bluebird bio Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 7, 2023

There are 16 speakers on the call.

Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Bluebird Bio Third Quarter 2023 Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. At this time, I would like to turn the conference over to your host, Ms.

Operator

Courtney O'Leary. Ma'am, please begin.

Speaker 1

Good morning, everyone, and thank you for joining our Q3 results call today. My name is Courtney O'Leary, Director of Investor Relations at Bluebird Bio. 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 expectations regarding our future financial results and financial position in addition to statements of the company's plans, expectations or intentions regarding regulatory progress, commercialization plans and business operations. Such statements are based on current expectations and assumptions that are subject to risks and uncertainties and involve a number of risk 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.

Speaker 1

On today's call, Andrew Obenshane, our CEO is going to provide some opening remarks on our overall business and potential Lovasel approval. Then Tom Klima, Chief Commercial and Operating Officer will discuss the positive momentum in our ZENTEGLO and SKISONA Commercial launches as well as launch preparations for Lovacell. And finally, Chris Krawchuck, Chief Financial Officer, will provide some color on our financial results before opening the call up for Q and A.

Speaker 2

With that,

Speaker 1

I will turn it over to Andrew.

Speaker 3

Thanks, Courtney, and thank you, everyone, for joining our call this morning. I'm excited today to update you on Bluebird's Q3 results and our preparations for the potential upcoming FDA approval of Lovacel. This has been a transformative year for the field of gene therapy and for Bluebird Bio. We validated the commercial model for gene therapy with our Zenteglo and SkySona launches. And as a reminder, Bluebird occupies a unique strategic position as It will potentially enable growth, profitability and expansion for years to come.

Speaker 3

And we are at an incredibly exciting moment for our company, but most importantly for patients as we approach the potential FDA approval of Lovacell for sickle cell disease in December. In a minute, Tom and Chris I'm going to provide more details on our commercial launches and financials, but I want to focus my comments this morning on Lobocell as we approach this key regulatory milestone. We are 6 weeks away from our Lova cell PDUFA date of December 20. This potential approval will be a significant moment for the sickle cell disease community, a major milestone for our company and if approved, will be the main driver of profitability for Bluebird for years to come. The review remains on track and our team remains confident in the robustness and maturity of our BLA package for individuals 12 and older with sickle cell disease and a history of vaso occlusive events or BOEs.

Speaker 3

We believe the fact that an FDA advisory committee wasn't requested for Lobocell as a testament to the breadth and the depth of the Lobocell data, significantly more than any other gene therapy program for sickle cell disease. Additionally, this is the 3rd lentiviral vector gene therapy that the FDA has reviewed from Bluebird and thus a technology they are very familiar with. Our lentiviral vector technology is also uniquely traceable, giving us an unrivaled understanding of our therapies and the ability to conduct a rigorous monitoring. We understand it can measure how we modify the cell to monitor effects over time. Last week, we announced that in early December, we will be presenting long term follow-up data from our Integlo and Lovacel programs at the 65th ASH Annual Meeting with an unparalleled up to 9 years of follow-up in transfusion dependent beta thalassemia and 5 years of follow-up in our sickle cell disease program.

Speaker 3

We continue to progress plans for our anticipated Lobo commercial launch in early 2024 following its potential FDA approval. With that, I will turn it over

Speaker 4

to Tom to highlight how our launches are progressing. Thanks, Andrew, and good morning, everyone. We have made tremendous progress this quarter and it's exciting to be here this morning to discuss our commercial advancement in greater detail. For Zenteglow, we continue to see strong linear growth with 16 patient starts or unique cell collections since launch. As a reminder, patient starts remains the key commercial metric to watch in the early stages of the ZYNTAGLA launch as it's the value creating moment for the company and represents a commitment from the patient.

Speaker 4

It is our experience that once a patient goes through cell collection, They will continue on the treatment journey and this will ultimately result in revenue for the company. Our qualified treatment center activation has accelerated this quarter and has nearly doubled since Q2 with 29 Q2s now activated at leading adult and pediatric centers across 16 states. We remain on track to scale our QTC network to between 4050 by the end of this year as we prepare for the LOVACEL launch. Looking ahead to 2024, we will carry our momentum into the New Year, likely continuing to expand our Q2C footprint to extend our reach and meet patient demand. We anticipate patient demand for ZYNTEGO will continue to grow steadily through the end of 2023 and into 2024 as more QTCs are activated and gain experience treating multiple patients.

