Blueprint Medicines Corp

NASDAQ:BPMC

Earnings Call Transcript 2018-Q4

[Operator]

Good day, ladies and gentlemen, and welcome to the Q4 2018 Blueprint Medicines Corporation Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call maybe recorded.

I would now like to introduce your host for today's conference, Mr. Jim Baker of Blueprint Medicines. Sir, you may begin.

[Jim Baker, Vice President, Corporate Affairs]

Thank you, operator. Good morning. Welcome to Blueprint Medicines fourth quarter and full-year 2018 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 will be reviewing today by going to the Investors Section of our website at blueprintmedicines.com.

Today, on our call, Jeff Albers, our Chief Executive Officer, will discuss our 2020 Blueprint strategy and recent business highlights. Kate Haviland, our Chief Operating Officer will discuss our personalized medicine approach in GIST. Dr. Andy Boral, our Chief Medical Officer, will provide an update on recent clinical progress; and Mike Landsittel, our Chief Finance Officer, will review our fourth quarter and full-year 2018 financial results. We will then open the call for your questions.

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

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

Now, here is our CEO, Jeff Albers.

[Jeff Albers, Chief Executive Officer]

Thanks, Jim, and good morning, everyone. And welcome to our fourth quarter financial results call. Today, we’ll highlight our 2020 Blueprint business strategy, as well as key upcoming milestones for our lead programs Avapritinib and BLU-667. Our vision has always been to build the leading precision therapy company. Since we began operations less than 8 years ago, we’ve invested in a robust scientific platform and rapidly advanced multiple programs into the clinic under a focused portfolio strategy.

Now, we’re approaching the point of making Avapritinib our first medicine available to patients and their treating physicians and BLU-667 is close behind. In fact, we’re increasingly confident that we could be the first company to discover and develop two distinct medicines and bring them the patients directly in less than 10 years from founding. And we expect these initial successes that spark a sustainable innovation cycle that will enable us to repeatedly deliver new medicines to patients.

In 2018, we fortified the foundation for this vision with remarkable achievements across our portfolio. For Avapritinib and GIST, we completed the enrollment of registration cohorts and reported topline data for our planned NDA submission for PDGFRA and fourth-line GIST. In systemic mastocytosis, we obtained FDA feedback on expedited approval pathways and initiated registration trials for Avapritinib in both advanced and indolent systemic mastocytosis.

We reported compelling critical proof of concept data for BLU-667 and rapidly advanced our trial into global expansion. We amended our ARROW protocol to allow for a potential expedited pathway leading to our announced plan to submit our FDA for second line non-small cell lung cancer and second line medullary thyroid cancer in the first half of 2020. Through a new collaboration with CStone Pharmaceuticals, we advanced an efficient development strategy for BLU-554 in Hepatocellular carcinoma and opened a significant opportunity to bring our three lead therapeutic candidates to patients in China.

Finally, we advanced our fourth therapeutic candidate BLU-782 into the clinic while expanding our research pipeline with two new wholly-owned research programs. As we enter 2019, we’re fast approaching a critical inflection point. Our transformation into a commercial stage company. In preparation for this milestone, we recently announced our 2020 Blueprint vision, a two-year strategy to launch our global commercial business.

Under the strategy by the end of 2020, we expect to have two marketed products and at least four pending marketing applications in the U.S. or EU. In addition, we expect to have six clinical stage therapeutic candidates and up to eight research programs as we advance new development candidates into the clinic and continue to invest in our research pipeline. More specifically, we envision a steady stream of near-term catalyst across our business this year.

In the second quarter, we plan to submit our first NDA for Avapritinib for PDGFRA and fourth-line GIST. In addition, we plan to disclose updated data for Avapritinib in both GIST and advanced systemic mastocytosis. Additionally, we plan to share updated BLU-667 data and complete enrollment of registration cohort in second line non-small cell lung cancer and second line medullary thyroid cancer.

In the second half of the year, we plan to report initial data from our Phase 2 PIONEER trial for avapritinib in indolent systemic mastocytosis. In addition, we expect to complete enrollment of avapritinib registration trials in third-line GIST and advanced systemic mastocytosis and initiate new registration trials for Avapritinib in second-line GIST and BLU-667 in first-line non-small cell lung cancer.

Finally, we plan to hold our first R&D day in the second half of the year and share new details on our research pipeline. Through all of this activity, we’re poised to impact patients’ lives globally and rapidly expand our business. And our first step on this path is to work with

regulatory authorities and the clinical community to bring Avapritinib to GIST patients.

