Blueprint Medicines Corp

NASDAQ:BPMC

Earnings Call Analysis

Blueprint Medicines Targets $500M Revenue with AYVAKIT and Promising Pipeline

Blueprint Medicines reported robust growth for its flagship drug, AYVAKIT, generating $128.2 million in Q3, a 137% increase year-over-year. The company raised its 2024 revenue guidance to between $475 million and $480 million, reflecting strong patient additions and compliance. AYVAKIT is on track to exceed a $2 billion revenue opportunity. International markets are also performing well, and cash burn is expected to decline significantly. Blueprint is focused on expanding its mast cell therapy portfolio, including upcoming studies for BLU-808 and elenestinib, while enhancing patient outreach initiatives to solidify its market position and drive sustainable growth into 2025.

Strong Revenue Growth from AYVAKIT

Blueprint Medicines reported a remarkable 137% increase in net product revenue from AYVAKIT in the third quarter, reaching $128.2 million, up from previous levels. This growth was primarily driven by strong patient demand and favorable patient compliance, boding well for the company's future prospects.

Revised Revenue Guidance

The company has raised its revenue guidance for AYVAKIT, now projecting 2024 net product revenues to be between $475 million and $480 million. This adjustment reflects an optimistic view on ongoing patient growth and retention, along with robust performance outside the U.S.

Sustained Patient Engagement and Compliance

The number of patients on AYVAKIT therapy continues to grow steadily, with new patient starts remaining strong and discontinuation rates being notably low. This effective patient management has reinforced the clinical benefits of AYVAKIT, enhancing treatment adherence.

International Expansion and Growth Potential

Blueprint is seeing significant international growth, particularly in countries like Germany, where AYVAKIT's launch dynamics parallel those in the U.S. The company expects ongoing international sales to contribute meaningfully, alongside planned market expansions in 2025 and beyond.

Focus on Long-term Growth and Sustainability

With a stable cash position of $882.4 million and decreasing cash burn, Blueprint is poised for sustainable financial growth. The company’s disciplined investment strategy will prioritize its mast cell therapy portfolio, further reinforcing its market position and aiming for a peak revenue opportunity exceeding $2 billion with AYVAKIT.

Investments in New Therapies: BLU-808

The company is not just focusing on AYVAKIT, but also on developing BLU-808, a wild-type KIT inhibitor, targeting chronic urticaria and related mast cell diseases. This development aims to expand the company’s impact and address significant medical needs, diversifying Blueprint's therapeutic offerings.

Market Dynamics and Future Outlook

Despite existing challenges in the wider healthcare market, Blueprint has managed to navigate these effectively, ensuring strong sales trajectories for AYVAKIT. The anticipated data for BLU-808 will provide crucial insights into its impact and potential, setting the stage for future growth.

Annual Cycle and Seasonal Trends

As the company transitions to the final quarter of the year, it notes the potential for seasonal variations impacting patient starts. However, the overall annual trajectory indicates strong growth, with management demonstrating confidence in navigating these trends effectively.

Upcoming Initiatives and Strategic Partnerships

Blueprint is exploring opportunities for direct-to-patient initiatives and partnerships in order to broaden its reach and fortify its position in both existing and new markets. This approach will bolster its growth strategy as it capitalizes on its market knowledge and expertise.

Earnings Call Transcript 2024-Q3

[Operator]

Good morning. My name is Nadia, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Blueprint Medicines Third Quarter 2024 Financial Results Conference Call. [Operator Instructions]. Thank you. Jenna Cohen, you may begin your conference.

[Jenna Cohen, executive]

Thank you, Nadia. Good morning, everyone, and welcome to Blueprint Medicines Third 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 today by going to the Investors 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&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 morning, we reported another strong quarter of AYVAKIT revenue growth. Adding additional momentum to our impressive year-to-date results and providing a strong foundation for us to drive long-term shareholder value creation in 2025 and beyond. AYVAKIT sales trajectory has given us the confidence to raise our revenue expectations significantly over the course of this year. And we now estimate that we will end the year between $475 million and $480 million in product revenue. We are on a $0.5 billion run rate in our first full year of ISM launch. Placing AYVAKIT firmly on the path to realizing its more than $2 billion peak revenue opportunity and positioning AYVAKIT's launch in ISM to be among the most successful rare disease launches to date.

To build a blockbuster medicine, we must demonstrate a significantly meaningful and differentiated clinical impact that transforms treatment paradigms and diseases with high medical need. This is so simple to say and not easy to do. At Blueprint, we have demonstrated that AYVAKIT drives clinically meaningful, deep and sustained symptom impact for patients with ISM. Now over several years in the pioneer study, with a consistent and well-tolerated safety profile. Treatment with AYVAKIT is allowing ISM patients to reclaim control of their lives and is transforming the treatment paradigm in ISM.

With continued long-term data generation and strong commercial adoption, we believe AYVAKIT is setting up to be the durable market leader across the spectrum of both advanced and indolent ISM for years to come. Building a blockbuster brand has never been easy. It has only become harder as therapeutic areas have become saturated as legislative regulatory and market access headwinds have strengthened all on the backdrop of what has been a challenging macro environment in recent years. At Blueprint, we have successfully managed through all of these challenges. Our commercial and medical teams have done a tremendous job navigating the range of short-term quarterly dynamics we face, including the industry-wide dynamics all medicines face, the dynamics that are intrinsic to rare disease markets and launches as well as the dynamics are unique and specific to the asset market.

