Blueprint Medicines Corp

NASDAQ:BPMC

Earnings Call Analysis

Blueprint Medicines' AYVAKIT Success and Future Outlook

Blueprint Medicines reported a strong quarter with AYVAKIT achieving $114.1 million in net product revenue, a 185% year-over-year increase. The drug's strong performance driven by new patient starts and low discontinuation rates has led the company to raise its 2024 revenue guidance to $435-450 million. The international launch is also gaining momentum, particularly in Germany, with further expansion planned for 2025. R&D efforts continue with BLU-808 entering clinical trials, aiming to address broader mast cell disease applications. The company remains financially robust with $868.5 million in cash, poised for long-term growth and shareholder value.

Remarkable AYVAKIT Performance and Revenue Growth

This quarter marked a significant milestone for Blueprint Medicines, with AYVAKIT achieving $114.1 million in net product revenue, including $101.5 million in the U.S. and $12.7 million internationally. AYVAKIT revenue grew by more than 185% year-over-year【4:0†source】. The company raised its revenue guidance, now expecting to achieve $435 million to $450 million in net product revenue for 2024【4:3†source】. The impressive performance was driven by strong trends in patient starts, low discontinuation rates, high compliance, and favorable free goods share【4:1†source】.

Expansion and Development of AYVAKIT's Market

Blueprint Medicines is expanding its reach with AYVAKIT, seeing strong adoption across both the U.S. and international markets. The company highlighted particular strength in Germany, and plans to bring AYVAKIT to more countries by 2025【4:1†source】. The long-term vision is for AYVAKIT to achieve peak revenues exceeding $2 billion, bolstered by continued growth in the patient base and robust prescriber adoption across multiple medical specialties【4:5†source】.

Pipeline Progress and Future Prospects

Blueprint Medicines made significant strides in its pipeline, with AYVAKIT being just the beginning. The company is advancing elenestinib (a next-generation KIT inhibitor) and BLU-808 (a wild-type KIT inhibitor)【4:2†source】. BLU-808, in particular, has entered clinical trials and shows promise in treating various mast cell diseases. Early results from these trials are expected next year【4:2†source】. The company believes these developments will drive the next wave of revenue growth and value creation.

Financial Health and Sustainability

Blueprint Medicines is in a strong financial position with $868.5 million in cash on hand, positioning itself well to continue its R&D investments and support long-term growth【4:3†source】. The company’s expenses have remained relatively flat, which, coupled with growing revenue from AYVAKIT, contributes to financial stability and the ability to drive long-term shareholder value.

Challenges and Considerations Ahead

Looking forward, Blueprint Medicines is attentive to factors such as seasonality, international pricing negotiations, and the complexity of new market dynamics as they continue AYVAKIT's rollout. The guidance reflects a cautious but optimistic view, accounting for these variables while still projecting significant growth【4:7†source】【4:9†source】.

Earnings Call Transcript 2024-Q2

[Operator]

Hello, everyone. At this time, I would like to welcome everyone to the Blueprint Medicines' Second Quarter 2024 Financial Results Conference Call. My name is Bruno, and I'll be operating your call today. [Operator Instructions]

I'll now hand over to your host, Jenna Cohen. Please, you may begin your conference.

[Jenna Cohen, executive]

Thank you, Bruno. Good morning, everyone, and welcome to Blueprint Medicines' Second Quarter 2024 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 by going to the Investor's section of our website at www.blueprintmedicines.com

Joining me today are Kate Haviland, Chief Executive Officer; Philina Lee, Chief Commercial Officer; Christy Rossi, Chief Operating Officer; and Mike Landsittel, Chief Financial Officer. Fouad Namouni, President, Research and Development, is also on the line and available during Q and A.

Before we begin, I'd like to remind you that some of the statements made during the call today are forward-looking statements, as outlined on Slide 3, and are subject to a number of risks and uncertainties. These may cause our actual results to differ materially, including those described in our reports filed with the SEC. You are cautioned not to place any undue reliance on these forward-looking statements and Blueprint disclaims any obligation to update such statements.

I'll now hand the call over to Kate.

[Kathryn Haviland, executive]

Thank you, Jenna, and good morning, everyone. This quarter marks a milestone, one full year since the U.S. approval of AYVAKIT for indolent systemic mastocytosis. At the beginning of the year, we laid out that our top priority as a company is AYVAKIT's launch execution. And we have delivered yet another very strong quarter of revenue, one that exceeded our own expectations as we continue to build this new rare disease market.

This is one of the most exciting rare disease launches happening today as each quarter makes AYVAKIT's path to a greater than $2 billion peak revenue opportunity that much clear. Our conviction in AYVAKIT's multibillion-dollar market opportunity is based on the positive reception and adoption of AYVAKIT we are seen across physicians, patients and payers as we successfully changed the treatment paradigm for patients with SM.

AYVAKIT offers a unique and multidimensional value proposition, a medicine that targets the source of SM, driving deep and durable benefits, while importantly also being very well tolerated, enabling patients to stay on AYVAKIT over the long term. As we increase the number of ISM patients on therapy, the cumulative effects of patients staying on therapy will be a significant driver of revenue this year and beyond.

Today, we're raising revenue guidance based on our strong performance in the first half of this year. With a full year of launch now under our belts and our growing experience with a range of factors that drive our business, we have more confidence in this guidance on how will we will end the year. Philina will discuss these factors driving commercial performance in more detail in a few minutes.

We have just started scratching the surface on reaching the patients with SM who could potentially benefit from treatment with AYVAKIT. And we expect that AYVAKIT will drive continued and sustainable revenue growth over the long term, enabling us to invest in our prioritized areas of research and development, focused in mast cell driven disorders, where there is high medical need in large patient populations, and where we can leverage our expertise and infrastructure to drive the next phase of value inflection of Blueprint Medicines.

