sickle cell disease have the potential, if approved, to reach approximately 22,000 patients in the U.S. With a clear focus on our near-term catalysts, we've made a decision to deprioritize direct investment in cryopreserved aparesis and to deprioritize direct investment in reduced toxicity conditioning and to maintain a targeted research effort in in vivo LBV beginning in sickle cell disease with support from the Gates Foundation. Over more than a decade, Bluebird has been a pioneer in the field of gene therapy, making remarkable advances across research, across development, manufacturing, and regulatory affairs. And building on this progress, the company is preparing for the approval of its first lentiviral vector of gene therapy in the U.S. It has not been easy. Being one of the first in gene therapy means that we have also faced a uniquely challenging environment, navigating the precedent-setting nature of being a pioneer in this field. as we anticipate we'll introduce these novel therapies with expectation of lifelong benefit. Since the split in November, we've encountered a number of unanticipated hurdles. These include a partial hold for LovaCell, an extension of our BetaCell and LSL PDUFA goal dates, and then all this has been set against the backdrop of a tough biotech market. And the combination of these have taken some traditional financing options off the table in the near term. We are optimistic that these options may be viable sources of funding in the future, but we recognize the need for action today to put us in a stronger financial position to reach our near-term goal of bringing LVV gene therapy to patients. This is why we've made the very tough but necessary decision to reshape our business and our cost structure. Jason Cole, our Chief Strategy and Financial Officer and a seasoned Bluebird executive, is going to now discuss restructuring in greater detail.
spk04: Thanks, Andrew, and good morning, everyone. As outlined in the press release, the restructuring is designed to deliver up to $160 million in cost savings over the next two years and extend our cash runway into the first half of 2023. As part of these actions, we are reducing our workforce by approximately 30%. Savings from these actions will be realized over the course of 2022, primarily in the next two quarters, resulting in a projected annualized 2022 cash burn of approximately $340 million and reducing the company's anticipated operating costs by between 35 and 40% by year end 2022 heading into the 2023 fiscal year. The reductions in our team will impact all parts of our organization, but most significantly impacts our research team, longer term product differentiation efforts, our near-term launch preparations, and our general and administrative teams. We are streamlining our 2022 launch preparations with a focus on three main areas. One, reimbursement and access with a focus on payers. Two, enabling treatment through a targeted QTC network of healthcare providers. And three, patient services to ensure a positive patient and caregiver experience. As Andrew mentioned, we've also made the decision to deprioritize our direct investment in reduced toxicity conditioning and cryopreserved apheresis. We have done substantial work in these two areas, but we need to focus our resources on our near-term critical milestones and allow the gene therapy field to carry these efforts forward for now. We've also been simplifying our external manufacturing footprint and plan to continue to rationalize our vendor arrangement. As we implement these actions, the company continues to evaluate additional financing options, including public or private equity financings and monetizing any priority review vouchers that may be issued upon the approval of Bettie Cell or Ellie Cell later this year. On behalf of our entire management team, I want to thank all of our fellow Bluebirds who were impacted by today's decision. We're immensely grateful for their contributions to the field of gene therapy and to the patients and their families. we have always aimed to serve. I'd also like to thank the Bluebirds who are remaining with the company for their continued commitment and support as we look to secure approvals and achieve our goal of bringing LVV gene therapies to patients this year and beyond. Now back to Andrew to provide some closing remarks.
spk03: Thank you, Jason. We are making these difficult decisions because we believe in the power and the potential of our LVV platform for gene therapy. I am confident that this is the right decision for patients and our therapies. And this year, we remain to be poised for one of the most event-filled years in the company's history, with significant near-term value-creating milestones on the horizon, including FDA adcoms for the first LVV gene therapies in the U.S., Betacel and LSL, expected on June 9th and 10th, Purdue for goal dates for Betacel and LSL on August 19th and September 16th, respectively, and continued progress to prepare the locus LBLA for submission in the first quarter of 2023. Realizing our mission of bringing potentially curative LBV gene therapy to patients and their families is closer than ever, and today's updates put us in a much stronger position to ultimately achieve this goal. Our ambition is to be as strong at our business as we are with our science. And with that, I will pause and ask Jason and Tom to join me and open up for Q&A. Operator?
spk05: Thank you. As a reminder, to ask a question, you'll need to press star 1 on your telephone. To withdraw your question, press the pound key. Our first question comes from Yaron Werber with Cowan. Your line is open.
