Blueprint Medicines(BPMC) - 2023 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Unaudited Q3 2023 financials show decreased assets, increased liabilities, and a net loss, with significant cash used in operations Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $55,972 | $119,709 | | Marketable securities | $771,254 | $958,763 | | Total current assets | $808,172 | $1,046,651 | | Total assets | $1,105,299 | $1,349,902 | | Liabilities & Equity | | | | Total current liabilities | $197,384 | $183,234 | | Liabilities related to sale of future royalties | $440,147 | $430,330 | | Term loan | $238,378 | $139,083 | | Total liabilities | $902,688 | $835,225 | | Total stockholders' equity | $202,611 | $514,677 | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Product revenue, net | $54,228 | $28,634 | $133,173 | $80,929 | | Total revenues | $56,566 | $65,977 | $177,423 | $165,255 | | Research and development | $110,252 | $127,981 | $330,184 | $359,579 | | Selling, general and administrative | $70,741 | $57,608 | $215,826 | $173,354 | | Net loss | $(133,713) | $(133,163) | $(396,068) | $(398,871) | | Net loss per share | $(2.20) | $(2.23) | $(6.55) | $(6.70) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(357,919) | $(380,872) | | Net cash provided by (used in) investing activities | $195,271 | $(96,258) | | Net cash provided by financing activities | $103,697 | $559,319 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q3 product revenue growth driven by AYVAKIT, offset by decreased collaboration revenue, while maintaining strong liquidity for future self-sustainability Overview - The company is a global precision therapy company focused on cancer and blood disorders, with two approved medicines: AYVAKIT®/AYVAKYT® (avapritinib) and GAVRETO® (pralsetinib)[373] - Key development programs are advancing for mast cell disorders (AYVAKIT, elenestinib, BLU-808), EGFR-mutant lung cancer (BLU-945, BLU-525, BLU-451), and CDK2-vulnerable cancers (BLU-222)[373][398][403] - In February 2023, Roche elected to terminate the GAVRETO (pralsetinib) collaboration agreement, effective February 2024, with Blueprint regaining global rights (ex-Greater China) and seeking a new partner[391][412][423] - The company has entered into multiple financing arrangements, including a Royalty Purchase Agreement with Royalty Pharma and a Future Revenue Purchase Agreement and a term loan facility with Sixth Street Partners, to strengthen its financial position[434][435][436] Results of Operations Comparison of Three Months Ended September 30, 2023 and 2022 (in thousands) | Line Item | Q3 2023 | Q3 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $56,566 | $65,977 | $(9,411) | (14)% | | Product revenue, net | $54,228 | $28,634 | $25,594 | 89% | | Collaboration & license revenue | $2,338 | $37,343 | $(35,005) | (94)% | | Total cost & operating expenses | $185,546 | $190,254 | $(4,708) | (2)% | | R&D Expense | $110,252 | $127,981 | $(17,729) | (14)% | | SG&A Expense | $70,741 | $57,608 | $13,133 | 23% | | Net loss | $(133,713) | $(133,163) | $(550) | (0)% | Comparison of Nine Months Ended September 30, 2023 and 2022 (in thousands) | Line Item | 9 Months 2023 | 9 Months 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $177,423 | $165,255 | $12,168 | 7% | | Product revenue, net | $133,173 | $80,929 | $52,244 | 65% | | Collaboration & license revenue | $44,250 | $84,326 | $(40,076) | (48)% | | Total cost & operating expenses | $558,591 | $552,974 | $5,617 | 1% | | R&D Expense | $330,184 | $359,579 | $(29,395) | (8)% | | SG&A Expense | $215,826 | $173,354 | $42,472 | 25% | | Net loss | $(396,068) | $(398,871) | $2,803 | 1% | - The 89% increase in Q3 product revenue was primarily driven by growth in the number of SM patients on AYVAKIT therapy, including from the recent label expansion for indolent SM[297] - The decrease in Q3 collaboration revenue was mainly due to lower manufacturing services for Roche and CStone, and the absence of revenue from the Roche immunotherapy collaboration which terminated in April 2023[299][300] - Q3 R&D expenses decreased by 14% YoY, primarily due to a $18.7 million reduction in clinical and manufacturing activities reflecting a focused approach to optimizing operational efficiency[340] - Q3 SG&A expenses increased by 23% YoY, driven by an $8.0 million increase in compensation for an expanded field team and a $5.4 million increase