2seventy bio, Inc.

Good day and thank you for standing by. Welcome to the 270Bios First Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following the prepared remarks, there will be a question and answer session. Please be advised that this call is recorded. I would now like to turn the call over to Jen Snyder, Head of Corporate Affairs. You may begin.

Thank you, Jada. This afternoon, 270Bio issued a press release providing a business update in addition to first quarter 2023 financial results. The press release can be found in the Investors and Media section of the company's website at 270Bio.com. Speaking on the call today are Nick Lashley, Chief Kairos Officer, Tip Baird, Chief Financial Officer, and Philip Gregory, Chief Scientific Officer, Steve Bernstein, Chief Medical Officer, is also on the call for Q&A. As a reminder, today's discussion will include forward-looking statements related to 270Bio'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, and statements regarding our financial condition, expectations, and other 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 forms, 10-K, 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. At this time, I would like to turn the call over to Nick Fleshley. Nick?

Thank you, Jen, and good afternoon, everyone. Thanks to everyone on the line for joining us as we discuss our first quarter 2023 results. We've had an incredibly strong start to the year and executed across all aspects of our business. Chip and Philip will take you through the details. We don't always host an earnings call, but given the amount of news we've had going on as of late and the overall macro environment, we felt it was important to host a call to highlight what's new and our belief in the future of 270. More specifically, there are three points we want you to take away from this call that we think are key to understanding 270. First, our commercial product at BACMA is not only outperforming, but also has a long-term financial tail. That is to say, we believe that not only is BACMA the first-in-class market-leading CAR T in multiple myeloma space, but also that we see continued growth towards 2 to 3 billion peak sales potential and a strong business throughout the rest of the decade and beyond. There is a view that myeloma is a winner-take-all market and that abecma will decline in future years. The myeloma market, in our view, is simply too big and too complex for any one player to serve all patients. And that is doubly true in a modality like CAR-T, given the complexities of manufacturing scale-up. Given this, we strongly believe in abecma's place in multiple myeloma now and in the future. Second, the pipeline and platform in investments we are making or paying dividends today with more to come. Most of our conversation with the investment community is focused on Abecma, and we're always excited to talk about the product. But we started 270 to focus on building the best oncology cell therapy company, period, using over our last 12 years of experience and capabilities to deliver a cell-based product capable of fully unleashing the T cell to potentially cure cancer. That means investing in the platform, research, and early pipeline as well as enabling capabilities and technologies to drive a revolutionary translational engine. You should expect us to continue to be unapologetically focused on this mission and lever our knowledge and product engine to partner as opportunities arise, but also to be disciplined in how we allocate capital to this part of the business. As you will hear from Philip, we're starting to see clear evidence that these investments are paying off in multiple ways. providing 270 unique optionality, which is so important in these tough macro times. We look forward to sharing more detail at the upcoming ASGCT conference and our R&D deep dive session on May 19th. Finally, we have the financial resources in place to execute on our plan. We did a capital raise at the end of February in a tough environment to secure a runway into 2026, removing any financing overhang. As you will hear from Chip, ABACMA has beaten quarterly estimates yet again, is cash flow positive to 270 today, and is tracking towards the higher end of the revenue range for this year. This translates into what we expect to be a reliable and growing source of cash to fund our operations into 2026 and potentially beyond. That is a very different outlook than the vast majority of development stage R&D companies. With that, I'm going to hand it over to Chip to talk more about the opportunities ahead for ABACMA.

