CAMBRIDGE Jul 31, 2020 (Thomson StreetEvents) -- Edited Transcript of Blueprint Medicines Corp earnings conference call or presentation Thursday, July 30, 2020 at 12:30:00pm GMT

* Anthony L. Boral

* Jeffrey W. Albers

* Andrea R. Tan

Ladies and gentlemen, thank you for standing by, and welcome to the Blueprint Medicines Second Quarter 2020 Financial and Operating Results Conference Call. (Operator Instructions) I would now like to hand the conference over to your speaker today, Kristin Hodous of Blueprint Medicines. Thank you. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Blueprint Medicines' Second Quarter 2020 Financial and Operating Results Conference Call. This morning, we issued a press release, which outlines the topics we plan to discuss today. You can access the press release as well as the slides that we'll be reviewing today by going to the Investors section of our website at http://www.blueprintmedicines.com.

Today, on our call, Jeff Albers, our Chief Executive Officer, will discuss Blueprint Medicines' second quarter 2020 business highlights. Christy Rossi, our Chief Commercial Officer, will provide a commercial update. And Mike Landsittel, our Chief Financial Officer, will review our financial results. Dr. Andy Boral, our Chief Medical Officer, is also on the call and will be available for Q&A.

Before we get started, I would like to remind everyone that statements we make on this conference call will include forward-looking statements. Actual events or results could differ materially from those expressed or implied by any forward-looking statements as a result of various risks, uncertainties and other factors, including those set forth in the Risk Factors section of our most recent quarterly report on Form 10-Q filed with the SEC and any other filings that we may make with the SEC.

In addition, any forward-looking statements made on this call represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update or revise any forward-looking statements.

Now here's our CEO, Jeff Albers.

Jeffrey W. Albers, Blueprint Medicines Corporation - CEO, President & Director [3]

Thanks, Kristin, and good morning, everyone. I'm happy to provide an update on what has been a productive quarter for Blueprint Medicines. At the beginning of the year, we talked about how 2020 was shaping up to be transformational for Blueprint Medicines as we evolved into a fully integrated precision medicine company, and it certainly has been given the achievements we've made against our goals over the first half of the year.

Let me highlight how this progress sets us up going into the second half of the year across our 3 areas of strategic focus. First, establishing our commercial foundation with AYVAKIT, which we will now harness for pralsetinib; second, prioritizing systemic mastocytosis given the significant medical need; and third, leveraging our discovery platform to advance future pipeline opportunities.

Let's start off with a strong U.S. AYVAKIT launch for the treatment of patients with PDGFR-alpha exon 18 mutant GIST. As Christy will discuss in a moment, we gained critical commercial experience and have built a nimble and highly effective team along with infrastructure to deliver our products to patients.

Our early experience with AYVAKIT gives us a strong foundation for our planned launch of pralsetinib in the coming months, which will now be amplified as we integrate the capabilities of our new partners at Genentech and Roche.

We're also capitalizing on our AYVAKIT experience outside of the U.S. Just a few days ago, we received a positive CHMP opinion for avapritinib for the treatment of patients with PDGFR-alpha D84V mutant GIST. This achievement sets up a final decision on our marketing authorization application by the end of this quarter.

Assuming avapritinib is approved, we expect to initiate our first commercial launch in Germany with additional European countries to follow. Additionally, as in the U.S., we expect this initial launch will lay the foundation for future systemic mastocytosis commercial efforts as well.

Building from commercial readiness, our second strategic area of focus is the great progress within our systemic mastocytosis program. We believe SM represents the single largest opportunity across our clinical stage portfolio. The significant medical need, combined with our differentiated approach of potently targeting the SM disease driver, opened an opportunity to advance a new treatment paradigm. Earlier this year, we reported very encouraging data from part 1 of our PIONEER trial of avapritinib in patients with indolent systemic mastocytosis.

Based on these data, we selected 25 milligrams once per day as the recommended dose and finalized the design of the registration-enabling part 2 with input from regulatory authorities. And today, we're pleased to announce that we've initiated part 2 of this trial.

Later this quarter, we plan to report top line data from the EXPLORER and PATHFINDER trials of avapritinib in patients with advanced systemic mastocytosis.

The combined data set, which will support the submission of a supplemental new drug application to the FDA in the fourth quarter, will include response assessments for approximately 50 patients starting at the recommended 200-milligram once-daily dose. Additional data supporting the submission will include response kinetics, including the time to response and the duration of response; objective measure readouts, such as serum tryptase and mast cell burden; and updated safety results across the broader trial populations.

Finally, our robust discovery platform continues to provide broad opportunities for future growth. Earlier this year, we nominated a first-in-class development candidate, BLU-945, for triple mutant EGFR positive non-small cell lung cancer. This program combines potent inhibition of treatment-resistant triple mutant EGFR with selectivity over the wild-type kinase, highlighting the ability of our scientific platform to continue to address challenging target product profiles.

At the virtual ESMO Congress in September, we plan to present new preclinical data for BLU-945 as well as share an update on our plans to bring this therapy into the clinic early next year.