Speaker 4

Shifting to reimbursement, I'm thrilled to announce this morning that we have signed outcomes based agreements for ZINTEGLO with Michigan and Massachusetts State Medicaid Agencies. Additionally, we are finalizing an agreement with the 3rd state, which may enable us to reach a large portion of patients with beta thalassemia. This significant development demonstrates government payer support for these types of innovative arrangements and eagerness to bring gene therapy to patients. We continue to see strong access for ZYNTEGLO and have received 0 ultimate denials across Commercial and government payers. Prior authorization approvals for drug product remain consistent at approximately 2 weeks.

Speaker 4

All of this progress continues to underscore that payers recognize the value of ZINTEGLO and the high burden of disease for patients with beta thalassemia who require regular transfusions. We look forward to closing out the year on a strong note, having delivered on every key milestone and anticipate giving 2024 guidance on commercial launch metrics early next year. Moving to Skysona, we have completed 6 patient starts, Activated 4 QTCs and received 0 ultimate denials from government or commercial payers to date. We remain on track with our guidance of 5 to 10 patient starts this year and anticipate giving 2024 patient start guidance early next year. And in recognition of growing patient demand we are seeing across ZINTEGLO and SKYSONA launches, we recently signed an agreement with Lonza to enable increased manufacturing capacity.

Speaker 4

Shifting to Lobocell, preparations are well underway for launch Patients are waiting for this transformative therapy. We have consistently seen strong patient excitement and in market research that more than 70% of patients Say they would consider gene therapy if recommended by their doctor. Demand is clearly there and continues to grow. Bluebird has been a trusted partner of the sickle cell patient community for over a decade and we recently expanded our team as part of an investment in patient education about gene therapy, which was in direct response to patient community feedback. As mentioned, our QTC network, which is 100% synergistic between Zentagua and Lobocell is rapidly scaling.

Speaker 4

The network can be converted to include Lobocell within weeks, a key competitive advantage. And our intent is Moving to access and reimbursement, a particular focus has been on ensuring timely and equitable access to Logosupp at launch. Bluebird has long been a leader in value based payment models and Lobocell for sickle cell is no exception. We are currently in late stage negotiations with a number of national payers on our innovative contracting approach. These pending contracts represent a significant percentage of sickle cell covered lives.

Speaker 4

The positive response we're seeing in advance of our potential FDA A approval underscores payers confidence in our offering and the recognized value of Lovacell and gives us further confidence as we prepare to make Gene therapy available for individuals living with sickle cell disease in early 2024. And finally, on manufacturing, We are applying many learnings from ZINTEGLO to optimize commercial manufacturing from cell collection through delivery of the therapy back to the hospital. We are excited about a potential LOVO cell approval next month and we are well positioned to compete. We plan to share more details on launch plans at that time. And with that, I'll turn it over to Chris to talk through the financials.

Speaker 5

Thanks, Tom, and good morning, everyone. As Tom mentioned, to date, there have been 22 combined patient starts for ZINTEGLO and SKYSONA. This translates over time to a potential $63,000,000 in gross revenue. In Q3, we reported $12,400,000 in total revenue, primarily driven by product revenue from ZINTEGLO and SKYSONA, again underscoring that strong linear growth. We remain on track with our full year 2023 cash burn guidance in the range of $270,000,000 to $300,000,000 and continue to prudently deploy capital to bring our therapies to our patients.

Speaker 5

Additionally, last week we announced that we've entered into an advanced agreement to sell a priority review voucher if granted for Lobocell for sickle cell disease for $103,000,000 This would be an important source of non dilutive capital and has the potential to strengthen our financial position ahead of the anticipated launch of LOVASIL. As of September 30, We had $227,000,000 in cash, cash equivalents, restricted cash and marketable securities. Not including the potential proceeds from the PRV sale or the release of our $53,000,000 in restricted cash, we have a cash runway into Q2 of next year. We plan to provide an updated cash runway guidance by early 2024 and continue to explore additional financing opportunities further extend our cash runway. And with that, I'll turn it back over to Andrew.

Speaker 3

Thanks, Chris, and thanks, Tom, for walking us through those updates. It's an exciting time for Bluebird as we stand 6 weeks out from our low cell PDUFA date and our largest opportunity yet, the potential to bring a gene therapy to individuals living and delivering on the promise of bringing potentially curative gene therapies to patients and their families. And with that, we'd like to open it up for questions. Operator?

Operator

Our first question or comment comes from the line of Dane Leone from RJS. Mr. Leone, your line is open.