Thanks, Nick. Q1 was another robust quarter of growth for ABECMA, reflecting continued strong demand for the product in the US. ABECMA sales were $118 million for the first quarter, which represents a 26% increase over the prior quarter and 111% growth over the same quarter last year. As a reminder, we and BMS share equally in all profits and losses of ABECMA in the United States. This was Beckman's best quarter to date and gives us confidence that we're on track to achieve the upper end of our $470 to $570 million of U.S. revenue guidance. Underpinning our commercial platform is one of the best and most underappreciated manufacturing operations in the CAR T space. We continue to achieve high manufacturing in-spec rates in the 90% range, and our turnaround time is consistently in the 30-day range. In addition, we made important progress this quarter expanding our manufacturing capacity. Specifically, in terms of vector capacity, we received FDA approval for our second adherent vector suite, which significantly increases vector capacity. BMS and 270 also continue to accelerate the introduction of suspension-based vector, and we're on track to file for regulatory approval later this year with the goal of having suspension vector approved for commercial use in the first part of 2024. BMS also announced an agreement for a manufacturing facility in Illinois to produce suspension vector in-house, which increases capacity and signals our shared belief in the long-term potential of the product. On the drug product side, we completed a successful step-up in capacity and are on track for additional ramps later this year. We also made important progress from a clinical and regulatory perspective this quarter. Our SPLA on the CARMA-3 study was accepted for filing with a December PDUFA date. Approval here would expand the label, leading to potentially reaching thousands more patients in the United States. We are in a supply-constrained market today, and with third-line approval, we expect the market to remain supply-constrained for several years to come. And while the field continues to evolve rapidly in terms of the competitive landscape, which is great news for patients, we look forward to upcoming medical meetings where the real-world evidence can provide a more comprehensive view of how products are performing in the commercial setting. Additionally, we look forward to highlighting the difference in the high risk nature of the patient population treated in our clinical trials. Finally, I'd like to add some additional context to Nick's earlier point about our belief that abecma has a long-term future in treating multiple myeloma. The three important facts behind our belief in the long-term potential of abecma. First, CAR T manufacturing scale-up is linear, complex, and governed by the regulators. It also depends on significant hiring and training of operators in the suites. And frankly, it just takes time. As an industry, we will be supply constrained for years. There's also a high medical need in multiple in the US with 30,000 patients newly diagnosed each year. Even with optimistic, never-been-seen-before growth and capacity from competitors, There's simply not enough capacity for any one sponsor to service the market. And finally, treatment decisions by physicians and patients depend on factors beyond reported clinical efficacy. Safety, inspect rates, turnaround time, and commercial execution all play a larger role in the CAR T setting, and we are seeing that play out. Shifting gears to first quarter financials, we ended the quarter in a strong balance sheet position with $341 million of cash and cash equivalents. APECMA was cash flow positive to 270 this quarter, and we expect the contribution from APECMA to continue to grow. We remain on track and on budget with our expenses, and we reiterate our net cash spend guidance of 180 to 220 million for 2023. This is a number that is down significantly from last year and will continue to decrease as we move towards cash flow breakeven in the coming years. I'm happy to take questions in the Q&A, but for now, we'll turn it over to Philip for some R&D highlights. thought.

Thanks, Chip. This is a very exciting time for 270 as we move many years of research effort into the clinic and translational arena supported by a significant ongoing ramp-up of 270 MPH, our internal drug product manufacturing, which is critical to our strategy of rapid and cost-efficient proof of concepts in the clinical setting. Indeed, our preclinical pipeline continues to make strong progress. The potency-enhanced MAI-J4 TCR program in solid tumors is heading towards an investigator-initiated trial with JW Therapeutics, our collaborator in China, and is anticipated for later this year. In addition, our MUX16-targeted CAR T-cell product in ovarian cancer is also anticipated for IND filing in the U.S. later in 2023. Both programs are part of our recently deepened collaboration with Regeneron, which aims to leverage our end-to-end scientific and manufacturing cell therapy platform to test CAR T-cells, including enhanced CAR Ts, in combination with innovative biologics and multi-arm proof-of-concept clinical studies, a potentially exciting and unique opportunity to realize the full potential of engineered T-cells in cancer therapy. In other areas of the pipeline, we were excited to share earlier this week that we, along with our partners Nevo Nordisk, achieved a significant milestone as part of the joint research and development collaboration focused on an in vivo gene editing treatment for hemophilia A. The preclinical data demonstrated the ability of our proprietary Megatel platform to drive the targeted integration of a corrective factor A transgene into a preselected site in the genome in small and large animal models. These data further validate our Megatel gene editing technology, which is already being explored in the clinical setting in the context of our oncology programs, and specifically the BBT369 program in non-Hodgkin lymphoma. In addition, and as we announced yesterday in our preview press release for the American Society of Gene and Cell Therapy Congress, we have a series of exciting presentations planned covering several of our key programs, including early findings from our phase one PLAT-08 study of SC-DEREC33 in patients with acute myeloid leukemia or AML. As a reminder, this study explores the first in human application of our regulatable CAR T-cell technology known as DEREC. The goal of this initial first in human study is to understand the safety and tolerability of the SC-DEREC33 drug product and to investigate the ability of rapamycin, the small molecule that regulates the system, to turn on the CAR-T cells in patients with AML. We're excited to share our early data on the safety and function of the direct regulatable switch technology during the ASGCT late-breaking abstract session. Last but not least, as Nick mentioned, we plan to talk more about our discovery engine, selected preclinical research programs, and all of the highlights from ASGCT during the research and development deep dive scheduled for later this month. I'd now like to turn the call back to Nick for closing remarks.