We are pleased to have received I&D clearance for BLU-808, our wild-type KIT inhibitor, and we have initiated the healthy volunteer study. We believe BLU-808 has the potential to impact core biology across a number of mast cell diseases by targeting KIT.

Christy will review our progress to date across our entire portfolio later on the call. With the foundation of significant and growing revenue from AYVAKIT, a next wave of therapies in our pipeline that address important medical needs and even larger scale patient opportunities, and the financial profile anchored by sustainable top line revenue growth, we have the financial flexibility to invest in innovation, and we have compelling opportunities in our portfolio that will drive the next wave of value creation as we continue building Blueprint Medicines. Mike will add more color to our financials to close this out.

With that, I'll turn it over to Philina for more detail on our commercial performance.

[Philina Lee, executive]

Thanks, Kate. In the second quarter, AYVAKIT achieved $114.1 million in net product revenue, including $101.5 million in the U.S. and $12.7 million ex-U.S. AYVAKIT revenue has grown by more than 185% year-over-year, reflecting our strong execution as we capture this unique rare disease opportunity.

Second quarter growth in the U.S. was driven by continued positive trends across key business fundamentals: growth in patients on AYVAKIT driven by new patient starts and low discontinuation rates, high compliance, and continued upside in our commercial versus free goods mix. And our international team had an exceptional quarter.

Let's take a closer look at what drove our business this quarter and what we expect to see for the rest of the year. First, we continue to see strong and steady growth in patients on AYVAKIT, driven by new patient starts and low discontinuation rates. We've seen a consistent pace of new patient starts over the first half of the year. These new patient starts are coming from an expanding AYVAKIT prescriber base that continues to grow in breadth and depth.

We continue to see low discontinuation rates consistent with a multiyear duration of therapy in ISM. Once patients start AYVAKIT, they're staying on treatment. This will continue to drive our base of patients on therapy and be an increasingly important growth driver over time. Patient compliance also remains strong, further reflecting how the compelling clinical profile in PIONEER is playing out in the real world.

Second, free goods favorability was another source of strength this quarter, reaching an average free goods share of just below 20% since ISM launch. Our free goods share has been a significant source of strength in the first half of the year as the mix of patients on AYVAKIT skews increasingly towards ISM and as the IRA Part D redesign has enabled more patients to access paid therapy.

Finally, the strong trends we have seen in our U.S. launch are playing out in our international business. Our international team is driving strong performance with the ISM launch underway in Germany, where the prescriber base is growing across both academic and community settings. And we are working to bring AYVAKIT to market for ISM in additional countries in 2025, both through our own global footprint and through distributors.

We're just getting started and expect our international business to be an important contributor to our growth going forward. Our year-to-date performance across key growth drivers has been strong, and our conviction in this blockbuster opportunity has never been stronger.

As we enter the second half of the year, we expect continued strength across the business, and we're also keeping our eye on a few things, like seasonality, something common across our industry, that we anticipate will impact the timing of patient starts; our share of free goods, which we believe has stabilized and will remain at a steady rate for the remainder of the year; and the revenue impact of German pricing negotiations, which could be finalized at the end of the year.

The most important part of seasonality, now that we understand it better, is that we don't expect it will impact annual performance. Patients are out there, and it's not a question of if, but when they'll start on AYVAKIT. And once they start, we know they'll stay on for a long time. As we enter the second half of the year, we're focused on driving increased breadth and depth of prescribing and activating patients to seek treatment. Let's look at these areas next.

As I mentioned, we continue to expand the breadth and depth of the AYVAKIT prescriber base. Prescriber breadth is growing steadily across all specialties, including allergy. Prescriber depth is growing as first positive experiences lead to repeat prescriptions. For the first time this quarter, we're seeing prescribers with more than 10 patients on therapy with AYVAKIT, and we see a clear trend of experienced prescribers broadening their view of who's an appropriate patient for AYVAKIT.

Long-term safety and efficacy data are highly motivating for providers and patients, which is why we continue to show that AYVAKIT's clinical profile is durable with long-term follow-up data. This past quarter, at the EAACI conference in Spain, we showed that AYVAKIT leads to deep and sustained symptom alleviation, and a well-tolerated safety profile, now over multiple years of treatment.

The chronic burden of ISM is often underappreciated and a key part of our ongoing strategy is redefining expectations for control with patients and providers. Trying a new treatment is a big step for patients who are accustomed to managing their disease by limiting their daily activities, taking symptom-directed medications and avoiding triggers. Patients living with ISM have made a lot of compromises. Oftentimes, they don't realize until after they've started AYVAKIT how good their lives can be again. But they need to get ready to make that change.

What we've been hearing in this first year of launch is that we are beginning to change the experience of living with ISM. Patients are sharing that AYVAKIT is life-changing, enabling them to return to work, school and family activities, reducing unpredictable symptom flares and helping them feel better. And they're starting to tell each other about it. This patient-to-patient dialogue is very powerful, and we're scaling several key initiatives to enable this further.

Building on the success of our virtual patient educational series, we recently launched our first in-person patient ambassador program in conjunction with the Mast Cell Disease Society's MastCellCon last month. Throughout that meeting, it was incredible to see firsthand the impact of patients sharing experiences with other patients.

In closing, our first full year of launch has been highly successful and sets us firmly on the path to achieve a more than $2 billion opportunity for AYVAKIT. We are proud of the effort our commercial and medical teams have put forward. We understand every step of the patient journey, and the education and support patients and providers need.

Our strategies are working, and AYVAKIT is making a difference. And we see a critical mass of both provider experience and patient activation that creates a nice compounding effect and bodes well for future growth.

With that, I'll turn it over to Christy.

