Thanks everyone for being here. My name is Yanan Zhu. I'm one of the biotech analysts here at Wells Fargo. We are fortunate to have bluebird bio's management team with us. And for this fireside chat, we have Andrew Obenshain, the CEO of the company, and Tom Klima, the Chief Commercial Officer and Chief Operating Officer of the company. Andrew and Tom, thank you for being with us. Thank you for having us, Yanan. Great. So, the company has three lentiviral gene therapies that have been approved by FDA and on the market. Two of them approved in 2022, and the latest was approved around the end of 2023. So can you provide an overview of how the commercial launches are going, and what do you think the next 12 months will look like for these launches? Actually, let me just start by reminding everyone about the gene therapy business model, which is a little bit different than small molecules or antibodies. We collect the cells from a patient. Once we collect the cells, that patient is generally committed. They're gonna go through with the procedure. But it takes us 4-5 months to ship the cells back to the hospital, at which point we collect the cash, which is a fee for agreement, or about 97% cash. And then about a month later, month 6, they get infused, and then the rest. It's a business where your actual value creation moment comes 6 months before you see it in the P&L. That's why we really are very careful to talk about how many first collections do we have. That's the value-creating moment for a gene therapy company, so with that in context, talk about 2024, and then I'll talk about 2025. So 2024, we really set up the infrastructure of a gene therapy company, and I think put to rest a lot of doubts about the commercial potential, so number one, these patients need to be treated in transplant centers. We now have 70 centers set up that can treat patients, so 70, which is by far the most in this category. Number two, these are very expensive therapies. They cost roughly $3 million each therapy. We've now established commercial coverage - commercial payer coverage, about 200 million lives. And for Medicaid, which is a large Medicaid patient population, especially for sickle cell, we about half the states have now affirmed coverage of patients. Half the population, excuse me, lives in a state that has affirmed coverage for sickle cell. Your mic fell off. Okay. Hear it wrestling. And for those online coming back, that was a $40 billion revenue line in January. Sorry. So anyway, so we've affirmed coverage. You know, if you are a sickle cell patient, and you live in, and there's about a 50% chance you live in a state that's already affirmed for coverage, which is fantastic progress for setting up the infrastructure for gene therapy. Now, let's go to uptake, and based on limited and a forward look to 2025. So we announced on August fourteenth, that as of August fourteenth, for the year, we had collected cells from 27 patients across our three products. So that was seven and a half months into the year. And we announced for the remaining four and a half months of the year, we'd already scheduled 40 patients out of an anticipated roughly 58 that we will collect cells from the end of the year, which we guide about 85 total collections. That's a huge acceleration towards the end of the year. And what I said in the beginning about that revenue cycle, that means that those patients, let's say those, we achieve those 58 patients in the last four and a half months of the year, at $3 million gross revenue per patient. You can see that it translates into quite a nice revenue line leading into 2025. So 2025, we really see as a growth year on our way to cash flow break even and profitability in the near term. Got it. Got it. I might have missed this. When did you record revenue? Is that when you ship the product back or when the infusion occurs? No. In fact, we collect cash when we ship the product. As we have a factory, we don't recognize the revenue until the infusion occurs. Oh, okay. And we recognize that it's about a month on average after we ship the product. Okay. Okay, but that's assuming infusion doesn't happen that quickly. I thought the patient for these, uh, chronic diseases, they may say, "I want to do the infusion, like, you know, in after spring break," or, you know, they could plan it pretty further out, right? Yeah. Tom, maybe you can talk about our experience to date. Sure, yeah. So as Andrew mentioned, the real value creation moment is cell collection. What we've seen is that patients in Qualified Treatment Centers really schedule their treatment around their life, as you mentioned. But what they do is they'll schedule a cell collection and a potential infusion about the same time. And what we found is QTCs are not really waiting long after they receive the final drug product to infuse the product. So it happens relatively quickly after they receive it. Wow! That's, that's a good sign because patients are really committed to getting the treatment- Mm-hmm. into their body, so that, that's great. That's right. -to hear. Great, so let's dive into each of the products in more detail. Mm-hmm. I think the biggest product, which is also our latest approved product, sickle cell, for sickle cell disease, Lyfgenia. So one observation is that, you in your guidance for how many cells you collect, how many cell collections you do this year, you did, you