Speaker 6

Hi, thanks for taking the questions and congratulations on all the progress and moving towards the approval of lodecele. Maybe a few questions for me. Firstly, could you just give us some color in terms of the patients that were actually infused and recognized as revenues in the quarter and what the remaining balance is of patients that had cell collections that you would expect to infuse and recognized revenue before year end. So just a little bit more color on the general guidance for the remainder of the year? And then secondly, could you provide us some Expectations around R and D burn as it relates to low cell, that's still probably the biggest bucket of R and D burn On a quarterly basis, is the expectation that after the approval, the burn will maybe Go down a bit, or is there still just obligations given the long term follow-up required from the clinical studies?

Speaker 7

Thank you.

Speaker 3

Thanks, Dane. So I think two questions in there. How do patients refused and versus collected in guidance for the rest of the year and R and D burn and how So Chris,

Speaker 4

do you want to address those?

Speaker 5

Yes. So let me start with the patients in FUSE. So we'll continue we're going to provide Cumulative guidance on both SYMTEGO and SkySELNA, not individually, because we're just in the early stages of where we are in our commercial launch. As you see, we've infused we have 22 patient starts in both products, And this translates again to about $63,000,000 in gross revenue and that will come in over time. Again, Our KPI for the company is patient starts.

Speaker 5

And then as it relates to your question on what has been deferred And patient revenue that's been deferred, it's about $8,500,000 that's sitting on our balance sheet. And then, can you repeat your question 23,

Speaker 4

R and D, I believe?

Speaker 6

Yes. So, thank you for that. So just on that subject, the correct interpretation of what you just said is there's $8,500,000 of Deferred revenue recognition that would still occur before year end and would there be incremental Revenue recognition beyond that deferred amount. And then secondly, on R and D, I was just commenting that In the Q, there is I think there is somewhere around $17,000,000 $18,000,000 of R and D burn still associated on a quarterly basis with Lovicel. Is that expected to go lower as we head into 2024 post the approval of the drug?

Speaker 6

Or are there still substantial remaining commitments for long term follow-up from the clinical studies?

Speaker 5

Yes. So Let me take that. So as it relates to R and D, the predominance of the R and D spend in the quarter contributes to lova There's also R and D spend that sits in the R and D line for both Synteglo and SkySona And that's attributable to our long term follow-up, and then any ongoing clinical work associated with the programs that we've got today. As it relates to 2024 and beyond, certainly as if and when LOVASIL gets approved, the R and D expense will go down and you'll See those costs coming through either in COGS or inventory and no longer in R and D. However, there will likely be

Operator

Thank you. Our next question or comment comes from the line of Jason Gerberry from Bank of America Securities. Mr. Gerberry, your line is now open.

Speaker 7

Thanks guys for taking my questions. So, when you're launching Lovacel, just wanted to understand a little bit more of the dynamics with The Medicaid reimbursement and how you expect that to phase How long would that roughly take and absent Medicaid policies in place at key states, would you just Expect revenue recognition to be deferred. So just if you could speak to those dynamics. And then Appreciate the comments about sort of the 70% of patients more interested, but do you expect there to be an early bolus Of sickle cell patients that are pent up and we think about the early launch, just curious if you can speak to that dynamic?

Speaker 3

Yes. Thanks, Jason. Good morning. I'm going to hand that to Tom to respond.

Speaker 4

Yes. Good morning, Jason. Let me start with the last question first. We Would expect that the launch of LoviCell would look like other gene therapies, specifically would look like the ZYNTAGLA launch. In that, we expect strong linear growth.

Speaker 4

We believe that there is a bolus of patient excitement and patient demand, but as we've seen, it just takes time to get patients Through the process of getting gene therapy and then on top of that the QTC's qualified treatment centers We are going to be working through the reimbursement process upfront. So, although we believe there's a bolus of excitement and bolus of patients that are eager for gene therapy, we would expect it to be Strong linear growth like we've seen with ZYNTAGO. It will be on a much higher scale given that there's it's a much larger patient population and that we already have qualified treatment centers in place. But we don't expect a bolus like a traditional oncology launch. As far as the Medicaid dynamic, about 50% we're estimating Patients who have sickle cell disease are covered by Medicaid.

Speaker 4

We have put an outcomes based agreement in place and are working with both Commercial payers and Medicaid payers right now to get the outcomes based agreement in place hopefully as soon as possible and as close to launch as possible. Clearly, patients who have Medicaid might take a little bit more time than a patient with commercial coverage. But if you reflect back on the As Integral launch, we've seen no denials either with commercial payers or with Medicaid payers. So the early patients will go through the medical exception process And we would expect fair and equitable coverage for patients both in commercial payers and Medicaid.

