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 with CEO Andrew Obenshain, and Chief Commercial and Operating Officer, Tom Klima. Welcome. Thank you. Thank you for having us. Thanks. For those who may not be familiar with Bluebird, can you just provide a brief introduction? Yeah, absolutely. So Bluebird, we are a gene therapy company, a fully commercial gene therapy company. We have three approved products. One, Lyfgenia for sickle cell disease, a second, Zynteglo for beta thalassemia, and a third, Skysona for adreno leukodystrophy. We're in the process right now of ramping those sales and on our way to profitability. Great! Maybe before diving into specific therapies, can you just talk about how the three launches are progressing? Yeah, absolutely. Let me just start by describing the economics of gene therapy, which is very, very different than a small molecule or a protein in our business. We collect cells from patients, and that is the start of the process. Once those cells are collected, that patient almost 100% of the times will go through the entire process. After we collect the cells, we manufacture them. Four or five months later, we send those cells back to the hospital. That's actually when we collect the cash, because we have a factory agreement, and then about one month later, those cells are given back to the patient, and that's when the revenue is recognized. From a patient start, it's four to five months until about 90% of the cash comes in, and another month for the revenue recognition. I say that to kind of help quantify how the launch is going. This year, on August fourteenth, we announced that we had collected cells from 27 patients. Of those 27 patients will turn into revenue six months later. Our gene therapies each priced around $3 million, so 27 times $3 million. And then we said that we are going to actually do a total of 85 collections this year. That means in the last four and a half months of the year, we anticipate 58 patient starts or 58 collections. So that's over $170 million in gross revenue potential that would be generated in that last four and a half months of the year. So I think that to call that an acceleration would be an understatement. So we have a real acceleration in the launches at this point. Can you talk about what gives you confidence in that acceleration, you know, this 58 number that you're talking about for the last four months of the year? Yeah. So I'll talk about just the numbers a bit, then maybe Tom can provide a little bit of qualitative color as well. Those patients are actually scheduled. 40 of those 58 patients are actually scheduled to come in and get their cells. And they schedule after they've gotten an insurance verification, after they've been deemed medically necessary, after they've gone all through the steps that they need to in order to be able to collect the cells, including family logistics of getting there. Those 40 patients are a very committed group. We already had 40 out of 55 scheduled as of August 14, and maybe you can talk a little bit more on the qualitative side as well. Yeah, sure. And I think one of the things that gives us confidence and the exciting part is the demand is definitely there. If you look at people living with sickle cell disease, we've seen nothing but excitement from patient committees, from our Qualified Treatment Centers, and from, you know, the KOLs in the community. If you look at the first data point is our what we call our Qualified Treatment Center network, or QTCs. These are the hospitals where gene therapy are administered. We started on this journey with just a small handful of QTCs. As of our last report, we announced that we had 71 Qualified Treatment Centers ready to give either Zynteglo or Lyfgenia. Of those, about 20 unique QTCs have started a therapy, one of our gene therapies. That gives us confidence that there are still fifty plus QTCs that are ramping up and getting ready to start offering either Lyfgenia or Zynteglo. And that coupled with the fact that we also expanded our manufacturing capacity for Zynteglo and Skysona to meet the growing demand there. We see acceleration, obviously, with Lyfgenia for sickle cell disease. We also continue to see strong linear growth for Zynteglo for beta thalassemia. Great! Maybe starting with Lyfgenia, yeah, can you just talk a little bit about, you know, the expectations for the timing for patients, you know, undergoing, you know, to reach infusion of drug, like that process? You talked about that process. but, you know, the timing of that and your expectations for potentially changing meaningfully over time, you know, what might we see more efficiencies over time? You know, how long would that take? Yep. So for Lyfgenia, for sickle cell disease, once we collect the cells, it takes about a hundred, somewhere between eighty-five and a hundred and five days for us to actually manufacture and release the cells. A little bit of trivia here, and you know, CAR T's are quicker, but CAR T's are differentiated T cells. In order for us to test and release, we actually have to take the stem cells, grow them into red blood cells or differentiate into red blood cells, and then ensure that those work. That's why this process takes a little bit longer. So that's about eighty-five to a hundred and five days, and if clever people in the audience are doing the math, they're saying: "Well, that's three and a half months, Andrew. That's not four to five months like you said," and that's because occasionally, you know, for some of our patients, they'll have to go through a second collection. So it's actually the time clock starts at that second collection, and that's why we say four to five months in order to deliver to the hospital. Now, the patient goes home during this time. They come in to get their