To be trusted is a larger praise than to be cherished.”― George MacDonald.
Shares of precision medicines concern Blueprint Medicines Company (NASDAQ:BPMC) have practically doubled up to now two months after posting robust Q3 2023 Ayvakit gross sales. The quarter featured the primary full contribution from its label enlargement into indolent systemic mastocytosis, suggesting blockbuster potential for Ayvakit. With loads of money – partially from out-licensing whole flop Gavreto – however a major burn and 5 early-stage scientific packages but to be prioritized, Blueprint merited a deeper dive. An evaluation follows under.
Blueprint Medicines Company is a Cambridge, Massachusetts primarily based commercial-stage biopharma concern centered on the event of precision medicines that focus on genetic drivers of illness for the remedy of most cancers and blood issues. It has two industrial merchandise, Ayvakit for systemic mastocytosis [SM] (avapritinib) and Gavreto (pralsetinib) for rearranged throughout transfection (RET)-cancers, as properly as 4 different scientific packages pursuing a number of indications. Blueprint was fashioned in 2011 and went public in 2015, elevating internet proceeds of $154.8 million at $18 per share. Its inventory trades near $85.00 a share, translating to an approximate market cap of $5.4 billion.
The corporate’s discovery platform identifies kinases which are drivers of ailments in genomically outlined affected person populations and creates compounds that selectively goal stated kinases. This strategy has resulted in two FDA approvals – with broadly various outcomes.
Ayvakit. Blueprint’s solely in-house industrial asset is once-daily, oral Ayvakit, which was accepted by the FDA in June 2021 for sufferers with superior SM and in Might 2023 for sufferers with indolent SM (ISM). Additionally it is green-lighted in Europe for superior SM in a second-line setting. It was first accepted in January 2020 for the remedy of metastatic gastrointestinal stromal tumors (GIST) harboring a PDGFRA exon 18 mutation, together with (the most typical) PDGFRA D842V.
Backing up a bit, SM is a uncommon dysfunction characterised by an overabundance of mast cells within the physique. A mast cell is an immune (white blood) cell that usually protects one from illness. Nevertheless, extreme quantities lead to signs much like an allergic response, triggered by alcohol, spicy meals, medicine, and so on., and manifesting in extreme irritation, organ injury, anaphylaxis, and anemia. These with superior (aggressive) SM have poor outcomes, with median total survival of lower than six months to three.5 years. Luckily, that class solely represents about 5%-10% of whole circumstances. ISM, though debilitating, is much less extreme, with an almost regular life expectancy and represents the overwhelming majority of SM circumstances. All three indications – together with GIST – for which Ayvakit are accepted (collectively often called KIT receptor inhibition) symbolize a worldwide alternative north of $3.5 billion (~$2.5 billion domestically).
Ayvakit’s ISM indication is a primary and solely approval, which could be very vital on condition that the affected person inhabitants is ~15 instances the dimensions of superior SM, with ~7,500 sufferers recognized within the U.S. Treating roughly half the American ISM class with Ayvakit would consequence within the achievement of blockbuster standing. To that finish, in 3Q23 – its first full quarter armed with its ISM label – internet gross sales of Ayvakit reached $54.2 million, representing a 90% enchancment over 3Q22.
It ought to be famous that Cogent Biosciences (COGT) is advancing an ISM candidate (bezuclastinib) by means of the clinic in a registrational-directed Part 2 research (SUMMIT) that seems to have equal efficacy and a stronger security profile than Ayvakit with no central nervous system uncomfortable side effects. That stated, Blueprint enjoys a major first-mover benefit (assuming bezuclastinib approval) in a small affected person inhabitants.
Gavreto. The corporate’s different industrial product is Gavreto, which acquired accelerated approval from the FDA for: grownup sufferers with metastatic RET fusion-positive non-small cell lung most cancers; sufferers 12 and older with superior or metastatic RET-mutant medullary thyroid most cancers [MTC] who require systemic remedy; in addition to sufferers 12 and older with superior metastatic RET fusion-positive thyroid most cancers who require systemic remedy and are radioactive iodine-refractory – all in 2020.
Blueprint parlayed the anticipated accelerated approvals for Gavreto into a major collaboration with Roche (OTCQX:RHHBY), beneath which it acquired $775 million upfront (together with a $100 million funding at $96.57 per share) and was eligible to garner a further $927 million in milestones and high-teens to mid-twenties royalties – all ex-U.S. besides Larger China. Domestically, the 2 considerations agreed to a 50/50 income share. In return, Roche acquired the event and industrial rights to pralsetinib ex-U.S. and Larger China, together with the rights to opt-in to a subsequent era RET compound they have been to co-develop.
