Blueprint Medicines(US:BPMC)2020-07-31 00:56markdown PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements for the three and six months ended June 30, 2020, along with notes detailing significant transactions and subsequent events [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $288,678 | $113,938 | | Total current assets | $568,312 | $516,786 | | **Total assets** | **$817,457** | **$707,694** | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $105,086 | $106,482 | | **Total liabilities** | **$236,090** | **$243,335** | | **Total stockholders' equity** | **$581,367** | **$464,359** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Product revenue, net | $5,680 | $— | $9,138 | $— | | Collaboration revenue | $2,663 | $5,110 | $5,372 | $5,840 | | **Total revenues** | **$8,343** | **$5,110** | **$14,510** | **$5,840** | | Research and development | $91,079 | $87,101 | $175,225 | $161,351 | | Selling, general and administrative | $42,174 | $21,923 | $77,829 | $38,476 | | **Net loss** | **$(123,474)** | **$(99,681)** | **$(234,428)** | **$(187,088)** | | **Net loss per share** | **$(2.28)** | **$(2.04)** | **$(4.39)** | **$(4.03)** | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(210,492) | $(161,416) | | Net cash provided by (used in) investing activities | $71,421 | $(158,739) | | Net cash provided by financing activities | $313,325 | $334,309 | | **Net increase in cash, cash equivalents, and restricted cash** | **$174,254** | **$14,154** | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company's first commercial product, **AYVAKIT™ (avapritinib)**, was approved by the FDA for the treatment of adults with unresectable or metastatic GIST harboring a PDGFRA exon 18 mutation[34](index=34&type=chunk) - As of June 30, 2020, the company had **$650.3 million** in cash, cash equivalents, and investments, which management believes is sufficient to fund operations for at least the next twelve months[35](index=35&type=chunk) Product Revenue from AYVAKIT (in thousands) | Period | Net Product Revenue | | :--- | :--- | | Three months ended June 30, 2020 | $5,700 | | Six months ended June 30, 2020 | $9,100 | - Subsequent to the quarter end, in July 2020, the company entered into a major collaboration with Roche for pralsetinib, receiving an upfront cash payment of **$675.0 million**. Roche also made a related equity investment of approximately **$94.0 million**[138](index=138&type=chunk)[139](index=139&type=chunk)[143](index=143&type=chunk) - In July 2020, the company received a **$20.0 million** cash milestone payment under its license agreement with Clementia[146](index=146&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's business strategy, clinical pipeline progress, and financial performance, emphasizing the commercial launch of AYVAKIT, regulatory advancements, increased revenues, rising operating expenses, and enhanced liquidity [Overview](index=43&type=section&id=Overview) - The company is advancing multiple investigational medicines, including avapritinib for systemic mastocytosis (SM), with plans to submit a supplemental NDA in **Q4 2020**[149](index=149&type=chunk)[152](index=152&type=chunk) - For pralsetinib, an NDA for RET fusion-positive NSCLC was accepted by the FDA with a PDUFA action date of **November 23, 2020**. A separate NDA was submitted for RET-mutant MTC and RET fusion-positive thyroid cancers[158](index=158&type=chunk) - In July 2020, the company entered into a collaboration with Roche to co-develop and co-commercialize pralsetinib in the U.S. and for Roche to commercialize it exclusively outside the U.S. (excluding Greater China)[172](index=172&type=chunk) - The company acknowledges potential temporary delays or disruptions to clinical trials due to the COVID-19 pandemic but states it has sufficient supply to meet anticipated global commercial and clinical needs through **2021**[177](index=177&type=chunk) [Results of Operations](index=63&type=section&id=Results%20of%20Operations) Comparison of Three Months Ended June 30, 2020 and 2019 (in thousands) | Account | Q2 2020 | Q2 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $8,343 | $5,110 | $3,233 | 63% | | Research and development | $91,079 | $87,101 | $3,978 | 5% | | Selling, general and administrative | $42,174 | $21,923 | $20,251 | 92% | | **Net loss** | **$(123,474)** | **$(99,681)** | **$(23,793)** | **24%** | - The increase in total revenues for Q2 2020 was driven by **$5.7 million** in net product revenue from the launch of AYVAKIT[225](index=225&type=chunk) - The **92% increase** in SG&A expense for Q2 2020 