While managing all these short-term dynamics, we have always maintained conviction AYVAKIT more than $2 billion peak revenue opportunity. And we continue to be focused on building a foundation for long-term growth in delivering compelling results year-over-year. Philina will talk in more detail about our commercial results shortly. Leveraging our leadership in ISM and our deep expertise in mast cell biology, we are working to broaden our impact by addressing the significant medical needs of thousands of patients with BLU-808, our wild-type KIT inhibitor. We designed BLU-808 to raise the bar on when a treatment for chronic urticaria and other mast cell mediated inflammatory diseases can offer. By taking into account the full patient experience. efficacy, tolerability and the burden associated with administration.

We see the opportunity for BLU-808 is twofold: to command a large share of significant established markets and to drive further growth by expanding the treated populations in those markets. Christy will provide an update on the progress we have made across our portfolio later on the call. As we report our Q3 results today, AYVAKIT's strong revenue ramp coupled with our disciplined investment in our most compelling product opportunities, places us in a position to realize a significant decline in cash burn this year, while maintaining our focus on long-term growth and value creation. We are building a solid financial foundation for Blueprint's future. Mike will talk more about our financial results later on the call, and we look forward to reviewing our portfolio priorities in early 2025. I will now turn it over to Philina to discuss this quarter's commercial performance in more detail.

[Philina Lee, executive]

Thanks, Kate. In the third quarter, AYVAKIT achieved $128.2 million in net product revenue with $113.1 million in the U.S. and $15.1 million ex U.S. This represents a 137% increase year-over-year, and our conviction in this blockbuster brand has never been stronger. Our team's efforts are coming to fruition as we build this market, and AYVAKIT's strong launch trajectory proves our success. Growth this quarter was driven by strength in our key business fundamentals. First, we continue to see strong and steady growth in patients on AYVAKIT driven by new patient starts and low discontinuations. Growth in patients on therapy is driving AYVAKIT's successful launch.

At our last call, we anticipated seasonal dynamics around summer holidays might impact patient starts and compliance, but this turned out to be less of an issue than expected. Our team did a great job managing through these dynamics, resulting in strong demand towards the end of Q3. We have a large base of patients on therapy, and we expect this to continue growing. Compliance remains high, consistent with what we've seen and trends in duration of therapy remains strong, demonstrating the real-world benefit patients see on AYVAKIT. Second, our mix of free and commercial goods remain stable. Our average free goods rate since ISM approval is in the mid-teens and has stabilized over the past 2 quarters. We expect this to remain consistent for the remainder of the year.

Finally, our international team delivered strong results this quarter, driving growth in advanced SM across several geographies and an IFM with the launch underway in Germany. Germany comprises the majority of international sales and the ISM launch dynamics we're seeing there mirror what we've seen in the U.S. In the third quarter, strong growth in volume offset a lower price accrual from our planned German price reassessment process, which will be complete by early next year. We anticipate geographic expansion across both advanced SM and ISM to continue to drive growth in 2025 and beyond as we launch them in additional markets. Breadth and depth of prescribing are strong lead indicators of continued growth. This chart shows how first positive experience with AYVAKIT leads to repeat prescribing among the top 400 providers by SM patient volume. But this is just part of the story.

We're engaging with several thousand providers beyond the top 400, and adoption is growing across this broader range. As AYVAKIT experience grows, we see new [ hem/oncs ] and allergists prescribing with adoption evenly split across academic and community settings. These dynamics are exactly what you'd want to see in a strong launch and they plant the seeds for continued growth. We have also seen the first examples of prescribing by additional specialties such as dermatologists. For example, we're seeing cases where dermatologists can become the local SM champion, motivated to diagnose and move more patients to treatment.

This dynamic bodes well, proving yet another opportunity to further grow the market and our ability to capture it with AYVAKIT. Awareness of FM continues to grow across a broadening spectrum of specialists who touch the constellation of disease symptoms. We understand the SM market better than anyone else. What activates patients to start a therapy that targets the root cause of ISM what drives urgency to treat among providers and how to streamline access to therapy. Now let's dive into some of our latest provider and patient initiatives. Our team recently launched a new branded campaign for providers designed to challenge the notion of well controlled along with resources that highlight the 2-year safety and efficacy data we presented at the European Academy of Allergy and Clinical Immunology Conference.

These data are valuable to providers considering AYVAKIT, and Christy will share more on this. Having made progress educating the provider base and growing AYVAKIT experience among [ hemoncs ] and allergists we can now further expand on our direct-to-patient initiatives. We recently launched a patient campaign to raise awareness and spotlight how Avocet targets the source of the disease. We also launched a new patient mentor program, increased support for face-to-face patient events and expanded our patient a master programs. We know that patients find it helpful to hear from other patients as they consider starting AYVAKIT, and an educated patient is a catalyst for treatment.

Our efforts with the SM community are working. AYVAKIT is helping more patients every quarter, and we are continually enhancing and expanding our initiatives as we drive this launch towards its peak potential. I'll now turn it over to Christy to share more about our data generation efforts and near-term catalysts as we head into 2025.

[Christina Rossi, executive]

Thanks, Philina. We have been treating SM patients with AYVAKIT in clinical trials since 2016. And have spent the last 8-plus years amassing a significant body of evidence on this long-term impact across the spectrum of this disease. In Advanced SM, we've been able to demonstrate significantly improved overall survival versus prior standard of care therapies. In an ISM, we know that HCPs and patients find longer-term data on the safety and clinical impact of AYVAKIT, meaningful and motivating in the setting of a chronic lifelong disease. We've continued to publish long-term follow-up data from the open-label extension of the PIONEER study. Most recently, we presented updated data demonstrating that with a median follow-up of more than 2 years, and with some patients treated as long as 4 years, AYVAKIT showed durable efficacy and a favorable safety profile.