Speaker 7

If I could just squeeze a follow-up in with Synteglo, were patients on Medicaid getting coverage through medical exceptions before an official Policy was in place?

Speaker 4

Yes, that's correct. Okay. Early in launch Right now, we have, I believe it's 17 states have coverage policies, Medicaid coverage policies. We now have the 2 outcomes based agreements Massachusetts and Michigan, we have a third that's really close, but early on patients were going through and getting approved in medical exception process and we would expect the same to be true for Lurtacel.

Speaker 7

Great. Thanks guys. Thanks

Speaker 8

Jason.

Operator

Thank you. Our next question or comment comes from the line of Eric Joseph from JPMorgan. Mr. Joseph, your line is now open.

Speaker 9

Great. Good morning. Thanks for taking the questions. I guess Just in thinking about or at least helping us frame expectations for elovus cell launch curve next year, can you just talk a bit about sort of the Capacity at or the expected capacity at qualified treatment vendors in terms of bed capacity, That's reserved for patients looking to undergo treatment. And then from a sort of pricing and reimbursement Perspective, just looking for a little more color on these outcomes based agreements.

Speaker 9

What outcomes in particular are going to be You know, tracked for success and then sort of where there how I guess A negative outcome sort of might get reflected ultimately in on the top line, whether that's in the form of a Sort of repayments or ultimately, we're kind of looking at a protracted

Speaker 6

So three questions in there. Number 1, bed capacity

Speaker 3

at hospitals. Number 2, what kind of metrics you're going to measure outcomes based agreements, if there's one for LOVASEL? And then number 3, if that's the case, how that gets reflected in the financials? So Let me hand those first two to Tom and then the third to Chris.

Speaker 4

Yes. Hi, good morning, Eric. So capacity at Qualified Treatment Centers has not been an issue We don't anticipate being an issue going forward. Part of that is many of these hospitals have built out huge cell and gene therapy Wings and big capabilities. Also because our diseases are not acute, hospitals and patients have the luxury and have the And have the convenience of being able to schedule around life events and schedule around busier times

Speaker 3

or less busy times at

Speaker 4

the hospital. So, so far we have not seen capacity at QTC be an issue. Number 2, you asked a little bit about price and then outcomes based agreements. Obviously, those go hand in hand. We will be talking more about price as we get closer to launch.

Speaker 4

Outcomes based agreements, I'm not going to give Specific endpoint right now for competitive reasons, but we did take into consideration obviously a different disease state with Sickle cell disease, different primary endpoints and then a higher Medicaid population. And what I will say is that we've received very positive feedback from payers. In fact, we're close right now to signing with a few large national payers around our outcomes based agreement, which we feel reflects The positive how it's being received and the positive momentum that we have.

Speaker 5

Perfect, Tom. And then just capping off on that, the way that we'll recognize revenue and constrain the revenue associated with any of the rebates that we'll offer is we effectively estimate the number of patients that are Coming through that particular class of trade and then constrain the revenue commensurate with that rebate that are being offered, Remember, SKISON is 17.1%. So we'd estimate that. And then as it relates to the amount of estimated revenue coming through the outcomes based agreement, We take a conservative approach here because of accounting standards require us to ensure there's no significant reversal of revenue. So we'll estimate the outcomes based agreement, the number of patients coming through that in conjunction with Tom's market analysis And then we'll constrain the revenue accordingly and periodically look at, the markers associated with That outcome based agreement and release the revenue accordingly, based on the contractual terms.

Speaker 9

Okay, great. I appreciate the color. Thanks again. Thanks for taking the questions.

Operator

Thank you. Our next question or comment comes from the line of Jack Allen from Baird. Mr. Allen, your line is now open.

Speaker 6

Great. Thanks for taking the questions and congratulations to the team on the progress. A lot of discussion about the commercial dynamics around sickle cell and rightfully so. One of the questions I had was, how are you looking to leverage your long term follow-up? Did you look at commercializing medication?

Speaker 6

Do you have any thoughts On ability to get that into the label and how you see that shaping up?

Speaker 3

Yes, go ahead, Tom. Yes.

Speaker 4

Hey, Jack. Good morning. Obviously, as we've looked back over the last many years in the market research and been out there in the QTCs recently, The amount of long term data that we have in the most robust package of any gene therapy in sickle cell disease It's a big difference when you talk to a thought leader, you thought and prescribing physician both either referring community Genoa transplants. So we obviously will continue to leverage the amount of long term follow-up that we have and that will continue to be an advantage for us.

