Blueprint Medicines(BPMC) - 2020 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Financial Statements The unaudited condensed consolidated financial statements for the quarter ended March 31, 2020, show the company's financial position, results of operations, changes in stockholders' equity, and cash flows Condensed Consolidated Balance Sheets As of March 31, 2020, total assets increased to $913.6 million from $707.7 million, primarily due to a public offering, while total liabilities slightly decreased and stockholders' equity grew Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $375,168 | $113,938 | | Total current assets | $704,683 | $516,786 | | Total assets | $913,623 | $707,694 | | Liabilities & Equity | | | | Total current liabilities | $98,288 | $106,482 | | Total liabilities | $230,692 | $243,335 | | Total stockholders' equity | $682,931 | $464,359 | Condensed Consolidated Statements of Operations and Comprehensive Loss For the three months ended March 31, 2020, total revenues reached $6.2 million, including the first product revenue from AYVAKIT, while net loss increased to $111.0 million due to higher operating expenses Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Product revenue, net | $3,458 | $— | | Collaboration revenue | $2,709 | $730 | | Total revenues | $6,167 | $730 | | Research and development | $84,146 | $74,250 | | Selling, general and administrative | $35,655 | $16,553 | | Total cost and operating expenses | $119,825 | $90,803 | | Net loss | $(110,955) | $(87,407) | | Net loss per share | $(2.11) | $(1.98) | Condensed Consolidated Statements of Cash Flows For the first three months of 2020, net cash used in operating activities was $109.3 million, offset by $310.2 million from financing activities, resulting in a $260.7 million net increase in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(109,328) | $(80,188) | | Net cash provided by investing activities | $59,860 | $89,314 | | Net cash provided by financing activities | $310,150 | $2,011 | Notes to Condensed Consolidated Financial Statements The notes detail the company's business, accounting policies, and financial statement components, highlighting the FDA approval of AYVAKIT, a $308.4 million follow-on offering, and sufficient capital for the next twelve months - On January 9, 2020, the company's product AYVAKIT™ (avapritinib) was approved by the FDA for treating adults with unresectable or metastatic GIST harboring a PDGFRA exon 18 mutation[30] - In January 2020, the company closed a follow-on public offering, receiving net proceeds of $308.4 million[32] - As of March 31, 2020, the company had cash, cash equivalents, and investments of $750.4 million, which is believed to be sufficient to fund operations for at least the next twelve months[33] - Total net product revenue for AYVAKIT was $3.5 million for the three months ended March 31, 2020, with associated reserves for chargebacks, rebates, and returns totaling $0.5 million[72] - Under the CStone agreement, the company recognized $2.0 million in license milestone revenue during the three months ended March 31, 2020[101][102] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's business overview, recent developments, financial results, and liquidity, highlighting AYVAKIT's launch, clinical program progress, and sufficient capital into H2 2022 Overview The company is a precision therapy company with one FDA-approved product, AYVAKIT, and active development programs for avapritinib, pralsetinib, and fisogatinib, while noting potential COVID-19 impacts - AYVAKIT (avapritinib) was approved by the FDA in January 2020 for adults with unresectable or metastatic GIST with a PDGFRA exon 18 mutation[162] - The company plans to submit a supplemental NDA to the FDA for avapritinib for advanced systemic mastocytosis (SM) in the second half of 2020[150] - Completed the submission of a rolling NDA to the FDA for pralsetinib for RET fusion-positive NSCLC in Q1 2020 and submitted an MAA to the EMA[157] - The Phase 3 VOYAGER trial for avapritinib in third-line GIST did not meet its primary endpoint, leading the company to discontinue development for GIST indications beyond PDGFRA exon 18 mutant GIST[163] Results of Operations For Q1 2020, total revenues increased to $6.2 million due to AYVAKIT sales and a CStone milestone, while R&D and SG&A expenses rose, resulting in a net loss of $111.0 million Comparison of Operations (in thousands) | Item | Q1 2020 | Q1 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $6,167 | $730 | $5,437 | 745% | | Research and development | $84,146 | $74,250 | $9,896 | 13% | | Selling, general and administrative | $35,655 | $16,553 | $19,102 | 115% | | Net loss | $(110,955) | $(87,407) | $(23,548) | 27% | - The increase in R&D expense was primarily due to a $6.9 