spk09: Great. Thank you for taking the questions. I appreciate it. Maybe a couple of questions. Number one, can you give us a sense, how are you thinking about margins once both products are on the market, or essentially all three of them. Do you have a sense how fast you can actually start getting to a reasonably sort of level of production and enhancing margins? Is that sort of a one- to two-year process, or is that sort of a three- to four-year process? And then secondly, do you have a sense yet as to how potential the rollout of demand is going to shape out more on the sickle cell side once it's approved, just given the need to open centers and sort of educate the market, et cetera? Thank you.
spk03: Thanks, Yaron, for the question. I'm going to pass the first part of that about margins and scale-up ramp over to you. Jason, and in the second part, I'm going to pass to Tom afterwards, who can comment on the commercial picture for, I think you specifically want to hear about Sickle. So, Jason? Thanks.
spk04: Jeroen, so it's a really good question. So, the way we think about margins is that those are going to increase over time, but will really improve once we get the Sickle Cell product, LovaCell, on the market. As I believe you know, the transition to suspension lentiviral vector is really a game changer as it leads to our manufacturing costs. But of course, another key variable there is volume, right? We have a fixed infrastructure that only reduces costs once we get to higher volumes. Betty cell is an orphan disease in the US. The patient numbers there are relatively small as we will be hitting that launch later this year. But we're confident in the sort of 2023, 2024 time horizon, once Sickle Cell is approved and launched, that the margins for that product and then the tail back into Betty Cell are quite attractive and are the kind of things that we are looking forward to realize once we get to that point. Maybe throw back to Tom for the other part.
spk13: Go ahead, Tom. Sure. Thanks for the question, Ron. And as Susan mentioned, we're hyper-focused right now on preparing able to be treated in time and fashion. And number three is with patient services and making sure that patients have a smooth and seamless process as they get treatment. So that won't change. And as we think about getting ready for the Lobosol launch, the Betty Sol launch will actually help us pave the way for the Lobosol launch and actually improve our uptake at time of Lobosol approval. Thank you, Tom. Thank you. I think we'll move to the next question.
spk05: Our next question comes from Jason Gerberry with Bank of America. Your line is open.
spk02: Hi, guys. Thank you for taking my questions. So just two for me. How are you guys thinking about exploring reduced tax conditioning on a go-forward basis? Will you revisit perhaps direct investment when the company is in a position of Better financial health, would you maybe consider partnerships down the line? And then on the advisory committees, these are obviously important events for unlocking the value of the PRVs. So just wanted to get your sense how you see these events, how important they are to getting validation on the risk-benefit from the prescribing community that will be participating in an adcom. And if you can just set the table a little bit, do you expect this to be a pretty standard panel with customary voting questions? Thanks.
spk03: Jason, thanks for the question. I'm actually going to answer those in reverse order. I'll take the first one on advisory committee, then I'll hand it to our chief strategy and financial officer, Jason, for the RTC. On the advisory committee, we've yet to receive the agenda from the FDA, so we don't actually have the exact run of show for that. But we do anticipate that it will be fairly standard in terms of talking about the efficacy of the products, which have been tremendous so far as we've presented. Safety will clearly be an important topic, as it will be for all gene therapies, and then also the manufacturing as well. And we do look forward to being able to present all of the decade of work that we've done in LVV gene therapy there and to have both the patient and the physician perspective. So we do anticipate it will be quite a robust discussion and a landmark for gene therapy, as this will be the first ex vivo LVV gene therapy discussion at an ad comp. Let me hand it over to Jason to discuss RTC. Yep, thanks.
spk04: So, Jason, yeah, it's a good question about RTC. And I think it's important to sort of step back and put the field of reduced toxicity conditioning into context because that really drove our decision here. So, you know, we've done a lot of market research around sickle cell disease patients in general and their perceptions of the kind of gene therapy we're bringing to market. And even with the current conditioning regimen, we believe there will be significant commercial uptake and success. But for those of you who may not be as familiar, reduced toxicity conditioning is really the next frontier for ex vivo gene therapy. And every company in this space is working on or interested in a solution. But when you dig into the science, it is still very early and uncertain in terms of probability of success. So there are a number of academics and companies working on RTC solutions, and we're going to continue to monitor those and explore the applicability of those advances once they are realized. So right now we need to focus on these near-term critical milestones for our company, but we believe by being the first ex vivo gene therapy to market, we would provide a really important platform to test any RTC regimens once they are validated clinically.
spk02: Got it. Great. Thank you.
spk05: Thank you. Our next question comes from Luca Isis with RBC. Your line is open.
