Welcome to the Morgan Stanley Global Healthcare Conference. I'm Jeff Hung, one of the biotech analysts. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. For this session, we have bluebird bio with CEO, Andrew Obenshain. Welcome, Andrew. Thank you, Jeff. Thanks for having me. For those who may not be familiar with bluebird bio, can you just provide a brief introduction? Sure. We are bluebird bio is a gene therapy company. We have a platform called lentiviral vector gene therapy, and we focus primarily on hemoglobinopathies in sickle cell disease and beta thalassemia, and we also have a program in adrenoleukodystrophy, which is a very rare disease. So we have two FDA approvals. We were approved last year and been busy launching the first two therapies, Skysona for adrenoleukodystrophy and Zynteglo for beta thalassemia. Those launches are progressing very well. We've announced that we have had 16 patients who we've collected cells from, which is the first step of the process. That translates into revenue later when those cells are infused back into the patient. But if all those cells would be transfused back in, that would, you know, represent about $45 million in value already for a rare disease launch, which we're very pleased with. But all of this work on those first two therapies are preparing us for the launch of our third, lovo-cel, for sickle cell disease, which we have a PDUFA date of December 20 this year, and we've been busy setting up all the treatment centers, talking to all the payers, and that preparation is preparing us very, very well to go after the lovo-cel opportunity starting in Q1 next year. Now, one of the key differentiators with bluebird bio's approach, the use of the patient's own hematopoietic stem cells as opposed to donors. So can you talk a little bit more about the advantages and the implications here? Yeah, well, I think the advantage of gene therapy is in a traditional transplant, you know, through myeloablative conditioning, you often receive someone else's cells, so that can lead to graft versus host disease. In this particular case, the patient's getting back their own cells with the corrected gene, which avoids the graft versus host disease and opens up the number of patients that potentially can benefit from a stem cell transplant. So in our cases for, let's just take Zynteglo, which we have on the market already, we were able to reduce... These are patients that have a transfusion burden. Every three to six weeks, they're going in for transfusion. With our treatment, in up to about 90% of cases, these patients remain transfusion-free afterwards, so they can live a, they can live a relatively normal life. Now, another differentiator is the use of lentiviral vectors. Mm-hmm. So how is yours different from other vectors? Yeah, so vectors all do the same thing, which is to deliver a gene to a place of interest. In our particular case, we are able to deliver quite a large payload, because lentiviral vector can carry a fairly large payload. We're able to have it delivered to the integrated into the genome, which means that with subsequent cell divisions, the therapeutic effect stays. So unlike some viruses where it stays in the cytoplasm and the therapeutic effect wanes over time, this effect is durable over time. Great. Well, maybe moving on to the pipeline, let's start with lovo-cel. Yeah. Can you just talk about how lovo-cel is differentiated from other sickle cell disease programs? Sure. We do have other competitors out there, namely, CRISPR Vertex with exa-cel, which will be coming to the market in a relatively similar timeframe. We use a different approach. So we put adult hemoglobin back into the patient with a single amino acid change there that confers the anti-sickling properties of fetal hemoglobin, but it's not fetal globin, it's adult hemoglobin that we put back into the patient. And our competitor uses a gene editing approach to increase the fetal hemoglobin levels. Although the approach is different, when we're talking to physicians, really what they care about is the follow-up, right? So we have 36 patients with 32-month mean follow-up, and it's a long duration of follow-up. It's the longest in the industry, and that's really the differentiator in the clinician's mind. They want to see that these therapies are safe over time and that the effect is maintained. So we think that that is a very important attribute of our, of our therapy. Now, you announced this month that the FDA wasn't scheduling an AdCom meeting for lovo-cel. Yep. Why do you think that is, you know, since Vertex will have one for exa-cel? Right. So we actually, to be totally transparent, I fully expected an advisory committee, not because I thought the FDA needed to review the therapy, but because I thought they would take advantage of a political platform to have two sickle cell therapies reviewed at the same time. They didn't. But the reason is, I think it's clear. We had our first two therapies reviewed by the FDA in an AdCom. It's the same platform, and in fact, in fact, during those AdComs, the lovo-cel safety data was reviewed. So