Ladies and gentlemen, thank you for standing by. And welcome to the Blueprint Medicines Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded.

I’d now like to hand the conference over to your speaker today, Kristin Hodous of Blueprint Medicines. Thank you. Please go ahead, ma'am..

Thank you, Operator. Good morning, everyone. And welcome to Blueprint Medicines' third quarter 2020 financial and operating results conference call. This morning, we issued a press release, which outlines the topics we plan to discuss today.

You can access the press release, as well as the slides that we'll be reviewing today by going to the Investors section of our website at www.blueprintmedicines.com.

Today, on our call, Jeff Albers, our Chief Executive Officer, will discuss Blueprint Medicines third quarter 2020 business highlights; Christy Rossi, our Chief Commercial Officer, will provide a commercial update; and Mike Landsittel, our Chief Financial Officer, will review our financial results; Dr.

Andy Boral, our Chief Medical Officer is also joining the call and will be available for Q&A. Before we get started, I would like to remind everyone that statements we make on this conference call will include forward-looking statements.

Actual events or results could differ materially from those expressed or implied by any forward-looking statements as a result of various risks, uncertainties and other factors, including those set forth in the Risk Factors section of our most recent quarterly report on form 10-Q filed with the SEC and any other filings that we make with the SEC.

In addition, any forward-looking statements made on this call represents our views only as of today and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update or revise any forward-looking statements. Now here's our CEO, Jeff Albers..

Thanks, Kristin, and good morning, everyone. It's a pleasure to update you today on the significant progress we made this past quarter across our entire portfolio. As we've discussed previously, our key areas of strategic focus have been threefold.

One, advancing our registrational programs and systemic mastocytosis; two, building our commercial expertise as we've launched multiple new products, and three, continuing to strengthen our pipeline with new investigational medicines from our research platform.

During the third quarter, and really the last month in particular, we made substantial progress across each of these focus areas, which highlights the strength of our portfolio as a whole and positions as well for continued growth opportunities ahead. Let me start with our focus on systemic mastocytosis or SM.

As a reminder, SM spans both advanced and non advanced forms of the disease and the medical need across the entire spectrum is significant and urgent..

Thanks, Jeff. Good morning, everyone. In many ways, our progress in Q3 highlights the incredible growth opportunity that is in front of us as we head into 2021. Growth that will be driven by the ongoing launch of GAVRETO; the expansion of the Blueprint commercial footprint into new geographies.

And, of course, most significantly by our efforts to bring avapritinib forward to patients suffering from systemic mastocytosis. Through this lens, our accomplishments in this quarter set the stage for the next phase of Blueprint Medicines journey as a leading fully integrated global precision medicine company..

Thanks Christy. Earlier this morning, we recorded detailed third quarter 2020 financial results in our press release. For today's call, I'll touch on a few financial highlights from the quarter. We recognize total revenues of $745 million in the third quarter.

As Christy mentioned, we are pleased to record $6.3 million of net product revenues, primarily driven by AVYAKIT sales. We also recognize approximately $739 million in collaboration revenue, including the upfront payment, equity purchase premium and milestone payments under our collaboration with Roche for pralsetinib.

Cost of sales remains low as we continue to work off commercial inventory that we expense pre approval. Our total operating expenses decreased compared to the prior quarter driven by global R&D cost sharing and US profit sharing under our collaboration with Roche.

Looking forward, we expect to see modest quarter-over- quarter operating expense growth as we continue to advance our investments in systemic mastocytosis with avapritinib and BLU-263, as well as advanced our discovery portfolio, including our EGFR programs towards the clinic.

We also anticipate significant increases in non cash stock based compensation expense for the foreseeable future. With approximately $1.4 billion in cash on hand, we are in the strongest financial position that we have ever been as a company..

Our first question comes from the line of Marc Frahm from Cowen..

Maybe on Indolan and FM. Can you give us a status update and when do you expect to complete the enrollment there? I know historically, you've talked about the end of this year being possible but then also talked about COVID possibly slowing things down.