know, in the past, you said 85-105, and across the three products, but sickle cell should be the biggest component. And then at the latest earnings, you revised, you know, you narrowed that to 85. Right. How do we read into that? Does that suggest that the sickle cell launch might have been a bit slower than you expected? Yeah, so we're first of all, we should start with, we're really excited with the demand that we continue to see for people living with sickle cell disease, both from patients themselves, but also from the QTCs. We revised our guidance to be at the lower end instead approximately 85, and that's because seven months in, we know more about how patients are scheduling going forward. But to Andrew's point, when you look at those that we've already collected, those that have scheduled in the remainder of the year, we feel confident in getting to the approximately 85 starts. And to your point, that was just a slightly slower start, and the reason for that is that patients just take time to get into the QTC and go through the process. It takes a little bit longer than it does for beta thalassemia, and that's why you saw, you know, a more, you know, steady start, and we always said that it would ramp in the second half of the year, and that's exactly what we're seeing. Got it. Okay. In terms of, you know, you did mention there are those that scheduling has occurred for cell collection by year-end. How confident that those would not fall through? What's the probability of that? So what we've seen historically, just based on our experience, is that once a patient goes through the process of getting a schedule, meaning they're usually gone through the process of having their benefits verified and have a letter of authorization from the insurance company, very high likelihood that they'll go through with their collection. And then the collection, again, is really the most important defining moment. Once they get their cells collected, we've seen every patient go through to infusion. Got it. Great, great. You might have touched on this earlier, but I wanted really to hear your takeaway of what's happening in the sickle cell disease market. I think this is, you know, genetic medicine is a new treatment option for these patients. You know, from your vantage point, what is the interest level? Are there any common themes of hesitation, for example, that you're seeing? And then we can talk about a couple of more detailed points. Sure. Yeah, we so first and foremost, there are about 100,000 people in the United States living with sickle cell disease. We are estimating that about 20,000 of those 100,000 are severe enough to be considering gene therapy. Historically, what we've seen in market research, just to use round terms, is we've seen about a third of patients say that they are ready for a curative, potentially curative type therapy soon, like in the next year. We've seen kind of a middle 30-40% say that they would wait a short period of time until they see how those early patients do and learn from them. Then we've seen 20%-30% say that they don't know enough about gene therapy to make a decision, or that because of conditioning or because of the risk of infertility or something like that, that the gene therapy would not be for them. So there's, I think, a lot of patients who would be considering gene therapy, and even with other, you know, therapies available today, that is just nothing but good for patients and good for sickle cell disease people living with sickle cell disease. Great. Yeah, thanks for that color. You know, you did mention roughly a third of patients want to get treated soon. Right. They have that willingness. So I was wondering, you know, what insight do you have when those patients sit in a room with a doctor to discuss this? Mm-hmm. I mean, like a couple of things that we heard is a fertility risk due to the myeloablative conditioning. That sounds like some patient may have some concerns there. And also the recent HHS, you know, decision to not cover fertility for sickle cell genetic treatment could also have some... You know, I don't know your view on how that might play out. Would that be a real thing, or would that be overturned through this ongoing lawsuit? Can you talk about that? Sure. So I think, you know, obviously we're working with physicians in our qualified treatment centers who understand the transplant procedure thoroughly. They understand sickle cell disease, so it does take a period of time for a patient to understand it's not just a conceptual one-and-done, and you're cured. It's a process and a commitment. But once they understand that, they are still willing to move forward, generally with treatment, and obviously have discussions with their family to move forward. We were obviously disappointed with the decision from the OIG not to support fertility preservation for people who have government insurance. We, we've always been a big believer in fair and equitable and equal access for all patients. So we are obviously focused on trying to make that happen. We do offer fertility preservation for people who have commercial insurance, and we're working, obviously, cross-functionally to hopefully one day make sure that that's also the case for people who have government insurance. In the meantime, I will say the QTCs are pretty astute at navigating this process, and we have seen people with Medicaid