spk01: Oh, great. Thanks so much for taking my question. So first, maybe on the clinical holds, any updates on the two clinical holds, the one for CALD as well as the one for sickle cell disease below 18 years of age? Again, any call there would be great. And the second, on the ad comp, I think in your prior press release, you mentioned that the ad comp was on June 9th and 10th versus I think this time you're saying in the press release that it's actually tentatively scheduled for June 9th and 10th. So just wondering what made you change that language in the press release. Thanks so much.
spk03: Yeah. Luca, thank you. I will actually take both of those. First of all, the dates, so we anticipate that the adcoms will be on June 9th and 10th. It actually has not been published in the federal register yet, which is a, I guess, a bureaucratic step that needs to take place. So once it's actually published in the federal register, we can actually confirm those dates for sure. Regarding the clinical hold, just as a reminder on our sickle cell study, our 210 study continues. The clinical hold is for pediatrics only. So the program progresses. We've actually pivoted to treat adult patients in that study, and the program continues with the enrollment of adult patients. We are in continued dialogue with the FDA and active dialogue with the FDA. We'll continue to update you as we learn more in terms of both the adrenal leukodystrophy and the sickle cell holds. Got it. Thanks so much.
spk05: Thank you. Our next question comes from Dane Leon with Raymond James. Your line is open.
spk11: Hi. Thank you for taking the questions. The primary debate that we have with investors regarding the outlook for both commercial programs when launched in the U.S. is why, especially with regards to TDT, the outcome will be different than what we saw with the launch in Europe that the team ultimately had to walk back from. Are there specific dynamics that you think are particularly different in the U.S. that are going to help adoption and demand for the base thalassemia product? And is there a revision in terms of how you think your team will approach pricing versus the approach that was taken in Europe?
spk13: Thank you.
spk03: Thanks, Dave, for the question. Let me pass that to Tom to answer.
spk13: Yeah. Good morning, Dane. Thanks for the question. I will start with the second half. the approval, but one thing has not changed in that we will price based on value of potentially one-time curative therapies. In terms of how we feel about the different markets, we've been doing market research now in the U.S. for over five years, and we've been actively engaged with both QGCs and payers for at least three years. We are currently in active negotiations with multiple payers in the U.S. in Europe or in Germany, we actually had a lot of patients enrolled. It was on the ability to secure pricing and ultimately reimbursement, which we feel more confident about in the U.S.
spk03: Yeah, I would just echo that, what Tom said. Certainly as a head of Europe, I attest that demand was not the issue. It certainly was the price set in Europe. So let's move on to the next question.
spk05: Thank you. Our next question comes from Salveen Richter with Goldman Sachs. Your line is open.
spk07: Hey, good morning. Thank you for taking our questions. This is Elizabeth on for Salveen. Could you just remind us where you stand in terms of manufacturing of the commercial validation lots for LoboCell, and are there any updates on this front, and can we still expect an update around the mid-year? Thank you.
spk03: So thanks for the question. So as I said before, the 210 trial, which is really the important trial for sickle cell disease continues, and that's enrolling adult patients. So as a reminder, we needed to do two things, which number one, qualify the commercial manufacturing plant, and number two, produce lots or manufacture lots in order to have comparability. We continue to be on our timelines for both of those items, and so we'll not update on the specifics as we complete each one, but we do remain on our timelines.
spk07: Thank you.
spk05: Thank you. Our next question comes from Raju Prasad with William Blair. Your line is open.
spk10: Thanks for taking the question. You know, can you give us a sense of how you might be thinking about potential pricing for BabyCell and LACell, given kind of the learnings from this integral EU launch? I mean, are you still considering kind of an annuity-type model or, you know, maybe just some color there? And then... Regarding the adcoms and CMC for the baby cell and alley cell products, will we see data on suspension culture there or is the commercial manufacturing for those products going to remain adherent for the foreseeable future? Thanks.
spk03: Thanks for the question. I'll take the second part first and then I'll hand it to Tom. We will commercialize both LSL and Betacel with adherent vector initially, so that's going to be the subject of the adcoms. So there will not be a discussion of suspension, I do not anticipate, at the adcoms. Let me hand the pricing question over to Tom.
spk13: Yeah, thanks for the question. Again, we're not going to comment specifically on price until FDA approval, but potentially curative therapy for very serious and also very expensive conditions. We have changed a little bit in terms of thinking in terms of wanting to push a payment model and instead we will offer options to pay
spk00: Thank you.
spk05: Thank you. Our next question comes from Jenna Wang with Barclays. Your line is open.