So just kind of where are we there?.

Sure. This is Jeff. I'll take that. So we've provided in the prepared statements in release that we will provide a more detailed update on enrollment at the beginning of 2021. As we talked about previously, it was certainly the startup was slowed due to COVID.

And now we continue to add more sites, and there are some critical sites that are coming on now; in some cases, they're in regions where cases seem to be lower. But in other cases, some of the sites that, I can think of one site in particular about to come on, where unfortunately, the cases seem to be spiking in that region as well.

So we want to get a little more color on that. But all the markers of engagement of patient's willingness to come in are there. So we need to be really optimistic, but we'll have a better sense of exact timing of when it will be fully enrolled at the beginning of next year..

Our next question comes from the line of Salveen Richte from Goldman Sachs..

Hi, everyone. Thanks for taking the question. This is Andrea on for Salveen. And maybe just as a follow up to that, would love to hear more about the cadence of other data readouts from SM portfolio, particularly when we might be able to see additional follow up for the PATHFINDER trial? And then I have a follow up..

Sure, so this is Jeff, I'll start. So we haven't guided to the next update. Obviously, we just provided the top line data for advanced SM in September. Obviously, we've -- we're in the process of first and foremost getting our sNDA file pulled together.

But we also need certainly intend to provide updates on that data set and in more fulsome nature at a medical conference, but we haven't guided to a specific timing..

Got it. And then just with respect to the collaboration with GAVRETO with Roche; you had spoken about the potential to explore additional indications or combinations. Just wondering how you and Roche are thinking about this right now, and when we might see advancement into one of those programs..

Yes, Andrea, I'll take that. So yes, so we're working very closely with our colleagues over at Roche. And it's been a very collegial relationship where we are in the process of figuring out how to expand accelerate and accelerate the development plan.

We are already pursuing the tumor agnostic indications in retrospect driven solid tumors that started out actually as an -- arrow study.

And really now the focus is on how to move pro set NIM earlier -- into earlier lines of therapy, both as a single agent, but also importantly, in combo with other medicines, including some of which would be in the Roche portfolio. And so as we work through these details will, I think will update in the future..

Our next question comes from the line of Reni Benjamin from JMP Securities..

Hey, good morning, guys. Thanks for taking the questions and congrats on all the progress.

Can you just, I know it's early for GAVRETO but as we follow the trajectory of the drug, should we be thinking about this ramp, kind of like neck and neck with that? Are there differences that we need to be considering as we think about the commercialization of this product? And then maybe just related to what's happening in the EU? You mentioned Germany; I jumped onto the call a little late.

And so just wanted to get a sense as to how the other country specific discussions are emerging and how we should view that. Thank you..

Sure. Yes, this is Christy. I can take that. So as I said, we're really excited about the progress that we're seeing with the GAVRETO launch, we've had a lot of great reception to the data, as well as the approach that we're taking.

If I think about what we've seen from Lilly, I think the biggest thing that we can take from that so far is that the opportunity is as attractive, right? I mean, we clearly know that there's a lot of ret patients out there. And we expect that that opportunity will continue to grow as more and more patients are identified.

I think the biggest difference is that now they're -- since they are available as opposed to one so you can't extrapolate obviously the ramp of an agent when it's the only agent on the market. But we are certainly going to continue to look to new patients start first in lung and then anticipating a thyroid approval on the heels of that.

And as we continue to ramp new patient starts we'll see that flow through. So look forward to having more of that data to share as we provide a Q4 update. And then on Europe and to address that question as well.

So we were thrilled to have that approval and have Blueprint really emerged as a global commercial company and now the German launch is underway; Germany is usually the first market out of the gate as I know I'm sure everyone's aware just given the reimbursement dynamics, we would expect other countries to come online over time.