already go through the process and move forward with treatment. Got it. Got it. And the fertility, does that include fertility preservation treatment? In some cases, the insurance companies will cover it. Other cases, QTCs find ways to get it covered, or they negotiate it through a single case agreement with the insurance company. But certainly, it's a heavy consideration for someone living with sickle cell disease in their family. Okay. Got it, and you know, the product does carry a black box warning, and now that you have been in the market for a little while, does that come up as a concern in actual promotion of the product and patient addition discussion? To be honest, I think the most often we get asked that question are at investor conferences. I think the medical community understands the risk associated with transplant, understands the risk associated with gene therapy, and, you know, they have these open discussions with their patients. They understand, you know, obviously, you have five years of patient data now for Lyfgenia and sickle cell disease, very well-characterized traceability of the LVV platform that they're comfortable with. So certainly it's something that a physician is absolutely gonna discuss with their patient, but we believe that they were comfortable with this going before the approval and before the final label. Okay. Great. Great. And I think you talked about the timeline earlier on. Could you elaborate a little bit and you know how many different components of that time for to like roughly six months, but you know what is the financial clearance? What is the preparation and then the conditioning and then manufacturing of the you know I guess manufacturing of the product before the conditioning and then the actual infusion. Could you divide that up for us a little bit? Yes. Let me just talk about the patient journey. I think that's the- Right. - and, we can talk about our perspective, too. So obviously, the patient comes in and consults the physician about whether or not this is an appropriate therapy for them, goes to the reimbursement process, and then is consented by the physician and gets reimbursement authorization. Those two things have to happen. And then they call us and say, "We'd like to schedule a slot, that where we know that you can manufacture the cells." In our manufacturing plant or where the clean room, they can accept cells on certain days of the week, and there are people there to process them. So once that's scheduled, the patient is called into the hospital roughly five, six days before that slot, and they are given a mobilization agent. In the case of sickle cell, that is, that is Plerixafor. In the case of beta thalassemia, that's Plerixafor plus G-CSF. That allows. They're given that about twelve hours before the collection, that allows the stem cells to be freed up from the bone marrow and put into the periphery. We then do an apheresis on the patient to collect those stem cells. We might do two collections, one day one, one day two, occasionally day three for a set of rescue cells. But the first two days of collection is then put into a shipping container, in cold storage, basically, and shipped to our manufacturing plant. It's in Houston for beta thalassemia, it's in New Jersey for sickle cell, and at that point, the product is manufactured in the course of a number of days. And then the end product becomes a frozen bag of stem cells that have been transduced with the lentiviral vector, and now include a copy of hemoglobin with a modified copy of adult hemoglobin. Now, what the patient does at this point is, after their collection, they go home, right? And they go about their life. We go about testing the product to make sure that it's potent, sterile, it's gonna work when we give it back to the patient. That takes a number of times. For sickle cell, that's up to 105 days to release that product. Once that product is ready, we notify the hospital. The hospital calls that patient back in. We ship the cells to the hospital. So the hospital now has the cells, that frozen bag of cells in their cell lab. And then the patient is called back in and undergoes myeloablative chemotherapy, where they receive several days of chemotherapy in order to create space in the bone marrow for the cells. Once the myeloablation is complete, the bag of cells is thawed, either in the cell lab or at the patient bedside, and infused into the patient. And amazingly, those stem cells find their way to the bone marrow and regrow, essentially regrow a blood system, this time with a different copy of hemoglobin than the patient has. The patient generally will stay in the hospital until neutrophil recovery takes place, and that after the transplant, and that's generally on the order of three to four weeks. It actually can be a little bit more than that as well, or a little bit less, depends on. It's very patient specific. Got it. Great. So on the, sounds like the reimbursement is early, very, very early on. They- It's confirmed early on, yeah, and then the actual reimbursement takes place after the patient leaves, the hospital submits the paperwork to the insurance company, saying: We've treated the patient, they've left, and then the insurance company will pay. Right. So, can you talk about the insurance? How does the insurance coverage look like? You know, how long does it take? What's the success rate? So we have