cells collected, they go home, then they come in for their transplant. Now, in terms of shrinking that timeframe, in the next year to two, that's probably that timeframe is probably gonna stay relatively the same, maybe go down a little bit. There probably won't be step changes in that, but there are things that we can do to optimize that in the future. I think importantly, this is not CAR T. The urgency to treat within a certain number of weeks is not there. So while it would be a convenience probably for the hospital, the patient to narrow that timeframe, it's not something that we see as really limiting the uptake of the product. Can you just talk about the feedback, you know, what that's been like from physicians and patients on Lyfgenia so far? Yeah. So we, it's probably early to give a lot of feedback in the commercial setting, but what we've seen consistently is that people living with sickle cell disease are excited for gene therapy and excited for potentially curative therapy. We have done a lot of market research and talked to KOLs, where we see preference for Lyfgenia for sickle cell disease over other gene therapies, and this is really driven by a number of factors, including things like mechanism of action, efficacy, and safety. But some of the nuances within the process that Andrew has described, we look at number of cell collections up front. 85% of the time in clinical trials, we're able to do cell collection in one or two collections, which is an important convenience for patients. If they have to go on to a third, fourth, fifth collection, that becomes very burdensome on patients and adds time to the process. Or you look at, you know, time to neutrophil engraftment in the hospital at the end of the process. So we see a lot of different reasons for that preference, but we're getting great feedback about Lyfgenia for people living with sickle cell disease. Now, across the treatment centers, what proportion are evaluating multiple patients for Lyfgenia? And then for centers that might only be evaluating one patient at a time, is that limited more by patient availability or interest? So what we've heard consistently is that within our QTCs, there are many, many patients that are interested in gene therapy. I think one of the things that takes longer in the front end is that hospitals take a little time to set up their own process for treating patients with gene therapy who have sickle cell disease, and initially, they are more likely to start with one or two patients in general. There are some centers that will do more than that, but in general, they like to have a patient or two get through the process and ultimately see reimbursement before they start treating, you know, 10, 20 patients. Now, you've commented on shifting focus from activating new QTCs to flowing through patients at activated QTCs. You know, how do you balance the activation of new QTCs with shortening times for collection, delivery, engraftment, et cetera? Yeah, so we took a very strategic approach as we designed our qualified treatment center network, and going back to last year, we had set a goal of 40-50 qualified treatment centers, and that goal is really founded on bringing our therapies closer to patients, and with 40 or 50 QTCs, that brought us within 200 miles of about 95% of the people living with sickle cell disease. We now are at 71 qualified treatment centers, so we far exceeded our goal. That's why we're now shifting our goal to pulling through patients at the qualified treatment centers. However, I do think that we do not want distance to a QTC to be a barrier for treatment, so eventually, we might continue to grow that network. But right now, it's all about, you know, getting more QTCs, more experience with Lyfgenia and Zynteglo. And then you've also said that the insurance process for patients gaining pre-approval, that takes time, especially for a given QTC's first patient. And when might you expect most QTCs to have gone through that initial patient experience? You know, is that more of a twenty twenty-five thing? Yeah, so just to address the first part of that, if you think about the speed to reimbursement, the first part of the story is access, and if you look at people who are covered, we have over two hundred million lives in the U.S. covered by either a coverage policy or an outcomes-based agreement that's specific to Lyfgenia. There are about 50% of patients who live in a state where there's affirmed coverage for Lyfgenia, and about 20% of people living with sickle cell disease live in a state where coverage has already been approved for at least one patient for Lyfgenia who have sickle cell disease. So if you look at the coverage landscape, and that includes Medicaid, that's Medicaid specifically, and commercial payers, but if you look at coverage, we've gotten consistent good feedback from payers. In fact, we're listed as preferred in the state of Florida recently, which is the largest Medicaid population in the United States, then you look at reimbursements. The actual time to reimbursement and the negotiations up front is taking about two weeks on average, and going pretty smoothly. And then, can you just talk a little bit about more on where you are on the reimbursement in terms of, you know, how important are the outcomes-based agreements and, you know, just general progress that you're making on the reimbursement front? Sure. As part of our belief in our therapies, we did offer outcomes-based agreements for both Zynteglo and Lyfgenia. The foundation behind that is basically, if the therapy doesn't work fully like it's supposed to, we don't believe a payer should have to pay full price. In the case of Zynteglo, we tied our outcomes-based agreements to transfusion independence, which was the primary endpoint of our study. And