Though a boon for Blueprint’s coffers, Gavreto proved to be an enormous flop, producing FY22 gross sales of solely ~$28 million, impelling Roche to return the beforehand promising asset and terminate the partnership in February 2023. Already on a protracted decline after reaching an all-time excessive of $125.61 on the again of Gavreto’s approval for thyroid cancers in December 2020, shares of BPMC already mirrored the Roche deal termination information and its official announcement marked their low, down 70% to $37.89. Their course reversed shortly thereafter with the Ayvakit’s Might 2023 approval for ISM. That flip of occasions additionally thrust Ayvakit, which had been considerably deprioritized when it couldn’t increase its GIST label into unresectable or metastatic in a fourth-line setting, again into the corporate’s highlight. It compelled administration to take a more durable have a look at its portfolio of scientific candidates in an try and trim bills in mild of Gavreto’s failure.
The outcomes of that evaluation are nonetheless considerably unknown as administration awaits some further knowledge from early stage trials earlier than making prioritization selections recognized, possible in early 2024.
BLU-222. One candidate that appears destine to make the reduce is BLU-222, which is designed to assault cancers weak to CDK2 inhibition, together with hormone-receptor optimistic, HER2-negative (HR+/HER-) breast most cancers and CCNEE1 protein-amplified tumors. Preliminary knowledge from a Part 1/2 trial included a partial response from BLU-222 monotherapy in an HR+/HER- metastatic breast most cancers affected person who had acquired 5 prior strains of remedy, in addition to a stable tolerability profile.
ISM Franchise. Blueprint can be seeking to strengthen its ISM franchise and is investigating elenestinib in an early stage trial, with a watch on advancing one other remedy (BLU-808) into the clinic. Elenestinib is designed to be an improved model of Ayvakit, with decreased off-target exercise and decrease penetration of the central nervous system – considerably much like Cogent’s scientific candidate bezuclastinib. BLU-808 is attacking spontaneous continual urticaria, a mast cell dysfunction characterised by itchy welts (hives).
Different candidates embody epidermal progress issue receptor (EGFR) inhibitors that may tackle quite a lot of activating mutations – together with the L858R mutation (BLU-945) and exon 20 insertions (BLU-451) – for the remedy of non-small cell lung most cancers (NSCLC). Two others, BLU-525 (EFGR+ NSCLC) and BLU-852 (superior cancers) ought to enter the clinic shortly.
Q3 2023 Financials
After gaining momentum post-Ayvakit approval for the ISM indication, BPMC shares slumped after its now lead asset’s Q2 2023 gross sales have been dogged by considerations of a slowdown in momentum with year-over-year progress decelerating to 40% from 64% in 1Q23 – a doable signal that the launch of the ISM indication was not as strong as hoped.
That each one modified when Blueprint launched Q3 2023 financials on October 26, 2023, posting Ayvakit gross sales that have been up 90% year-over-year; thus, recapturing its momentum with outcomes that have been ~$6.0 million higher than expectations. Blueprint’s inventory rose 26% within the subsequent buying and selling session and at the moment are up 110% since simply previous to that announcement. Administration additionally indicated that it expects FY24 working bills to be round $600 million, down ~$100 million from Avenue consensus.
Stability Sheet & Analyst Commentary:
Thanks, in giant measure to the upfront cash from Roche, in addition to royalty and debt financing, Blueprint is in good monetary stead, holding money and investments of $827.2 million in opposition to royalty and debt obligations of $678.5 million, which, given the ramp in Ayvakit gross sales, ought to present it with a self-sustaining monetary profile. The corporate has entered into royalty agreements for each Gavreto and Ayvakit. The latter includes funds as much as 9.75% on annual gross sales as much as $900 million with variable caps starting from $362.5 million to $462.5 million contingent on the tempo of reimbursement. Gavreto gross sales are a write down for Roche and can possible be one for Royalty Pharma (RPRX), who offered $150 million of financing to Blueprint.
Though largely optimistic, Avenue analysts’ opinions on the corporate run the gamut with 9 buys and 4 outperform rankings in opposition to one promote, one underperform, and three holds. Their present median worth goal of $85 is correct on the present buying and selling ranges of the inventory. On common, they anticipate Blueprint to generate income of $243.0 million in FY23, adopted by $396.3 million in FY24.
Nevertheless, even with a significant drop in bills and improved Ayvakit gross sales, the corporate may churn by means of $175 million to $250 million of money in FY24. Moreover Ayvakit, Blueprint is awash in early-stage packages that it has but to prioritize. Its $5.6 billion market cap has already priced in blockbuster standing for Ayvakit. After its two-month practically 100% surge, now’s the time to be taking income in Blueprint Medicines Company shares, not initiating a place.
The belief of the harmless is the liar’s most great tool.” – Stephen King.
Editor’s Observe: This text discusses a number of securities that don’t commerce on a serious U.S. change. Please concentrate on the dangers related to these shares.