Blueprint Medicines - Q1 2024

Transcript

Operator (participant)

Good morning. My name is Faith, and I will be your conference operator today. At this time, I would like to welcome everyone to the Blueprint Medicines' first quarter 2024 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press Star followed by the number one on your telephone keypad. If you would like to withdraw your question, press Star followed by the number two. Please plan to limit yourself to one question. Thank you. Jenna Cohen, you may begin your conference.

Jenna Cohen (VP for Investor Relations)

Thanks, Faith, and good morning, everyone. Welcome to Blueprint Medicines' first quarter 2024 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. Joining me today are Kate Haviland, Chief Executive Officer, Philina Lee, Chief Commercial Officer, Fouad Namouni, President, Research and Development, and Mike Landsittel, Chief Financial Officer. Christy Rossi, Chief Operating Officer, and Becker Hewes, Chief Medical Officer, are also on the line and available during Q&A. Before we begin, I'd like to remind you that some of the statements made during the call today are forward-looking statements, as outlined on slide three, and are subject to a number of risks and uncertainties. Thema...

These may cause our actual results to differ materially, including those described in our reports filed with the SEC. You are cautioned not to place any undue reliance on these forward-looking statements, and Blueprint disclaims any obligation to update such statements. I'll now hand the call over to Kate.

Kate Haviland (CEO)

Thank you, Jenna, and good morning, everyone. We delivered another very strong quarter in our launch of AYVAKIT in indolent systemic mastocytosis, and we are entering 2024 in a position of strength. We have great momentum across all aspects of our business as we execute on our three priorities that we laid out in January. Our first priority is the launch of AYVAKIT in indolent systemic mastocytosis. We have driven impressive revenue growth, and importantly, we are building the foundation for top-line revenue growth well into the next decade. We are also making significant progress in advancing our pipeline of innovative programs that are focused in the most... in our most compelling opportunities, where we believe we have the greatest prospect of improving patient outcomes. And third, we are maintaining a strong and durable financial position and a self-sustainable financial profile. I'll briefly touch on each of these.

Starting with the exceptionally strong commercial performance we delivered in Q1, we achieved $92.5 million in AYVAKIT net product revenue for the quarter. This result surpassed external consensus as well as our own internal expectations. Philina will discuss in more detail the components of our continued commercial success, but I want to take a moment to say how incredibly proud I am of our hardworking and dedicated commercial and medical team members. Their commitment to delivering for patients with SM globally is resulting in this type of performance. These results also reflect the profound impact that AYVAKIT is having on patients, as well as our strong and growing prescriber base. Today, we are also increasing our AYVAKIT guidance for the year to $390 million-$410 million.

Later on the call, Mike will share more of our thinking around today's AYVAKIT guidance increase, which is setting us squarely on a revenue trajectory to peak sales of greater than $2 billion globally. This revenue trajectory makes AYVAKIT one of the most exciting rare disease launches happening right now and puts us on a similar path to other notable rare disease product launches of first-in-class medicines that built new multi-billion-dollar markets. We are also strengthening our presence in allergy and inflammation with BLU-808, our wild-type KIT inhibitor. The BLU-808 program builds on the significant insights we have gained in mast cell biology in targeting KIT, the master control switch on mast cells, which we believe has the greatest prospect of improving outcomes for a large number of patients across allergic and inflammatory diseases.

Our recent webinar, titled The Powerful Mast Cell, highlighted the scientific rationale for our aspiration to fundamentally shift the way many allergic inflammatory diseases are treated by targeting this primary effector cell, the mast cell, with both mono and combination therapeutic approaches. We are on track to file the IND for BLU-808 this quarter to enable initiation of a phase I study in healthy volunteers. We've established a successful track record with AYVAKIT, and you can continue to expect Blueprint to discover and develop potent and highly selective molecules as we expand our mast cell franchise beyond systemic mastocytosis. Turning now to the oncology side of our portfolio. Next month at ASCO, we will be presenting data demonstrating that BLU-222 is the first CDK2 inhibitor to be well tolerated in combination with an approved CDK4/6 inhibitor.