basically, if we said if a patient doesn't achieve transfusion independence or maintain transfusion independence, then a payer would be rebated up to 80% of the cost of the therapy. Obviously, this is very well-received by payers because they wanted some assurance that if the therapy didn't work, they wouldn't have to pay full price for it. Just to go one step further, if you look at the exposure that we feel we're taking, it is pretty minimal because in our clinical trials, 90% of patients achieve TI, and if they achieve TI, transfusion independence, 100% maintained it. If you look at sickle cell disease, obviously, if you look at the burden of disease in sickle cell disease, these are people who are, you know, in part on Medicaid. They are, you know, in and out of the hospital multiple times in a year in many cases. It's just an incredibly burdensome disease. So we tied our outcomes-based agreement to hospitalizations related to VOEs with the same concept that we applied in beta thalassemia. Now, what kind of advantages do you think Lyfgenia provides patients and physicians when compared to Casgevy? And what are the early market feedback that you're hearing for how Lyfgenia stacks up to the competition? Yeah, so our foundational belief is that more therapies for people living with sickle cell disease is a good thing, and we believe that more therapies will ultimately rise to the tide for everyone in the field. Having said that, we do also believe that we have some distinct advantages. If we start with the qualified treatment center network, we have 71 qualified treatment centers, which is by far the most in the field. If you look at you know some of the nuances with treatment, we have you know five years of data now, and the longest follow-up for any gene therapy in sickle cell disease. If you look at some of the process components, whether it's cell collections, time to delivery, time to neutrophil engraftment, we are hearing that we have a distinct advantage there. Then just, you know, we have two years of experience now working with our qualified treatment centers with Zynteglo and beta thalassemia, and those relationships are proving to be an advantage as we think about Lyfgenia and sickle cell disease. Now, you've met resistance to overturning government restrictions for providing fertility assistance to address potential impacts, you know, from myelo ablative chemotherapy. You know, what are your views on the pathway for lifting these restrictions, you know, as others have also raised the issue? Sure, so obviously, people who are facing, you know, dealing with their disease and thinking about going through a gene therapy regimen, have to consider the impact of myeloablation on fertility. It's a big consideration. I don't want to downplay that consideration. That's something that we did offer in clinical trials that many patients took advantage of. We... You know, it's public now that we had actually asked the OIG for their opinion on multiple aspects of patient services, including fertility preservation. We were disappointed to learn that they didn't feel like that was something we could offer to people who have government insurance. Our goal is to provide timely and, you know, equitable fertility preservation for all people. We do, however, now offer for commercial people with commercial insurance, and we're working across multiple fronts to hopefully one day ensure that people who have government insurance also have the same, you know, access to fertility preservation. In the meantime, I will say that QTCs are pretty astute in helping patients navigate the situation. But again, it's our goal that everyone has access to gene therapy and not at the trade-off of worrying about fertility. Great. Maybe shifting to Zynteglo, you indicated that the recent expansion at your Lonza facility doubles manufacturing capacity for Zynteglo and Skysona. You know, what kind of benefit are you expecting from the extra capacity on sales, and, you know, were there limitations to adoption from the manufacturing side? Our philosophy has always been to look at manufacturing in terms of we expand manufacturing as we see demand coming in. The fact that we expanded manufacturing for Zynteglo and Skysona is, you know, attributed to the demand we saw coming in. We actually got to a point where we had a short wait list for Zynteglo, and upon expanding capacity, we were able to continue to grow and fill the slots, and continue to schedule patients well in advance for Zynteglo. That's part of the reason we feel confident in the ramp for Zynteglo and adding to our 85 starts this year. Now, on the payer side, have insurer-based restrictions on ZYNTEGLO access that changed over time? So the one thing that is actually ended up being consistent with what we had previously thought, we had estimated that about 75% of people living with beta thalassemia have commercial insurance. I will say that we saw a pretty big bolus of people who had Medicaid coverage come in in the beginning, and so it had us kind of thinking, you know, we should reevaluate. But then over time, as we saw more patients come in, it actually balanced out to be consistent with what we saw in the claims data. It's probably a little too early to tell for Lyfgenia, but, you know, I think the most important thing is that we have seen zero ultimate denials across both so far, and that's both for commercial payers as well as Medicaid. Maybe moving to Skysona, you reported four patient starts in 2024 as of last month. Can you just talk about what drives the lower versus the higher end of the 5-10 patient range that you've cited? I think it's right on track. If you look at, it was as of August, and if you look at the second half of the year, both because of the size of the patient population, but also the