Safety data were consistent for a subset of patients who dose escalated to 50 milligrams once daily, reinforcing the flexibility that HCPs have to customize treatment based on the individual needs of their patients. What that blueprint apart, however, is not just the mountain of evidence we continue to amass with AYVAKIT. Our team has developed a tremendous command of the SM market by being at the table with a broad group of health care providers diagnosing and treating patients every day. We have an unparalleled depth of knowledge and expertise across the continuum, from research through development to commercialization, which affords us an evolved understanding of patient and provider needs over the long term.

This creates a virtuous cycle where Insight fuels innovation, enabling us to drive progress with AYVAKIT and guiding us on how to deliver and evolve value proposition with elenestinib our next-generation KIT D816V inhibitor. And we're establishing the same virtuous cycle in mast cell disorders more broadly. It was insight and feedback from allergists that inspired us to pursue a potent, selective and tunable oral wild-type KIT inhibitor, resulting in BLU-808. And just last weekend at the American College of Allergy, Asthma and Immunology meeting in Boston, I saw firsthand evidence of scientific exchange sparking new ideas and driving strategy and impact across our mall portfolio.

As we approach the end of what has truly been an exceptional year and look ahead to 2025, I'd like to touch on some of the near-term milestones and catalysts our team is focused on, starting with our primary strategic priority of advancing this mast cell portfolio. This includes the successful global commercial launch of Avocet, which Helena discussed today. It also includes the advancement of elenestinib, where we remain on track to initiate the registration-enabling Part 2 of the HARBOR study by year-end and BLU-808, which has been moving through a Phase I study in healthy volunteers. We anticipate sharing this data early next year, including initial data on BLU-808 safety profile, drug-like properties, and early biomarker responses that will help to inform how we think about the potential for broad disease impact.

I hope you have attempts to dial in for the second in our series of science focused seminars on November 14. And where we plan to talk more about the strategic development plans for our mast cell therapy franchise. Regarding our cell cycle portfolio, we have been closely tracking the emerging data sets, including those shared at ESMO that continue to validate the promise of targeting CDK2. We are nearing the end of the combination dose escalation portion of the Phase I BELA study. And in parallel, we have also advanced our next-generation program particularly our CDK2 degrader, more quickly than we originally expected. Given the significant investment and capabilities required to move into later stage breast cancer trials, we've been clear that we will not move BLU-222 forward beyond the space of development on our own and have been engaging in strategic partnership discussions.

Through these conversations, we are evaluating the emerging data from CDK2 inhibitors as well as the profiles of our next-generation assets to determine what may be the best-in-class approach and therefore, with the optimal structure and timing of a potential partnership would look like. We anticipate sharing more about our plans and priorities early next year. In 2024, our team has executed to both drive exceptional top line revenue growth and prioritize our investments in our highest value programs, laying a strong financial foundation for sustainable corporate growth.

I will now turn it over to Mike to discuss our financial results.

[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 third quarter, total revenues were $128.2 million from net product sales of AYVAKIT, and as mentioned earlier, we are raising our AYVAKIT product revenue guidance and now expect to achieve $475 million to $480 million in net product revenue in 2024. This updated guidance is based on continued growth in total patients on therapy, continued favorability in compliance and other factors and stronger-than-expected performance outside of the U.S. Our gross to net margin remained stable in the mid-80s and our international business is on track to break even by the end of this year.

Our total costs and operating expenses remained relatively flat at $177.2 million for the third quarter. We anticipate that both our R&D and SG&A expenses will remain relatively consistent as we close out the remainder of this year. As we look ahead to 2025, our capital allocation priorities remain squarely focused on investment in our mass cell portfolio. This is to ensure that we're capturing the clear opportunity that the SM market represents with the commercialization of AYVAKIT and advancing our pipeline of other mast cell therapies to drive long-term growth in areas where our conviction around disease biology is clear. We plan to share more perspective on our 2025 capital allocation strategy early next year.

We continue to strengthen our financial position with $882.4 million in cash on hand at the end of the quarter. And importantly, we've seen our cash burn drop significantly in 2024. And we expect this trend to continue in 2025, reinforcing our clear path to financial sustainability. With the ongoing success of the AYVAKIT launch and our commitment to disciplined investment to drive growth, we are in a great position to continue to create long-term shareholder value.

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

[Operator]

[Operator Instructions] roster. Our first question goes to Marc Frahm of TD Cowen.

[Marc Frahm, analyst]

Congrats on another strong quarter. Maybe just on the ISM side to start. Just you're getting a meaningful number of patients out at 6, 12 months now. Any type of reauthorization criteria you're seeing or any type of maybe headwinds we should expect in terms of discontinuation starting to kind of factor into the launch trajectory? And then as we get to the wild-type KIT inhibition data next year, just curious, kind of, where you think the thresholds are of kind of target engagement to kind of induce a response? And do you really need to hit those levels chronically? Or do you think more of a pulsatile or induction maintenance might be the best approach.

[Kathryn Haviland, executive]

Thanks, Marc. So Philina, maybe you can talk about what we're seeing in terms of authorizations and for patients and then Fouad, I'll hand it over to you for a more BLU-808 and what we're expecting there.

[Philina Lee, executive]

Marc, as you mentioned, we are seeing a significant and growing patient base of patients on therapy, and we expect this to continue to grow. In terms of reauthorizations, I think overall, we are incredibly pleased with the strength of access that continues. We have secured and maintained strong payer coverage. We have not seen problems with reauthorization. In terms of the discontinuation rates, that remains very low.