Clearly the biggest hurdle as I think everyone's aware is really securing pricing and reimbursement and the timelines around that are different by market. So we will -- we are actively engaged in those discussions and look forward to having AVYAKIT commercially available for PDGFRA D842V mutant patients in Europe, in the coming months..

Our next question comes to the line of Andrew Berens from SVB Leerink..

Hi, Thanks. I wanted to ask you guys a question regarding the ASM regulatory process, which you're about to submit. I know we probably visited this in the past, but I was wondering how you think the FDA will look at your submission, which -- what you have two studies.

They're both non-controlled versus might have store in, which has a full approval based on a control trial..

Hey, it's Andy. I'll take that. Yes, so no, we think the data with avapritinib in advanced SM is really transformative for patients and pretty dramatically different than what's been seen. So we are actually very confident in the data set based on both EXPLORER and PATHFINDER studies.

It's consistent with the discussions we've had with FDA and we're on track to submit that and sNDA submission in the fourth quarter and are confident that will be well received. I actually want to point out that while had a randomized study in leukemia with single arm data and advanced system, they got approval..

Our next question comes from the line of Peter Lawson from Barclays..

Hey, thanks for taking my question. Just on BLU-945 I guess the triple and the double EGFR mutant drugs.

How should we think about trial designs? And when should we be thinking about initial data for both those drugs?.

Sure, Andy, why don't you take that?.

Yes. So just remind everyone that BLU-945, which is our triple mutant EGFR inhibitor, was specifically designed to potently inhibit the most common on target resistance mutations to both ESMO and ban the first generation EGFR inhibitors, while not inhibiting the wild type kinase, that weltec kinase.

And really, we think this profile has the opportunity to provide a very important benefit to patients, both with treatment resistance disease, but also in combination with other EGFR directed agents.

And I think as you know, we're also developing a double mutant inhibitor, which is really focused on the resistance situation following from pralsetinib.

And really the, what's truly exciting about this program is the opportunity to combine these two medicines, since they'll both be wild type sparing, in the frontline setting where we can really provide high response rates prolong disease control, we think by preventing the emergence of resistance really, potentially, of all of the known on target EGFR resistance mechanisms.

So we are planning to advance 945 into the clinic in the first half of 2021. And we expect to nominate a double mutant inhibitor by the end of the year..

And this is Jeff, to underscore that, it's been interesting as we share data at the Virtual Media, as much as the engagement from investigators and has really been exciting on this program.

And that I think Andy summarized that well as first establishing single agent, the single agent opportunity, but the ability to combine these two therapies based on the profile that Andy just laid out and the potential from a safety perspective to move into early lines and really prevent resistant and then maximize durability is something that internally, there's just growing enthusiasm to move those programs as efficiently and effectively forward as possible..

Our next question comes from the line of David Lebowitz from Morgan Stanley..

Thank you very much for taking my question. When you look at the initial GAVRETO launch vis-à-vis the recent entry of the Roche partnership, would you say the commercialization effort is fully ramped up to steady state at this point, given how closely the partnership was entered, or do you expect it will evolve more in the coming one..

Sure. Yes. So as I said, the Roche engine and tech teams have been trained and they are out engaging. And we're certainly working at a local level to collaborate on specific engagements and of course, at a national level as well to make sure that we're fully utilizing the capabilities of both partners. So I would say the effort is ramped up.

Of course, as you go through a launch, one of the critical things is to be nimble and flexible and to adapt as you learn more information. So I'm sure we will do that, like we would do with any products. But we've got both teams fully engaged. And we're really excited about that..

This is Jeff. If I just add on there that obviously it's going to be a continued evolution too, because we've got the additional thyroid indication coming. And then ultimately, where we really think that the value from these two teams working together is going to be realizes and patient identification.

So that will be more of a sort of a gradual realization of maximizing that opportunity..

With that in mind, understanding that since it is ret targeted therapy, and yes, the approval this point is non small cell and MTC could come in first quarter.

How do you expect physicians will, I guess, deal with people that come up testing positive for ret fusions and ret alterations in other indications at this point?.

