This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk06: Good day, and thank you for standing by. Welcome to the 270Bio Second Quarter 2023 Earnings 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 will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jen Snyder, Head of Corporate Affairs. Please go ahead.
spk09: Thank you, Operator. This morning, 270Bio issued a press release providing a business update in addition to second 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 Leshley, Chief Kairos Officer, Chip Baird, Chief Financial Officer, and Steve Bernstein, Chief Medical Officer. Philip Gregory, Chief Scientific Officer, is also on the line for the Q&A section. As a reminder, today's discussion will include forward-looking statements related to 270-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, 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 form 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 Lashley. Nick?
spk00: Thanks, Jen. Good morning, everyone, and thank you for joining us as we discuss our second quarter 2023 results and business updates. We are now well into our second full year as 270Bios. executing on our mission of giving more time to people living with cancer through the transformative power of cell therapy. Since the creation of 270, our mission has always been dual-pronged, to deliver on the commercial potential of ABECMA and to leverage our translational engine to develop an innovative cell therapy pipeline. And in the first half of 2023, we've made important progress against these goals. With ABECMA, we continue to successfully deliver in the commercial setting to an extensive and growing number of people living with multiple myeloma who are in need of better treatment options. We recently hosted a myeloma patient and his wife at our all-hands meeting, reminding us the impact that ABECMA is having on patients and families. It was humbling, inspiring, and a deep reflection of our why. At the same time, we recognize we are in the midst of a rapidly evolving competitive environment, which is expected to impact the second half of ABECMA performance. Chip will comment more fully on ABECMA market dynamics. And I can say that we've spent a significant amount of time with the broader BMS team to hear not only their rationale for the long-term belief in the potential of APECMA, but also the month-to-month tactical in-line commercial strategy. It is both grounded in a strong understanding of the landscape and very well supported by internal resources, from the CEO to the sales rep, given their conviction to the cell therapy field. Overall, we're making significant short- and long-term investments with BMS to maximize the potential of this important therapy for patients. On the development side, we continue to apply our scientific knowledge and research engine to address some of the most pressing therapeutic challenges in oncology. We have a number of preclinical and clinical programs in liquid and solid tumors, and the common thread is that we're using layered cell therapy approaches to deliver potentially transformative impact for patients. One such program is Derek 33. Since the Grade 5 AE in June, the 270 and Seattle Children's team have conducted the root cause investigation and have developed potential amendments to the PLAT-08 protocol. This past Friday, Seattle Children's received the official notice of the FDA clinical hold. This was expected, and we need to hear more from the FDA in terms of their specific concerns and how it will impact the potential path forward for the program. Steve will provide more details later in this call. Our pipeline programs are stacked with innovation and represent multiple opportunities for us to make unincremental steps forward for patients with cancer. That said, we will also be clear-eyed and disciplined about these programs. And if a program is not clearing a very high bar, we will terminate and allocate capital elsewhere. I look forward to your questions, but for now, I'll hand it over to Chip to talk more about ABACMA and our Q2 results. Chip?
spk02: Thanks, Nick, and thanks to everyone for joining the call. ABECMA delivered solid results in the second quarter with $115.1 million of revenue in the United States. As a reminder, we are in a 50-50 COCO with BMS for the U.S. ABECMA business, and we record collaboration arrangement revenue, which represents our 50% of the operating profit of the U.S. business. For the quarter ending June 30, we recorded 24.5 million of collaboration arrangement revenue related to the ABACMA collaboration. This is better than we had expected and is driven by an improving gross margin, which in turn has been helped by a continuing improvement in manufacturing success rates, which remain north of 90%. So, as expected, the ABACMA collaboration is delivering cash flow to 270. As BMS reported in their 2Q earnings, They are forecasting lower revenues in the third quarter with a return to growth in the fourth quarter. Based on this, we have updated our ABACMA U.S. revenue guidance for 2023 to the lower end of our original $470 to $570 million range. We have three important points we want investors to hear on this updated forecast. First, the downward revision was not driven by the scheduled maintenance of the S-12 manufacturing facility in June. This maintenance was planned and built into the original forecast and as a normal course for aseptic manufacturing processes. The shutdown was successful and we're back online. Second, the downturn is due to a dynamic competitive landscape. In the fifth line plus setting, the original patient bolus has been largely addressed and we are now in an incidence-based market. But with the December PDUFA date for a potential label expansion to third line plus, We believe there is a significant larger opportunity for a BACMA coming soon. We are investing with BMS in manufacturing capacity for 2024 and beyond to address this larger market. And third, the BMS commercial team is increasing their sales and marketing efforts on a BACMA. We spent the day with the BMS commercial leadership last week, and they are increasing their commercial footprint and intensity across the myeloma market. We continue to closely manage our expenses, and together with the improving contribution from the ABECMA collaboration, you can see the impact on our bottom line. For the second quarter of 2023, we recorded a net loss of 42.1 million, down significantly from a net loss of 77.4 million for the same period last year. We remain committed to maintaining our cash runway into at least 2026, and we continue to actively evaluate pipeline investments and our overall cost structure. With that, I'll hand it over to Steve to provide some additional detail on the update we've provided this morning regarding our AML program.