And as you know, I think the two things that continue to drive this launch is growing that strong patient base as well as our ability to retain patients on therapy. So we're really pleased to see the trends in duration of therapy, which really connect to the potential for long-term chronic treatment.

[Fouad Namouni, executive]

And Marc, thank you for the question on wild-type kit. As we all know now, [ type kit ] is a very well validated target. I've seen a lot of good work from biologics there. I think developing a small oral molecule like 808 give us the flexibility to really tune and titrate the development and the schedule of this monocline variety of diseases and allow us really to navigate between the inhibition of the activity and the degranulation of mast cell all the way to the depletion of mast cell. And I think having such a molecule like we give us the flexibility, and we are happy to work with this type optimal molecules.

[Operator]

The next question goes to Brad Canino of Stifel.

[Bradley Canino, analyst]

I actually consider this to be the most aggressive guide you've provided in terms of implied growth in forward quarters. I think feedback I've gotten from investors, and I imagine what you've heard as well is that some of the previous guides appeared a bit too conservative. Can you help us understand how your forecasting views and abilities have changed, particularly as you think about how to incorporate variables for the 2025 guidance coming up next year?

[Kathryn Haviland, executive]

Yes, Brad, thank you. I mean we're incredibly pleased to be at a point at this point in the year where we can now say that we're going to be nearing $500 million in revenue this year, which is a really tremendous place to be. And as you said, we've raise the guide we've also tightened the range to $475 million to $40 million. But could you do you want to talk more about the last year guidance, which I know we've talked about BT and how we think about this year as well as next year

.

[Christina Rossi, executive]

Yes. Thanks for the question, Brad. So our philosophy throughout the year has been to try and look at the range of variables that influence revenue, provide our best estimates on how we think -- what the range of outcomes on those variables may look like? And then what do we think that could imply for revenue in the context of a launch into a category that did not exist before, a market that we are building for the first time. And the first disease-modifying therapy in that market, which is an incredible privilege and such an opportunity, right? So many markets, you're fighting for market share and trying to have patients switch off of therapies, and we are really building an entirely new market opportunity, which is compelling, but has its challenges.

And certainly, I think forecasting the first year of sales in that context can be a little bit difficult. We've definitely done our best, and we are thrilled that we have exceeded our own view, frankly, of how these variables might fall through the year. We're now in a place where we're 10 months into the year. And so we are providing a guide essentially on Q4. Our ability to forecast how we will land 1 quarter is obviously much tighter than when we're looking at a whole year. And so this guidance really represents our best thinking on how we will end the year. And it's really as simple as that as we go into guidance for next year, clearly, we will now be more than a year -- well more than a year into the launch. So we know this market quite well. We're still, of course, forecasting new therapy in a new market, but I think have a good sense of some of the key variables that will impact.

We typically set guidance, as you know, on our Q4 call, having some early experience next year with aspects like, for example, free drug in the context of the IRA changes will be really informative and helpful to us as we think about setting that guidance. But philosophy will stay the same.

[Operator]

The next question goes to Ren Benjamin of Citizen at JPM.

[Reni Benjamin, analyst]

Congratulations on a great quarter. Can you talk a little bit about the direct-to-patient ad campaign and the new patient mentor program? How does it potentially impact SG&A? And how do you evaluate whether this is working or not? And if it if it isn't working, what are the other options that you have at your fingertips to grow market share?

[Kathryn Haviland, executive]

Thanks, Ren, for the question. I think -- and first and foremost, I think we're at such a wonderful place in this launch, where we have critical mass, where it now makes a lot of sense for us to be kind of doubling down and pushing forward on some of these direct to patient campaigns and initiatives that Philina talked about. But Philina, do you want to talk a little bit about how you think about that relative to SG&A spend and the impact of these types of efforts as we look to kind of activate and educate patients.

[Philina Lee, executive]

Yes. Ren, I think maybe just first off, starting at the enterprise level. We've talked about how our -- our top priorities for investment in Blueprint's growth are really across our mast cell portfolio, including the AYVAKIT launch, elenestinib and 808. And we will certainly look to continue to find opportunities to invest where we see the most impactful benefit in terms of return on investment. And so in terms of how that translates into the AYVAKIT launch, you've just seen with our updated guidance that we are well on the course to deliver nearly $0.5 billion in revenue firmly on the path to achieve that peak conviction has never been this strong.

Now is the time for us to be leaning in further into these direct-to-patient initiatives now that we have secured an activated and growing prescriber base that continues to grow we have the opportunity to lean in and further engage and activate patients. Why that's important is we continue to see that challenging that notion of well-controlled is critically important to open patients aperture to what may be possible in terms of starting on a disease-modifying therapy. While patients may have become acclimated to the sense of a new normal or sort of coping with the disease and like restricting their behaviors and their activities, there's nothing more compelling than just hearing from another patient, their experience on AYVAKIT and what it can feel like, how transformative that can be to reclaim what that new normal is like.

And so going into those direct-to-patient initiatives, both in terms of raising awareness, talking about the importance of targeting the source of the disease and creating more of these opportunities for patients to hear from other patients will be a critically important component of continuing to drive in this launch.

[Operator]

The next question goes to Michael Schmidt of Guggenheim.

[Paul Jeng, analyst]

This is Paul on for Michael. Just a quick one on AYVAKIT performance in the third quarter. Was the sort of anticipated summer seasonality actively counterbalanced by efforts on your end? Or did it simply play out less than expected. It would be great to your thinking on seasonality in ISM in general over the balance of the full 12 months now that you've had 1.5 years on the market. And then my second one is just on BLU-808 and early signals of activity that we might see. How do you think about some of the classic markers like mast cell [indiscernible] reduction for the oral agent just compared to what's been shown by the kit antibodies. And what's the right way to think about correlation between those biomarkers and clinically relevant endpoints like the year to carry activity score.