With this data, we now have the clinical evidence that BLU-222 is a differentiated best-in-class CDK2 inhibitor. BLU-222's ability to combine with approved CDK4/6 inhibitors also position it to move quickly, with the potential to also become the first-in-class CDK2 inhibitor approved for patients with hormone receptor-positive, HER2-negative breast cancer. I remain confident that we will execute a strategic partnership in the second half of this year to rapidly move BLU-222 forward into registration-directed trials. Importantly, we are executing across the business while maintaining financial discipline. Our total costs and operating expense continue to decline, and with $735.6 million in cash on our balance sheet, we are in a strong and durable financial position....

I am proud of the tremendous progress Blueprint has made in the first quarter of this year, and continue to be impressed by the heads-down executional focus I see across all of our teams to make sure we're achieving our goal, goals quarter after quarter. Now, let me turn it over to Philina to discuss this quarter's commercial performance. Philina?

Philina Lee (Chief Commercial Officer)

Thanks, Kate, and good morning, everyone. We had an exceptional first quarter, generating AYVAKIT net product revenue of $92.5 million, including $83.1 million in the U.S. and $9.4 million ex-U.S. AYVAKIT revenue has grown more than 135% year-over-year. We saw positive trends across all key business fundamentals, continued strong and steady growth in patients on AYVAKIT, reflecting a strong pace of new patient starts and low discontinuation rates. Our mix of commercial versus free goods also skewed more favorable than we anticipated. Compliance remains high. Our international ISM launch is off to a robust start, with Germany off to the races. Let's look at our key fundamentals in more detail.

Starting with growth in patients on AYVAKIT, we drove a really strong pace of new patient starts coming out of the holidays throughout the first quarter of the year. We continue to see low discontinuation rates driving positive trends in duration of therapy. For advanced SM patients, duration of therapy is trending even longer than our last update, now at an average of 25 months. While it's still early days, duration of therapy in ISM patients is trending significantly longer. This is exactly what we expected based on AYVAKIT's benefit risk profile. Q1 tends to be a tough quarter in our industry, with patients' benefits reverifications, lower gross to net, and impacts on compliance. Our market access team did a great job managing through all of this.

Our free goods share once again has been a surprise to the upside and is now averaging about 20% since ISM launch. The favorability in commercial versus free goods is really driven by two things. First, the payer mix of ISM patients skews more commercial, and we estimate that ISM patients now comprise the majority of patients on therapy. Second, Medicare patients were able to access paid therapy, as we saw last year. Importantly, unlike last year, we expect these patients will be able to stay on paid therapy for the rest of the year due to changes to the out-of-pocket cap as part of Medicare Part D benefits redesign in the Inflation Reduction Act. In this third full quarter of launch, we are seeing strong and steady performance against our key revenue drivers, just as we expected.

The favorability in commercial mix exceeded our expectations and provides a tailwind for the remainder of the year. This, along with confidence in our strong continued execution, is a key driver for our guidance update today. We'll continue to watch the fundamentals that drive revenue over the course of the year, such as the ongoing pace of new patient starts, duration of therapy, compliance, and free goods, as well as our ongoing European launch performance. Taken together, our first three ISM launch quarters are showing a clear inflection point for AYVAKIT revenue growth. Now, let's talk about why we expect to sustain this growth for years to come. Our team is executing well against our commercial strategy, and we continue to make headway across multiple paths to drive sustained growth. We continue to grow breadth and depth in the AYVAKIT prescriber base across all specialties and settings.

Prescriber breadth is one of the most important lead indicators for revenue growth. The number of new AYVAKIT prescribers continued to grow this quarter, including a growing number of allergists who have been activated to treat SM patients. Overall, prescribing is still split evenly across the academic and community setting. The chart on the left shows AYVAKIT adoption into the top 400 providers by SM patient volume. As you can see, we're starting to see even more depth from repeat prescribing as positive first experiences lead providers to start their second, third, or more patients on AYVAKIT. Because the chronic burden of ISM is often underappreciated, a key part of our ongoing execution is redefining what disease control means for providers and patients.

We continue to expand our direct-to-patient and provider educational initiatives to foster greater awareness of the burden of disease, with the goal of activating patients to ask about AYVAKIT. Living with ISM can be very isolating. Establishing patient-to-patient connections is a critical part of the journey to treatment. In Q1, we launched a monthly educational series where patients can learn from the experiences of other patients who are taking AYVAKIT. As part of our ongoing community-building efforts, we held a first-of-its-kind summit, bringing together patient advocates, patients, and multidisciplinary thought leaders. Just this month, we launched an unbranded direct-to-patient campaign to drive further awareness of the toll of living with ISM and the availability of a new treatment option. All of these efforts are yielding impressive results.