spk10: Steve. Thanks, Chip. Good morning, everyone. In June, we announced the pause of our PLAT-08 study in AML in response to a fatal grade five serious adverse event. This event occurred in the first patient treated at the second dose level in the phase one trial. It cannot be stated enough that the safety of every patient who participates in our studies or receives our therapies is of utmost priority to us. We continue to keep the patient's family in our thoughts. Since that time, and in collaboration with Seattle Children's, both our partner and the regulatory study sponsor, we have been conducting a thorough investigation of the root cause of this event. This investigation has provided insights into the pathobiology of this toxicity, leading to several study protocol changes, which the team believes may mitigate this toxicity and allow for the continuation of the PLAT-08 study. As a result, our collective team is actively amending the protocol. And as Nick shared, we received formal notice of FDA clinical hold on Friday afternoon. We will continue to collaborate with Seattle Children's and the FDA to determine appropriate next steps and a potential path forward here. I'm happy to address any questions in the Q&A portion, but for now, we'll pass it back to Nick.
spk00: Thanks, Steve. We appreciate everyone's time and we'll close by saying that we remain committed to delivering for patients, to innovation, and to driving value for shareholders. There is no hiding that it has been hard a hard and rapidly evolving period for the company and all stakeholders. We are focused on doing everything we can to adjust and improve our strategic focus and day-to-day execution to enable us to best deliver across all stakeholders, including hardworking, dedicated employees, committed shareholders, and, of course, patients and families in need. With that, operator, you may now open the line for questions.
spk06: Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. We ask that you please limit yourself to one question. Please stand by while we compile the Q&A roster. Our first question comes from the line of Salveen Richter with Goldman Sachs. Your line is now open.
spk08: Hello, thank you for taking our question. This is Tommy on for Salveen. Can we just get a little bit more detail about the drivers behind the updated revenue guidance? I believe that you mentioned that it was not due to the pre-scheduled shutdown, but more so the patient demographics. Just some more color on that would be helpful. Thank you.
spk00: Yeah, this is Nick. I think Chip can jump into that. I think we've certainly been watching all the various moving parts. And one thing that, you know, you know when these maintenances come. We had some confusion in the marketplace, and I think people were looking to that and saying, wasn't that a bit of a surprise situation? Or why was that a surprise? And we just wanted to make clear that it wasn't, right? I think what is evolving is the dynamics in the marketplace. And as Chip said and can elaborate a little bit more on along with BMS, we feel confident that as the marketplace continues to evolve and as the expansion of the lines evolves, then so will be the use of a BACMA in combination or not in combination in partnership with these other treatments for myeloma. But Chip, if you want to provide a little bit more detail on what we know.
spk02: No, that was well said. I think what we have seen is an increase in the overall CAR T capacity, both our capacity, competitive capacity, as well as the utilization of T cell engagers and collectively more patients in the fifth line plus setting getting innovative therapies, which is great for patients. Again, we view that as a moment in time. The field is going to A shift yet again towards the end of this year with our PDUFA date and, again, with other regulatory approvals coming. Stepping back, myeloma is a huge market. It's a huge opportunity. The history has never been a winner-take-all. And so I think these therapies will all have important roles to play, and we certainly see that for APECMA as well.
spk06: Thank you. Thank you. Our next question comes from the line of Dana Graybosh with Levering Partners. Your line is now open.