Speaker 3

Yes. And I would just say, a lot of times you see just a point in time efficacy. In this particular case, we will be publishing all this long term follow-up. So it's a much more robust picture of the overall profile of the

Operator

Thank you. Our next question or comment comes from the line of Gena Wang from Barclays. Mr. Wang, your line is open.

Speaker 2

I think three quick questions. The first question is regarding this Quarter, the product revenue $12,300,000 Could you give a little bit more color to breakdown regarding Zantaglo and the Skysona revenue? And then my second question is regarding the Lonza amendment increase the manufacturing capacity. So what is how much increase that is and what is the expanded capacity in terms of the patient numbers? And then lastly regarding the outcome based Medicaid outcome based forms and Teklo, just wanted to have a clarification For the revenue recognized or released, will you also proactively track taking into account the possible Outcome failure, say like a 10% discount for your revenue recognition.

Speaker 3

Okay, Great. I will let me take the first bit of that, which is about Lonza, then I'll hand the second bit to Chris for The breakdown and then what I'm going to ask you to Gina once you get through those 2, if you can actually repeat your last questions, I'm not sure we got it. But regarding the Lonza amendment, we are not providing Manufacturing forecast, our plan has always been to scale up commensurate with demand and we initiated this process in Q1 and we're We're pleased with this agreement, as we see encouraging demand for Syntagwell. So it's really just part of our plan. And then Chris, do you want to talk about the quarterly revenue?

Speaker 5

So, Gena, thanks for the question. And while we're not reporting infusion numbers, but you can see that patients are completing and moving through the process, which effectively then is translating to cash collections reinforcing our balance sheet. And as a reminder, We have had 22 patient starts, which effectively represents approximately $63,000,000 in gross revenue. So you can see that it's strong linear growth as we've described and that will continue. And then can you do me a favor and repeat your question on the outcomes based agreement?

Speaker 5

Not sure I understood it. I'm sorry.

Speaker 2

Yes. So I think you lay out very clearly like Medicaid 23.1%, 17.1% Discount when you recognize, but there is another layer, say, outcome based. Do you proactively book or pre book, say, like you assume maybe 90% success or 10% will be failure, will you proactively putting that 10% discount on top of say 23.1% and 17.1

Speaker 5

Yes. So I'll start here and of course Tom and I will complement this. I think it's a mutual question. So what we do is we look at how the patients will flow through a particular channel which rebate they qualify for. And then we make estimates based on that.

Speaker 5

I think Tom threw out an estimate earlier on how many patients would end market research on his, what I'll call professional expertise, Estimate the number of patients that will come through the outcomes based rebate or would qualify for an outcomes based rebate. So you then whittle down the population in that regard. And then what we do is we evaluate, the patient coming through that outcomes based agreement, the duration of time that patient enters in and kind of hits a particular marker, And then we constrain the revenue associated with that particular patient's rebate. In that case, each quarter we will then look at that outcomes based Based agreement rebate in that patient and we'll follow that patient through, using not only the clinical trial information as it's informed Our outcomes based agreement, but actually the patient's health, etcetera. So it's a very collective effort that we look at and make estimates on that outcomes based agreement.

Speaker 5

We will never be in a situation where we recognize revenue ahead. We will for conservative purposes, we will constrain the revenue. And then what we'll do is we'll release the revenue when that particular endpoint is met.

Speaker 4

And maybe hi, Gina, this is Tom. Maybe just to add to that for Zyntego, keep in mind that based on claims data historically about 70% to 75% of patients are covered Through commercial insurance and the remainder covered through Medicaid. So even in the states where we announced this morning that we have an outcomes based agreement, we would still expect The majority of the patients to be covered through commercial payers.

Speaker 2

Thank you.

Operator

Thank you. Our next question or comment comes from the line of Mani Foroohar from Leerink. Your line is now open.

Speaker 10

Hoping that could help provide a little bit of quantitative clarity around operating leverage. So presuming that the approval comes through as expected and presuming that we see The linear growth that we're expecting as well, so you've got a couple of different products launching, growing, compounding linearly. How should we think about Potential improvement in gross margin profile, should we expect gross margin to be relatively flat until there's some Prescribe level of absolute scale and if that's true, how should we think about that scale? Is it proportion of the market? Is it absolute number of patients?

Speaker 10

Is there some threshold in terms of absolute amount of revenue, which you think that operating leverage starts to kick in and margins have improved? How do you think about that?