had, for Skysona and Zynteglo, we have had no ultimate denials, from any insurance company. For Lyfgenia, we're still early in the process, but we've had 200 million lives commercially covered. And as I was saying, if you're a patient, there's a 50% chance that you live in a state that's already affirmed coverage for Lyfgenia, and there's actually a 20% chance that you live in a state where they've already, the Medicaid agency has already approved a patient for Lyfgenia. So we've had a very good success rate so far. Now, once you have that letter of authorization from, the insurance company, then it's almost certain that the insurance company will pay. And that risk is actually borne by the hospital. That risk is not borne by Bluebird. Right. Got it. Got it, got it. So, you have a large QTC network, like seventy of them, across the Lyfgenia and Zynteglo. I was just wondering how concentrated patient flow is to those centers? Sure. So our goal when we designed the Qualified Treatment Center network many years ago was to first have QTCs where people living with beta thalassemia live, and then have an expanded view where we also looked at the concentration of patients where people living with sickle cell disease live. We believe that people are much more willing to get treated closer to home, which seems natural and intuitive. And so we really designed putting our QTC network where people are and bringing therapies to people versus making people go long distances to get therapy. Our goal was initially 40-50 QTCs at the end of last year, which put us within, you know, 85%, within 200 miles of the vast majority of people living with sickle cell disease. We are now at 70 and growing a little bit. Our focus right now is really on patient pull-through within that network. We will probably grow a little bit more than that, but right now, it's really focused on getting our qualified treatment centers to, you know, get patients treated. Just statistically, if you look at the 70 QTCs, what we've said is that over 20 unique QTCs have started one of our therapies, so there's obviously enormous room for growth if you look at the 50 QTCs that have come on board that have not yet treated a patient, so we feel good about where we are, but we feel great about the growth potential going forward. Got it. Among the 70, is there, like a quartile distribution of very high, you know, high patient flow centers, or is it roughly equally distributed? I think, you know, going forward, if you look at just the size of the hospitals and the capacity within the hospitals, the bigger institutions might be, you know, willing to treat ten plus patients a year. Some of the smaller institutions might treat, you know, two to five patients a year. So I think it just really depends on their hospital bed capacity and their apheresis capacity, and their staffing, obviously. Got it. So there might be some centers that overlap with CRISPR and Vertex's commercial treatment. Any color on how physicians and patients in those centers have, you know, discussed or made their choices so far? Yeah, so our goal has always been parity. We want people living with sickle cell disease to have access to all therapies. We believe that long term, most centers are gonna offer both therapies. Right now, we have 70 centers, and based on what I've seen on other websites, I think they have about 20 or 25 centers, so clearly we have a head start there. As far as how they think about offering it to patients, I think they, in most cases, if they have both available, they'll offer both, and they'll have a discussion about the risks and benefits associated with each, and then patients will make decisions. I see. But so far, there hasn't been any insight on patient preference, for example. Have you heard any feedback from the field? Yeah, so yeah, we've obviously been doing a lot of market research over the years. We've talked to thought leaders consistently over the years. Some analysts have done key interviews, and all the feedback has been consistent so far. In fact, on our last call, I referenced a recent market research study in over 40 qualified treatment centers, where Lyfgenia and Bluebird were preferred over the other gene therapies, and some of the reasons included the mechanism, the known mechanism of LVV, the length of long-term follow-up that we have, the size of the data package, the process and the shorter potential process for Lyfgenia, the number of cell collections on the front end, so there were a number of logistical things in addition to safety and efficacy. Got it. Very helpful. So in terms of manufacturing, what's the current turnaround time and the capacity? So let me talk about sickle cell. We say that's up to 105 days to release the product. That's since the four to five months to send it back. You know, the 85% of the time, a patient only needs one or two collections. So they would, you know, one collection, and it's back in 105 days. If they need two, it's gonna be a couple weeks longer because we have to manufacture the second one as well. We believe that that's the best in class in the market right now. And in terms of the capacity, we have enough to meet the existing demand. We haven't disclosed that publicly, but I will say that our Zynteglo and our Lyfgenia supply chains are separate, right? They're separate plants, so one use of one does not impinge upon the other. Got