Business Overview and History

2seventy bio, Inc. (TSVT) is a cell and gene therapy company dedicated to developing transformative treatments for cancer. The company's approach combines its expertise in T cell engineering technology, lentiviral vector gene delivery, and a suite of innovative technologies to create highly targeted cellular therapies for patients with cancer.

2seventy bio was incorporated in Delaware in April 2021, emerging from a spin-off of the oncology portfolio and programs from bluebird bio, Inc. The company's lead product, Abecma, 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.

Prior to the spin-off, in March 2021, bluebird bio's Abecma (idecabtagene vicleucel) was approved by the FDA for the treatment of adults with multiple myeloma who have received at least four prior lines of therapy. The rights and responsibilities for Abecma were assumed by 2seventy bio as part of the separation from bluebird bio.

In 2022, the company faced challenges as it experienced a sustained decline in its stock price, partly due to decreased external expectations for future Abecma sales resulting from increased competitive dynamics in the multiple myeloma market. This decline led to a goodwill impairment test, resulting in a non-cash impairment charge of $12.1 million.

In September 2023, 2seventy bio announced a restructuring plan to conserve financial resources and better align its workforce with current business needs. This plan resulted in a workforce reduction of approximately 40%, incurring one-time costs of $8.6 million related to severance and retention packages.

In January 2024, 2seventy bio underwent a strategic realignment to focus exclusively on the development and commercialization of Abecma. As part of this shift, the company divested its oncology and autoimmune research and development programs, clinical manufacturing capabilities, and related platform technologies to Regeneron Pharmaceuticals, Inc. for $5 million in upfront consideration. Additionally, 2seventy bio sold its hemophilia A program and related technology to Novo Nordisk A/S for $38 million.

These divestments allowed 2seventy bio to streamline its operations and focus its resources on maximizing the commercial potential of Abecma. As of the end of the third quarter of 2024, the company had just 70 employees, the majority of whom are funded through the Abecma co-commercialization agreement with Bristol-Myers Squibb.

Financial Performance and Liquidity

For the nine months ended September 30, 2024, 2seventy bio reported total revenues of $34.9 million, down from $89.7 million in the prior year period. This decline was primarily due to a decrease in collaborative arrangement revenue from the company's partnership with Bristol-Myers Squibb, as Abecma sales growth was offset by higher selling, general, and administrative expenses.

The company's net loss for the nine-month period was $37.7 million, a significant improvement from the $160.8 million net loss reported in the same period of 2023. This improvement was driven by a 52% reduction in GAAP operating expenses, primarily in research and development costs, as the company streamlined its operations.

In the most recent quarter (Q3 2024), 2seventy bio reported revenue of $13.53 million, representing a 12.4% increase compared to Q3 2023. This growth was primarily driven by higher Abecma sales. The net loss for Q3 2024 improved to $9.93 million from $71.64 million in Q3 2023, reflecting the company's efforts to reduce operating expenses.

For the full year 2023, 2seventy bio reported revenue of $100.39 million and a net loss of $217.57 million. The company's operating cash flow (OCF) for 2023 was negative $166.86 million, and free cash flow (FCF) was negative $180.72 million.

As of September 30, 2024, 2seventy bio had $192.4 million in cash, cash equivalents, and marketable securities, providing a cash runway beyond 2027. The company's liquidity position is further supported by a current ratio and quick ratio of 4.95, indicating strong short-term solvency. The debt-to-equity ratio stands at 1.08, suggesting a balanced capital structure.

2seventy bio expects net cash spend in the range of $40 million to $60 million for the full year 2024, a significant improvement from the $63 million burn rate in Q4 2023 alone. The company has achieved a $10 million or 24% reduction in GAAP operating expenses in Q3 2024 compared to the prior quarter, and a $140 million or 52% year-to-date reduction in GAAP operating expenses versus the same period last year.

Abecma Commercialization and Growth Strategy

2seventy bio's primary focus is on the continued commercialization and growth of Abecma in the United States. In the third quarter of 2024, Abecma generated $77 million in U.S. commercial revenue, a 42% increase from the previous quarter. This growth was driven by the product's expanded label, which was approved by the FDA in April 2024 for the treatment of adult patients with relapsed or refractory multiple myeloma after two or more prior lines of therapy.

The company is working to further differentiate Abecma in the competitive CAR-T market by highlighting its well-established safety profile and competitive efficacy, particularly when patients receive effective bridging therapy prior to treatment. Additionally, 2seventy bio and Bristol-Myers Squibb are actively pursuing ways to optimize the cost structure of Abecma to increase the operating margin and cash flow from the business.

One example of this cost optimization is the decision to discontinue enrollment in the Phase 3 KarMMa-9 study, which is expected to result in over $80 million in cost savings for 2seventy bio over the next several years. The company is also closely examining other areas of the Abecma program to identify opportunities for further expense reductions.

For 2024, 2seventy bio expects U.S. Abecma revenues to be approximately $240 million to $250 million. The company anticipates Q4 2024 Abecma revenues to be impacted by continued competition and a reduction in CAR-T infusions during the U.S. holiday season. Looking ahead, 2seventy bio expects operating expenses to continue to decline in 2025 as the company prioritizes streamlining its cost structure for both Abecma and its supporting corporate functions.

Importantly, 2seventy bio now believes the Abecma breakeven point is closer to $300 million in total U.S. sales, compared to the previous guidance of $400 million. This revised estimate reflects the company's efforts to optimize costs and improve operational efficiency.

Risks and Challenges

Despite the company's strategic focus on Abecma, 2seventy bio faces several risks and challenges. The multiple myeloma market remains highly competitive, with several novel therapies, including other BCMA-directed treatments, vying for market share. The company must continue to differentiate Abecma and demonstrate its value proposition to physicians and patients.

Additionally, the manufacturing and supply of Abecma and its associated lentiviral vector remain critical components of the company's operations. Any disruptions or quality issues in these areas could have a significant impact on the product's availability and 2seventy bio's financial performance.

Furthermore, the company's path to profitability and long-term sustainability will depend on its ability to consistently grow Abecma's revenue while maintaining a disciplined approach to cost management. Failure to execute on these priorities could jeopardize 2seventy bio's strategic objectives and shareholder value.

Conclusion

2seventy bio has navigated a significant transformation in 2024, streamlining its operations and focusing exclusively on the commercialization and development of Abecma. The company's strategic shift has improved its financial profile, with a reduced burn rate and extended cash runway. While challenges remain, 2seventy bio's commitment to delivering more time for patients with its innovative cell therapy continues to drive its decision-making and long-term vision. The company's focus on optimizing Abecma's cost structure and expanding its market presence positions it for potential profitability as it approaches the revised breakeven point of $300 million in U.S. sales.