Nick? Thanks, Philip. As you can see, we're executing across the business with continued progress and milestones throughout the year. For the balance of 2023, you will continue to see proof of the three points I highlighted at the top of the call. First, our commercial product at Beckman is delivering quarter by quarter, tracking the long-term growth with two to three billion in peak sales. Second, the pipeline and platform investments are delivering a highly differentiated cell therapy product engine. Finally, we have the financial resources to execute on our plan with runway into 2026 with a reliable and growing source of funds from ABECMA. In closing, time. It's about time. Our mission is and always will be grounded in doing everything we can to give back time to those patients and families who have been robbed of time by cancer. Abecma and the therapies developed alongside our prior colleagues at Bluebird for adrenal leukodystrophy, beta thalassemia, and sickle cell disease are amazing at just that. But the 270 team has no intention of stopping there. With that, operator, you may now open the line for questions.

Thank you. At this time, we will conduct the question and answer session. To ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please limit yourself to one question and one follow-up just for the sake of time. Please stand by while we compile the Q&A roster. Our first question comes from the line of Salveen Richter of Goldman Sachs. Your line is now open.

Good afternoon. This is for Salveen. Thank you for taking our question, and congratulations on the great quarter. Just on the $2 to $3 billion peak U.S. sales opportunity for ABECMA, I guess what remains to be done on the supply front and then on ABECMA's label to get there, and when do you expect this guidance to be achieved? And then just quickly, could you frame expectations into the DEREC 33 data at ASGCT? Thank you.

Hiro, this is Nick. Just two to three billion obviously is focused on the peak sales, and I'll let Chip comment on that, but it certainly is predicated on the continued evolution in the marketplace, continued evolution on the manufacturing front, as well as the clinical studies heading into frontline over time. I'll let Chip maybe speak to some of the more specific details, and then we'll come back to the Derek 33 question that I'll have Philip speak to.

Yeah, thanks, Nick. Just to add, on the manufacturing side, we've had success in scaling both sector and drug product, and additional ramps will be required to get to that number. That'll include the transition to suspension vector, which we highlighted in the call, and we expect to occur in 2024. That'll be a platform, and now with the second facility in Illinois, we believe we have a very clear line of sight to the capacity we need on the vector side. On the drug product side, we continue to scale at the facility in Summit, New Jersey, S12, and expect additional ramps to come from that facility. There are other cell therapy manufacturing sites that are in the works, one in Devons, Massachusetts, and one in Leiden, Netherlands, that will support the overall cell therapy franchise led by BMS. And there are additional investments and plans that are, as we said, below the waterline that we expect to be able to share more about in months to come. And then last to your question in terms of when could we get there, I think that would involve the approval or expansion of the label from a Karma 9 study, which is a study that initiates later this year.

The only thing I would just quickly add to that is I think this overall, one of the environments that we expect to be in for years to come is a supply-constrained environment. So as much as BMS is doing, I think, a fabulous job, and for that matter, J&J and Legend are doing a fabulous job, there are more patients out there suffering from myeloma than any of us can get to. So there is an urgency. We're all operating under that. Unfortunately, it's going to be a while before we get out from under the supply constraint. And then as we start adding earlier lines of therapy, it will keep bumping into that for some time. This is an unfortunate situation, but it is one that we're all working on very diligently. Philip, can you cover the DERIC-33 expectations? I know you outlined it briefly in your script, but maybe just provide a little bit more color on that.

Absolutely. Sure. Happy to. So, yeah, as a reminder, this is a study that explores the first human application of our regulatable CAR T-cell technology called DERIC, and obviously this is in the context of the DERIC-33 drug product. The first questions that we're trying to address in that context are, of course, to understand the safety and tolerability of the drug products, but also to investigate the ability of the small molecule that regulates the system to be able to turn those cells on. You can't have efficacy until you can turn the cells on, and obviously you can't have efficacy until the drug is safe. So as we said in the beginning, our initial goal in these early patients is to basically understand the safety, tolerability, and evidence of being able to turn this switch on. So that's what we're going to be trying to show you both at AHGCT and, of course, we'll provide an update on this as well at the R&D deep dive.