[Christina Rossi, executive]

Thanks, Philina. In addition to the continued execution of the AYVAKIT launch, we are focused on driving the next wave of innovation and growth at Blueprint Medicines. And today, I'd like to speak briefly about progress against our 2024 portfolio milestones.

Let's start with the franchise we are building in mast cell disorders with AYVAKIT, elenestinib and BLU-808. SM is a multibillion-dollar market opportunity, and we are committed to extending our leadership position and patient impact. Through our engagement with physicians and patients, and the unparalleled depth of clinical data and real-world experience we have amassed, we have unique insights into the biology of SM and the next frontiers of innovation that can move us further towards our goal of eradicating this disease.

We have been advancing elenestinib, our next-generation KIT D816V inhibitor, to the registration-directed Part 2 of the HARBOR study. We are on track to initiate Part 2 of HARBOR by year-end. And as we do, we will be sharing more details about our plans. In addition, today I'm happy to share that we've reached an important milestone in our efforts to bring BLU-808, our wild-type KIT inhibitor, to a broad range of patients suffering from allergic and inflammatory diseases.

We've moved BLU-808 into the clinic with the initiation of our healthy volunteer study and are eagerly anticipating initial data early next year. We believe this data could mark an important inflection point for the program, supporting our hypothesis that we can achieve tunable biological activity with a wide therapeutic window and enabling us to rapidly establish clinical proof-of-concept in a range of mast cell disorders, including and beyond urticaria.

Our goal is to raise the bar on what a disease-modifying treatment can offer, considering the full patient experience, efficacy, safety and the burden associated with administration. And we will share more about our development strategy in the second installment of our scientific webinar series planned for this fall.

Mast cell disorders are the key pillar in our R&D strategy. And our second focus area of cell cycle inhibition, the clinical data we are generating with BLU-222 is validating the importance of CDK2 as a target and gives us conviction that the next frontier in the treatment of breast cancer is the complete inhibition of the cell cycle achieved by targeting cell cycle regulators in combination.

We believe that the optimal approach to bring BLU-222 forward to patients is in the context of a partnership to maximize the transformative potential of this target and these discussions are ongoing. We are also making significant progress advancing cell cycle degraders, which are poised to represent the first development candidates out of our targeted protein degradation platform. This platform was established just a few years ago under Percy Carter's leadership, and is already an integral part of our R&D engine across both allergy inflammation and oncology.

With that, I will turn it over to Mike.

[Michael Landsittel, executive]

Thanks, Christy. Earlier this morning, we reported detailed financial results in our press release. And for today's call, I'll touch on a few highlights from the quarter. In the second quarter, total revenues were $138.2 million, including $114.1 million in net product revenues from sales of AYVAKIT and $24 million in collaboration, license and other revenues.

As Philina noted earlier on the call, we are raising our AYVAKIT product revenue guidance and now expect to achieve $435 million to $450 million in net product revenue in 2024. This guidance update continues to reflect our evolving view of the fundamentals driving the business: patients on therapy, including a greater understanding of the role that seasonality plays in ISM; free goods favorability and its impact on revenue growth in the second half compared to the first half of the year; continued strength in compliance and duration of therapy; and the potential impact of the ISM price negotiations in Germany.

First half growth trajectory was influenced by stronger-than-expected performance with upside across a combination of variables that drove results above the strong and steady growth that we have always expected. Throughout the year, we have talked about our philosophy in setting guidance and our goal of providing estimates that are relevant and reflective of our own expectations.

We've also talked about the inherent challenges in setting guidance so early in the launch into a brand-new market that we are building. I'm thrilled that our performance year-to-date has enabled us to raise guidance twice, and we are also now in a position to have better insight into the variables that will drive performance in the second half of the year and the range of likely outcomes on those variables. And this is reflected in our update today.

Turning to expenses. Our total cost and operating expenses were relatively flat at $181.2 million for the second quarter, and we anticipate that both our research and development expenses and our SG&A expenses will remain relatively flat for the remainder of this year. We remain in a solid financial position with $868.5 million in cash on hand. And with the ongoing success of the AYVAKIT launch and our commitment to manage operating expenses, we are in a great position to continue to drive long-term shareholder value.

With that, I'll now turn the call back over to the operator for questions. Operator?

[Operator]

[Operator Instructions] Our first question comes from Salveen Richter from Goldman Sachs.

[Salveen Richter, analyst]

With regard to the ISM launch here now that you are full year post approval, how are you thinking of quarterly dynamics here? And could you discuss any impact you've seen to date from the Part D redesign and how this might be evolved? And for your wild-type KIT, should we expect healthy volunteer data this year or early next year? And how are you thinking about the importance of this data set as it relates to PK/PD such as potential for flexible dosing?

[Kathryn Haviland, executive]

Thank you, Salveen, for the question. Philina, why don't you talk a little bit more about those quarterly dynamics and how we're seeing some of the Part D reform impacting that? And then, Fouad, if you can talk a little bit more about the wild type KIT healthy volunteer data, that would be great.

[Philina Lee, executive]

Salveen, first off, I think we're just really pleased with yet another strong quarter in our launch, and this has strengthened our conviction to the greatest degree I think we've ever had really to see the degree of provider feedback, the growing prescriber base and how activated patients are coming. These are the factors that will really portend towards the peak potential of AYVAKIT.

Speaking to the quarterly dynamics, I think as we dig in and learn more about this chronic rare disease opportunity, one of the things that we're learning is to expect some seasonal dynamics, right? And so for patients with a chronic rare disease, trying something new is really a big step and they may be more hesitant to do that around times of vacations and holidays.

We saw some of this dynamic last year around Q4. But more importantly is to note that the opportunity is absolutely there. The patients funnel is strong. There are a number of patients in need who are not well controlled. And it's not a question of if, but when they go on therapy. The timing of when they start depends on a few things. We talked about seasonal impacts. We talked about the timing of when they happen to have patient visits.