in commercial activities to support the indolent SM launch[467] Liquidity and Capital Resources - As of September 30, 2023, the company had $827.2 million in cash, cash equivalents, and marketable securities[29][497] - Management anticipates that existing cash, along with future product revenues, will be sufficient to achieve a self-sustainable financial profile[29] - In August 2023, the company drew down an additional $100.0 million in gross proceeds from its senior secured delayed draw term loan facility with Sixth Street Partners[95][457] Cash Flow Summary (in thousands) | Cash Flow Activity | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(357,919) | $(380,872) | | Net cash provided by (used in) investing activities | $195,271 | $(96,258) | | Net cash provided by financing activities | $103,697 | $559,319 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its $827.2 million investment portfolio, with limited exposure to foreign currency and inflation impacts - The primary market risk is interest rate sensitivity on the company's investment portfolio of $827.2 million, but a 10% change in rates is not expected to have a material effect due to the short-term and low-risk nature of the investments[38][39] - The company has limited exposure to foreign currency exchange rate risk from contracts with vendors in Asia and Europe and does not currently hedge this risk[41] - Inflation has not had a significant impact on the business to date, but sustained high inflation could increase costs for labor, clinical trials, and manufacturing[42] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that as of September 30, 2023, the company's disclosure controls and procedures were effective at the reasonable assurance level[44] - No changes occurred during the fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[45] PART II – OTHER INFORMATION Item 1. Legal Proceedings As of the reporting date, the company is not a party to any material legal proceedings - The company is not currently a party to any material legal proceedings[47] Item 1A. Risk Factors The company faces significant risks including commercialization challenges, drug development and regulatory hurdles, reliance on third parties, financial sustainability, and intellectual property protection - Commercialization Risks: The marketing and sale of AYVAKIT and GAVRETO may be unsuccessful due to challenges in market acceptance by physicians and payors, substantial competition from other therapies, and the risk that market opportunities are smaller than estimated[53][54][112] - Development & Regulatory Risks: The company may be unable to obtain regulatory approval for drug candidates or for expanded indications (e.g., avapritinib for indolent SM outside the U.S.), experience delays in clinical trial enrollment, or encounter undesirable side effects that could halt development[55][56][194] - Third-Party Reliance Risks: The business depends on collaborations (e.g., the recently terminated Roche partnership for GAVRETO), third-party CROs to conduct clinical trials, and single-source third-party manufacturers for drug supply, which increases operational risk[60][107][108] - Financial Risks: The company has a history of operating losses and anticipates continued losses, with significant future capital requirements where an inability to raise additional funds could force delays or elimination of R&D programs or commercialization efforts[106][519][794] - Intellectual Property Risks: The company's ability to successfully commercialize its products may be impaired if it is unable to obtain and maintain sufficient patent protection or if it faces infringement lawsuits from competitors[61][109] Item 5. Other Information During the third quarter of 2023, Ariel Hurley, the company's Senior Vice President of Finance and Principal Accounting Officer, adopted a Rule 10b5-1 trading plan for the sale of up to 16,867 shares of common stock - On September 13, 2023, an officer of the company adopted a Rule 10b5-1 trading arrangement for the potential sale of 16,867 shares of common stock, effective through September 23, 2024[767][768] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including officer certifications pursuant to the Sarbanes-Oxley Act of 2002 and Inline XBRL documents - The report includes required certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1) and Inline XBRL data files[769]