2seventy bio, Inc. (NASDAQ:TSVT) Q1 2024 Earnings Call Transcript May 8, 2024
2seventy bio, Inc. misses on earnings expectations. Reported EPS is $-0.81 EPS, expectations were $-0.72. TSVT isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day and thank you for standing by. Welcome to the 2seventy bio First Quarter 2024 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. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Jenn Snyder with 2seventy bio. Please go ahead.
Jenn Snyder: Thank you, Shannon, and good morning, everyone. Thank you for joining us. This morning we issued a press release on our first quarter 2024 financial results. The press release can be found in the Investors and Media section of the company’s website at 2seventybio.com. As a reminder, today’s discussion will include forward-looking statements related to 2seventy 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 with respect to sales, efficacy and perceived therapeutic benefits of a Abecma, the timing and review of additional studies and regulatory applications for Abecma, 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 Factors 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. We 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. Anna Truppel-Hartmann, Chief Medical Officer, is also on the line for questions during the Q&A.
And now I will turn it over to Chip. Chip?
Chip Baird: Thank you, Jenn, and thank you all for joining this morning. Today we disclosed our first quarter 2024 financial results and recent business and operational updates. I’d like to walk through some of the business updates and then Vicki Eatwell, our Chief Financial Officer, will go into detail on our financials. The first quarter of 2024 was an eventful one. We completed a major strategic realignment to focus exclusively on Abecma. To achieve this, we sold our oncology and autoimmune R&D programs to Regeneron. As part of the sale, we transferred approximately 160 employees and approximately 67% of our real estate footprint to Regeneron. We think this is an ideal outcome for the science and these programs, and we look forward to seeing what the team can achieve in years to come.
We also took the tough but necessary decision to reduce headcount by an additional 14% as part of the strategic refocusing. The end result is that we have emerged with a leaner cost structure, cash runway beyond 2027 and time to get Abecma back on track commercially. To that end, we have consistently said that the path to Abecma growth hinges on earlier line approval. We traveled quite a journey on this front, including an ODAC meeting in March to advise FDA on our supplemental BLA. The 2seventy and BMS teams did an amazing job at the panel, and we were subsequently approved in the earlier line setting, which opens a much larger addressable patient population. So it’s been a great start to the year and we are now singularly focused on getting Abecma back on track commercially.
We are in the early days of launch and expect that it will take into the second half before we see meaningful growth. We’ve talked for some time now about known strengths for Abecma, including strong efficacy that is reproduced in the real world setting, a well-established and manageable safety profile and consistent manufacturing turnaround time at high rates of in spec product. With KarMMa-3 data in the label and real world evidence that continues to mature, we believe we have a competitive profile in earlier line triple class exposed patients, which is a population with high unmet need. To be clear, multiple myeloma is a competitive market space, and a return to growth will take time. But we have a strong commercial organization and a launch strategy that we believe in and we look forward to executing on the plan.
I’m happy to talk about our strategy in the Q&A, but for now we’ll turn it over to our newly promoted CFO, Vicki Eatwell, to talk about the first quarter results. Vicki?
Vicki Eatwell: Thanks, Jeff. First quarter Abecma U.S. revenues, as reported by Bristol-Myers Squibb, were $52 million, which was in line with our expectations and reflects ongoing competition in the late line setting. As Chip stated, we are in the midst of a commercial launch following the recent FDA approval of Abecma based on our KarMMa-3 study, which greatly increases the addressable patient population. We look forward to delivering Abecma to an increased number of patients and expect to see a return to growth in the second half of the year. As a reminder, we share equally in the profits or losses of the U.S. Abecma business with BMS, and we record collaboration arrangement revenue or loss each quarter, which largely represents our 50% share of revenue, cost of goods sold and selling expenses related to the U.S. business.
In the first quarter, we reported share of collaboration loss of $1.2 million related to our collaboration with BMS, driven by decreased patient demand in the late line setting. Turning briefly to our cost structure, and as a reminder, the sale of our R&D pipeline to Regeneron, combined with our cost-saving actions, is expected to achieve $150 million to $200 million of cost savings in 2024 and 2025, respectively. We anticipate staying within our previously guided net cash spend range of $80 million to $100 million in 2024 and we are committed to carefully managing our spend to preserve cash runway. As we reported last quarter, we expect our runway to go beyond 2027 and see a path to potential breakeven by 2025 as Abecma returns to growth. With that, I’ll turn it back to Chip.
Chip Baird: Thanks, Vicki. I’ll close with two thoughts. First, we’ve been through a lot of change in the first quarter, but one thing that is unchanged is our patient focus. We believe in the potential of Abecma to make a meaningful impact for patients in the early line setting and are singularly focused on delivering more time for every myeloma patient we are able to serve. Together with our partners at BMS, this will be a top priority. Second, we’re focused on being careful stewards of investor capital, staying focused on reaching break-even and profitability and driving value for shareholders. Together with Vicki, Anna, Jess, and the rest of the team, we will continue to focus on these priorities to drive value. And with that, we’re happy to take questions. Operator?
Operator: Thank you. [Operator Instructions] Our first question comes from the line of Daina Graybosch with Leerink Partners. Your line is now open.
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