Another component that's important is how they're feeling when they show up at that visit, which impacts the provider's ability to recognize their -- the disease burden. And so importantly, the opportunity is absolutely there. It's not a question of if, but when. If a patient doesn't start in August they will likely start at a subsequent visit. And when they start, we know they'll stay on AYVAKIT. These are the most important factors that give us confidence in that peak opportunity.

To your question about Part D redesign, we've highlighted the proportion of free goods as one of the important fundamentals in our launch. And that with the strong execution of our team, we've been able to convert a number of patients over to access commercial therapy. We believe at this point that the proportion of free goods has stabilized. We've reached just under 20% on average launch to date, and we expect this to remain relatively stable for the rest of the year.

[Kathryn Haviland, executive]

Maybe just one thing to add on that, Salveen, is that as we think about ISM, really this is much more of an I&I type of footprint in terms of payer mix. These patients tend to skew younger, have more commercial payers. And so that's obviously part of the favorability that we're seeing as well.

Fouad, do you want to move on to BLU-808?

[Fouad Namouni, executive]

Yes. Thank you, Kate and Salveen. So I'm really very happy that the FDA review process IND was very smooth and that now the healthy volunteer study is up and running. We expect the SADMAT data to be available early in 2025. And it is an important milestone, an important inflection point for us to show the PK, the PD and the safety data in healthy volunteers.

We all know wild-type KIT, as a target in chronic spontaneous urticaria or CSU, now in cold-induced urticaria has been already demonstrated. So showing a good profile that's consistent with our expectations from 808 will be really a major inflection point for us. So that data would be very important early next year.

[Operator]

Our next question comes from Brad Canino from Stifel.

[Bradley Canino, analyst]

Nice quarter. One of the main discussions I still have is around how to think about the right eligibility proportion for AYVAKIT. And there is this thesis, and you even talked about this, that this number is likely dynamic over time where you might see there is a threshold for use around disease severity declines with physician experience. So I'm looking at this and you now have initial practices that have been installed for a year. You're highlighting that many of the practices have up to 10 or more patients on therapy.

So I want to ask what is your initial read? What are you seeing on the ground of the type of patient that's starting therapy today at those legacy practices where there is good AYVAKIT experience? And what is your vision for where this eligibility number goes long term?

[Kathryn Haviland, executive]

Thank you, Brad, for that question. And it's a great question as we really do see this as a growing overall pie. Philina, do you want to talk a little bit more about that?

[Philina Lee, executive]

Yes. Thanks, Brad. I think your hypothesis is really on point and we really do see a trend towards providers with that first positive experience on AYVAKIT where they're likely to select the 1 or 2 most symptomatic patients within their practice. We are really seeing a trend towards them broadening the lens on who's an appropriate patient for AYVAKIT towards patients who may have 1 or 2 predominant symptoms that are significantly impacting their quality of life.

Having interacted with a number of these providers firsthand and through our field intelligence, we see multiple signs of that deepening and we also see it reflected in our claims data as we look at the degree of symptom burden, ER visits and other measures of disease severity. What we're starting to see is a real trend towards that broadening lens of providers opening their minds to who's eligible for AYVAKIT. And so we think that portends very well towards us achieving the peak opportunity.

[Christina Rossi, executive]

Yes. And maybe just to add on to that, Brad, a couple of things. One, to Philina's point, really almost every SM patient in the United States is eligible for AYVAKIT. And we have such a broad label. And I think, to Philina's point, what we're seeing is that both prescribers and patients are widening their lens on the benefits of treatment, which increasingly we're beginning to understand, go beyond just sort of resolution of symptoms but really addressing some of the underlying drivers of the disease that we think could have longer term implications for these patients.

The other really interesting aspect of this market is sort of our increasing understanding that the prevalence may actually be underestimated and may be growing, right? So we know that the number of diagnosed patients has been growing over time. There's also increasingly data out there that suggests that the true prevalence of the disease could be twice what we thought it was. So I think the dynamics are really interesting and how they will play out to drive what ultimately could be a peak potential that's even greater than what we've estimated to date.

[Operator]

Our next question comes from Marc Frahm from TD Cowen.

[Marc Frahm, analyst]

Congrats on another strong quarter for AYVAKIT. Maybe over the last few quarters, last year or so, AYVAKIT has been growing like $15 million, $20 million a quarter at least. Just your guidance seems to assume quite a significant slowdown from that, I guess. And then all the commentary around huge patient population still to access and everything would be kind of pointing to the opposite.

I guess is there some sort of dynamic beyond just maybe people pushing out a month or 2 start because of summer vacations that is driving that? Was there some sort of stocking impact in Q2 or something else we should be thinking about? And then maybe longer term, to the last point of Christy is that maybe this opportunity is even bigger than $2 billion. I guess what do you need to see to -- what needs to happen to kind of give you confidence that it is $2.5 billion or $3 billion or something bigger than $2 billion?

[Kathryn Haviland, executive]

Thank you, Mark, for the questions. Philina, do you want to talk a little bit about how we've considered the range of variables that inform guidance? I mean maybe I'll just clarify very quickly. There is no stocking impact, Mark. We actually -- as we've mentioned on some other calls where we actually have kind of guidance and contractual guidelines within our channel that doesn't allow for that.

But maybe, Philina, you can talk a little bit more about how we're thinking about guidance in those range of variables.

[Philina Lee, executive]

Yes. And I think maybe first off, Mark, to your question about what do we need to see, I think it's exactly what we're seeing, which is giving us that conviction in the peak opportunity and that we're marching along the path to achieve that peak. I think it's valuable to sort of look to where we started this year and where we are now at the midpoint where our updated guidance represents a more than doubling of our revenue over last year.