spk03: Hi, thanks for the question. We've been doing some KOL interviews recently, and there's some skepticism, I'd say, in the market that there's a lot of, there'll be a lot of demand for CAR-T in the aerial lines of myeloma, just given referral dynamics and maybe hesitancy for community docs to refer their patients earlier. And I wonder what work you've done with BMS that gives you confidence in that demand will come and how much more demand you expect as you move into the earlier lines in CARMA-3. Thank you.
spk00: Yes, Nick, I'll take a quick stab. I think you can call 100 doctors, you'll probably get 100 different answers. Our view and our conviction and our research in collaboration with BMS is pretty clear that we do think there's a very strong role for CAR-T and a very strong role for that as it gets earlier because at the end of the day, cancer is about efficacy. It is about having a dramatic impact in the sooner you can have that, the more impactful it will be over the long term. So we think that certainly has to be proven out through the data, but is starting to be proven out by the data by us as well as other CAR Ts. So in that sense, we have very strong conviction that fifth line, fourth line, third line, second line, and certainly first line is going to be an area where we'll have a very strong contribution in place in the marketplace. Convenience is certainly a factor especially if you have no alternatives. So, for example, in the fifth line setting, if you can't get a hold of our CAR-T, what are you going to do? If you don't have time, you're going to take whatever's available. And that is the dynamic that we've seen. We don't think that is a data-driven dynamic. That is an availability-driven dynamic. And so over time, that will, we believe, evolve, especially as we get into third line and then as you go even further. And I think we've heard the same thing out of our J&J colleagues as well as anyone else who has a CAR-T. So we're pretty confident, but again, that's something we'll have to play out quarter by quarter.
spk06: Thank you. Our next question comes from the line of Yaron Werber with TD Cowan. Your line is now open.
spk05: Great. Thanks for taking that. I have a couple of questions. One, when you're thinking dynamically what's going on in the competitive market right now, was the issue in the quarter sort of just prioritizing the wait list or the list in general and clinics to make sure that they match up with supply, because obviously there was obviously plenty of demand out there. And secondly, um, it sounds to me like your, your Q3 is going to be sort of a down take over Q2 and then Q4 is going to grow over Q3. Can you just explain a little bit, I know July is obviously mostly offline because the way it worked out, but are you totally back to your, capacity back in May, or are you able to increase it at this point by the end of the year? And how fast would that happen? Thank you.
spk00: Chip, you want to just, I know you had a few comments there.
spk02: Yeah, thanks, Jeroen. Yeah, I think you have it right. The third quarter is impacted by the June shutdown. So again, as we've talked about, the June slots become July revenue. So there's roughly a month lag there. So July is a light month, which contributes to the expectation that the third quarter is down. You know, we do expect a return to growth as we move, you know, month to month and quarter to quarter here, driven by a couple of different factors. With BMS expanding the number of sites and the overall commercial footprint, we're expanding the number of reps and people in the field, detailing it back when I was talking to treaters, not just at academic centers, but in the community setting. And back to Dana's earlier question, I think that's an important dynamic here as well as that community referral dynamic that's important. The fifth line will be important in the earlier lines as well. So, you know, again, I think it'll evolve over time, but we certainly, from the top on down, this is a priority for us. This is a priority for PMS as well.
spk00: And, Yaron, just to highlight a few things that Chip just said, because I think this was and is a very active and has been a very active ongoing effort. I'm sure you've chatted with the equivalent folks over at BMS, and we certainly have, that there's a pretty dramatic full force investment going on across the capacity, which has been a lot of the focus, but also around sites, around sales, boots on the ground, et cetera, where now you're getting to a more traditional kind of share a voice situation where you want to make sure that people have access. But it has still been settling, right? And I view this, what happened in the last quarter, the last six months, is still very much a settling phenomenon. It is not a, you know, kind of the situation is done and over. That is not the way we look at this. Very much a growth and continued settlement. And I think there's going to be more than enough growth opportunity for both the BACMA and certainly the other assets in CAR T, as well as the TCEs that are sitting out. There are other drugs that are coming forth in myeloma. We've seen that again and again and again. We're just in that early ramp-up phase, and a bank was one of them. And this quarter, certainly, sort of the situation we're in right now is very much evolving and one that I don't think anyone has a clear understanding on. We're getting one ourselves that is better and one that has led us to a lot of confidence, and we're happy to see that BMS shares that confidence and certainly have no waiver in their stance.
spk06: Thank you. As a reminder, to ask a question at this time, please press star 1-1 on your touchtone telephone. Our next question comes from the line of Kelsey Goodwin with Guggenheim. Your line is now open.