Speaker 3

Yes. So, Mandy, I'm going to answer that qualitatively, then hand it to Chris. So, we're not going to give you the how many patients do we need or anything like that to go profitable, but the Or to get to a positive to maintain as a robust positive gross margin. But sickle cell is different from beta thalassemia and Skysona In two ways. Number 1, just the patient numbers are higher.

Speaker 3

So you're starting at a higher base, more QTCs just as you're going to start a higher base right away And grow from there. So linear growth takes off from a different start point, number 1. Number 2, we switch vectors. So we have a much more efficient vector production System for Lovicel, which will mean that Lovicel has a significantly better gross margin than ZINTEGO or SkySona, which are relatively rare indications and therefore didn't require that vector change. So there's 2 things working in favor of Lovacel for improving markets.

Speaker 3

So that really is what's going to be driving it. Chris, did you want to add anything to that?

Speaker 5

The other things I'll add there are the operating leverage that we See in the business, certainly, we have a level of fixed costs in the business and those fixed costs are commensurate with our ability to continue to reserve our capacity And pace our capacity commensurate with our sales. And then the improvement in our margin is really driven by volume, and manufacturing production yields. And those two things will really drive our company from the margins that you see today to effectively the margins that we believe are attainable, which are a minimum of 70%.

Speaker 10

Okay. As a quick follow-up, now I'm talking about the scaling out in terms of gross margin and I understand that why you guys are answering that Qualitatively, let's move down the income statement a little bit. How should we think about Potential expansion on the SG and A side line, as Lovicel grows Over time, do we expect a fairly stable scale of the sales force in the U. S? Should we expect the sales force to And reasonably linearly in a step function, should opportunities expand by number of QTCs, like how should we be modeling that?

Speaker 5

I think Tom has historically described in Other forms and discussions that setting up QTCs is relatively low cost, really principally focused on time and time commitment. That SG and A, to answer your question, spot on, will grow linearly at the pace of revenue. And we continue to kind of look We believe our infrastructure, our commercial infrastructure is pretty well set up to achieve the opportunities that we have in front of us and that Part of what Tom and Andrew described as leveraging our 18 month head start, and that's what we've invested in. So you should see SG and A pace with sales and we'll continue to make investments in that regard, but they will pace with revenue.

Speaker 3

I would just add, it will increase as revenue increases, but not necessarily the same percentage. That's correct. Because we do have a lot of good leverage. There's a rare disease Market we're going after very targeted transplant centers. So the infrastructure that we need to build, most of it has already been built and it will be adding to it to supplement Versus actually adding wholesale cost.

Speaker 7

Great. Thanks guys.

Operator

Thank you. Our next question or comment comes from the line of Salveen Richter from Goldman Sachs. Mr. Richter, your line is now open.

Speaker 11

Good morning. This is Anumeet on for Salveen. Thank you for taking our question and congratulations on the progress. I just have one question on manufacturing. What issues have you seen to date with manufacturing ZINTEGLO?

Speaker 11

And has this been a hurdle to cell collection and treating patients to date? And then just a follow-up on the QTCs that are being activated by the end of the year. I guess what proportion of the sickle cell patients are these QTCs able to address? Thanks.

Speaker 3

Yes. So Tom,

Speaker 4

why don't you start with

Speaker 3

the QTC question about what how much they can address?

Speaker 4

Yes. Hi, good morning. So we designed our QTC network with the end goal being getting to the sickle cell community and our goal with the 40 to 50 QGCs that we plan to have on board by the end of this year was to be within 95% or reach 95% of patients who have sickle cell Disease within 200 miles of a planned QTC. So we feel that we have excellent coverage for the sickle cell community. We will likely continue to expand QTCs into next year, because we wouldn't want a patient being unwilling to travel and to be a barrier for treatment.

Speaker 3

And regarding manufacturing, so in our clinical trials, we did show that we had recollections in manufacturing. And that's the same remains true on commercial. This is really just part of Gene therapy, specifically gene therapy where you're collecting stem cells, not T cells. The critical difference The T cells you can expand them or re expand them with sickle cells with stem cells, your only option is to collect them. We have 1 mobilization agent to do it.

Speaker 3

So we do see or 2 in the case of a thalassemia, 1 in the case of sickle cell. So we do see recollections for various reasons And we uphold the highest quality standards for manufacturing. So that means at times we have steps in the process that need to be repeated. But I think this is going to be

Speaker 11

Got it. Thank you.