With this in mind, I now ask Kate our Chief Operating Officer to discuss our precision medicine approach in GIST. Kate?

[Kate Haviland, Chief Operating Officer]

Thanks Jeff and good morning every one. Avapritinib is a highly selective KIT and PDGFR-alpha inhibitor, which like all our compounds was designed in-house by our scientist at Blueprint medicine. The consistency of Avapritinib’s clinical activity in both GIST and systemic mastocytosis gives us confidence and the significant opportunities we have to provide important benefits to a wide range of patient by treating the underlying genomic drivers of their disease.

Across the multiple GIST in SM populations we are targeting, we believe there are at least 30,000 patients in the U.S., EU5, and Japan. We feel a strong sense of urgency to make sure that Avapritinib is made available globally to patients who could benefit from treatment. To ensure we meet this goal, we have three areas of focus. Our first area of focus is our initial NDA submission for PDGFRA Exon 18 mutant GIST and fourth-line GIST.

Currently, there are no effective treatments for these [indiscernible] disease and patient prognosis is poor. Underscoring the urgency to bring forward new treatments as quickly as possible. As we saw the results emerging from the Phase I navigator trial, we believe the data were compelling and had the potential to support accelerates approvals in these populations. The data had continued to mature favorably over time and our confidence in pursing in accelerated approval approach has increased.

Our second area of focus is advancing a confirmatory study in third-line GIST comparing Avapritinib to [Stivarga] the current standard of care. This approach gives us the opportunity to bring Avapritinib to a larger population of GIST patients, move up in the treatment paradigm, and obtain a full approval in fourth-line GIST.

We purse that the development strategy, which acknowledges the current approach to the treatment of GIST, which is based on the use of approved product sequentially, so that we could execute this study quickly, and indeed this strategy has resulted in rapid execution of the global voyager study and the plan to submit a supplementary marketing application for the third-line GIST in 2020, right on the heels of our potential first approval in GIST.

Our third area of focus is to advance the precision medicine treatment approach in GIST over the longer-term. Our goal is to develop transformative therapies against the genomic drivers of GIST and to partner with healthcare providers to pair the right treatment to the right patient to optimize outcomes.

We believe we’re uniquely positioned to drive this shipped in treatment by leveraging our growing understanding of the molecular basis of the disease through our broad clinical experience; in combining that understanding with the knowledge in knowledge with our ability to rapidly design and develop precision therapies.

Many GIST experts we work with view molecularly targeted medicine as a future of GIST treatment. This view is reinforced by our clinical type results demonstrating the impact of Avapritinib across multiple GIST mutational profile. At the CTOS meeting last fall, we presented new data that showed Avapritinib is most active in about 80% of patients who do not have two specific resistance mutations in the KIT team.

These are the patients who are mostly likely to receive important benefits from treatment with Avapritinib and the group we will begin involving in the upcoming COMPASS-2L study. These data further solidified for us and our clinical expert advisors that a precision medicine approach, the treatment GIST is the best way to optimize patient outcomes. We understand there are challenges to changing any treatment paradigm.

However, we believe it our responsibility to deliver the best possible outcome to patients, even if it means shaking up the status quo. This responsibility starts by developing Avapritinib, a truly novel investigational therapy and ways that can provide perceptible and highly meaningful benefit to patients and their treating physicians, participating in our studies. This kind of [transformative] impact will facilitate the education of physicians and patients globally on the benefits of mutation testing and provide a clearer value to help their systems around the world.

We are excited to be on the leading edge of this effort and fundamentally rethink it is the right approach for patients. Importantly, we are not stopping with Avapritinib. Our scientific platform has allowed us to efficiently advance other compounds to potently and selectively target resistance mutations that are not effectively addressed by any of the approved or investigational therapies for GIST.

We look forward to sharing more information about this research at up-coming medical meetings or at our R&D day later this year. We are excited by the near-term opportunities for Avapritinib and GIST, which comprise a strong foundation that we will continue to build upon as we pursue a precision medicine approach with the treatment of GIST. Our continued investment in earlier scientific initiatives focused on GIST along with our broad development efforts across multiple GIST patient populations with Avapritinib demonstrate our leadership and commitment to substantially improving outcomes for all GIST patients.

I’d now like to turn the call over to Andy to review our clinical programs.