Just one thing, Philip, I'll add, and feel free to correct me if you think I'm off base here, but the other aspect of this switch that's important is our entire sort of belief in how we're going to get after fully unleashing the T cell in cancers predicate our ability to mix and match different tools and capabilities to engineer the T cells and partner the T cells. Having an on switch, which is a very unusual concept, is incredibly important in doing that, not just in AML, but across, we believe, over time, solid tumors to allow us to turn on these cells when we need to, but also give them a rest when we need to. And so that concept of pulsing is something that has not really been done effectively in the space that we think is going to be a critical component of all the products that we start to, or some version of our products that we go into the future. So there's an element that is a platform capability here and why this switch is so important to us And then certainly, of course, because AML has so much medical need specifically in that disease. Next question.

Thank you. One moment for our next question, please. Our next question is from Dana Graybosh of SVB Securities. Your line is now open. Thank you. Thanks for the questions.

Two for me. First, on the real-world evidence, as we start to see more of these data points coming out, and I think you said we might see some more at ASCO, what data points do you think are of most relevance for us to understand the commercial decision making? And my second question is, is on the delivery infrastructure. So we know, I think everybody knows, there's a ton of unmet need and multiple myeloma, and supply is constrained. How much capacity do you estimate the site has to deliver CAR T, and will that become a bottleneck, and when? Thank you.

Thank you for the questions. They're both good. I'll have Chip jump in on the capacity one, and then Steve, if you want to partner with me on the real-world evidence. I don't think it's Obviously, we've got to wait and see as the data starts to come out, but one of the things that's really important, and we're pleased with how a back point came out of the gate, as people do analysis in the real world on how this product's actually working, the execution part of it, the ability to actually manufacture consistently, the ability to get the same or better efficacy than what you saw earlier, because you're not dealing with a very controlled setup, otherwise known as a clinical study, where you can control for a lot of variables that the real world doesn't really apply to. So that is an incredibly important component, and that's something where we've been very pleased, along with BMS, on how ABECMA has performed. And there's data out there and abstracts out there you can go back and look at, and we're certainly trying to understand that for the other products in this space. So it's not only on the execution front, also how does it perform and how does it assist patients across it. That is an important aspect of a real-world treating physicians decision-making process.

Yeah, I mean, this is Steve. I would completely agree. The relevant data is what is the efficacy, safety, and deliverability of your product in real world patients that most of whom don't fit all of the pristine requirements of a clinical trial.

On the capacity question, Chip, can you handle that?

Yeah, Dan, just to round out on that, we've heard this question from others in terms of is there a theoretical max at the sites and how many patients per week or per month that they can handle? I think there likely is. We haven't been bumping up against that yet. In fact, I think we're more still in the stance that the sites would like more slots per month than we or anyone in the field is able to deliver. I also think that forming early relationships with the sites, long-term relationships, getting experience with those sites and those treating physicians is going to be critical and is a component of our belief in the long-term and the tail, that physicians who use the drug, prescribe this drug, know how it reacts in patients over the three-, four-, five-year timeframe and beyond is going to be a difference maker later in the decade.

Thank you for the questions. Next.

Thank you. One moment for our next question, please. Our next question comes from Yaron Werber of SBV Security, or of TD Cohen. Your line is now open.

Hi, this is Jayna on for Yaron. Congrats on a solid quarter, and thanks for taking our question. So you've guided towards starting the CARMA-9 trial in patients with inadequate response to 1L transplant by year end 23. When do you think we could see initial data from this trial? And do you have any other phase three trials planned for the frontline setting, such as a BECMA head-to-head versus transplant or head-to-head versus kind of triplet, quadruplet? Or alternatively, will you be focusing on patients who are kind of underserved by transplant? Thank you.

I'll let Steve comment on that, but I think right now it's still premature to get into. You are correct. We're looking at sort of a suboptimal response to transplant. The details of that protocol are to come. And as far as the readouts go there, we haven't commented on that, but you can imagine certainly a number of years, but it very much depends on the design of the study and the timing and the enrollment rates, et cetera, et cetera, and the events, et cetera. So, but again, it certainly is a number of years before that will roll out. Whether that's 27, 28, 29, I think we have to just sort of figure out. And we certainly, as we have more details, we'll let you you know there. As far as your second part of your question there, I think that relates maybe to the design of CARMA9, so I'm not sure we're going to get into that at this point. But Steve, if you have anything to add, please feel free.

