Blueprint Medicines: A Slow But Steady Blueprint For Success

Blueprint Medicines Corporation (NASDAQ:BPMC) has two approved drugs and recently received a label expansion for one of them; however, a weak uptake of the approved drugs, leading to a slashing of guidance, has hurt the stock. A weak pipeline does not help.

The approved drug is a tyrosine kinase inhibitor, or TKI, called avapritinib, now called AYVAKIT, and it was originally approved for a rare disease called PDGFRA-driven GIST in the U.S. and Europe. In that same year, in 2020, its second molecule pralsetinib, now called GAVRETO, was approved for RET-altered NSCLC, MTC and other thyroid cancers in the U.S. AYVAKIT then received a label expansion for the treatment of advanced systemic mastocytosis (SM). So far, so good; however, the market – the drug market – hasn’t been too quick to notice the drug, and it hasn’t been selling as much as BPMC would have wanted. Hence, the slashing of the guidance.

In my previous article, I noted that in 2017, the FDA approved Rydapt, or midostaurin, from Novartis AG (NVS) in SM. I discussed how avapritinib is differentiated from midostaurin in so far as the latter has limited KIT D816V inhibitory activity. According to the company, the difference between avapritinib and Rydapt is:

The current treatment paradigm for SM varies by disease subtype. Currently, there are no approved targeted therapies that address the approximately 95% of SM patients with the KIT D816V mutation. Midostaurin, which was approved in April 2017 by the FDA for the treatment of advanced SM, is a multi-kinase inhibitor with limited KIT D816V inhibitory activity, and imatinib does not address patients with the KIT D816V mutation.

Moreover, Rydapt is also not approved in non-advanced or indolent SM, but avapritinib is targeting this indication. It produced positive data from the PIONEER trial, a registration-directed phase 2 trial in non-advanced SM. Key data:

Part 2 of the PIONEER clinical trial was designed to evaluate Ayvakit (25 mg once daily dosing: N=141) versus control (N=71) over 24 weeks.

According to topline data on Jun. 23, the trial reached the primary endpoint indicating a 15.6-point decline in mean total symptom score for the treatment arm compared to a 9.2-point decline for the control arm.

The company said the drug was well-tolerated and indicated a favorable safety profile. However, 0.7% of those in the Ayvakit arm and none in the control arm discontinued due to treatment-related adverse events.

For 2021, the company had revenue guidance of $170-$180mn, which it hit squarely. In February, Blueprint Medicines announced it anticipated approximately $180M to $200M ($215.32M consensus) in total revenues in 2022, including approximately $115M to $130M in AYVAKIT net product revenues.

The problem with BPMC’s AYVAKIT has always been a cost-benefit question. As SVB Leerink analysts put it:

In our view, these data will further magnify the commercial debate, as investors question the size of the addressable ISM population for a chronically used therapy with a limited treatment effect that could cost >$350,000 per year. We think some physicians, payors and patients may balk at the anticipated cost given that Ayvakit appears to add about a 10% improvement in symptoms versus best supportive care.

It should be noted that the smaller Part I of the PIONEER study saw a much better treatment difference between the control and placebo arms than the larger part II. The company also switched outcome measures just before data lock, according to written recommendations from the FDA. Mean absolute change in total symptom score (TSS), which was previously a key secondary goal, became the main goal, while the proportion of patients with a 30% or greater decrease in TSS, previously the primary outcome measure, became a key secondary endpoint. However, in their data drop, the company did not share responder rates for this key secondary endpoint, although it reached statistical significance, and said they will share it later.

So the question is not of approvability, but of commercialization, and commercialization is also the key concern for the approved indications, as well. Advanced SM is a larger market than the other approved indications, almost $1bn in peak sales estimates have been seen from analysts, so maybe avapritinib sales will pick up. In SM, it has a 57% ORR, as against Rydapt’s 17%. The indolent form is numerically larger, but it may not carry the nearly $350,000 per year price tag of avapritinib too well.

Financials

BPMC has a market cap of $2.79bn and a cash reserve of $1.2bn. Cost of sales was $3.0 million for the third quarter of 2022. Research and development expenses were $128.0 million, and selling, general and administrative expenses were $57.6 million. Revenues were $66.0 million for the third quarter of 2022, including $28.6 million of net product revenues from sales of AYVAKIT/AYVAKYT. The company, as I note below, also has a line of credit for purchasing additional assets. Thus, the company has a very long cash runway, at least 6 quarters.

In August, Blueprint struck financing deals worth up to $1.25 billion with Sixth Street and Royalty Pharma, with a $260 million credit facility set aside specifically for purchasing external assets. Part of this came from selling future royalties of its two approved products. The company plans to purchase assets from other companies and establish itself as a leading precision cancer therapy company. Last year it spent $250mn acquiring Lengo Therapeutics for its LNG-451, a highly selective brain-penetrant precision therapy targeting EGFR exon 20 insertion mutations.

Bottom Line

Blueprint Medicines Corporation is going to file an sNDA for indolent SM soon and expects approval by mid-2023. They have a lot of cash, and while revenue is not as much as expected, it is still considerable. Many companies are doing worse than this. BPMC is also trading near 52-week lows. As such, a long-term investment in Blueprint Medicines Corporation can be considered.