spk07: Oh, hey, good morning. Thanks for taking my question. Maybe shifting gears off of ABECMA, maybe could you just provide some more color on the toxicity root cause analysis in the PLATO-8 study? And maybe could you provide some color on what protocol changes were made post-analysis? Thank you.
spk00: Kelsey, this is Nick. It's a great question, and I'll save my colleague Steve here. Steve, from a painful sort of non-answer. Right now, we're very much, like you said, we have done the root cause analysis. We're confident that we have some proposals in collaboration with the FDA to get this study sort of back up and rolling. We can't get into the details of that right now because we want to make sure we honor the relationship not only with the study and the patients, but also with the FDA. So, that's about as far as we can go at this point in time. So, That was the wording that we chose there was pretty specific, that it's ongoing, we have a plan, it's shared with SCRI, and the FDA engagement has begun. And so we're confident, but we share details at a subsequent date.
spk06: Thank you. Our next question comes from the line of Vikram Pirowit with Morgan Stanley. Your line is now open.
spk04: Hi, good morning. Thanks for taking our question. Just two quick ones from our side. First, on the increased commercial presence you alluded to from BMS's side, could you talk a little bit more about kind of the size and scope of that increased commercial muscle that BMS plans to put into ABECMA? What is the scale of that? And what are some of the key messages that you've discussed with BMS that they'll be putting forward to help ABECMA compete further? And then secondly, Could you remind us what's implied from like a pipeline development standpoint in your cash runway guidance for 2026? Thanks.
spk00: Yeah, hi. It's Nick again. Thanks. Good question. So you're also going to be a little probably sort of not totally satiated with my answer. We're not going to provide the details on that expansion there, but it is sizable and it is significant both along the sites and the intention there. So that rollout, getting to more and more centers. in a rapid fashion, still the leading in the field on that, but also people in boots on the ground across their cell therapy capabilities because the innovation-based sell on this is something that's really important and that is an exciting piece. So that I feel a lot of confidence on. And Chris, the incoming CEO there, is very much convicted and behind cell therapy, always has been. He's been our lead contact throughout our entire relationship. So we're very pleased to see that he got the opportunity to be the incoming CEO. So in that sense, I'm confident around the commitment in that regard. As far as it relates to what the messages are, that'll become clear in the field, but we certainly stand behind the real world evidence and how people are experiencing a Beckman in a very consistent manner, not only from a manufacturing point of view, but from a safety point of view and efficacy point of view. And so there's lots of ample data out there that'll continue to evolve that leads us to believe that it's sort of one of the drugs of choice for sure in the CAR T space. And as it expands, uh, we feel that there is plenty of opportunities that relates to that. And those are the types of messages people are going out there with. And that, that is, as you know, is going to be a quarter by quarter now kind of battle, if you will. Uh, but one that BMS is certainly used to and their experience in myeloma is, is, is probably, uh, exceeds just about any other player in the space, given their cell gene history. Do you want us to address that? Sorry. I think the second question was just into, uh,
spk02: and what's assumed there. And I think, you know, we assume a contribution from a Beckman, which we've already seen, and that that contribution from a cash flow perspective continues and starts to ramp as we move into the third line setting. But certainly between the overall utilization and the margin pickup that we've seen there, that's something that we feel good about and will continue to closely monitor and drive towards You know, from an investment perspective, we have a number of shots on goal in the clinical setting. And then moving into the clinical setting, our goal in the first 15 to 30 patients is to achieve human proof of concept in an unincremental way. And either we see that or we move on. And as Nick said before, we allocate capital elsewhere. The other thing that, you know, we've been emphasizing and we showed this slide on our R&D day, but just to say it again, a lot of that R&D is – funded through collaborations, whether it's the solid tumor programs with Regeneron, whether it's our investment in ABACMA with BMS. We actually have a good amount of subsidy that comes from the collaborations that we've put in place to enable us to prosecute a cell therapy pipeline across a number of programs.