was primarily due to building the commercial infrastructure for AYVAKIT and preparing for the potential commercialization of pralsetinib[231](index=231&type=chunk) [Liquidity and Capital Resources](index=67&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2020, the company had cash, cash equivalents, and investments of **$650.3 million**[248](index=248&type=chunk) - In July 2020, the company's cash position was significantly enhanced by receiving **$769.0 million** from its pralsetinib collaboration with Roche and a **$20.0 million** milestone payment from Clementia[247](index=247&type=chunk) - Management anticipates that existing cash, combined with the Roche upfront payments and future product revenues, will be sufficient to achieve a self-sustainable financial profile[253](index=253&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=73&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposures are interest rate sensitivity on its cash and investment portfolio and foreign currency exchange rate fluctuations. Management believes a 10% change in interest rates would not materially affect the portfolio's fair value. The company does not currently hedge its foreign currency risk - The company's primary market risk is interest rate sensitivity related to its **$650.3 million** in cash, cash equivalents, and investments as of June 30, 2020[266](index=266&type=chunk) - Due to the short-term duration and low-risk profile of its investments, the company believes an immediate **10% change** in interest rates would not have a material effect on the portfolio's fair market value[267](index=267&type=chunk) [Item 4. Controls and Procedures](index=75&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation as of June 30, 2020, the company's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective. There were no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of **June 30, 2020**[272](index=272&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[273](index=273&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=76&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is not currently a party to any material legal proceedings - As of the filing date, the company is not a party to any material legal proceedings[276](index=276&type=chunk) [Item 1A. Risk Factors](index=76&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant business risks, including historical operating losses, the impact of the COVID-19 pandemic, capital needs, drug development uncertainties, commercialization challenges, and reliance on third-party operations - The company has a limited operating history and has incurred significant operating losses since inception, with a net loss of **$234.4 million** for the six months ended June 30, 2020[278](index=278&type=chunk)[281](index=281&type=chunk) - The COVID-19 pandemic poses a risk to business operations, including potential delays or disruptions to clinical trials, supply chains, and commercial activities[287](index=287&type=chunk)[289](index=289&type=chunk) - The company faces substantial competition. For pralsetinib, it will compete with Eli Lilly's selpercatinib, which was approved by the FDA in **May 2020** for similar indications[393](index=393&type=chunk) - The company relies on single-source third-party suppliers for the API, drug substance, and drug product of avapritinib and pralsetinib, which poses a significant risk to supply continuity[476](index=476&type=chunk)[477](index=477&type=chunk) [Item 5. Other Information](index=166&type=section&id=Item%205.%20Other%20Information) This section discloses a key corporate action taken after the quarter's end. On July 30, 2020, the company established an "at-the-market" (ATM) offering agreement with Cowen and Company, LLC, enabling it to sell up to $250.0 million of its common stock - On **July 30, 2020**, the company entered into a sales agreement with Cowen and Company, LLC, for an "at-the-market" offering, allowing it to sell up to **$250.0 million** of its common stock from time to time[588](index=588&type=chunk) [Item 6. Exhibits](index=168&type=section&id=Item%206.%20Exhibits) This section provides an index of the exhibits filed with the Form 10-Q. Notable exhibits include the sales agreement for the at-the-market offering, the collaboration agreement with Roche, and certifications by the Principal Executive Officer and Principal Financial Officer - Key exhibits filed with this report include the Sales Agreement with Cowen and the Collaboration Agreement with F. Hoffmann-La Roche Ltd and Genentech, Inc[595](index=595&type=chunk)