Importantly, the triple mutant EGFR program is just the first of up to 3 new development candidates we hope to nominate by the end of the year.

Our progress across these areas lays the foundation for significant growth for Blueprint Medicines as we continue on our path to become the world's leading precision medicine company. We look forward to updating you on these critical data and regulatory milestones over the coming months and into the second half or throughout the second half of the year.

And with that, I'll now turn the call over to Christy to provide an update on our commercial efforts. Christy?

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Christina Rossi, Blueprint Medicines Corporation - Chief Commercial Officer [4]

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Great. Thanks, Jeff, and good morning, everyone. I'm happy to share an update on our commercial progress, including our first full quarter of AYVAKIT sales in PDGFR-alpha exon 18 mutant GIST and our ongoing preparation for the planned launch of pralsetinib.

Through the first half of 2020, we have been focused on establishing the foundation that will support multiple anticipated global launches in the coming years. With potential near-term approvals of pralsetinib in the U.S. and avapritinib in Europe, we are truly excited to be on the precipice of delivering a portfolio of precision therapies that address significant patient needs. Of course, the successful launch of AYVAKIT has been the essential first step on our journey towards realizing this goal.

In the second quarter, we generated $5.7 million in net sales or $9.1 million since launch driven by strong execution against our launch strategies. We quickly established Blueprint with key oncology and hematology centers of excellence and other stakeholders that are critical not just for our initial launch for GIST, but for pralsetinib and systemic mastocytosis. We achieved broad access for AYVAKIT rapidly, and we continue to see strong patient access in line with or better than our label. By focusing on clinical education and individualized patient support, we have ensured that prescribed patients can start on treatment quickly and also remain on treatment as long as it is clinically appropriate. And I've been particularly pleased to see that refill rates have been high, suggesting that our real-world duration may exceed those seen in our clinical studies.

Finally, last quarter, I noted that I was encouraged to see strong breadth of prescribing upon launch. This trend has continued in Q2, fueled by the efforts of our seasoned field team, and we continue to add new prescribers with approximately half now coming from the community setting.

I've noted before the significant overlap between GIST and lung prescribers in the community, and this has enabled us to advance our profiling and disease awareness efforts as we prepare for the next chapter in our commercial evolution, our anticipated launch of pralsetinib.

As I've shared before, we plan to deliver a best-in-class RET inhibitor to patients, focusing on our differentiated clinical profile, including deep and durable responses, a predictable and manageable safety profile and once-daily dosing. We will be launching with a patient- and health care provider-centered approach that recognizes the importance of community oncology centers and a highly experienced team for whom this is the top priority.

I was confident in our ability to launch before we entered into our transformative partnership with Genentech. And as we started to engage with our colleagues there to implement this collaboration, I could not be more excited about the power we will bring across our 2 organizations. While Blueprint will be driving launch efforts, we are already working to integrate with Genentech and identify near-term opportunities for them to amplify and extend our efforts. For example, by leveraging their substantial diagnostic and data capabilities, in addition to the experience of their team.

As we prepare for the launch of our second medicine in a single year. We are well positioned to maximize the opportunity for pralsetinib. With a differentiated product profile, a focused and nimble team that is amplified by a strong partner and a foundational infrastructure from our experience with AYVAKIT, we are thrilled with our commercial preparation and execution thus far. We are well on our way to building a best-in-class commercial organization to effectively deliver multiple precision therapies to patients.

I'd now like to turn it over to Mike to discuss financial updates.

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Michael Landsittel, Blueprint Medicines Corporation - CFO & Treasurer [5]

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Thanks, Christy. Earlier this morning, we reported detailed second quarter 2020 financial results in our press release. For today's call, I'll touch on a few financial highlights from the quarter. As Christy mentioned, we were pleased to record $5.7 million of AYVAKIT net product sales in the second quarter. Cost of sales remain low as we continue to work off inventory of AYVAKIT that we expensed pre-approval.

Our total operating expenses increased slightly compared to the prior quarter driven in part by an increase in stock-based compensation expense.

Looking forward, in light of our global collaboration with Roche, we expect to see quarter-over-quarter expense growth stabilize for the second half of 2020 as savings through the cost and profit sharing arrangement with pralsetinib offset planned increases in R&D investments in systematic mastocytosis and our discovery portfolio. We do anticipate continued increases in noncash stock-based compensation expense for the foreseeable future.

With over $1.4 billion in cash after including the upfront payments from our Roche collaboration, we are in the strongest financial position that we have ever been as a company. Excluding the upfront payment from Roche, we anticipate the potential for additional revenues of up to $80 million in the second half of 2020 from a combination of milestones from our multiple collaborations and product sales.

We also received an additional $20 million in cash in July from our collaboration with Clementia for BLU-782 that was previously recognized as revenue in Q4 2019. Between our collaborations and future anticipated product revenues, we now have a clear pathway to financial independence and enhanced flexibility to invest more in multiple high-value opportunities across our portfolio.

We are in a unique position for a company of our size and age and are looking forward to sharing further updates with you as we continue to make progress across our portfolio.

With that, I would now like to turn the call over to our operator for questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Salveen Richter with Goldman Sachs.