So our focus right now is certainly on really driving education around non small cell lung and then obviously preparing for thyroid, which we're hopeful will be in the near future and that approval, and so we're ready to go there. We certainly do see ret alterations in other indications as well, that's not a commercial focus.

We certainly shared some clinical data in that respect. And I think we may see utilization there, we would anticipate that, but that's not a place that we would be primarily focused from a commercial perspective..

Sure.

And then last question, certainly the operating expenditures dropped a quite a bit from second quarter in both R&D and SG&A, with the first quarter kind of being in the middle, given the recent partnership, how should we think of -- what we should think of is the right run rate as far as spend level going forward? Would it be closer to the first quarter, second quarter or third?.

Hey, Mike, do you want to take that one?.

Yes, thanks. This is Mike. Yes. So I think what you saw in the third quarter was the impact of the global R&D cost sharing as well as the US cost sharing profit sharing from the Roche collaboration. And so that caused a reset of clinical or operating expenses are for Q3.

I think going forward, we think we will see modest quarter- over-quarter increases, maybe not unlike; I don't want to point to a specific quarter. But the trend that we saw over the past year or so around quarter-on-quarter growth, it just will be resetting from a lower level since we have the impact of the cost and profit sharing..

Our next question comes from the line of Chris Raymond from Piper Sandler..

Good morning, and thanks for taking the question. This is Nicole Gabreski on for Chris. So maybe just one on the pipeline, following up with some of the other questions. So I know you guys have talked about disclosing up to three new development candidates this year. And I know one of those is BLU-945.

And the second will be the EGFR double mutant candidate. But because I'm just curious, is there a certain venue where we can expect to hear more about the EGFR double mutant candidate, as well as potentially more detail around a potential third development candidate? Thanks..

Sure. This is Jeff, I'll take that. So in terms of venue, we haven't guided to where we'll provide preclinical data, I think you could safely assume that's going to happen for the double mutant program in 2021.

It will sort of reset goals and guidance early in Q1 as we do every year, in terms of a venue for the third development candidate I think they're to sort of the team is pulling all that together will likely happen later in the quarter. So I think early Q1 is what where we would announce what that program is..

Our next question comes from the line of Dane Leone from Raymond James..

Hi, thanks for taking our questions here. So I guess I'll just jam two together here.

Firstly, when you're thinking about the market opportunity for avapritinib and SM, ASM and in ISM, and that's 75,000 patients, you listed as the market opportunity, how are you thinking about the incremental opportunity with BLU-263? Is that more and mass cell activation syndromes, like Hereditary Alpha Tryptasemia Syndrome or HATS, as it's called.

And then secondly, regarding BLU-945 maybe could put some more contexts in terms of osimertinib moving now to adjuvant and how you would think about running the study? And then just basically, what's the checklist to do to actually get that study started in the first half the year from a regulatory and clinical site standpoint? Thank you..

So Christy, why don't you take the first question, then I'll probably pass it over to Andy for the second question. .

Sure. So we are moving avapritinib forward, obviously very rapidly in ISM. And we're very excited about the data that's emerging there in pioneer, BLU-263, I think about really as an opportunity to sort of solidify and expand our emerging franchise in mass cell disorders, we're thinking about that first for ISM as well.

And there, I think the potential is, as the profile emerges to really optimize labeling, dosing, and maybe to be able to penetrate even more broadly into the indolan opportunity. And so we're excited about that.

And then we are also investigating BLU-263 as we said before in other mass cell disorders, and really feel like we can optimize the profile there for a group of diseases that really require chronic lifelong treatment. So we'll be moving both of those forward, and I will turn it to Andy Boral..

So maybe I'll take your second first. So the steps to getting 945 into the clinic, it's -- we're just working on the components, and final non clinical tasks and other work are necessary for the IND and of course, we will submit the IND and be on track to begin that study in the first half of next year.

I think there's nothing specific or unusual, that's going on there.