No, the only thing that I have to add, and thank you for the question, is to remember our focus, as was mentioned, is improving the efficacy of transplant. Transplant is very effective. It's a standard therapy for patients in their first line. However, a significant proportion of those patients don't do well if they don't have an adequate response after transplant. And we believe, and we particularly believe based on our CARMA2C data, which showed very effective outcome in patients that had a sub-adequate response to transplant that then went to get a BECMA, we believe that there is a good likelihood that this study will be successful. and really improve the outcome of patients in first line in this patient population. So that's what we're focused in now. And as Nick said, as we get closer to the initiation, we'll be able to share more data vis-a-vis study design timelines, et cetera.

One thing that's Nick, again, I might add is just, I think this is classic for especially myeloma, but I'm sure for all forms of treatment where you're dealing with lines of therapy. And generally, as we've done with ABECMA, you start in the very late lines and you make your way up. And that process takes years and gets more complicated as more established agents get set into the behavior patterns as well as get set into what you need to demonstrate to improve. And given the efficacy that we and certain other members in this space have, I think that's going to get hurdles going to get higher and higher. So and we're in that game. BMS is in that game. We're building the manufacturing to do that. We believe in the medicine, especially based on CARMA-2 and its ability to deliver. And that data, we believe that's going to continue to improve in great ways to help myeloma and hopefully get dangerously close to start being able to use words like cure for whatever percent of patients that we can, which is a big word, especially in myeloma. So we're very hopeful. Thank you for the question. Thanks so much.

Thank you. One moment for our next question, please. Our next question is from Michael Schmidt of Guggenheim. Your line is now open.

Hey, this is Paul on for Michael. Thanks for taking our questions. I have two on BBT369. First, can you set some expectations for the upcoming data this year in terms of scope of the readout as well as number of patients and possible split between post-CAR and CAR-naive patients? And then secondly, there was some news this week that J&J is licensing a CD19, CD20 CAR T therapy for NHL. So I wonder if you could talk a little bit about how the CD79A and CD20 approach is differentiated from a mechanism and design perspective and sort of where you see the best potential positioning of 369. Thank you.

Yeah, this is Nick. I'll cover off, and Philip or Steve, if you want to comment on the second question here. The reality is there's still quite a big need in lymphoma, right? Significant percent of those patients are getting a good response. There's also a significant brand of patients that are not, and it's not durable enough. So we're pleased to see news like we just saw and others that have been recently out there. 369 hurdle we know is high. We've been clear that that product is a swing for the fences. And so we certainly will continue to think of it that way. And that's the way that it's been constructed. And Philip can go into it a little bit. We're not going to comment on any of the sort of the details of sort of numbers and so forth, because that's on the come. But at the same time, we have said we'll be providing an update on 369 by the end of the year. So with that, maybe is there any context here? I'll put it over to Steve to speak to your second part of your question.

Yeah, I see your second part of the question. The first is if you're looking for a therapy initially in patients that fail CD19, one has to ask what are the mechanisms of failure? And one of those mechanisms is that you have downregulation or loss of CD19. So our approach was to look at a construct that is non-CD19 containing. The second to overcome the issue of antigenic heterogeneity was to dual target. And CD79A is very attractive because it is probably a survival, mediates a survival signal for malignant B cells because they need tonic signaling through the B cell receptor. And thus, it's unlikely that this will be lost or down-regulated significantly. And we know CD20 is a very well-validated target for many therapies, especially the prototype Rituxan. So to us, we were addressing these problems by a dual-targeted 79A and CD20. And as Nick said, we're enrolling this in the clinic. We will soon be able to report data as we start to see more data.

Yeah, maybe just one thing to add. This is Philip. The other thing that we've done beyond the dual targeting components is, of course, we've edited the cell, right? So I mentioned that earlier on the call today. So these cells are edited at a gene called Sibyl B. And this is essentially a sort of internal checkpoint on T cell function and, importantly, on T cell functional persistence. And so that addresses a third mechanism of failure of getting to the deep and durable responses that one desires in B cell lymphoma, which is to have persistent functional T cells that can drive to that deep response. So hopefully, as Steve said, with the dual targeting, with the targets we've selected, and with the ability to edit the cell, we've hopefully done something pretty significant in terms of a pretty differentiated T-cell product.

Thank you for the question. Thanks.

Thank you. I would now like to turn it back to Nick Lushley for closing remarks.

All right, we appreciate everyone taking the time and hearing our story, and we look forward to chatting with you more. If you have a desire to speak more about any of the elements of what we discussed today, you know how to reach out to us, and we'd be more than happy to dig in. For now, thank you, everybody, for taking the time.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.