To your question more about the dynamics and the growth rate, so certainly I think the guidance provides the best signpost for the continued growth. As I've alluded to, this represents substantial revenue growth year-over-year. The guidance factors in a number of variables. And so we've talked about how it's patients on therapy, which is a function both of new patient starts and discontinuation rates, which have been very low for attending chronic durations of therapy.

I think we've spoken a couple of times to the potential for seasonal impacts which we wouldn't be surprised to see around the times of the holidays. But importantly is that even if quarter-over-quarter is variable, it's the year-over-year that remains strong and puts us marching towards that impact.

Other factors that are important, we talked about the proportion of free goods, compliance and international where we certainly see potential growth and contribution there from our expanding geographic contribution.

[Christina Rossi, executive]

Yes. Thanks, Mark. Just to reiterate what Philina said, first of all, just on the sort of dynamics. I think we've had these conversations as we've talked about guidance for the year and how we think about quarter-on-quarter dynamics. This launch is not about sort of one quarter versus the next. It's about sort of the journey that we're on towards this incredible peak opportunity. And I think what this year has demonstrated is that we are -- that opportunity is absolutely there. We are capturing it. And big picture, we're in a place where we started the year with a guide of $3.50 to $3.90 and we've raised that substantially, right? So we really are very pleased with where we are right now and what that portends for future growth.

In terms of what we need to see to raise the peak, we have been strong in our conviction. I mean, I have seen this as a blockbuster opportunity going back to 2019. I think we have been on a journey, building a market that from scratch, really. And so I think we're bringing everybody along with us as we demonstrate that a market opportunity is really there. We'll raise the peak as we feel it is meaningful to kind of bring everybody along and as we continue to execute the launch and really show that that opportunity is there. But some of the things we're going to be looking at are exactly the dynamics that Philina said, right, that broadening of the lens on who may be an appropriate patient to treat.

The continued growth in diagnosed patients where suddenly we're seeing the number of diagnosed patients in the United States approach our initial estimates of what the actual prevalence of the disease is. It would not surprise me to be in a place where we could see more patients diagnosed than the 32,000 estimate that we had at launch. And so I think we'll continue to look at those dynamics, but this is really one of the most exciting launch opportunities that I've had a chance to experience in my career where you have the first disease-identifying therapy in a really serious, prevalent rare disease.

[Operator]

Our next question comes from Michael Schmidt from Guggenheim.

[Michael Schmidt, analyst]

Congrats from me as all on a great continued AYVAKIT launch here. Just one more on that. So you mentioned obviously treatment duration being one very important growth driver here. And so when you think about patients, what are you seeing in terms of patients that are using the drug continuously versus perhaps in a more intermittent way? And what are you seeing for refill rate and how you're thinking about that dynamic longer term ultimately?

[Kathryn Haviland, executive]

Philina, do you want to talk a little more about compliance and kind of how we're seeing patients continue on therapy here?

[Philina Lee, executive]

Yes. Thanks for the question, Michael. We're really pleased to see that that strong profile of AYVAKIT from PIONEER is playing out exactly as we hoped in the real world. I think we've shared earlier that advanced SM duration of therapy is now trending to 25 months and longer. If we look at our ISM trends relative to that, patients who have started on therapy are trending towards an even longer duration of therapy with very few discontinuations consistent with a multiyear chronic duration of therapy in the real world.

To your question on compliance, again I think, really pleased to see how high compliance remains in the real world, certainly towards the upper bound of analogs that we have seen. And we're really pleased to see all these impacts. We think, as Kate alluded to, this is going to become increasingly important contribution to our growth as we march towards that peak opportunity.

[Operator]

Our next question comes from Reni Benjamin from Citizens JMP.

[Reni Benjamin, analyst]

Congratulations on an amazing quarter and upping of guidance. Maybe for us, just of the top 400 or 450 docs that you're originally targeting, how many are prescribing? And is the idea to get all of them to kind of 10-plus patients? Or is there kind of a strategy to also start expanding beyond the original number of targeted physicians as you go through this launch?

[Kathryn Haviland, executive]

Yes. Thanks for that question, Ren. And Philina, do you want to talk a little bit more about the strength we've seen in the breadth and depth here in physicians adopting AYVA?

[Philina Lee, executive]

Yes, Ren, maybe just to be clear, our adoption and our breadth has been tremendous launch to date and continues to grow. It's certainly not limited towards just the top 400 providers by volume. That top 400 snapshot, I think, is most important to illustrate the dynamics of deepening that we've talked about. And we're really pleased to see that there are now providers who are treating more than 10 ISM patients. I think we would expect to continue to see deepening among those top 400.

But importantly, the breadth and depth that we're seeing is far more expansive beyond this. We see a growing number of hematologists, oncologists, allergists in the academic and community setting who are adopting AYVAKIT. And in fact, we also see these dynamics of deepening happening across that entire tranche of providers who are prescribing, which we think just really reflects again the strength of the profile in the real world and how providers can become comfortable with AYVAKIT and putting those repeat patients on therapy over time.

[Operator]

Our next question comes from Laura Prendergast from Raymond James.

[Laura Prendergast, analyst]

Congrats on the great quarter. Two quick ones from me. First, what -- I know they're obviously low, but what are the real-world discontinuation rates of AYVAKIT shaping out to be? And then for 808, how much of this clinical development fits into your financial -- into your guidance or financial self-sustainability, assuming once you have a healthy volunteer data, you'll probably want to move pretty rapidly into a Phase II for CSU and possibly other indications?

[Kathryn Haviland, executive]

Yes. Thanks for that question, Laura. Maybe Philina, can you just comment on the discontinuation? And then, Michael, you take the question about how much we have allocated to wild-type KIT. So let's go.