Unaided awareness among patients has grown nearly eightfold since approval, and we expect our expanding peer-to-peer and patient initiatives will continue to activate more patients and providers to try AYVAKIT. In closing, the momentum we've shown in our first three quarters of launch make us incredibly confident about the path we are on to achieve a more than $2 billion peak opportunity with AYVAKIT. We are building and shaping this market. We are growing the prescriber base. We are activating more patients to seek treatment. We're growing the number of diagnosed patients, and there is plenty of headroom to continue to grow. We knocked it out of the park this quarter, and we remain laser-focused on our mission to help more patients in need.

With that, I'll hand it to Fouad, who will share how we're expanding our efforts in mast cell disorders to help more patients with allergic and inflammatory conditions beyond SM.

Fouad Namouni (President for Research and Development)

Thanks, Philina. Last week, Dr. Mariana Castells, a renowned researcher and clinical expert in mast cell diseases, joined us for a webinar titled The Powerful Mast Cell: A Promising and Yet Underappreciated Target for Treating Allergic and Inflammatory Diseases. The webinar was the first in a new series we have planned to keep you updated on how we are thinking about the evolving science behind our portfolio and R&D strategy. If you haven't yet had a chance to listen to the discussion, I encourage you to check out the replay, which is live on our website. The mast cell is a key driver cell responsible for the pathogenesis of a wide range of allergic and inflammatory conditions. Research into mast cell biology and its involvement in inflammatory diseases has recently increased with the goal to identify novel therapeutic targets in allergy and inflammation.

This webcast focused on the biology of mast cells, including their essential roles as driver of and contributors to inflammatory responses, their core involvement in biological pathways relevant to an array of allergic and inflammatory diseases, and Blueprint's approach to modulating mast cells and building a pipeline in allergic and inflammatory diseases. Blueprint has a long and proven track record of leadership in this space, as evidenced by the success of AYVAKIT and the ongoing development of elenestinib. We have built what we believe is one of the most advanced mast cell drug discovery capabilities in the industry. BLU-808 is poised to help us beyond systemic mastocytosis.

Tackling the challenge of developing a potent and highly selective, tunable, oral wild-type KIT inhibitor is a logical evolution of our capabilities in this space, and the opportunity we have ahead of us is significantly larger than any we've pursued in the past. Our vision for scientific leadership in mast cell diseases is built on four key pillars. First, leverage deep understanding of the mast cell biology and to modulate its activity. Second, select the best targets, modalities for monotherapy and combination strategies to achieve first and best-in-class positions. Third, establish a strong preclinical and early clinical POC, or proof of concept, to de-risk development. And lastly, pursue pipeline-in-a-pill opportunities in major mast cell-associated disorders where there is a medical need.

We will continue to provide updates on our mast cell franchise throughout the course of the year, including BLU-808 IND submission on track for this quarter, which will enable us to initiate the healthy volunteer study. We will also initiate part two of the HARBOR trial for elenestinib in indolent systemic mastocytosis in the second half of this year. As we expand our mast cell focus, we continue to drive innovation in systemic mastocytosis as our understanding of the spectrum of patients and the underlying biology of the disease evolves. Moving from allergy and inflammation to our oncology part of the portfolio, we are happy to report for the first time at the 2024 ASCO meeting, the safety and the signal of early clinical activity of BLU-222 in combination with ribociclib and fulvestrant in hormone-positive, HER2-negative breast cancer patients.

We believe these data clearly demonstrate the first and best-in-class potential of BLU-222 to become the combination partner of choice with CDK4/6 inhibitor in hormone-positive, HER2-negative breast cancer. With this, I will turn it over to Mike to discuss our financial results. Mike?

Mike Landsittel (CFO)

Thanks, Fouad. Earlier this morning, we reported detailed financial results in our press release. For today's call, I'll touch on a few highlights. In the first quarter, total revenues were $96.1 million, including $92.5 million in net product revenues from sales of AYVAKIT and $3.6 million in collaboration and license revenues. As Philina discussed, AYVAKIT revenue was driven by strong, continued strong and steady growth in patient starts, positive trends underlying extended duration of therapy, and favorability in the mix of commercial patients. Given the strength in Q1, we are raising our AYVAKIT product revenue guidance and now expect to achieve $390 million-$410 million in net product revenue in 2024.