predictive nature of progression with ALD, we continue to believe that it'll be between five and ten starts a year. We are at four as of August, whenever we reported in August, August fourteenth. I think given the rest of the year, we'll probably fall right in the same range of five to ten. Okay. And maybe circling back to the start of this conversation, when you're talking about the timing for patients receiving drug. Just trying to get a better understanding, like, if a patient lived right next to a QTC, how quick could they receive each of your three drugs? Just to get a better understanding for that process. Yeah. So the proximity to the QTC is probably more of a, you know, willingness to go seek treatment factor than a time to receive treatment. The process is still the same, where they would go, even if they lived next door, they would go in and go through mobilization and cell collection. They would then go home and live their life while the manufacturing process took place, and then once the manufacturing process was done, we would still ship it back to the Qualified Treatment Center, and then they come back in for the treatment. So that time is really unaffected by the distance that they would live from a Qualified Treatment Center. Great. Now, outside of commercial growth, you know, how are you thinking of growth through your gene therapy platform and any potential acquisitions or partnerships? Yeah. You know, being a pioneer, you kind of learn a lot along the way. It's actually we've built up a lot of expertise, and we've spent a lot of money to build what we have. ... I think there's three core attributes of our platform that we have that others would probably need. Number one, the both the cell processing and the viral production expertise. Now, we do that outside of our four walls. I mean, the arms and legs are outside the four walls, but the all the knowledge is inside, all the brains are inside, and that's something that's very, very important, that in order technically, how to develop those, how to do. How to get them approved, et cetera. Second thing we have, is that we have gotten four BLAs through the FDA and two MAAs through the EMA. I say four BLAs because the team that is at Bluebird actually worked on the Abecma product as well, the vector for the Abecma products as well, before we split. And the last thing is, we have a transplant call point. We have 70 transplant centers, where any ex vivo therapy will need to be performed. So any CAR T, et cetera, gets performed at those transplant centers. So if you look behind us, there's over 200 companies developing gene therapies, and that's not even including the CAR T companies, and they're facing a choice of developing the entire infrastructure that we did themselves, or partnering. Partnering with us, or partnering with a very, very limited number of pharmaceutical companies that have this type of capability. So we think that, you know, so right now we're focused on these three therapies. We're focused on getting to profitability, but shortly thereafter, we think we will be in position to really help out a lot of the people coming behind us with innovation. Great. Maybe a couple questions on the financials. Mm-hmm. Can you just remind us of your cash position and runway? Yeah. So we announced publicly that we have cash runway into the second quarter of twenty twenty-five. We actually have a loan agreement with Hercules that, you know, some minimum cash covenants will actually end up, if we don't raise money before then, tripping them in Q1. So, you know, obviously, we're seeking sources of capital at the moment. Now, you've postponed reporting an annual financials for 2023 and need to restate some of the prior quarters. Mm-hmm. You've recently submitted an updated plan for the submission. Can you just remind us why that's needed, you know, what remains outstanding, and when you might have all your- Yeah ... financials updated? We anticipate that we're relatively close to completing this process. It's in the hands, you know. It's a little bit outside of our hands, too, because we're dealing with the auditors as well. But these relate to six manufacturing leases. There was a rule change in 2018 about how to account for the manufacturing lease. At the time, Bluebird was an R&D company, right? The manufacturing leases were not a big part of our company. That obviously changed over time, and our accounting team caught last fall that we had been inconsistently accounting for these leases, and really needed to go back and reach agreement with the auditors and go back and consistently account for the lease, which meant finding every single piece of paper all the way back to 2019, for these leases. Hence, a very, very big undertaking, and we're nearing the completion of that undertaking at this point. Great, thanks. Maybe one last question before we close. What, if anything, do you think that the Street most misunderstands about Bluebird? Yeah, I think there's a couple things. Number one, I think that we are just from a business perspective, this team has been very, very focused on managing costs, understanding the cost of the business, so I think we're a lot closer to profitability than the Street probably thinks. In fact, I don't think most of the models have us going to profitability within the model timeframe. And then I think the second thing is just the ramp and the competitive position we are. We believe that we are the market leader in the U.S. And I think with that, these forty schedules that we have after April fourteenth, or sorry, August fourteenth, will translate into collections plus some additional ones, and we'll see a very nice ramp in the business going into 2025. Great. Looks like we'll leave it there. Thanks so much for your time. Yep. Thank you. Appreciate it. Yep.