2seventy bio, Inc. (TSVT) has undergone a significant strategic realignment in the first quarter of 2024, positioning the company to laser-focus on the commercialization and development of its lead product, Abecma. The company reported its Q1 2024 financial results, showcasing the impact of its recent actions and the path forward for Abecma.
Financial Overview
For the full year 2023, 2seventy bio reported annual revenue of $100.4 million and a net loss of $217.6 million. The company's annual operating cash flow was -$166.9 million, and its annual free cash flow was -$180.7 million. These financial results highlight the challenges the company has faced in recent years as it has navigated the commercialization of Abecma and the development of its broader pipeline.In the first quarter of 2024, 2seventy bio reported total revenues of $12.4 million, a decrease from the $41.6 million reported in the same period of 2023. This decline was primarily attributable to a decrease in collaborative arrangement revenue recognized under the company's collaboration with Bristol Myers Squibb (BMS), driven by decreased Abecma net sales and higher BMS selling, general, and administrative expenses. The company reported a share of collaboration loss of $1.2 million in Q1 2024, compared to collaborative arrangement revenue of $22.9 million in Q1 2023.
Strategic Realignment and Cost Savings
In January 2024, 2seventy bio announced a strategic realignment to focus exclusively on the commercialization and development of Abecma. As part of this realignment, the company entered into an asset purchase agreement with Regeneron Pharmaceuticals, Inc. to sell its oncology and autoimmune research and development programs, clinical manufacturing capabilities, and related platform technologies. This transaction closed on April 1, 2024, and resulted in the transfer of approximately 160 employees and 67% of the company's real estate footprint to Regeneron.In addition to the asset sale, 2seventy bio implemented a further workforce reduction of 14%, building on the 40% reduction announced in September 2023. These cost-saving actions, combined with the asset sale, are expected to achieve $150 million to $200 million in cost savings in 2024 and 2025, respectively. The company expects to stay within its previously guided net cash spend range of $80 million to $100 million in 2024 and sees a path to potential breakeven by 2025 as Abecma returns to growth.
Abecma Commercialization and Development
Abecma, 2seventy bio's first and only commercial product, is a BCMA-directed CAR T-cell therapy approved for the treatment of adult patients with relapsed or refractory multiple myeloma after two or more prior lines of therapy. In the first quarter of 2024, Abecma generated U.S. revenues of $52 million, which represents the total revenue for the product. 2seventy bio's portion of this revenue is included in the $12.4 million total revenue reported for the quarter.The company's strategic focus is now on driving Abecma's growth, particularly in the earlier line setting. In March 2024, the FDA approved Abecma for the treatment of adult patients with relapsed or refractory multiple myeloma after two or more prior lines of therapy, significantly expanding the addressable patient population. 2seventy bio and its partner, BMS, are now working to deliver Abecma to an increased number of patients and expect to see a return to growth in the second half of 2024.
Key Strengths and Competitive Positioning of Abecma
2seventy bio believes Abecma has several key strengths that will support its growth in the earlier line setting:1. Strong Efficacy: Abecma has demonstrated impressive efficacy in clinical trials, with a median progression-free survival of 13 months compared to 4 months for standard of care in the KarMMa-3 study.
2. Manageable Safety Profile: Abecma has a well-established and manageable safety profile, with the company's commercial and clinical teams well-versed in managing the product's side effects.
3. Consistent Manufacturing: Abecma has consistently achieved over 90% manufacturing in-spec rates, with a turnaround time of just under 30 days.
4. Real-World Evidence: The real-world performance of Abecma has been consistent with the clinical trial data, providing confidence in the product's efficacy and safety in the broader patient population.
These strengths, combined with the expanded label in the earlier line setting, position Abecma well to compete in the crowded multiple myeloma market. However, the company acknowledges that multiple myeloma is a highly competitive space, and a return to growth will take time.
Liquidity
As of March 31, 2024, 2seventy bio had cash, cash equivalents, and marketable securities of approximately $181.4 million. Based on the company's current operating plans, including the ongoing commercialization of Abecma, management expects this cash position to be sufficient to fund current planned operations for at least the next twelve months.To further strengthen its liquidity, 2seventy bio established an at-the-market (ATM) facility in November 2022 with Cowen and Company, LLC, allowing the company to sell up to $150 million in gross proceeds of its common stock. However, no sales of common stock have occurred under this ATM as of the date of the Q1 2024 report.
Risks and Challenges
Despite the company's strategic focus on Abecma, 2seventy bio continues to face several risks and uncertainties, including:1. Competitive Landscape: The multiple myeloma market is highly competitive, with the potential for increased competition from bispecific antibodies and other CAR-T therapies.
2. Regulatory Approval and Commercialization: The company's ability to successfully obtain additional regulatory approvals for Abecma in earlier lines of therapy and effectively commercialize the product will be critical to its long-term success.
3. Manufacturing and Supply Chain: Disruptions in the company's manufacturing processes or supply chain could impact the availability of Abecma and the company's ability to meet demand.
4. Financial Performance: 2seventy bio's ability to achieve profitability and positive cash flow will depend on the successful commercialization of Abecma and the company's ability to manage its cost structure.
Outlook
2seventy bio's strategic realignment has positioned the company to focus solely on the commercialization and development of Abecma, its first and only commercial product. The company believes Abecma has several key strengths, including strong efficacy, a manageable safety profile, and consistent manufacturing, that will support its growth in the earlier line setting for multiple myeloma.While the multiple myeloma market is highly competitive, 2seventy bio is committed to executing on its launch strategy and delivering Abecma to an increased number of patients. The company expects to see a return to growth for Abecma in the second half of 2024 and sees a path to potential breakeven by 2025 as the product's sales ramp up.