it was actually reviewed during those AdComs. So really, we didn't feel there was actually a need for an AdCom. In retrospect, I guess we understand why there's not an AdCom. We certainly thought they were going to take advantage of the platform to have one. Mm-hmm. Now, since you expect synergy from the Zynteglo network for lovo-cel- Mm-hmm. What kind of launch preparations remain outstanding for lovo-cel? Well, I think you bring up an important point, which is that the treatment centers that we're setting up, there's a 100% overlap between beta thalassemia and sickle cell. So whatever we're setting up for beta thalassemia, we can set up for sickle cell. The conversations we're having with payers about a Zynteglo outcomes agreement, those, you know, those relationships are warm to then have a conversation about lovo-cel reimbursement, too. So everything that we're setting up is really going to help us with that lovo-cel launch. All the people that we have in the field, all the field teams, the medical affairs team, is entirely synergistic. So because lovo-cel is a larger opportunity, we will scale up slightly commercially, but the infrastructure is already there. What has the payer feedback been like? So we've had very good payer feedback. They were very receptive to our outcomes-based agreement for Zynteglo. We've had zero ultimate payer denials to this point. We are working on an approach for sickle cell that we've discussed with payers, and they've been enthusiastic about it, so we have that, that planned as well, but we're not publicly disclosing what that is yet. ... Okay, fair enough. Moving on to Zynteglo, can you just talk about Zynteglo for beta thal and, and how the launch is going? Absolutely. So, again, this is a therapy that addresses people with a rare disease called beta-thalassemia. There's roughly 1,500 patients in the U.S. These are patients that have to go to the hospital every, you know, every so often, and when I say so often, I mean, two, three, four, five, six weeks, to get a transfusion in order to stay alive. And our therapy has the potential to relieve them of the need for those transfusions entirely. So it's really, really a transformative therapy for patients. So we've been very pleased with the uptake to date. We continue to see a linear progress in our launch of, you know, as more QTCs come on board. So just the way we built it is we brought in five treatment centers first, then we brought in another 10, and we're scaling up to 40. And we're seeing that each of those original set, five centers, bringing on their second, third, fourth patient. We're seeing that second cohort bring on their first patient, and we anticipate that to continue to ramp, so we expect a nice linear ramp throughout the course of the year. Maybe it's still a bit early, but any insights you've gained from treating these patients so far? You know, have they remained transfusion independent, that kind of thing? So it's a little too early to say. From our clinical data, we would expect that the preponderance of them were remain transfusion independent. Okay. Now you said that the patient starts remain the key metric- Mm-hmm. during the first year of launch. So do you think patient starts will remain the key metric going forward, or when do you think that the patient starts will become less of a focus? Right. So patient starts will remain a key metric for the near future. At some point, we'll switch directly to revenue. We'll probably skip infusion, so we'll go from patient starts to revenue. But patient starts remain an incredibly important metric because we anticipate nearly 100% of those patient starts are going to translate into revenue. And there is about a three-month manufacturing time for us to produce it. Then we send it to the hospital, and then that time frame from when they get the frozen product to when they infuse it is out of our control right now. So as we get more and more patients, we'll get a better handle on what that average time is. But for... Until we have a good handle on that and then how revenue comes in, infusion, patient starts is the appropriate metrics to track. Okay. And you've activated 16 Qualified Treatment Centers? Correct. Yeah. Can you talk about what goes into activating a QTC- Yeah What gives you confidence that you can reach 40-50 QTCs by the end of the year? So absolutely. A qualified treatment center essentially becomes part of our supply chain. It's a very different relationship with the pharmaceutical company or biotech company than hospitals have had before. So we set up two things. We set up a master services agreement, which has some business terms in it, and we set up a quality agreement, which helps integrate them into our supply chain. Every hospital is different. When we started this off, we were learning. It took us months to set them up. We can get that done in weeks at this point. I think one of the advantages of being a smaller company is we have 350 people that are focused only on this. So when we're talking to hospitals, if we need to bring in our CFO, we bring in our CFO. If I need to go, I