Operator

Thank you. Our next question or comment comes from the line of Eric Schmidt from Cantor Fitzgerald. Mr. Schmidt, your line is open.

Speaker 8

Thank you

Speaker 12

for taking my question. It's about Lovacell manufacturing. I think you have 2 different facilities that are supporting the manufacturing, one for vector and one for drug product. Maybe you could just confirm whether that's the case and And comment as to whether these facilities have been approved to support any other existing commercial products or whether they've been already inspected by the FDA? Thanks.

Speaker 3

So the last one, I can't comment whether it's expected by the FDA or not because we don't go back and forth with just we don't I do this blow by blow with FDA interactions, but you're correct, we do have 2 facilities. We make the Vector in Belgium with Thermo Fisher and we make the drug product In New Jersey, with a company called Menaras, we have worked with these companies for quite a long time now. So I haven't really established a relationship. No, those ones have not gone through other The inspections, but our team has. They've gone through 2 inspections in Europe.

Speaker 3

They've gone through the Bechtma inspection. We worked with 1 company. They So this is their 6th time around. So we feel very confident in our process. Thank you very much.

Operator

Thank you. Our next question or comment comes from the line of Yanan Xu from Wells Fargo. Mr. Zhu, your line is open.

Speaker 13

Our questions, If I may, I have three questions. First, could you talk about whether for the BLA for Lobocell, whether You're in the labeling discussion stage with FDA. Second question also on Lovacell. You talked about this The launch for Lobocell is going to be at a higher scale as a starting point. I think there are 20,000 severe sickle cell patients versus perhaps 1500, TDT patients, that's 10x In scale or actually a little more than 10x, is that how you see this launch as well or Could there be some other factors like willingness to get treated that could affect that scale?

Speaker 13

And lastly, a question on PDT launch. Could you give some color on adult versus pediatric patients so far? Thank you.

Speaker 3

Yes. Thank you for the question. So on the BLA, we don't comment on ongoing interactions with the agency. So We've submitted for the LOVEST health for the treatment of patients with sickle cell disease is 12 and over, who have history of nasal occlusive events And we are confident in the robustness and maturity of our BLA package and the review process. Then the last next 2, I'm going to pass to Tom.

Speaker 3

I think there was a question about The sickle is 10x thal, should be expecting to see that dynamic play out in the market and then the third is about TDT adult versus Go ahead, Tom.

Speaker 4

Yes. Hi, good morning, Yanan. So global cell, obviously a much larger opportunity. And just to remind everyone, there are about 100,000 patients in the United States who have Sickle cell disease and we believe that there are about 20,000 who have more severe sickle cell disease that could potentially be qualifying for gene therapy. With beta thalassemia TDT, there are about 1500 patients in the United States and we're estimating that about 850 Of those 1500 would be potentially eligible for gene therapy.

Speaker 4

So it's actually greater than 20 times The market size, so it's obviously a much larger patient population, addressable patient population. And then it's hard to Comment on individual dynamics with patients coming in for treatment with for the beta thalassemia was INTEGLO And that's because we haven't seen a huge end yet, but we've seen just such a huge range. We have both adult and pediatric centers online now. We've seen a lot of patients come forward that obviously meet the criteria and we've seen a lot of different stories. So it's hard to say that there's a common theme there, But we're just excited that the demand is there and the demand is there from a wide range of patients.

Operator

Thank you. Our next question or comment comes from the line of Luca Issey from RBC Capital. Mr. Eze, your line is now open.

Speaker 14

Thanks so much for taking my questions. Two quick ones here. Maybe the first on pricing. I believe your PDUFA date is 12 days after your competitor, which means you'll have an opportunity to see their pricing before you make the final call. Is there a scenario where you'll price the drug at a discount versus them to gain faster commercial adoption?

Speaker 14

Or should we assume there's a price on par with them? Any call there much appreciated. And then maybe on safety, any update on the 2 patients that develop AML in the trial for sickle disease? Wondering If you could comment on how they're doing today and maybe bigger picture whether there is a scenario where you get a label that includes risk of secondary malignancies While your competitor does not, and in best scenario, how should we think about implications for the launch? Thanks so much.

Speaker 3

Thanks, Luca, for the question. Tom, do you want to take the first bit there?