And osimertinib, osimertinib I think is actually, I think offers a pretty interesting opportunity, in fact, probably 945 because as we talked to some of the lung cancer experts that we interact with, there's definitely a thinking that osi goes to adjuvant in those patients, when they as they progress for their initial metastatic progression, that a lot of people will go back now to use a front first generation EGFR inhibitor.

And so that gets you actually back to the triple mutant again, risk with the drugs in the opposite order. So we think that could be an opportunity for BLU-945 in the study..

And maybe then I'll merge those two questions together, and sort of at the 30,000 foot level, early on, when we were building Blueprint Medicines, we often talked about playing to where the puck will go rather than where it is currently.

And I think that really underscores why we're so confident today in our position is that if you look at how the year has unfolded, as we get the back half of this year, on the osimertinib piece of moving into earlier lines, the evolution of sort of the treatment paradigm for EGFR driven lung cancer, the building out of two different programs that will be effective, or provide an opportunity, regardless of when and how patients are treated in EGFR gives him a lot of flexibility from a development perspective.

Similarly, following that playbook of osimertinib moving into the Agivent setting could impact how we think about future ret development for pralsetinib within our Roche collaboration. And then as you think about systemic mastocytosis, we had clearly articulated that as a priority.

And we took the time to really understand and characterize avapritinib into seeing the activity we have 200 milligrams in the advanced form of the disease, as well as 25 milligram in the non advanced form of disease gives us a really strong starting point. And then we made investments in 263 to round out from a position of strength.

And so there are still be patients where there's need whether it be expanding as Christy said in indolent SM or in other mass cell diseases, but if you think about how a portfolio evolves over time, all of that is at play here and with the strong financial position allows us to continue to invest in the opportunities that provide the greatest potential patient benefit..

Our next question comes from the line of Arlinda Lee from Canaccord..

Hi, guys, thanks for taking my question. I have a couple; one on the SM filing for avapritinib. And I'm curious what's skating for that. And then on 263, I miss when you said you were planning to initiate that trial.

And also, can you briefly talk about -- you mentioned it was not brain penetrant? Can you also talk about the other design elements that went into 263? Thanks..

Sure.

Andy, do you want to take those? So avapritinib filing on advanced SM and then characteristics of 263?.

Yes. So in terms of what's gaining for the ISM filing, it's just now getting the documents together. And there's actually a fair bit of writing to do and that kind of thing, but all the, we have all the data in hand, and so we're just doing the final, into the final parts of the process to get the filing together. And again, that'll go in this year.

263, so the, in terms of the trial, we're very happy to get that healthy volunteer study started in the first half of the year on track despite COVID-19; it remains on track to provide the key data by the end of this year, which is really the dose determining data for what the appropriate dose or dose range would be for patients with ISM, for the first ISM, we haven't specifically guided to when that first ISM study will start, but obviously, that's a high priority for us.

And, Arlinda, as you mentioned, we designed BLU-263 very specifically not to cross the blood brain barrier and that's an important distinction from avapritinib. It also as a bit more selectivity on a couple of other fronts, it's on a few other enzymes so we think are potentially, offer potential benefit, but some of that are hypothetical..

Our next question comes from the line of Michael Schmidt of Guggenheim..

Hey, guys, thanks for taking my questions. I just had one on AVYAKIT. Your sales in the third quarter suggest about 100 patients treated. Can you confirm that? And I think you mentioned some non promoted use.

Could you maybe quantify that a little bit? How much of that is and just more broadly, versus potentially in ASM patients already at this point?.

Sure. I'll take that.

So I'm not going to get into details on exactly how many patients we've treated, obviously, the matter is complex, you've got patients continuing to start, we have shorter durations, when we see late line kit driven just patients on therapy, we are seeing quite long durations, when you see PDGFRA alpha patients, but overall, we're pleased to continue to see revenue growth and just and very happy to have that option available for patients.