[Kathryn Haviland, executive]

Yes. Thanks, Paul. There's a lot in that. So maybe line, if you could take the first piece and then we'll hand it to Fouad. One thing I would just say is that the commentary that we have been making around as we think about new patient starts since before we even launched is this is a rare disease, and we expect there to be variability in lumpiness on a week-by-week type of basis. But over the longer perspective, we continue to believe there'll be strong and steady growth in patient on therapy.

And the commentary we made on the last quarter was that -- and it is not about if patients start, it's about when. And I think what has been really clear is both of those things allayed out exactly as we have described. So Philina, would you like to talk more about that.

[Philina Lee, executive]

Yes. So I think Kate teed it up really well. We've alluded to some of the short-term quarterly dynamics that can impact a particular quarter. We know that holidays have the potential to impact the timing of patient starts to go to the next visit. What we saw in the third quarter is that our team has done an incredible job managing through these dynamics. With a strong increase of demand through the back half of the year. But I think most importantly, sort of lasering out from the quarter to quarter is really that year-over-year trajectory. And we can see from the updated guidance. We are on a path to deliver over 100% growth year-over-year. And again, I think that places us firmly on the path of marching towards that greater than $2 billion peak.

[Kathryn Haviland, executive]

And then Fouad, do you want to talk a little bit about [indiscernible] and what we're thinking about from a biomarker and correlation prescriptive?

[Fouad Namouni, executive]

Thank you, Paul, for the question. We are developing this small molecule, as I said earlier answering Marc's question with the idea that with a small or mice, we can really tune the dose on the schedule to really navigate the wide range of the activity of the mass cell and target a number of type two inflammatory diseases. As Christy mentioned, we anticipate to report the data early from the [indiscernible] study early in 2025, and we look at overall subject, safety. We look at our pharmacology, we expect the pharmacology to be a very good one and really allowing us to do the tunability and the titration that I talked about earlier, and we will report a number of biomarkers, including the level of [indiscernible].

More specifically to your question, Tryptase is a supportive pharmacodynamic marker for the activity of the agents and varies from [ disease ] one mother. So would like to see tryptase in these healthy volunteers. We also know that in some more complex diseases where there is already a POC like chronic urticaria, Tryptase is much a part of the story, but in a much more complex environment. As an example, when you go to type 2 asthma diseases are more complex than just looking at tryptase, but you can look at other markets. So we have the opportunity to share data with tryptase and NBE on tryptase.

[Kathryn Haviland, executive]

And this is where maybe I'll just put a plug in again for our seminar coming out November 14, where we'll talk more about how we're thinking about 808 in our overall kind of development strategy in mast cell. So please do tune in, if you can.

[Operator]

The next question goes to Salveen Richter of Goldman Sachs.

[Tommie Reerink, analyst]

This is Tommie on for Salveen. And congrats on the quarter. So to follow up from some of the previous questions on overall, how derisking do you think that the healthy volunteer data will be with regard to navigating a therapeutic window. And what's your view on the differentiation here from strategies such as MRGP or two? And then just one on ISM you look to 2025, maybe lay out some of the moving parts that we should be aware here, especially as ex U.S. starts to play a larger role.

[Kathryn Haviland, executive]

Yes. Thank you very much for the question. And Fouad will talk about 808. And of course, we'll be talking more about on the Q4 call, but maybe you can just give a high level on that. But yes.

[Fouad Namouni, executive]

So from an in perspective, our development strategy is really to target wild-type to fine-tune the mass cell and go to a variety of diseases. In terms of derisking to your question, if we look today at one type kit, POC, I think biologics did a very good job showing the strong proof of concept in chronic articles continuous and also called in used. And therefore, the data that we anticipate to share early in 2025 will be a major inflection point for us and for patients to really benefit from what we hope and expect to be a good drug profile for 808.

Now there is a lot of room to improve on the overall therapeutic index for these therapies. And we believe having a small molecule that we can fine-tune with completely different type of pharmacology from biologics will help us achieve such a goal, not only in chronic [indiscernible], but in a variety of diseases. And as Kate mentioned earlier, we will talk about these diseases at our seminar in a few weeks. Regarding your question on different max cell targets and more specifically, [indiscernible]. There are a number of targets on the math cell. We believe, and as the scientific community does too, that such a target is probably organ restricted potentially to the skin. And could -- when we need to see more clinical data because I mean it's really data -- it's a data free zone, if I can use this analogy.

On the -- our strategy by going to wild-type kit, we know that we will target the mast cell wherever it is, either in the long or in the gut or in the skin. And so we believe going after the inhibition of all type kit is a much broader strategy than other targets.

[Kathryn Haviland, executive]

Yes. And then, Chris, do you want to talk little bit about just on a high level, what we think about '25. Obviously, we'll spend a lot more time with you all on this mentioned.

[Christina Rossi, executive]

Yes. So we'll provide guidance again on the Q4 call. I think the variables that we'll be thinking about are going to be broadly very similar to sort of what we've been talking about this year at a macro level, what's driving this launch is new patients starting on therapy and keeping those patients on therapy over time and what -- of course, it's becoming more and more important. As we progress through the launches, we now have a very substantial number of patients being treated with AYVAKIT kit that we will be carrying into next year and then, of course, growing from that base. We'll have new markets coming on internationally, as you mentioned, as we negotiate pricing and reimbursement and move through additional launches.