Speaker 4

Sure. Hi, good morning, Luca. We're going to run the same process on our Price for Lovacell that we ran with Synteglo and Skysona, obviously different dynamics in sickle cell disease, but we'll take Into consideration in clinical benefit, quality of life improvements, cost saving system, impact to society just like we do with Our other therapies, obviously, a one time potentially curative therapy in a chronic condition, Many

Speaker 3

are seeing

Speaker 4

the values recognized by payers, is recognized recently by ICER. So clearly the models are out there. We won't comment On our competitors pricing, we don't obviously have any privy to that. We believe that we are leaders in establishing value and setting price for these

Speaker 3

And then Luca, just on the safety issues, As a reminder, there have been no cases of insertion on oncogenesis with Lovacell. However, there have been cases of cancer related To the transplant procedure involving Lovacel. And unfortunately, 2 of those patients in our early clinical trials where we our procedures were In the earlier phase of Generation 1 procedures since the Group A did develop leukemia and AML and those two patients did pass away. So although they are not those 2 patients are not in our efficacy data set, it is likely That we will have a mention of that safety event in the label, to in what part of the label or where is yet to be Determined, but certainly they will be in there, something that we've known for quite a while. Again, I think the really important point is that no cases of insertional oncogenesis.

Speaker 3

These are cases that were related to the procedure.

Speaker 14

Got it. Thanks so much.

Operator

Thank you. Our next question or comment comes from the line of Sami Corwin from William Blair. Mr. Corwin, your line is now open.

Speaker 15

Hi there. Thanks for taking my questions. I was curious, is there a incremental cost to opening new QTCs? And then thinking about your commercial manufacturing time for LOVACEL, how should we be thinking about that? Will it likely be closer to the Duration of manufacturing time to produce in TEGLO or will it be closer to Skysona?

Speaker 15

And then across all three products, do you think that it's possible to Increase efficiencies and decrease that manufacturing time in the long term.

Speaker 3

I'll take the first one, I'll

Speaker 4

take So we've done a

Speaker 3

lot of ROI analysis on

Speaker 4

our QTC network and the only cost is really just the time and the headcount to get Get the qualified treatment center up and running. So in our ROI analysis, if they just treat one patient over the course of 2 years, it's a very profitable endeavor for us. So we will likely continue to expand our qualified treatment Center network beyond the 40 to 50 that we said we would do this year, not hardly any incremental cost at all.

Speaker 3

And then on the commercial time for release, Lobocell will be closer to ZINTEGLO than it will be to Spexona, Just because the release tests are relatively similar for those products and that's what drives timeline. I will say just in terms of your question about timelines overall, The biggest impact of the timeline will be how many times you have to collect cells from the patients, right? And That's going to be the biggest time of time lines and we do anticipate bringing that down nicely over time. We think we have a robust process that allows us to do that. And then the second consideration is just how long those release tests take.

Speaker 3

Some of those release tests are just long lead time that to incubate, so you're never going to get down below at certain threshold, You can imagine some time being taken out of those lead times.

Speaker 15

Great. Thank you.

Operator

Thank you. Our next question or comment comes from the line of Jeffrey Hung from Morgan Stanley. Mr. Hung, your line is now open.

Speaker 8

Hi. This is Michael Riad on for Jeff Hung. Thank you for taking our questions. On the outcomes based agreement, Specifically for Integral with Michigan and Massachusetts, state Medicaid agencies. Given that there have been 0 ultimate denials, Is this slowly becoming a formality or do the state agencies generally have uncertainties on outcomes and feel that they can benefit from the agreement?

Speaker 8

I guess I just want to understand the rationale given that there's been 0 denial to date. Thanks so much.

Speaker 4

Go ahead, Tom. Yes. Hi, good morning. So I think what we're The thing is that state Medicaid agencies obviously recognize the value of one time therapies in a disease state like beta thalassemia that's very costly to the system. However, I think they also appreciate our outcomes based agreement where we're saying if a patient doesn't achieve transfusion independence and maintain transfusion Independence, then they should be rebated at least a percentage of the cost of the therapy.

Speaker 4

That just gives them the additional security that they're not paying for something that doesn't work. So it's an added assurance and in this case we feel that it's obviously a testament to the value of Integlo and their willingness to work with us.

Speaker 8

Okay. Thanks so much. That's really helpful.

Operator

Thank you. I'm showing no additional questions in the queue at this Time, I would like to turn the conference back over to Mr. Andrew Obuchane for any closing comments.

Speaker 3

Great. And thanks everyone for joining our Q3 call this morning and for your thoughtful questions. It's a very exciting

Speaker 6

time for Bluebird and the

Speaker 3

patients that we aim to serve. If you have any additional questions or would like to set up a follow-up call, please reach out to Courtney. Thank you.

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Earnings Conference Call
bluebird bio Q3 2023
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