In terms of quantifying the exact mix, as I said before, it's challenging to do that, we can try to make estimates, but we're relying primarily on feedback we may get from prescribers and patients, the coding for these patients is the same.

And so we're not in a position to be able to say with certainty, we just know that we continue to see utilization clearly have a guidelines listing in late line. Just and we know that the unmet need in patients is still very high..

Understood, and then Christy, with GAVRETO now on the market realized only been a few weeks, but just wondering what the initial feedback has been from lung cancer physicians, and with two TKI is now available, and maybe what has feedback been around some of the differentiating side effects of those two drugs, specifically, the absence of QTC prolongation.

And then some of the potential differences in efficacy and dosing frequencies?.

Sure, yes. So I think the feedback has been, as I said, very, very positive. I think, first of all, the community's thrilled to have effective therapies available for the patients, right, that have not had treatments available today. I think, we're going to see utilization of both agents, I think GAVRETO was used to be very highly effective.

I think, certainly the safety, as you mentioned, is probably where you see maybe more difference and again, I think the idea of side effects that are sort of in the wheelhouse of prescribing oncologists that's something that I think is comforting versus some things that may just require some different management approach, I mean TTC is one, hypersensitivity is another, again that I think we've continued to hear about in the real world.

And, it's early days, I think with both of these agents. And so I think what we have to remember is that the clinical profile will continue to emerge over time, both from an efficacy and safety perspective as you start to get that real world utilization.

The last piece, I think, that we've been very happy to get feedback around is sort of the non clinical aspects of the profile that are also very important, right. So once daily dosing, which again, oncologist like everybody else, in fact, we had one person say to us and oncologist, but I still like to get called back around issues.

And so simplicity is important. And the approach that we've taken, which is really again, prioritized, practices and dispensing pharmacies, being able to retain control and treatment of their patients has been very well received..

Our next question comes from the line of David Nierengarten from Wedbush Securities..

Hi, thanks with the new interpretation of the name. I'll -- just one question. You mentioned a couple formulary wins, I believe in the prepared remarks.

I was curious as to the dynamics on formularies and payers, are they preferring one agent over the other, sorry, this is regarding GAVRETO? Or is it equal? Or basically that's it Are they -- is there a preference for one over the other on the formularies? Or are they treated equally? Thanks..

Sure. So it's interesting when you see the word formulary in this space, it can have many different connotations, right, there's different aspects of formulary choice at a payer level, but also certainly at Health System levels within community group practices, et cetera that will drive selection of one therapy over another.

With payers, what we've seen is broad access; I think most agents, frankly, will be covered by most payers, that are what we would expect.

And certainly we support that we; we want patients to have access to both therapies, I think at a practice level, and given some of the dynamics, and certainly more of a focus on quality and cost measures that are now becoming very important in oncology. The pricing strategy that we've taken, I think has been incredibly well received.

And there's clear value there that may drive preferential utilization of GAVRETO.

And again, the approach around distribution and et cetera that really again allows pharmacies that are integrated into community practices who want to be able to care for their patients, and often are fighting broader healthcare system dynamics that prevent them from being able to do that have been very happy with the approach that we've taken.

So that is another place where we're seeing some preference being driven..

Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to Jeff Albers for closing remarks..

Thanks, operator, and thanks again, for everyone for taking time with us and their continued support a Blueprint Medicines. Obviously, this is a really rewarding quarter to reflect on. And I'm appreciative to all the employees at Blueprint Medicines and the focus they kept during this difficult time.

And I also have been thinking about looking forward in a lot of ways we feel like we're just getting started, we're in a really strong position now. We know we have to continue to execute over the remainder of the year.

And then we continue to be really encouraged by the setup as we look forward and based on the investigational medicine that we continue to work on preclinically; the regulatory feedback and processes that we're undertaking, as well as now adding in the commercial components. So look forward to providing future updates. Thanks a lot. Have a great day..

Ladies and gentlemen, this concludes today's conference calls. Thank you for participating. You may now disconnect..