Every year has its own factors. I'm sure we'll talk a bit about free drug, IRA impact, et cetera, as we get into next year and sort of see how the first couple of months of the year play out. But the big picture, again, is that we are in the early innings of a launch with a substantial amount of room for continued growth and look forward to driving more on that view as we go into next year.

[Operator]

The next question goes to Derek Archila of Wells Fargo.

[Derek Archila, analyst]

Congrats on the updates here and on the quarter. Just one clarifying and then just one question. So just on 3Q relative to the second quarter, just in terms of the net patient adds, I guess, what does that look like Q-over-Q? And then I guess in terms of the seasonal factor here, can you kind of just kind of give us some qualitative information on the magnitude and how it might impact 4Q. And then just on 808, you guys have been talking a lot about on the call, very exciting. I guess is your expectation tryptase reduction in line with antibodies and safety better than the antibody? Or how do you think the overall profile will look and all that and done.

[Kathryn Haviland, executive]

Yes. Thanks, Derek, for the question. So as we moved away from talking about kind of that projected estimated number on therapy at the end of the quarter last year, Derek, but we can certainly provide kind of qualitative commentary around how we're thinking about seasonality and what we've seen there. And I know we've touched on that, but Philina, do you want to kind of reiterate the -- how you're thinking about seasonality.

[Philina Lee, executive]

Yes. I think I would just reiterate by starting with the expectation that we continue to expect strong and steady growth in the number of patients on therapy. This is what we have always said. There might be variations month-to-month based on factors like holidays. We know that in Q4, for example, there are fewer business days. But I think maybe going back to what Christy just articulated, the most important piece that's driving this launch is that continued growth in patients on therapy, strong and steady. Quarters are going to be more steady than months in a rare disease launch, such as this one. And most importantly, the arc of that overall trajectory is that we're showing significant growth on a year-to-year basis, significant headroom to continue to grow and we're really focused on marching towards that peak potential.

[Kathryn Haviland, executive]

And I think, Derek, now that we're kind of coming like the end of our first full year of launch. We have a lot of confidence around the dynamics that we see in any given quarter. And those are, as I said in my prepared remarks, like dynamics that everyone faces, dynamics that are specific to rare diseases and those that are unique to SM. And I think we now have shown and demonstrated that our team is able to understand those and work through those in a very constructed way. The goal here is to move towards the $2 billion plus product, and we're going to do that year by year, right? So that is our focus and will continue to be our focus. And then, Fouad, do you want to talk a little bit about BLU-808 and how you're seeing about that relative to what we've seen from some of the data that's come out from the body.

[Fouad Namouni, executive]

Yes. I think the -- clearly, the data from the antibody approach validates the target and specifically in two subsets of [ arteceria ], which is chronic spontaneous [ articaria ] and conduced urticaria, which is a really good thing and mentioned earlier, this makes our set and met data report and we anticipate early next year, extremely important and a major inflection point for patients and for Blueprint Medicine. Developing a small molecule in this area gives us the opportunity to really navigate the targeting of mass cell all the way from depleting the mast cell when we need to do that. to inhibiting the active and the degranulation without getting full depletion will allow us also to have a very good therapeutic index by, on one hand, having activity on the disease, on the other hand, not reaching that far and that deep to myeloid progenitor to generate adverse events of toxicity that we don't need to. It is very difficult to do with biologics. We believe our strategy with a small molecule is very differentiated and will allow us to find to titrate and achieve these goals.

[Operator]

The next question goes to Mike Ulz of Morgan Stanley.

[Michael Ulz, analyst]

Congrats on the quarter as well. Maybe just on AYVAKIT, you highlighted sort of strength OUS and being better than expected. Maybe you could provide some more color there and how you expect those trends to sort of evolve as we get into next year.

[Kathryn Haviland, executive]

Yes. Thanks, Mike. We're incredibly pleased with how the international launch has been going. The team has done just a tremendous job in terms of kind of delivering well beyond expectations. And Christy, I don't know if you want to talk a little bit more about that international.

[Christina Rossi, executive]

Yes. We were really, really pleased with the strength of the quarter. Of course, we talk a lot about Germany, which is the first out of the gate on ISM and where we've seen ethylene dynamics that look very similar to the U.S. in terms of uptake, which has been really gratifying to see, including prescribing coming from both academic centers and in the community. So very similar dynamics. And in the quarter, what we saw was the strength of that uptake really overcoming some of the price headwinds that we had referred to. Of course, we're still working through the process with negotiations in Germany and we'll have stuff where that lands early next year, but the demand growth is really more than offsetting that, which has been great to see.

And then, of course, we continue to see growth in other markets, which are still launching in [indiscernible]. As we get into next year, we expect to see more of the major markets in Europe start to come online as we work through ISM pricing negotiations. So we've talked about international being an important driver of top line revenue growth. I expect that to continue. Of course, the U.S. will represent the lion's share of the opportunity in the short term, but we would expect international to continue to become a more and more important part of the opportunity. And certainly, when we think about the peak, we're excited about the potential we see both in the U.S. as well as outside the U.S.

[Kathryn Haviland, executive]

And then one thing to add in Mike's commentary, he mentioned that actually at the end of this year, our international organization is going to break even. And so this team is really driving kind of tremendous top line growth in a very financially efficient and disciplined way. So that is -- I think that's a great place for us to be.

[Operator]

The next question to my Ami Fadia of Needham.

[Ami Fadia, analyst]

Congrats on the nice quarter. Two quick questions, firstly on an elenestinib. With the Part 2 of the HARBOR study initiated by the end of the year, can you talk about how your development strategy differs from that of AYVAKIT, and how do you see it being differentiated from AYVAKIT. And with regards to BLU-808, the tunability of a small molecule strategy, I think you've sort of talked about quite a bit in the Q&A. As we see the data from the volunteer study a dual escalation study, how would you take that information and then think about the different diseases where you could apply it? And maybe sort of what are some of the indications that you're thinking about taking it into some initial parts there would be helpful.