[Philina Lee, executive]

Yes, Laura, I think as we've alluded to the -- in the real world, the discontinuation rates that we're seeing are very low, right? So once patients start on therapy, they're staying on therapy. They're doing that in a highly compliant way. These are patients who have a very sticky preference, I think, when it comes to really balancing all of the things that they're doing in their lives to gain control over their disease, which includes sort of both the behaviors that they're taking to avoid triggers as well as how they're taking medication. It turns out this is an extremely compliant patient population.

And so mapping that over to some of the data I alluded to in EAACI, where we presented just strong and sustained symptom alleviation sustained QOL benefit as well as a very well-tolerated safety profile that was seen over a median of 2 years and with patients on therapy as long as 4 years and ongoing. And so we absolutely expect this profile to be playing out in the real world as well.

[Kathryn Haviland, executive]

And Mike, do you want to talk a little bit about wild-type KIT.

[Michael Landsittel, executive]

Yes. And then just with respect to kind of our financial guidance, so to answer your question, Laura, yes, like the development plan for wild-type KIT is baked into our guidance that we give about our confidence to be able to get to a self-sustaining financial profile.

Our priorities, as we look beyond AYVAKIT, are to continue to allocate capital to high-value R&D opportunities like BLU-808 that are going to drive our long-term growth rate. And so that is factored in. And obviously, we'll share more color on specific financial guidance as we get into that trial and see how the data plays out.

[Kathryn Haviland, executive]

And to your point, Laura, I mean with the really strong proof of concept that targeting KIT impacts core biology of disease that we've seen and that we believe it's really potentially the most promising way to improve patient symptoms and outcomes across a range of diseases.

We're very excited about this BLU-808 program. And as we said, I think this healthy volunteer data will be a significant inflection point for us that will help us think about how broad do we think this molecule could go. And that we're certainly going to look at that data to define. We have it as an absolute priority for investment, as Mike said, and we will consider even going beyond that as we anticipate this data to be very strong.

[Operator]

Our next question comes from Michael Ulz from Morgan Stanley.

[Rohit Bhasin, analyst]

This is Rohit on for Mike. On the ex-U.S. front, you mentioned expanding AYVAKIT to additional countries in 2025. Can you just talk about the opportunity and expectations there?

[Kathryn Haviland, executive]

Yes. Thanks, Mike. Christy, do you want to talk about our international expansion?

[Christina Rossi, executive]

Yes. So we are really pleased with what we're seeing from our international business. We had a great quarter this quarter. And importantly, we're really in the beginning stages of bringing AYVAKIT to patients globally and expect this to be a continued driver of top line revenue growth as we go forward from here.

The nature of the business outside the U.S. is that often pricing reimbursement is sort of a gating factor. And so launches tend to lag what we see in the United States. So what we're seeing right now is primarily Germany launching in ISM, but a number of other markets continuing to launch in advanced SM. We have a footprint throughout Europe. We also bring AYVAKIT to patients through distributors in Eastern Europe and other geographies. And so we have a great opportunity to continue to expand our revenue base.

I'd expect ISM launches to start to come online next year, primarily in some of the other major markets beyond Germany where we're actively engaged in pricing and reimbursement procedures, and sort of walking through that process now. So we would expect as those come online, we'll be able to start to commercialize in the larger ISM opportunity. So bottom line is continue to expect that to be an important driver of growth and it's certainly a contributor to that peak potential that we see for AYVIKIT globally.

[Operator]

Our next question comes from Ami Fadia from Needham.

[Ami Fadia, analyst]

I have 2 questions, one for Philina and just a follow-up to Brad's question from earlier. Can you talk through the spectrum of severity of patients across the 32,000-plus patients? And is there a way to, in some way, objectively quantify and map these patients in terms of sort of that decreasing sort of threshold for treatment? You've sort of done your patient activation efforts and gotten feedback from physicians. What's sort of your current thinking around that? And then I have another one for Becker.

[Kathryn Haviland, executive]

Please go ahead with your second question, Ami, because we'll shut the line after.

[Ami Fadia, analyst]

Sounds good. Just with regards to BLU-808, is there some sort of a biomarker or a metric that we should be looking for in order to understand the breadth of application of the data from the healthy volunteer study that will read out next year?

[Kathryn Haviland, executive]

Thanks, Ami. So Philina, I think the first question around the spectrum of kind of disease burden that we're seeing as patients are coming on AYVAKIT and how we think about that. And then for BLU-808, Fouad, you want to talk a little bit about how we're going to be looking at target engagement in the healthy volunteer study.

[Philina Lee, executive]

Yes. Thanks for the question, Ami. I think as Christy alluded to, given the breadth of the label, virtually all patients who are adults living with ISM are eligible for AYVAKIT. And certainly, I think the dynamic we're seeing playing out in our launch to date is really starting with patients who tend to be on the more severe end of symptomology, but broadening towards an ever-widening lens on who is an appropriate patient.

And we're seeing that, I think, both on the provider side as they gain experience as well as on the patient side as patients who are on that step of considering AYVAKIT are encountering more of their providers gaining that experience, having comfort managing AYVAKIT and identifying "I have an opportunity to address these 1 or 2 symptoms that are really impacting my quality of life".

I think importantly, just the way we think about ISM too is really, it's not just a static disease. It's not necessarily even just treating the symptoms that's important. This is a disease where you have too many mast cells, too many abnormal or mutated mast cells in the bone marrow and other organs of the body that's leading to worsening of symptoms over time, that's leading progressively to impacts on bone health and other elements of the biology, that's leading the potential for a progression. And so I think one piece we're also seeing on the leading edge with key opinion leaders is really that urgency to treat ISM in an attempt to improve that natural history of the disease.