it. Yeah, yeah. Do you feel like the sickle cell manufacturing capacity can give you room to, you know, for the first year or two years of launch? You don't have to worry about manufacturing capacity? So the way we think about manufacturing capacity is that we will add it on as demand ramps, and so we watch demand, and then we will add on capacity as we need. We might have a small waiting list at times. That actually just happened to us with Zynteglo. We just doubled the capacity for Zynteglo for the time period. Before that, patients were waiting for a couple of months. Not all of them noticed, because they're scheduling, we're scheduling out a couple of months anyway for many patients. So the same will be true with sickle cell. What we'll do is, it's very expensive to add manufacturing capacity, so you don't want to do it too much in advance. You wanna watch how the market evolves, then add that capacity. So we have plans in place to address that to the capacity, but we have capacity for the launch phase of both products at this point. ... Yeah, that makes sense. Can I ask you what your estimate is for the proportion of sickle cell patients who may undergo a genetic medicine treatment in the next five years? Wow! So, Tom, well, first of all, we not only have done the market research, but some of the other analysts are doing calls with KOLs right now. It's interesting that they match up pretty consistently. If you ask, you know, are you going to do it during the next one year, that's generally about 30% of people living with sickle cell disease who are severe enough to be qualified for gene therapy, and if you ask on a longer-term horizon, you ask about 5 years. I think we ask for 3 years. In the next 3 years, that adds another 30%, and then, you know, the remaining group has a hesitation for some reason. You know, based on everything we're seeing, based on the demand we're seeing coming into the QTCs, we're extremely excited about the potential in the short term with gene therapy. Great. Thank you for those insights. Sure. Maybe let's touch on Beta thalassemia. So how do you see that launch go from here? Have you reached steady state? Could there be inflection in cell collections going forward? Yeah. So again, we've kind of described the launch of Zynteglo's steady linear growth. As Andrew just mentioned, we just executed an expansion at our Lonza facility in Houston for Zynteglo and Skysona. As he also mentioned, we had a wait list kind of built up there, so we anticipate that launch to continue to accelerate and kind of keep up its steady linear growth. You know, that was a fortunate situation where it took a little bit of time for the patient word to spread in the community. But, what we're seeing now is that after two years, the patients that have gone through the process are spreading, you know, their positive experience to other patients, and that's causing acceleration in that launch as well. Got it. Interesting. Interesting, and I do want to ask about the capacity. You know, had that been limiting the cell collections for the beta thalassemia launch before the capacity was increased? As Andrew mentioned, we had a short wait list. So there were a number of patients that wanted to be treated, and we just solved that by scheduling them a little bit further out, as the capacity came online through the expansion. Got it. So overall, you know, going back to that eighty-five number, I think you, Andrew, you have already, you know, talked about why you think that number is very achievable. You already have... You need fifty-eight additional patients, and you already have fifty-four scheduled, and it's a matter of getting another eighteen- Mm-hmm You know, scheduled. So overall, is your- is that fair to say you're confident for meeting that guidance very high? We said approximately 85 patients when on August 14th. That's what we said, and on September 4th, we're saying approximately 85 patients, so. Got it. Got it. Let's talk about financials. So I think the company has been going through work to restate some of its financial statements. It's taking a while. Could you explain what is it that needs to be done, and why it has taken a while? Yep, absolutely. So there's six leases that are the subject of this restatement. This is actually an accounting practice that was going on Bluebird long before we split the company. And there was a new financial guidance in 2019 that talked about how you account for leases. And the company, Bluebird, was inconsistently accounting for across the six leases, how it was doing that. Now, at the time, we were an R&D company, not a commercial company, so those leases were not a significant part of our financial statements. Now, as we grew up as a company and continued forward with the same accounting practice that we had, those leases became more significant. Actually, the company last fall, as we began to scale, actually caught it and said, "We need to actually figure out actually how to-- We need to restate how we do our leases," and talked to the accountants, and the accountant said, "Yes, you in fact actually do a restatement." Now, this involves going back five years, finding all the pieces of paper for every change order for any of those six leases, making sure that we can audit it correctly all the way back, so that we can start in 2022, we can have the right starting balance and restate the now almost 10 