[Kathryn Haviland, executive]

Yes. Thank you, Ami. And I think maybe we'll start -- I'll hand -- Christy can talk a little bit more about elenestinib and Fouad Floyd will answer the question about BLU-808. I think just stepping back for one moment is that the position we're in at Blueprint Medicines with AYVAKIT becoming the standard of care and a durable leader across advanced 7 ISM. And then the opportunity we now have to bring elenestinib for to really maximize the longer-term performance and innovation across the SM franchise is really a unique and incredible position. Do you want to talk a little bit, Christy, about how we're thinking about bringing elenestinib forward to do just that?

[Christina Rossi, executive]

Yes. So as Kate said, our strategy with elenestinib is really to a franchise that we think is incredibly important, both for patients and for Blueprint as we get into really the next decade and beyond. This is an opportunity that we are growing into, and we think we have a significant amount of headroom in SM to continue to grow. Our expectation is that AYVAKIT will be the durable market leader for quite some time and will be growing for years to come. and the value of elenestinib is really to be able to bring a therapy that delivers additional differentiated clinical impact over the long term so that we can continue to drive growth in the franchise into the latter part of the next decade.

And so we will be initiating part 2 of Harbor. We'll obviously share more about what the design of that study looks like. But we know that the only way that you get to extend the value of a franchise like this is by delivering clinical differentiation. We understand more about the full manifestations of the disease now and much more about that than we did 5 or 10 years ago. And so I think our ability to measure clinical impact and really demonstrates what a targeted therapy can do in the space is different now than it was when we started the PIONEER study. So in terms of what the actual design of HARBOR will look like. We'll obviously have more to say about that. as we open the study. And again, I would point everybody to our mast cell webinar that we have scheduled on November 14, where we're planning on sharing more about our development strategy across our mast cell portfolio.

[Fouad Namouni, executive]

Thank you, Ami, for the question. So your first question is how with the data from the [indiscernible] study help us understand the tunability profile of 808. I would say, as we all know, said a study, we are exploring a number of doses and a variety of cohorts of patients over time, and we are also looking at pharmacodynamic marker. So when we look at the totality of the pharmacology and the data in healthy volunteers at a variety of doses of a different level of inhibition and their impact on the pharmacodynamic marker will give us really a good understanding of how can we can develop tunable and titrable schedules for a variety of dies.

For the second part of your question on what is the breadth in terms of number of diseases and what other disease will go to, I think we're targeting type 2 inflammation in a broad way. We'll have the opportunity in a few weeks from now, I was similar to talk really about these diseases and how we think about them. But you can think about really targeting a broad variety of type 2 information. How we will do it and as we mentioned in the past, is through some or a number of and cohort studies to really early on see the activity across a wide range of diseases and start step-by-step derisking away towards the selection of a major indication for registrational development.

[Operator]

The next question goes to Marcus Scheider of Oppenheimer.

[Unknown Analyst]

This is Marcus on for Matt. You've shown already some nice preclinical data on asthma. Is it fair to say that this is -- this will be one of your focus area?

[Fouad Namouni, executive]

That's a great question. Obviously, as a type to ask more precisely is one of the key type 2 in -- we'll be looking at the range of these diseases, obviously. I think in a matter of a few weeks, we'll be able really to get in a little bit more specific about the diseases. But I mean it is safe to say that many diseases in the type of inflammation range or area will be a part of our thinking.

[Operator]

The next question goes to Peter Lawson of Barclays.

[Peter Lawson, analyst]

Great. Thanks for the update. Really appreciate it. On Slide 6, our data around breadth and depth. Just I thought it was an interesting dynamic to number of physicians with greater than 10 patients. Just wondering if you could kind of talk through that if there's room to grow there if this is how -- is that how it kind of plateaus out or if there's an ability to grow beyond greater than patients and if these are sensors angle.

[Kathryn Haviland, executive]

Yes. Thank you for the question, Peter. And as [indiscernible] as we've been saying this kind of across the launch, the breadth and depth dynamics that we're seeing here have just been a tremendous strength in the launch. And that graph is a snapshot of some of the providers. But Philina, you just want to talk about our opportunity, as I know that we continue to believe will drive quite a bit of depth as well.

[Philina Lee, executive]

Yes. Peter, to your question, I think the bottom line is significant headroom to grow across all metrics and measures that we see across this market in both providers and patients. So if we look at our provider base, so we're really excited to see the uptick in the number of providers who are treating 10 or more patients, again, that even within those top 400 providers, substantial headroom to continue to grow and treat more patients on therapy within those top 400. As I said on the call, that's just a tiny part of the picture. There are additional -- many additional providers across that top 400 as well where we continue to see growing breadth as well as depth.

And we haven't even really yet explored the potential of additional specialties such as dermatology and others who are treating the broader constellation of of patients based on their symptomology. So bottom line, significant headroom to grow, and we're confident that places us on a past to achieve really more than $2 billion peak.

[Operator]

The next question goes to Laura Prendergast of Raymond James.

[Laura Prendergast, analyst]

Congrats on a great quarter. I know you said you expect free drug dynamics to generally remain steady below 20% for mid-teens as you said on average. But are you seeing or do you expect any month-to-month or quarter-to-quarter variability in these dynamics? And then just a quick second question for me. Any guidance on how to think about gross margin moving forward?