spk00: Just one last thing I'll add to the course real quick on the backside of ABACMA. Just to go back to it, because I find this, entertaining is the wrong word, but I find it curious to see how everyone is so quick to draw conclusions on the performance of a drug and the future of a drug based on sort of information that is happening real time. And I think if CAR T has shown us anything over the last couple of years is that we don't know what the hell we're talking about half the time as it relates to what the opportunity is at that moment in time, because the field is digesting this. The FDA is digesting this. Manufacturing specialists are digesting this. The sites are digesting all this. and that we're still very much in that space. So from our point of view, this quarter and the bounciness of this quarter has no reflection on the future of this opportunity as it relates to Beckman. The one thing we know about myeloma is it has, unfortunately, a tremendous number of patients that are in need, and that is going to continue to expand, and Beckman is going to have a very strong role in that. We feel very strongly about that, and it will play out quarter by quarter, but the long-term aspects and potential of this medicine has never been in question, nor is it in question for BMS.
spk04: Got it. Thank you.
spk00: You're welcome.
spk06: Thank you. Our next question is a follow up from the line of Dana Graybosh with LeRink Partners. Your line is now open.
spk03: Hi. Thanks for a second question for me. I'm going to ask another ABECMA one. And I'm sorry, Nick, ask you to look at what's happening in the moment. You have really different sites, sites where there are big academic centers and both the competitive CAR T and ABECMA are offered. And then BMS has really already expanded the site to sites where the other competitive CAR-Ts don't have available sites. And I wonder what you're learning from in these two different types of sites competitively, those that have more options and those that have fewer options, if you have any insights that you've gained as you have more slots available on the demand and the competitiveness and any implications of that going forward.
spk00: Yeah, I do, frankly, and so does BMS, but frankly, it's not one that we're going to spend a lot of time talking about publicly because it is exactly that dynamic that gives us actually quite a bit of confidence, which is there are some centers certainly that have both available. They're one that have, in some cases, just a BACMA available, and we're following that at a site-by-site level. and that's something that gives us insight into utilization. And in some cases, generically speaking, right, people have a good experience with one drug or the other, and you're going to move in one direction or the other for a period of time. But as people get and want to use both medicines more frequently, we're not seeing that one light goes out and one light turns on, and that's the end of the story. It's very much not the dynamic. And BMS's footprint has expanded but has not expanded greatly in the last, few months in partly because we were going from a demand basis, right, where you're supply constrained, to now going to where you actually want to drive more and more demand because supply is catching up. So I continue to have that dynamic. I think ABECMA performs very well in the real world. We saw that in the data and also in the dialogue as it relates to how a provider can have very clear expectations of the efficacy and safety profile and clarity on the probability of being able to manufacture. Lots of those things I think puts ABECMA in a very good position. And the analytics that I won't go into detail on very much support that, and that's something that will play out. Does that mean we know everything? No, not at all. Does it mean we have confidence about the future and our place in that? I would go so far as to say yes on that, and I think BMS would agree on that. But as you and I both know, BMS certainly is not sort of prone to sharing a tremendous amount of detail at that level because it's sort of not necessarily relevant. It's also a competitive field, so we're going to continue to participate accordingly.
spk06: Thank you. Our next question comes from the line of John Newman with Canaccord Genuity. Your line is now open.
spk01: Hey, guys. Good morning, and thank you for taking my question. So you've discussed in the past about the ongoing work to transition to suspension vector. I think you've actually investigated that in CARMA 3. Curious, when that comes online, should we think about that suspension vector process as giving you more capacity or pushing the success rate even higher? You've always been in a very high success rate, but wondering if it's one of those or perhaps both of those. Thanks.
spk02: Yeah, John, I'm happy to take that one. Yeah, suspension moving towards commercial approval for that early next year. What that does for us is a couple of things. It certainly will help on the gross margin. Suspension is a more cost-effective way of manufacturing vector, which is a key starting material for our manufacturing process. It also has greater capacity, and so that de-risks the supply chain and our ability to continue to scale drug product. Ultimately, drug product is what we're going to be focused on for years couple years to come in terms of increasing capacity there. But vector and suspension vector is an important component of that.
spk01: Great. Thank you.
spk06: Thank you. And I'm sure no further questions at this time. I'd like to turn the call back over to Nick Leschley for closing remarks.
spk00: Yeah. Thank you, everybody. And thank you for joining. And thank you for the questions. And I would encourage, if you want to understand any of these in more detail, to reach out to us. We're more than happy to talk about any elements of this. But for now, I'll just thank everyone for joining the call and hope everyone has a great day.
spk06: This concludes today's conference call. Thank you for participating. You may now disconnect.
Disclaimer