[Kathryn Haviland, executive]

Maybe just to add one thing, Ami, is at the beginning of this year, we did kind of -- as we look at claims data, which Christy already could have talked through how we believe that that's likely an undercall of what the overall disease prevalence is. But we said there's just about a little under 10,000 patients who would qualify as moderate-to-severe. So those are patients that are kind of right in line with our PIONEER clinical trial. And so if you think about 10,000 there plus this broadening aperture, really we are just scratching the surface of this opportunity and there are thousands of patients who could potentially benefit from AYVAKIT, which again leads to our conviction on this peak opportunity.

Fouad, do you want to talk little bit about BLU-808 and the…?

[Fouad Namouni, executive]

I mean for BLU-808 and the data that we'll see from healthy volunteers will cover, obviously, the safety which is important, but also the pharmacology pharmacodynamics. And we're looking at the wide number of pharmacodynamic markers in the healthy volunteer study.

As we all know, when we talked about it at our past webinar a few months ago, wild-type KIT as a target is really an ideal target to tackle type 2 inflammation or inflammatory diseases and the range of applicability is pretty broad. The way we are thinking about it or the way we are tackling that and increasing our confidence in the opportunity for BLU-808 is really not only looking at biomarker but rapidly looking at clinical -- multiple clinical proof of concept as we finish the execution of the very early study that we just started. That will give us even an idea on the breadth of the diseases with type 2 inflammation diseases that we will go to with the BLU-808.

[Operator]

Our next question comes from Matt Biegler from Oppenheimer.

[Matthew Biegler, analyst]

Congrats on the front from us as well. Can you comment on whether there's been any net pricing increases quarter-over-quarter? And if so, could you break down revenue growth by price versus volume is a question that a few investors have asked us.

[Kathryn Haviland, executive]

Thanks for the question, Matt. I think that's an easy one. I can just take that. But no, we have not had any quarter-over-quarter net pricing increases. So that's not one of the contributing factors.

[Operator]

Our next question comes from David Lebowitz from Citi.

[Unknown Analyst]

John on for David. On AYVKIT, can you contextualize some of the trends you're seeing for prescribers at academic centers versus community centers? And in the slides, it appears that the relative proportion of community docs has ticked slightly down from the last quarter. So just any color there would be helpful.

[Kathryn Haviland, executive]

Yes, John, thanks for the question. I think one of the things that we've been really pleased about is the participation of the community so early even in the first quarter of our launch. But, Philina, do you want to talk a bit more about that split?

[Philina Lee, executive]

Yes, sure. So as Kate alluded to, I think, really the breadth of prescribing is one of the most important lead indicators in a chronic rare disease launch like this one. We see that as a great sort of lead for continued growth and prescribing. The trend that you're speaking to in terms of academic and community, so I think first off, we've just been pleased to see broad adoption across all specialties as well as settings, academic and community, hematology, oncology as well as an increasing number of allergists.

The trend that we're seeing this quarter, I think, probably speaks more to the extent of deepening that we're seeing, which is likely occurring more within those centers of excellence. But as I alluded to before, we're really seeing deepening along that entire curve of providers who have adopted AYVAKIT. And so we expect both continued breadth as well as continued depth across all specialties and settings over time.

[Operator]

Our next question comes from Peter Lawson from Barclays.

[Unknown Analyst]

This is Alex on for Peter at Barclays. Just on elenestinib, just wondering if you could remind us how that molecule differentiates or improves on the profile of AVYKIT. And then how should we think about the time needed to complete the pivotal study?

[Kathryn Haviland, executive]

Thanks, Alex, for the question. Christy, do you want to talk about elenestinib?

[Christina Rossi, executive]

Sure. So we're moving out on elenestinib forward. It's our next-generation KIT D816V inhibitor. As we said before, it's another very potent selective molecule. Primary point of differentiation is around brain penetrance although increasingly we know we don't think that's necessarily relevant in ISM. So our strategy is really to bring this forward in a way where we can really clinically differentiate and address where the disease is going in ISM.

So we now understand the biology of the disease, the spectrum of the disease in a much deeper way than we did 10 years ago at Blueprint Medicines. And I think the frontier has really moved in terms of what the expectations are for treating patients and really moving towards that goal of really eradicating what is a very serious chronic disease in this patient setting.

And so when we think about Part 2 of HARBOR, we're really being thoughtful in terms of how we bring elenestinib forward to really demonstrate that differentiated clinical impact on ISM. And again, we'll be sharing more about that as we head into the end of the year.

[Operator]

Our next question comes from Andy Berens from Leerink.

[Andrew Berens, analyst]

Congrats on the numbers. Two questions from me. I was wondering if you could give us some insight into the 20% free drug number. I recall in Q1 of last year, you told us a bit over $5 million of the ASM revenues were from free drug purchased by tradable organizations. Can you give us the number this quarter? Do these patients have their drug purchased by charitable organizations? Are they ultimately converted to paying patients? Just trying to get a sense whether they're expected to grow as the patient numbers increase in order to maintain this sub-20%.

And then the second question would be what percentage of the ISM patients escalate to 50 milligrams or higher?

[Kathryn Haviland, executive]

Thanks for the question, Andy. Christy, do you want to take both of those?

[Christina Rossi, executive]

Sure. Nice to hear from you, Andy. We are, as you said, really happy to see kind of the dynamics that we're seeing with free drug in this launch. And a lot of the evolution comes from the underlying dynamics in the patient population, right? So as Kate said, we are launching really more into a chronic immunology space with ISM. Patients are younger. The payer mix is different, so we see more commercial patients. And that naturally will help start to reduce our exposure to free drug.

In addition, we see some benefit this year from the IRA redesign, which has limited patient out of pocket and basically means that more patients can afford to access paid therapy, whether that's on their own or with the addition of external sources of support that patients may find on their own. This dynamic is very different than what we saw last year that you're alluding to. The reason why we quantified and were able to quantify that dynamic last year was because it was in the setting of advanced SM, and we knew that that sort of tailwind was temporary and would unwind, right?