[Andy Boral, Chief Medical Officer]

Thanks Kate. I want to begin by highlighting the top-line data as in the NAVIGATOR trial, which we first closed in early January and will use in our planned NDA submission for PDGFRA and fourth-line GIST in second quarter. In PDGFRA GIST, the overall response rate was 86% and the medium duration of response was not reached.

In the fourth-line GIST, the overall response rate was 22% and the medium duration response was 10.2 months. Safety results were consistent with previously reported data. Given the robustness of the data and the lack of approval of approved treatments for these forms of GIST we’re confident in our approach and look forward to working with FDA during the review period.

In addition, we plan to present the detailed registration data in the first half of the year. I’m also please to share that the pioneer trials of Avapritinib indolent systemic mastocytosis is ramping up with the activation of new sites around the world. As a reminder, we reported compelling data for several patients with indolent systemic mastocytosis enrolled in our Phase 1 EXPLORER trial at the ASH Annual Meeting in December.

All seven of these patients have profound improvements on objective measures of mast cell burden, including bone marrow mast cells and serum tryptase, which we think provide compelling evidence of clinical activity in this population. One of the pioneer trials is designed to evaluate three low doses of Avapritinib with the goal of optimizing the risk benefit profile for chronic therapy in the indolent population.

During this part of the trial, which is now ongoing, we expect to pick a recommended dose, validate the patient reported outcome survey, which will serve as the registration end-point in part 2 and generate initial safety and efficacy data, which we plan to present in the second half of the year.

Moving now to BLU-667, we’re excited to report today that the FDA has granted breakthrough therapy designation to BLU-667 for the treatment of RET mutation-positive medullary thyroid cancer that requires systemic treatment and for which there are no acceptable alternative therapies. This is our first breakthrough therapy designation for BLU-667, representing continued forward progress for the program.

In the first half of this year, we plan to present updated data from the ARROW trial, including the first significant positive data from the expansion portion for all patients-initiated treatment at the recommended Phase 2 dose. In addition, we plan to complete enrollment of patient cohorts for second-line non-small cell lung cancer and second-line medullary thyroid cancer in the second quarter of 2019, which will be used to support a planned NDA submission in the first half of 2020.

I’d like to close by reminding everyone about the breadth of our clinical activities. As we enter 2019, we’re preparing our first NDA and we’re planning seven registration trials for Avapritinib and BLU-667. We expect to make progress across all of these programs this year setting up multiple planned registration data disclosures and regulatory submissions in the U.S. and in Europe in 2020. Reflecting on my four years of Blueprint Medicines, I’m thrilled to see our vision realized and I’m proud of the employees who are working tirelessly to deliver for patients.

I’ll now turn the call over to Mike to review our financial results for the fourth quarter.

[Mike Landsittel, Chief Finance Officer]

Thanks Andy. So, earlier this morning, we reported detailed fourth quarter and full-year 2018 financial results in our press release. For today’s call, I’ll just touch on a few financial highlights from the quarter and year. First, we enter 2019 in a strong financial position with $494 million in cash and we continue to expect that our cash run rate will be sufficient to enable us to fund our operation into the second half of 2020.

Second, collaboration revenues increased to $44.5 million for the full-year 2018, primarily due to the $40 million upfront payment from our collaboration with CStone Pharmaceuticals. We also continue to recognize the portion of the upfront and milestone payments received under our collaboration with Roche on a quarterly basis.

Third, there was an increase in total operating expenses of $32 million in the fourth quarter, compared to the fourth quarter of 2017, and $119 million for the full-year 2018, compared to 2017. These quarter-over-quarter and year-over-year increases reflect the expansion of our clinical portfolio with the initiation of new registration enabling clinical trials for Avapritinib and GIST and systemic mastocytosis, as well as the expansion of the ongoing Phase 1 ARROW trial of BLU-667 in RET-altered cancers.

In 2019, we expect continued stepped increase in operating expenses as we build out our commercial capabilities and initiate registration enabling trials for Avapritinib in second-line GIST and for BLU-667 in first line non-small cell lung cancer. We also expect to continue to execute our clinical development plan for BLU-554 through our ongoing collaboration with CStone Pharmaceuticals, which demonstrates [our ability to] effectively and efficiently manage our portfolio.

Overall, we believe our continued strong financial position and responsible program management positions us well to meaningfully advance our clinical and research pipeline to build the company and potentially deliver our first approved medicine to patients in the year ahead.