quarters of financials. That's just a lot of work, right? It's a lot of people time. It's a lot of work. Once we missed the deadline of August 15th, sorry, April 15th, we... Or May 15th, excuse me. The important thing is not is to get it right. So what we don't wanna do is rush, get it wrong, and have to restate. So we are working expeditiously to complete those filings. Generally, restatements take on the order of six months to a year. We hope to be on the much shorter end of that. And we hope to be doing filing those statements very, very shortly. Got it. Thanks for that update. Mm-hmm. Can you remind us of the cash runway of the company, and what is the strategy to bolster balance sheet? Yep. We have cash into the first, sorry, Q2 of 2025. However, we do have a loan agreement with Hercules Capital, and there are certain cash minimums there. We will dip below those cash minimums before that in Q1, so we'll work with Hercules. Hercules, as we've already restated our agreement with them once. We have a very good working relationship with Hercules. Clearly, we do need to find sources of capital for the company. Investor conferences are good places to go and tell our story. That's. We will be looking at all sorts of ways that we can bring capital into the company, whether that's debt, royalty financing, equity, like, all sorts of ways. Again, we have restricted cash, like our account, PRV account, et cetera. Got it. Yeah, on the PRV point of the PRV. Mm-hmm. Is there still discussion ongoing with the agency? We have ongoing dialogue with the agency, ongoing back and forth with the agency as we continue to discuss that. So can't really give an update there. Okay. Got it. Got it. And the Hercules additional financing seems to have conditions of that you also have to get other financing, significant amount, right, before you can access the Hercules financing? Right. So we already have $75 million from Hercules. There's 2 additional tranches of $25 million each, both keyed off performance milestones. The first one, March 31st, 2025. In order to access that milestone on March 31st, we have to both raise $75 million before December 20th and start 50 Lyfgenia patients before that time. In order to access the second one, where another $25 million, which should happen by the end of the year, we'd have to raise $100 million by December 20th, or $125 million by June 30th. And then the performance milestone is that we would have to have 50 Lyfgenia, or sorry, 50 total infusions, excuse me, 50 total infusions across the portfolio in the trailing six months. Got it. There, there's some specific, you know, Lyfgenia patient numbers in that condition, you know, as part of that condition, right? Is that like a fairly stretchy goal, or do you feel that's a very reasonable goal? So, I think we designed those milestones to match what we think is achievable- Got it. with Hercules. I don't think you commented on the 85, like, complete- Mm-hmm. You know, we generally do think sickle cell must be the major component, but not really. We don't really have granularity on that. Mm-hmm. Is there any way that we can think of, you know, how many of them should be sickle cell? So in the short term, because of the head start with Zynteglo, obviously, most in the short term are going to be Zynteglo, and you saw that in our most recent report. You know, the sickle cell market is 20 times bigger than the market for beta thalassemia, so eventually it will balance out, and Lygienia will be the lion's share of the future. But in the short term, it'll take a little bit of time for that to catch up. Very, very soon, you should start to see more Lyfgenia than Zynteglo, but it'll take a quarter or two to catch up. Yep. I'm gonna phone a friend on the second milestone. I think I got that second milestone wrong. What was it? 70 total deliveries within six months, of which 40 need to be Lyfgenia. Thank you. 70 total deliveries within six months, of which 40 need to be Lyfgenia. Thank you. That's James Sterling, our new CFO, and thank God he's here. Got it. I think we're about to be out of time. I'm wondering if there's any questions in the room. Oh. I'd just say with the three approved products, it seems like, you know, any company with three approved products that could have very large revenues attached to them is not a company that, you know, has the stock under a dollar. So, I mean, would there be new partners out there or other larger pharmaceuticals looking to grow or some way to bring the company the funding that it needs to proceed with these great drugs you've or procedures or, you know, that you've discovered and approved? Yeah, well, we certainly agree that we think that the opportunity in front of us is very attractive. And you know, we are, as a public company, right, everyone can read our 10-K. Well, soon read our 10-K, or read our financial statements and see where we are and listen to everything publicly. So yeah, we believe that we have a very attractive business, that we can either grow ourselves or do it in concert with someone else. Yeah. You're not five years away or three years away, right? I mean, you're there. The products are approved. Yep. So it just appears like there should be options. Yep. Okay, great. Okay. Great. I think we learned a lot from the session. Thank you for a great fireside chat session. Thank you so much, Hugh. Appreciate it. Thanks, everyone.