We've had a stronger than expected start to the year, and we are still learning about the seasonal trends and impacts of in ISM as we make our way through the first year of launch. Our guidance philosophy is to provide our best understanding of where we may end the year, given the various puts and takes on revenue, both in the U.S. and E.U. each quarter. This update, relatively early in the year, reflects that commitment. The increase in today's guidance reinforces that we are on our path to capturing AYVAKIT's peak opportunity of greater than $2 billion. This revenue growth, coupled with expense discipline and focused investment, is what continues to give us confidence in achieving a financially self-sustaining profile. Our total costs and operating expenses continue to decline and were $174.9 million for the first quarter.

We anticipate that our research and development expenses will remain relatively flat for the remainder of the year, with some quarter-to-quarter variability. We also expect our SG&A expenses to remain relatively stable as we continue to gain operating leverage from our commercial infrastructure. We believe that the current full-year sell-side consensus for total costs and expenses of approximately $715 million, which includes non-cash stock-based compensation expense, reflects an appropriate estimate for 2024. We remain in an exceptionally strong and durable financial position, with $735.6 million in cash on hand. AYVAKIT's revenue performance and today's guidance increase, coupled with our continued focus on managing operating expenses, will result in our goal of further reducing our cash burn in 2024.

Our solid financial profile drives our ability to generate long-term value as we invest in the commercial success of AYVAKIT and advance an innovative portfolio of medicines. With that, I'll now turn the call back over to the operator for questions. Operator?

Operator (participant)

Thank you. At this time, I would like to remind everyone, in order to ask a question, press Star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Brad Canino from Stifel. Brad, your line is open. Please ask your question.

Brad Canino (Director and Equity Research Analyst)

Thank you. Great quarter. Kate, I remember back at the Quad AI meeting in February, you referenced a strong sense of ISM awareness and the desire to treat patients, and the company also had a strong presence at that meeting. So I guess in your view, how much of that awareness momentum is baked into the trajectory exiting the quarter, and what does the team still see as headroom? Thank you.

Kate Haviland (CEO)

Yeah, thanks for that question, Brad. And to your point, I think one of the things that was very notable about Quad AI this year was just in comparison to the year previous, where we are kind of introducing Blueprint for the first time and showing the AYVAKIT pivotal data for the first time. And then here we were kind of sitting with a large group of now people who had clinical experience with the drug and were treating patients, which was such a kind of notable step change to your point. So, maybe you want to talk a little bit about how our awareness, you know, the impact of awareness and healthcare providers, the growing prescriber base, and how that's really fueling our future growth this year and beyond.

Philina Lee (Chief Commercial Officer)

Yeah, thanks for the question, Brad. You know, to your point, Quad AI, certainly the excitement was palpable from treaters across the academic and community setting. You know, that said, I would still say we're still just getting started with significant headroom to grow. You know, the team has the ongoing pace of interactions of regional meetings, the cadence of congresses throughout the year. I think if we really look at our lead indicators on the provider side, you know, with our breadth and depth of prescribing, this is a really strong foundation for continued growth and certainly leaves significant headroom for continued penetration, not just into the top 400, but well beyond that, into the broader treating community.

In addition, touching on some of the direct to consumer, you know, initiatives, we're really excited to, to really be rolling out the next wave of, of engagement for patient activation. And that, that also leaves significant headroom, to grow in sort of patients' awareness and likelihood to ask their providers of, of AYVAKIT. All of this, we think, bodes exceptionally well that we are on well on that path towards that over $2 billion peak opportunity for AYVAKIT.

Operator (participant)

Thank you. Your next question comes from the line of, Marc Frahm from TD Cowen. Marc, your line is open.

Marc Frahm (Managing Director and Equity Research Analyst)

Hi, thanks for taking my questions and congrats on the quarter as well. Maybe following up on Brad's question, just how are you seeing kind of maybe trends, kind of, leading indicators to get into that bigger population that, you know, hasn't been well diagnosed historically? Things like testing rates and, and stuff like that, to, to really access maybe, you know, the next kind of 10,000 patients that you've kind of talked about being out there that haven't been cared for historically. And then related to some of that, just with the top line really taking off here, just can maybe Kate and Mike talk about kind of the, the goal of getting to profitability?