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

[Operator]

Thank you. [Operator Instructions] Our first question comes from Terence Flynn with Goldman Sachs. Your line is now open.

[Jason Jakoby, Goldman Sachs]

Hi guys. This is Jason on for Terence. For BLU-667, did you guys request breakthrough destination for both MTC in-line or was just MTC? And then for the lung setting, just how do you think your drug stands up against the competitor drug out there? Thank you.

[Jeff Albers, Chief Executive Officer]

Hi, Jason. This is Jeff, I’ll take those questions. So, on the first one, which was around BTD, I think it’s the same as we’ve always talked about that we don’t comment on any planned or pending regulatory filing and just as a reminder our approach is and always has been our – as we move new programs in the clinic, first we focus on establishing clear clinical proof of concept, then we work with regulators to identify potential accelerated path and as we commented in the prepared remarks, we amended our protocol for BLU-667 in the second half of last year.

And then, from a trial perspective, we continue to rapidly enroll the trial, we’ve guided now to being fully enrolled either in March or the second quarter for the two potential registration cohorts, which namely are second line non-small cell lung cancer and second line medullary thyroid cancer.

On the second question of comparing two competition, we continue to believe that BLU-667 is a very active molecule and will – I’m trying to think the right way to say this without guiding, addresses the need of a broad set of patients that have RET-altered cancers and we look forward to providing a robust clinical update at ASCO potentially this year.

[Operator]

Thank you. And our next question will come from Marc Frahm with Cowen and Company. Your line is now open.

[Marc Frahm, Cowen and Company]

Hi, thanks for taking my questions. First on the planned filing in GIST, have you had your formal pre-NDA meeting at or, I know there were probably some delays with the government shutdown or have you always managed to schedule it?

[Jeff Albers, Chief Executive Officer]

Thanks Marc. Andy, why don’t you take that one, so that – our path to the NDA.

[Andy Boral, Chief Medical Officer]

Yes. So, as Jeff said, we don’t comment specifically on planned ongoing regulatory interactions. We are on-track for our filing with Avapritinib in GIST both in the Exon 18 PDGFRA group and the broader fourth-line group for the first half of this year, and we don’t anticipate any delays to that plan.

[Marc Frahm, Cowen and Company]

Okay. And then, maybe this is for Kate. When you start thinking about building out a salesforce, can you talk a little bit about kind of the size and scope of the team you think you need to assemble for this initial label, and kind of timing of that build? And then, as you’ve gotten into the market research, you know the treatment lines can start to fall apart once we get the third line in GIST? How many people do you think are actually going to be encompassed in this initial label of PDGFR in fourth-line?

[Kate Haviland, Chief Operating Officer]

Thanks, Marc for the question. So, you probably saw the news, at the end of last year that the higher our Chief Commercial Officer and that your first question around the commercial build and infrastructure will be a subject of future conversations that we're looking forward to have, and Christy will be able to comment on those as those plans come together.

In terms of the opportunities that – we continue to believe that GIST is – the amount of medical need that patients experience, particularly as we look at the late line patients where they have no treatment options currently and the prognosis is very poor has a significant opportunity to really improve their outcomes and so from a population perspective, you’ll see in our filings we know that about 5,000 patients to 6,000 patients progress the third line GIST and the subset will continue to progress to fourth-line. And so, we consider this an important opportunity for avapritinib to optimize outcomes for those patients.

[Marc Frahm, Cowen and Company]

Okay. Thank you.

[Operator]

Thank you. And our next question comes from Arlinda Lee with Canaccord. Your line is now open.

[Arlinda Lee, Canaccord]

Hi guys. Thanks for taking my questions. Could I ask maybe a couple of questions. When you commence for breakthrough designation, what package did you kind of show to the FDA? And then secondly, on your RET program, can you comment on maybe anything you see in terms of resistance mutations, we’ve heard that competitors have reflected and just kind of curious if you were able to enroll any of these patients’ trial or have any comments on resistance mutations that might be emerging from your dataset? Thanks.

[Jeff Albers, Chief Executive Officer]

Thanks, Arlinda. This is Jeff. I’ll take that one. So, in terms of packages, I mean it’s always in any regulatory filing you pull together clinical data as it emerges, so I don't think there is anything distinct or unique worth commenting in this regard. The big factor is response rate and also duration of response because those – when you are thinking of an accelerated approval pathway are the areas of focus and that’s true across all of our programs.

