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spk02: Good day and thank you for standing by. Welcome to the 270Bio Third Quarter 2024 earnings conference call. At this time, all participants are in 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 one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. 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.
spk04: 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 and media section of the company's website at 270bio.com. 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 with respect to sales, efficacy, and perceived therapeutic benefits of a VATMA, 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 factor 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.
spk07: 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 270 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 Ebekma's earlier-line approval and return to growth. In 2024, we have accomplished a tremendous amount to improve this picture. We've successfully completed the sale of our oncology and autoimmune R&D pipeline to Regeneron, including about 160 employees and the majority of our real estate footprint for the next several years. We sold our Hemophilia A program and related technology to Novo Nordisk for 40 million. We received FDA approval in the third-line setting, making Ebekma available to more patients living with multiple myeloma. And we've achieved a significant return to growth for Ebekma, 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 Ebekma, and continuing to make meaningful progress towards our goal of break-even operations. Our burn rate was approximately 10 million this quarter, and we have 70 employees, the majority of whom are funded through the Ebekma-CoCo agreement with Bristol-Meyer Squibb. Looking ahead, we're gonna focus on two key priorities for Ebekma. First, we're gonna continue to completely, we're going to continue to compete commercially. Ebekma has an important place in a growing CAR T market and third-line myeloma. Recent real-world evidence studies underscore that Ebekma 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 Ebekma to increase the operating margin cash flow from the business. The decision to discontinue enrollment in the CARM-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 270. 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.
spk03: Thanks, Chip. Third quarter Ebekma 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. Ebekma 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 myeloma market continues to be one that is dynamic and competitive. We expect U.S. Ebekma revenues to be approximately 240 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. Ebekma 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%, -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 Ebekma and our supporting corporate function. We continue to expect net cash spend in the range of $40 to $60 million for 2024 and cash runway beyond 2027. With that, I'll turn it back to Chip.
spk07: Thanks, Vicki. As we close, I want to reiterate that we are encouraged by strong growth in Ebekma 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 break even, potentially as soon as 2025. We believe in the potential of Ebekma to make a meaningful impact on the lives of patients and their families and plan to expand Ebekma's reach to as many multiple monoloma 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.
spk02: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one 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 Dana Graybosh with LeeRink Partners. Your line is now open. Hi,
spk01: 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 Ebekma than you had anticipated and any earlier line dynamics that were surprises to you.
spk07: Dana, thanks for the question. Yeah, 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 Cartee 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 Cartee to patients as well as just continued awareness in earlier lines, third line setting of Cartee, of the benefit of Cartee, of sequencing of Cartee relative to T cell engagers. There's no one stock answer, but I think what we've been encouraged by is the steady growth and pickup in Cartee class share. Again, our view with Ebekma is that we need to and will continue to compete for our place in that share. I know you've written about that and we were pleased to see that, particularly around recent news. We have a meaningful share there. We have a differentiated safety profile. We have patients for whom we think Ebekma can be the right treatment option. 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 into the overall third line setting, if you assume third line represents something like 16,000 patients in the United States. 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.
spk02: Thank you. Our next question comes from the line of Salvin Richter with Goldman Sachs. Your line is now open.
spk06: Hey, thanks. This is Matt Onfair, Salvin. Was hoping you could speak to what drove the better margins for the Ebekma profit share and then separately, is 400 million in Ebekma still the estimated break-even 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? Thank you.
spk07: Matt, thanks for those questions. I'll ask Vicki to comment on margin and break-even. In terms of positioning, heading into 2025, we've guided here, we expect to end 24 in the $240-250 million dollar range for total Ebekma 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 are leaning into continuing to participate in our share of that. But Vicki, do you want to comment on margin and third-corner margin and then break-even?
spk03: Yes. Yeah, 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 too 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 rates north of 95% and so that obviously helps as you translate that into margin. On the break-even question, that's a good one. In the past, as you noted Matt, we've guided to about 400 million being the break-even sales point for, and that's a total U.S. sales for 270 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 is what I would guide. Thanks Matt.
spk02: Thank you. As a reminder, to ask a question at this time, please press star 1-1 on your touchstone telephone. Our next question comes from the line of Samantha Simenko with Citi, your line is now open.
spk05: 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'm wondering if you could just speak a little bit on the appraisal rates that you've seen thus far in 4Q and how they compared to the increase you saw on 4Q and how we should think about that trajectory carrying over into 2025. Thanks very much.
spk07: Hi Sam, thanks for the call. I mean, thanks for the call. Thanks for the question. Thanks for being part of our call. The, yeah, the AIF rates, you know, that's something that we track on a weekly basis and again, we were very encouraged to see the growth in AIFs in the third quarter. As we sit here in the fourth quarter, again, I would say to the comments on the call, you know, there is seasonality that occurs, particularly as people think about where they're gonna be where 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, you know, 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, you know, together with BMS, we're doing everything we can be doing, we should be doing to support commercially. So again, I think we'll have more to say about 2025 at a later date, but, you know, certainly have been encouraged and really happy with the growth we've seen here in the third quarter.
spk02: 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.
spk07: Thanks, thanks, Dr. Albrecht and thanks to everyone for participating in the call today. We appreciate the time and have a great day.
spk02: This concludes today's conference call. Thank you for your participation. You may now disconnect.
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