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Andrea R. Tan, Goldman Sachs Group, Inc., Research Division - Research Analyst [2]

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This is Andrea on for Salveen. My first one is maybe for Jeff. Can you just remind us the expectations on timing for patient screening enrollment for part 2 of the PIONEER study and when we might see data? And then I have a follow-up question.

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Jeffrey W. Albers, Blueprint Medicines Corporation - CEO, President & Director [3]

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Sure. So this is Jeff. On PIONEER, we talked about this at the last quarterly call that we've now initiated the study and continue to see a lot of enthusiasm from both sites that were involved in part 1 as well as some new sites coming on that are going through their screening process. We have not guided to timing of readout. As a reminder, we plan to enroll 200 patients. But we want to see how the site initiation and impact of COVID plays out not just in the next few weeks, but also over the coming months. So to have a better handle on the consistency with which sites are staying open, we're going to hold off on providing that guidance.

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Andrea R. Tan, Goldman Sachs Group, Inc., Research Division - Research Analyst [4]

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Got it. And then maybe just a second question for Christy. How should we think about the cadence of hiring for the AYVAKIT launch both in the U.S. and then expected in the EU. And then can you speak to the progress of how you guys have been incorporating the Roche team in preparation for pralsetinib? Just maybe some actions that have been taking place there.

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Christina Rossi, Blueprint Medicines Corporation - Chief Commercial Officer [5]

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Sure. So the first question was around AYVAKIT in the U.S and EU. The U.S. team, as I said before, for AYVAKIT is in place, has been in place since launch and, in fact, that team is really built with a portfolio focus in mind. So that team will be driving the pralsetinib launch and really all along our primary priority with that team has been very much focused on preparing for and launching pralsetinib. So we're going to see that team's primary focus really shift. Currently, it's disease education and profiling. And then upon launch, we'll be focused on driving promotion for pralsetinib.

For Europe, we have a small, focused, nimble team in place in the countries that we anticipate near-term launches. The focus of that team will be on driving the initial AYVAKIT launch. And because that market is very focused at a number of treatment centers with whom we already have relationships, we believe that we can target that market effectively with a small and nimble team. And then that team will have the foundational infrastructure that will prepare for an eventual SM approval in Europe.

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Jeffrey W. Albers, Blueprint Medicines Corporation - CEO, President & Director [6]

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And Christy, the second part was integration with Roche?

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Christina Rossi, Blueprint Medicines Corporation - Chief Commercial Officer [7]

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Sorry. Yes. So the Roche team, as I said, has been very involved in these initial weeks. We'll announce the collaboration due to the proximity of what we anticipate to be an imminent approval for pralsetinib. Certainly, Blueprint will be driving many of the launch efforts, but we've already identified ways for Genentech in the United States to come in and really amplify our efforts, particularly around patient identification, leveraging data, helping to drive testing as an example; and then clearly, just leveraging the power of their portfolio of targeted therapies into which pralsetinib fits really nicely. So we're still working through specifics on some of the details on roles and responsibilities but have identified a number of ways where they think they can come in and really help us out of the gate.

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Operator [8]

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Our next question comes from the line of Peter Lawson with Barclays.

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Peter Richard Lawson, Barclays Bank PLC, Research Division - Research Analyst [9]

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Just on the RET space. Just point out what you're hearing from physicians regarding the better CR rates and like of QT prolongation versus [what codes] molecule. And I know we're kind of hearing mixed messages. So great to understand what you're hearing.

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Jeffrey W. Albers, Blueprint Medicines Corporation - CEO, President & Director [10]

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Sure. This is Jeff. Maybe I'll start, and then Andy and/or Christy can weigh in. We've been very encouraged by the data that we've put out most recently at ASCO and the response to that. As you know, the consistency of activity we're seeing, the deep and durable responses, the notable CR rates, which for many physicians are something that they're very encouraged by and they'll want to see how does that translate into durability of response over the longer term. And then the predictable safety profile. As Andy noted in his opening comments, that particularly if you push out the community, what we hear is physicians want -- are much more comfortable with side effects that they've managed historically or consistent with other therapies. And the more unusual an adverse event, the more that could have an impact on what they're going to -- how they're going to treat. So there's obviously differences when we look at the academic sites versus the community sites. But overall, we think we have a very promising profile with pralsetinib.

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Anthony L. Boral, Blueprint Medicines Corporation - Chief Medical Officer [11]

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Jeff, maybe I'll just add that we talk to a lot of both our investigators and other kind of community docs. Now the CR rate, I think, repeatedly comes back as a distinguishing characteristic. Now a bit more on the QT. I think the hardest thing about things like QT prolongations is that it restricts the use of other medications that the patients often need just for general supportive care, antibiotics, antiemetics. And so I think just not having to worry about that is a real advantage.

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Peter Richard Lawson, Barclays Bank PLC, Research Division - Research Analyst [12]

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Great. And then just on the launch dynamics. I mean what should we look at? Is it other RET, ROS1 or ALK? And what are the best proxies here? And what are the kind of the puts and takes versus those other launches?

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