spk06: Thank you. I have three questions. The first one is regarding LSL. Should we expect the clinical hold to be removed before ad hoc or would that be discussed, the additional safety would be discussed at ad hoc? Second question regarding the margin. I'm just wondering if you can give us a little bit quantitative description about lower cell and the better cell regarding the cost at the launch and the cost in three years using suspension cells and mature production. And the last question is regarding the cost profitability, now you have three products in preparation for launch, at which year you would expect to be profitable?
spk03: Hi, Gina. So let me take the first bit of that on LSL clinical hold and the adcom, and then I'll hand the margin and profit questions over to Jason. So we do remain on clinical hold for LSL. We do anticipate that the adcom is what's going to adjudicate that, the risk-benefit of LSL. And so the adcom will determine whether this is a positive, in the advisory committee's mind, if this is a positive risk-benefit, how the mechanics of the hold would be lifted in the event that that was a positive adcom. I don't know, but that would be adjudicated in that form. Let me hand it over to Jason to talk about margin and profit.
spk04: Thanks, Janet. So as it relates to margin, I think we're only going to go as far as the sort of qualitative description that I gave earlier. You can imagine as we get closer to the time of a sickle cell launch with a price, we could get more quantitative then, but that's still a bit far off, and so we're not going to go into that detail now. In terms of profitability, I think, hearkening back to my answer earlier on the call, The real driver of Bluebird's ability to transition to a company that brings in more money than it spends is tied to Lotus Cell and getting that product approved promptly after we file in early 2023 and then having a successful launch, building on the qualified treatment centers that we should already be treating patients in. So based on our models, that transition happens pretty fast given the untapped patient opportunity that comes with bringing a product like this to the sickle cell community. So we see that, quote, profitability probably in about two years or so, but that's about as specific as we can get now.
spk06: Thank you. Just going back to the second question, I know you cannot comment on the margin because it's related to the price, but just focusing on the cost, should we be thinking about hundreds of thousands of dollars right now in the future drop to below $100,000 or in the $50,000 range?
spk04: I appreciate your persistence, but we're not going to be commenting on our overall sort of costs of goods right now. There's so many variables, including sort of volume and throughput. So, sorry.
spk06: Fair. Thank you.
spk05: Thank you. And we have a question from Yananzu with Wells Fargo. Your line is open.
spk12: Hi, thanks for taking my questions. I have three. First, in that cash runway into first half 23, could you give a little bit more granularity whether it's how far into first half is the cash sufficient to fund operation? Second, within that assumption, within that cash runway, what is the assumption for the actual launch, as well as the manufacturing of the product, commercial product? Is it going to be a limited launch in some way, or is it going to be a full kind of launch effort? And the last question, for the Betty cell adcom, do you expect the FDA to discuss insertional mutagenesis, noting that We know that, of course, insertional oncogenesis is not a finding associated with beta cell clinical trial. Thank you.
spk03: Well, great. So I'm actually going to take your questions in absolute reverse order. I'll take the first part and answer Tom for the beta cell launch characterization and over to Jason for the cash. So on the outcome, we don't have the agenda yet. So certainly, insertional oncogenesis will be a subject for LSL. Whether they delineate between the two products day by day or whether they blend them, we just do not know yet. So I really can't comment on how the discussion about LVV and insertional oncogenesis with LSL will be folded into the outcomes. We simply don't have the agenda. Let me hand it over to Tom for the launch.
spk13: Yeah, hi. Good morning, Yolanda. Thank you for the question. With our QTC focused launch, and we will focus on those treatment centers that have high volumes of patients with beta thalassemia or TDT and start with those treatment centers first. Keep in mind that many patients with TDT are already being seen by or treated by a QTC, and so those would be our main priorities. And then we will grow our QTC network over time as we realize early success with the limited number of QTCs that we launch with.
spk04: Dan, jumping in on the cash question, we're not going to give sort of further specific guidance around our runway within the first half of 22, but it's fair to say we are designing our cash burn to get us through the very important milestone of the BLA filing for LoboCell. And in addition, as we sort of reduce this plan we're announcing today to action, we're going to continue to seek and implement opportunities to extend our runway. And so when we provide an update for the first quarter, when we issue our earnings in May, you could expect probably some additional detail in that filing.
spk12: Great. Thanks for the answers.
spk05: Thank you, and I'm showing no other questions in the queue. I'd like to turn the call back to Andrew Obenshain for any closing remarks.
spk03: Thank you for joining us today. We do hope to be talking to you frequently through this milestone-laden year as we move through important events for Bluebirds, for patients, and for the investors. So thank you.
spk05: This concludes today's conference call. Thank you for participating. You may now disconnect.
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