So we knew that we had a proportion of patients who would access free drug, but unfortunately -- or paid therapy, but would have to move back to free drug. In this case, what we're seeing is that patients who access commercial therapy, we expect that to be a permanent situation for as long as they're clinically indicated to be on treatment, which again an ISM tends to be for long periods of time. So we expect that benefit to continue.

As Philina said, we think that the rate of free drug overall has reached a relatively steady state. So as we think about guidance going forward, we wouldn't expect that to be a big driver one way or the other.

[Kathryn Haviland, executive]

You want to talk a little bit about what we're seeing in terms of the 50-milligram usage?

[Christina Rossi, executive]

Yes. So we continue to report patients starting at 25 milligrams being the vast majority of patients we're seeing across SM. We really don't see a lot of utilization of 50 milligrams. Where we've seen it, it tends to primarily be utilized in centers of excellence where they're really treating the full spectrum of SM patients. And we know it's the spectrum, right? We see patients from advanced to indolent. It's a very clinically heterogeneous patient population and that each patient need is unique.

And so the fact that we have a range of safe and effective doses available for patients that prescribers can easily access is a huge strength of this profile. One of the things we've learned about SM is that it's not a one-size-fits-all disease. It's not a one-dose-fits-all patients disease. But for the vast majority of ISM patients, 25 milligrams is the right dose, and that's certainly what we're continuing to see in the real world.

[Operator]

Our next question and last question comes from Sudan Loganathan from Stephens.

[Sudan Loganathan, analyst]

Congratulations again on your great quarter. My first question is more big picture on your views on the business development. With the growing cash position and ongoing acceleration of AYVAKIT launch, do you have the appetite for bolt-on deals to bring in earlier late-stage clinical assets into the mix that may benefit from the groundwork that AYVAKIT has set? Or is the focus still on developing the pipeline from the discovery stage kind of endeavors akin to what you're doing with the targeted protein degradation portfolio?

And then secondly, on HARBOR study, do you anticipate there would be any challenges with enrolling for ISM patients for the study with the effect of AYVAKIT on the market for the same indication? Will there be any patients enrolled in this program that may actually be refractory to AYVAKIT getting on with that profile fit to test out there?

[Kathryn Haviland, executive]

Thank you, Sudan, for the questions, and welcome. We really appreciate your kind of joining the Blueprint coverage team here. So in terms of those questions, maybe Christy, you can start with BD, and then Fouad, you want to talk about HARBOR.

But -- and, Sudan, one of the things that I think has been a strength of Blueprint Medicines in the almost 9 years that I've been here is that we consistently think about business development, both on the buy side and sell side, as ways of achieving and optimizing our corporate goals and optimizing our business. But maybe, Christy, do you want to talk a bit more specifically on how we're thinking about BD?

[Philina Lee, executive]

Yes. So as Kate said, I mean this is, to us, a strategic lever to optimize the portfolio in terms of both inbound and outbound business development. We are constantly sort of engaged on that front, scanning kind of the external environment, looking for things that could be a fit, talking to strategic companies, again, both from an inbound and outbound business development perspective.

We are very clear about what our priorities are, right? So we've been very clear in terms of capital allocation, our time and attention and effort. It's very much from a clinical and commercial perspective particularly focused on advancing our mast cell disorder franchise. And that's really around continuing to execute the AYVAKIT launch as well as the AYVAKIT clinical development program, which continues to be prolific and generate a lot of important data, bringing elenestinib forward.

And then very importantly, BLU-808, which as we said on this call, we are really moving towards, we think, an inflection point here as we get that Phase I data and believe that we could advance across a number of fronts to bring this forward to patients suffering from mast cell disorders.

So that is our focus and nothing from a BD perspective is distracting from that focus. But of course, we're going to continue to look and open to things that make sense strategically, both from an inbound and outbound perspective.

[Kathryn Haviland, executive]

And maybe to just add one other thing is that we have been -- we would be remiss not to talk about the fact that our discovery team has been prolific in driving innovation at Blueprint Medicines. I mean I think we're now at 17 development candidates that come out of our labs.

Like, we're the only company that brought 2 candidates from our lab, 2 FDA approval in less than 10 years. Our research and development teams are just absolutely top notch, top quality, and that just gives us an incredible opportunity to have that internal innovation engine that really enables us to keep a high bar as we think about external innovation.

Fouad, do you want to talk about HARBOR?

[Fouad Namouni, executive]

Yes. I mean I'm going to build on the innovation team. And I'm very happy to really say that our teams continue to innovate to really design a registrational strategy for HARBOR that will differentiate elenestinib from AYVAKIT. In answer to Christy's earlier point, major questions that will be -- are needed to be answered in many years from now.

In terms of execution of elenestinib and the availability of AYVA as the standard of care today, we don't expect major challenges in terms of repeating patients. First, because institutions that do clinical trial that really have that skillset and that performance aspect of, at the same time doing clinical trial, but also treating patients and they know how to do this.

Also, I mean the study will open in the U.S. And as we did with PIONEER, the study will also open in a number of international sites to support the recruitment and to also help patients from other countries to get access to elenestinib trials. So we are very confident about our ability to execute elenestinib HARBOR Part 2 study.

[Operator]

We currently have no further questions. So I would like to turn the call back to the CEO, Kate Haviland, for closing remarks. Please go ahead.

[Kathryn Haviland, executive]

Thank you, operator. And as we cross through the second half of 2022, we are in a tremendously strong position thanks to our people who are driving the success of Blueprint Medicines. I'm extremely proud of the hard work, contributions and dedication of our entire team at Blueprint Medicines as we deliver on our commitment to patients with systemic mastocytosis and beyond. Thank you all for taking the time to join us today, and we thank you for your continued support of Blueprint Medicines.

[Operator]

Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines. Thank you.