go. If we need to bring in our IT team, we bring in our IT team, our legal team. And obviously, in those, these first instances, it's a, you know, it's a learning experience. We're getting more and more efficient, bringing them on. So I think we'll scale from that 15, which was sufficient for the Zynteglo and Skysona launches, to the 40-50 by the end of the year, which is a number that we'd like to have for our lovo-cel launch. Then can you just talk a little bit more about what kind of lag there is from QTC activation to a patient actually being identified and treated? It could be zero days, it could be longer, depends on the QTC. It's once you've seen one hospital, it's really one hospital. So but most o ur initial five QTCs have all treated patients at this point. Okay. Maybe a few questions on Skysona. First, can you just talk about the indication it treats? Yeah. So Skysona is, so if anyone's ever seen the movie Lorenzo's Oil, that is the disease in that, in that movie. It's called adrenoleukodystrophy, and it is a terrible disease. These boys are diagnosed, in the first five years of life. They are first diagnosed because they start exhibiting signs of ADHD. They start exhibiting some neurological decline. There's usually a diagnostic odyssey to actually get diagnosed. And when they are diagnosed, really, their only option is, you know, potentially a transplant at that point. And if they're left untreated, these boys will die, within the first decade or early second decade of life. So it's an absolutely tragic disease. So what we do is we have a gene therapy that replaces a missing gene, the ABCD1 gene, for these boys, and can slow the decline of the disease. And again, it's a gene therapy transplant. So it's something that is incredibly impactful as a therapy on these families. And you reported five patient starts to date? Mm-hmm. Up from three at the end of Q1. Yeah. You reiterate your expectations for 5-10- That's right. Patient starts this year. So what are the key factors that might drive the lower versus the higher end of the range? So it's a very concentrated market. There's 40 new diagnoses per year. This is an incident population, so these boys pass through a window of eligibility, where when they first get diagnosed, before they progress too much. So that's in that window of eligibility is roughly a year or something a little bit more. So it's entirely an incident disease. And really, it just, it's like many of these small, rare diseases, it varies year to year, just on variability of the population. So we think it's going to stay within that 5-10 range, and it's just going to bounce up and down based on the variability of the population. Well, these boys have a choice between when sometimes they get diagnosed too late for transplant, so they can't be treated. Sometimes they get treated with a stem cell transplant, and sometimes a physician will act, you know, opt for gene therapy. So we have some newborn screening in, I think, a majority of U.S. states at this point, which has actually been something we've been working on for years. It's one of those projects we started on five, six, seven years ago, and now it's borne fruit to where we have roughly half, over half the states covered. So we think that that will help get the boys in for treatment in time, whether they use our therapy or whether they get a transplant. ... Okay, and you've activated 4 QTC to administer Skysona. Yeah. So, how many do you think you'll have activated by year-end? I think we'll either be four-five by year-end. What are the limit there is about 5 QTCs. Okay. So all of our other QTCs will treat both beta thalassemia and sickle cell patients, but Skysona, our adrenoleukodystrophy, will be remained in a very small number of expert centers. Mm-hmm. And then you talked about the black box warning for MDS- Mm-hmm. -and two additional cases in patients from clinical studies. Yeah. How long after treatment did the two patients develop MDS? Can you just remind us about the overall frequency of MDS cases in patients in the clinical studies? Yep. So far, we have reported five cases. I think it's, believe it's five cases of MDS. And the onset has ranged from three to seven years post-treatment. In this particular case, we believe it is directly related to the vector. That we use a different vector than we use in our other programs. It has both a more powerful viral promoter, it's an earlier generation vector, and that it's more ubiquitously expressed across cell lines. Whereas, for, we don't believe there's any bearing on our other programs, as we use a different vector with different safety mechanisms. So we believe the vector has caused the oncogenesis in these boys with MDS. When these boys get MDS, they are treated with a transplant, so there's a treatment for it. And we are closely monitoring those boys to see what the outcomes will be. But we have said that we do expect more cases of MDS with Skysona. Okay. Now, right now, you're focused on the U.S. Like, how do you think about upside potential from ex-U.S. countries, and what are your plans for these geographies? Yeah. So