In terms of resistant mutations, we’ve not seen that to date and, you know but it is always with any of our programs something that we watch for, we track closely, and would be or will be subject to any medical conference presentations that we give in the future.

[Arlinda Lee, Canaccord]

Thank you.

[Operator]

Thank you. [Operator Instructions] Our next question comes from Michael Schmidt with Guggenheim Securities. Your line is now open.

[Charles Zhu, Guggenheim Partners]

Hi, guys. This is Charles Zhu calling in for Michael Schmidt. Thanks for taking the question and congratulations on the quarterly progress. I've got a couple of questions. First on the avapritinib, given that the COMPASS study will exclude V654A and T670I mutations, what would you say the potential breakthroughs towards utilization in the third and fourth line since those trials are in all-comers?

[Kate Haviland, Chief Operating Officer]

Sure. Hi, this is Kate. I’ll take that question. So, we described a little bit of our development strategy, which is really have accommodated the current treatment paradigm in GIST, which is, as you just mentioned a sequential treatment, kind of line of therapy approach, and the latter lines of treatment. And that’s really allowed us to move very quickly in executing those studies and enable our ability to file an NDA and as Jeff discussed, particularly in record time.

I think when we think about the approach to second-line, which is focused on the 80% of patients who do not have those two mutations that you mentioned, what we believe is that those patients may be very well served by the current standard of care, which is Sutent, and it is some data to indicate that Sutent is particularly active in those mutations. What we do know is that patients will progress and so our view would be that all patients with GIST at some point in their treatment cycle will have an opportunity to receive treatment with avapritinib.

[Charles Zhu, Guggenheim Partners]

Okay. And what is your view on KIT mutation frequencies as patients progress through these lines, particularly around these V654A and T670I and can investors expect additional data cuts along those mutations for the VOYAGER and NAVIGATOR trials? Thank you.

[Jeff Albers, Chief Executive Officer]

This is Jeff. I will take that question. I think Kate just laid out the rationale, quite frankly both in prepared remarks and in that answer. But I think it’s important to keep in mind that we think this is just a first step, this is almost independent of avapritinib, a first step in where the treatment of GIST is going. And it’s going to be avapritinib, but it’s going to really be for all therapies, those that are both already available to patients, as well as those in development or planned for future development to credibly articulate where they’re creating or providing the greatest benefits that are understanding of the underlying drivers of disease is rapidly evolving as a community and there’s going to be opportunity to really pair the right treatment with the appropriate patient.

So, as we continue to share data, we will look for ways to put a finer point on those distinctions on where you’re seeing activity, what type of activity by mutation? So, you should expect that to be part of our medical conference updates going forward.

[Charles Zhu, Guggenheim Partners]

Okay, great. And then just one more regarding systemic mastocytosis, can you provide any additional incremental color on the patient reported outcomes tool and potentially highlight some of the key similarities and differences between what you’ve previously presented at ASH and advanced SM versus what you will use in indolent disease?

[Andy Boral, Chief Medical Officer]

It is Andy, I’ll take that question Charles. So, we’ve been really thrilled with the data that we presented at ASH the end of last year with avapritinib and advanced systemic mastocytosis as we saw a statistically significant improvement with our mastocytosis specific PRO across multiple measures and that correlated nicely with profound decreases in mast cell burden, mast cells in the bone marrow tryptase, D816V allele burden. I think that really shows that reducing mast cells is critical for reducing symptoms in mastocytosis.

We would expect that to be true in both in advanced disease and in indolent disease. At the indolent systemic mastocytosis PRO that we’ve created is very similar, but little different from the advanced PRO. The indolent PRO is now being used in the pioneer study. And I’d say that have many of the basic concepts, symptom concepts are very similar around rash, around GI symptoms, fatigue, there are subtle differences, but we do think that they are close enough that improvement in the advanced SM, PRO that we saw in the seven indolent patients on the advanced study, we predict that you would see similar results with the indolent PRO.

[Charles Zhu, Guggenheim Partners]

Great. Thank you very much for taking my question and congrats again on the quarter.

[Operator]

Thank you. I’m not showing any further questions at this time. I would now like to turn the call back over to Jeff Albers for any closing remarks.

[Jeff Albers, Chief Executive Officer]

Thank you, operator. And thanks everyone for taking time to join us this morning and for your continued support of Blueprint Medicines, and we look forward to updating you further throughout 2019 as we advance our lead therapeutic programs towards potential approval. Thanks a lot.

[Operator]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program and you may all disconnect. Everyone, have a great day.