[Kathryn Haviland, executive]

Yes. So thank you, Laura, for those questions. Philina, do you want to talk about how we're thinking about free drug as we close out this year. And of course, this is all resets in 2025. And as Christy mentioned, we're going to be painting to close attention to that in January as we look at the impact of the rest of the IRA. But Philina,how do you want to think about it for the rest of this year?

[Philina Lee, executive]

Yes, Laura. So we've talked about how launch today the proportion of patients on free drug has reached the mid-teens. That has been relatively consistent over the past couple of quarters, and we expect that to remain consistent through the end of this year. As Kate alluded to, I think one thing we'll want to keep our eye on is this resets next year due to the changes in sort of Part D from the IR. And really, at this point, we have such a substantial patient base on therapy that small changes in these factors like free drug can have impacts on revenue. So another piece to look at, along with all the other variables that alluded to, that will influence how we think about 2035.

[Kathryn Haviland, executive]

And Mike, do you want to talk a little bit about the gross margin question that Laura asked

[Michael Landsittel, executive]

Yes. Thanks, Laura. Just with respect to gross margin, like, first of all, like we think we are in a solid position with AYVAKIT. We have relatively low cost of goods sold. And so we expect our gross margins to be high and remain really relatively stable at this point in the launch that we have enough volume coming through. We do see some variation due to sales of product to partners like CStone. So a month or quarter-to-quarter, so you might see some variability. But fundamentally, we expect margins to be stable and strong.

[Operator]

The next question goes to David Lebowitz of Citi.

[David Lebowitz, analyst]

I have two for you. First, on physician mix. In the past, you've broken down the academic versus community doctors. If you could just update us on that update on that unless I missed it. And then number two, I just wanted to ask about elenestinib and the HARBOR 2 trial. It's being studied in ISM, I know it's getting under way. So competitive therapy out there in studying but also in ISM and smoldering mastocytosis, I'm just curious as to why it would be IFM only as opposed to including DSM patients.

[Kathryn Haviland, executive]

Yes. And maybe Philina you could just talk about the mix of physicians and then I'll let Fouad to talk a little bit more about elenestinib and how we're thinking about the kind of inclusion criteria there.

[Philina Lee, executive]

So one of the most important leading indicators is the sort of prescriber base, which continues to grow for AYVAKIT. We see that across all specialties and settings. So in terms of the mix continues to be pretty evenly split between the academic and community setting. We continue to see additional hemoncs as well as allergists immunologists trying evict for the first time. And as they have that first positive experience going on to repeat prescribe and really broadening the lens on the patients that they see as addressable for treatment. And importantly, we're really encouraged to see the growing interest and receptivity from a broader range of specialties as well. We alluded to an example in dermatology, and we see potential there for continued growth and interactions to really grow this market and move more patients towards treatment.

[Fouad Namouni, executive]

And David, to your question on the design of hardware part 2, our pivotal registrational study. As Christy mentioned earlier, over the last many years, we have been really working with the overall community on this disease all the way from indolent to advance and exploring all the spectrum of this -- the subtypes of this disease, and we have a good understanding of SM as a disease, not only from subtypes of patients but what really patients and physicians will be looking for in the next many years. I think all these data and this knowledge is factored in our development.

We'll be able to share more in the next weeks and months on these data. smoldering to your specific question, as we all know, the very, very small group of patients about 2% or 2.5% of the SM and clearly dedicated studies for these patients are very difficult to execute, but it is a group of patients that are very interesting that we know very well, including the way we work and our data are influencing the changes of definitions of this disease with the expert community.

[Operator]

We have time for one question before the top of the hour. The next question goes to Sudan Loganathan of Stephens.

[Sudan Loganathan, analyst]

Congrats on the great quarter and taking my questions. With the strong launch trajectory for AYVAKIT and the market know-how that you have established. Do you have any interest in M&A or other business development activities to bolt-on a late-stage assets that can benefit from the synergies that you have with the AYVAKIT market that you've established? Or is the focus kind of conical allocation into the in-house pipeline that you're developing with elenestinib and BLU-808 and maybe some other areas that you're interested in?

[Kathryn Haviland, executive]

Yes. Thank you, Sudan, for the question. And I think we have just a tremendous kind of benefit at Blueprint Medicines to be able to drive our growth organically. And our research team has been over the -- since our founding, 13-ish years ago, has got a tremendous productivity and bringing forth innovative new molecules against targets of interest. And so -- our focus and our capital allocation is really on internal programs between AYVAKIT, elenestinib and BLU-808 has this potential to go very broad those are really where we're prioritizing how we think about capital.

There's a lot going on in our own labs, we don't talk about with all of you. And so as those progress, we look forward to be able to discuss those. We're always out talking to everybody from a BD perspective, and that is to optimize our own portfolio and how we allocate our own dollars and thinking about how we can partner on our programs and although there is anything externally that would make sense. But really, our focus is internally and really driving that operating leverage, both based on -- in financial efficiency to continue to bring innovation forward for patients who have significant medical needs.

[Operator]

That concludes today's Q&A. Ms. Kate Haviland, I turn the call back over to you.

[Kathryn Haviland, executive]

Yes. Thank you, everyone, for joining us today. As we come into closing out 2024, really AYVAKIT's strong revenue ramp coupled with our disciplined investment in our most compelling product opportunities as we just talked about with the last question, has put us on a path to drive sustainable growth while we enhance long-term shareholder value. And we're setting up for a very, very exciting 2025 at Blueprint Medicines, and we look forward to, in a few short weeks here talking more about that when we kick off the year. So thank you all, and thank you for your continued support at Blueprint.

[Operator]

Thank you. This concludes today's conference call. You may now disconnect.