right now, as a company, we are focused on the U.S. That is really our... We were in Europe before. We withdrawn. We are a U.S. business. At some point, it'll be the right time to go back to Europe. We will not do that ourselves. We will, we'll almost certainly partner that. In my opinion, I think there's a couple of things that need to happen first. First of all, I think we need to launch lovo-cel in the U.S. and continue the launch of Zynteglo, to show that there's actually a market for this therapy, right, in the U.S. Second of all, I think we need to see gene therapies price in Europe. We haven't seen them price over EUR 1 million, or even up to EUR 1.5 million would be nice, to actually incentivize some development for Europe. We haven't seen that yet. So the first one to go is the hemophilia products that are coming. Our competitor, exa-cel, will hopefully be getting approval in Europe at the end of this year. So then they'll have about a year to price in Germany. I think it'll be very interesting to see where these prices come out, and that might open up the... reopen up the potential for expansion ex-US. Great. You've noted a focus on profitability with Q2 earnings. Can you just remind us about timing for when you expect to be profitable, and then how do you think about profitability versus backfilling pipeline programs? Yeah. So a couple of different questions there. Let me just focus on, we particularly have a five-year vision. So where could we be in five years as a company? And in five years, we fully expect that this will be a multibillion-dollar business across the portfolio, with up to 70%-70% gross margin. And remember, it's a very rare disease type of market, so a very focused commercial footprint. So we think it's gonna be have some attractive economics. We haven't said where we're gonna go profitable within that five years. You know, I hope it's sooner rather than later within that five years, and that certainly will be driven by lovo-cel approval. Because lovo-cel has a greater volume and a more attractive, or a higher, gross margin than Zynteglo or Skysona. So that will certainly help drive us to profitability. But our future, which you're also asking about, right? So we have these three therapies. What's next? We have nothing else in our pipeline, to be really clear. But we sit in a super unique position within the cell and gene therapy market. We are the only standalone cell and gene therapy company doing self, you know, cell processing that has approvals and has the manufacturing expertise, the legal and so the regulatory and clinical expertise, and the commercial expertise to actually bridge that translation from clinical to commercial for a gene therapy. The rest are really big pharma with CAR-T, and there's about 250 companies behind us investing in various forms of cell and gene therapy. And we do see ourselves as potentially building up that pipeline through licensing and acquisitions at a later point, but not now. Once we have financial strength, we think with the expertise to really help a lot of those companies translate those innovations to the market. Great. Can you just remind us how much cash you have and how far that's going to get you? Yeah. So we have cash into Q2 of next year. And clearly, your next question is that we do need to fundraise, and we're looking at a number of different options in order to extend that cash runway. I'd say that, you know, bluebird bio is in a much stronger position than we were last year, and the number of options on the table are given that we have two therapies on the market and the third coming, I think are quite robust. So we're looking at non-dilutive options, as simple as if we get the PRV from the approval of lovo-cel, we selling that PRV. We can look at some debt options, royalty financing or straight debt. We can look at equity options, too. We have an ATM that we can open up, and we could do a PIPEs or straight equity financing as well. In some combination of that menu, is on the table to finance the company, but it'll be likely a series of things. Now, part of your cash is restricted, right? That's true, yeah. Can you just remind us, like, what could make the restricted cash available for you? Yeah. So that's tied up in a lease. It's tied up in a lease between two. Essentially, we had a building, or the old Bluebird had a building that we subleased to a pharmaceutical company, who in turn, subleased it to a big technology company. Both these companies are quite wealthy, multibillion dollars, you know, companies. And little old Bluebird is securing the rent payments from big company A to big company B, which is silly, we know. Legal paperwork needs to get done to release that. We're working on it. I can't really give a timeline for when that happens, but I think it's much more likely that we will want to invest more in the business next year to expand and that we will be doing financing options long before we will need to access that restricted cash. All right. Well, great. Looks like we'll have to leave it there. Thanks so much for your time. Thank you very much.