million increase in personnel expense and a $3.7 million increase in external clinical activities for pralsetinib[223] - The increase in SG&A expense was mainly due to increased costs and personnel expenses associated with building the commercial infrastructure for AYVAKIT[225] Liquidity and Capital Resources As of March 31, 2020, the company held $750.4 million in cash and investments, bolstered by a January 2020 public offering, and expects sufficient capital to fund operations into the second half of 2022 - As of March 31, 2020, the company had cash, cash equivalents and investments of $750.4 million[233] - Net cash provided by financing activities increased by $308.1 million in Q1 2020 compared to Q1 2019, primarily due to the January 2020 follow-on public offering[236] - The company believes its existing cash, cash equivalents, and investments will be sufficient to fund operations into the second half of 2022[238] - As of March 31, 2020, the company has minimum purchase obligations of approximately $16.2 million under commercial manufacturing agreements[248] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate sensitivity and foreign currency exchange rates, with minimal material effect expected from a 10% interest rate change due to its short-term investment portfolio - The company's primary market risk is interest rate sensitivity on its $750.4 million portfolio of cash, cash equivalents, and investments[251] - Due to the short-term nature of its investments, a 10% change in interest rates is not expected to have a material effect on the portfolio's fair market value[252] - The company has exposure to foreign currency exchange rate risk from contracts with vendors in Asia and Europe, but this risk is currently considered minimal[253] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2020, with no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that as of March 31, 2020, the company's disclosure controls and procedures were effective at the reasonable assurance level[258] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[259] PART II – OTHER INFORMATION This section covers legal proceedings, key risk factors, and other significant corporate information Legal Proceedings The company reports that it is not currently a party to any material legal proceedings - The company is not currently a party to any material legal proceedings[262] Risk Factors This section details significant risks that could adversely affect the company's business, including operating losses, COVID-19 impacts, drug development challenges, commercialization difficulties, reliance on third parties, intellectual property issues, and competition - The company has a history of significant operating losses ($111.0 million for Q1 2020) and expects to incur continued losses, requiring additional funding to sustain operations[264][267][272] - The COVID-19 pandemic poses a significant risk, with potential to delay clinical trials, disrupt supply chains, and adversely impact commercial activities[285][286][289] - Clinical drug development is a lengthy, expensive, and uncertain process. The recent failure of the Phase 3 VOYAGER trial to meet its primary endpoint is cited as an example of this risk[298][299] - The company relies on single-source third-party suppliers for the manufacture of AYVAKIT and its clinical-stage candidates, which increases the risk of supply disruptions[376][461][469] - The company faces substantial competition from major pharmaceutical and biotechnology companies with greater financial resources and expertise[381][382][387] Other Information On April 30, 2020, the company amended its collaboration agreement with Roche and its bylaws to establish exclusive forum provisions for certain legal claims - On April 30, 2020, the company entered into an eighth amendment to its collaboration and license agreement with Roche[582] - On April 30, 2020, the company's board of directors amended its bylaws to designate exclusive forums for certain legal actions to be the Court of Chancery of the State of Delaware and the United States District Court for the District of Massachusetts[584] Exhibits This section lists the exhibits filed with the Form 10-Q, including amended bylaws, the Roche collaboration agreement amendment, and officer certifications - Key exhibits filed include the Amended and Restated Bylaws, the Eighth Amendment to the Collaboration and License Agreement with Roche, and officer certifications[588] Signatures The report is duly signed and authorized by Jeffrey W. Albers, President and Chief Executive Officer, and Michael Landsittel, Chief Financial Officer, on May 6, 2020 - The Form 10-Q was signed on May 6, 2020, by Jeffrey W. Albers (Principal Executive Officer) and Michael Landsittel (Principal Financial Officer)[598][599][600]