How important is that for the company, particularly as you start thinking about things like BLU-808 coming in, that, you know, could have a very broad development program off it, ultimately?

Kate Haviland (CEO)

Yeah, thanks for the questions, Marc. Maybe we'll start with talking about how we see. I mean, we're building a brand new market here with AYVAKIT in SM and how we think about the different kind of avenues of growth of building that market. So some of the things you mentioned already, which is the increasing rate of diagnosis, which is a critical part, but also the fact that we know that there is a number of patients who are diagnosed, and, you know, that we are just kind of starting to penetrate. We have a lot of room there as well. So Philina, how do you think about both penetrating the currently diagnosed group versus the opportunities to continue to grow the overall size of the market?

Philina Lee (Chief Commercial Officer)

Yeah, I would say, thanks for the question, Marc. You know, first and foremost, if we just look at the patients who are already diagnosed, which continues to steadily increase, you know, penetration into that patient population already represents an over $1 billion opportunity, and that's, that's where sort of like here and now, primary focus is, is dedicated.

... and you spoke to sort of the, you know, what there are multiple prongs for continued growth, and you spoke specifically to continued growth in diagnosis. There, we are really focused on continuing to drive initiatives like the high-sensitivity KIT testing, the disease awareness, the sponsored testing from Blueprint. And, you know, we're really encouraged to see significant increases in the volumes of high-sensitivity KIT testing, especially even in the allergy segment, where that's really important. And even beyond that, we know there are further levers for growth for AYVAKIT, and that's adoption into a broader range of patients, you know, sort of widening that line of who is seen as not well controlled, as well as expansion into further geographies.

We're seeing, as I said, you know, really strong initial performance in our international launches. All of this bodes really well towards that peak opportunity.

Kate Haviland (CEO)

Yeah, and one thing maybe to add there is, you know, this feels very similar to other rare disease launches we've seen, where, you know, the epidemiology and these disease states tend to be kind of dated and very small studies that inform that. And, you know, what we're seeing is even in our sponsored testing, patients coming out of other pools of patients, be that MCAS or others, that I think have been very much underrepresented in the current epidemiology. So yeah, we'll be providing more views on that as it comes. But, you know, our view is this market has a long way to go in terms of continuing to grow the number of patients on therapy as well as the number of patients who are diagnosed with this disease.

Maybe now turning to your question about, you know, the importance of profitability, and how we think about that. Mike, do you want to start?

Mike Landsittel (CFO)

Yeah, I'll start. I think, Marc, I think the key is, you know, we're trying to build a sustainable business for the long term. And so, you know, part of that is making sure that we stay laser-focused on our top priority investment areas, such as BLU-808, which is upcoming. And that requires financial discipline and focus, but like long term, we're looking to find these key value drivers where we can add long-term value to the company, and that's, that's the long-term goal.

Kate Haviland (CEO)

Yeah, and just adding, I completely agree. I think, you know, one of the things we've been known for at Blueprint Medicines is our research and development capabilities, and we have a just tremendous opportunity to continue to drive innovation and to make really meaningful impacts on patients. I think BLU-808 is certainly on everyone's radar, but we have, you know, some of our favorite programs we haven't had a chance to talk to anybody about yet. And so, we know we're looking forward to talking about our continued innovation in this space.

Marc Frahm (Managing Director and Equity Research Analyst)

Great. Thank you.

Operator (participant)

Thank you. Your next question comes from the line of Michael Schmidt. Michael, your line is open.

Brad Canino (Director and Equity Research Analyst)

Good morning. This is Paul on for Michael. Thanks for taking our question, and congrats on the quarter. Mine's on AYVAKIT for the ex-U.S. opportunity. I know you mentioned Germany is sort of driving European sales this year. Do you still see a roughly 10% contribution to this year's full year sales? And how are you currently thinking about the longer-term trajectory in Europe, perhaps beyond this year? And then maybe just squeezing one on CDK2. Any updates on sort of the color or the tenor of the progress of your partnership discussions for that? And are these exclusively on BLU-222 or perhaps more broadly for the CDK franchise? Thank you.

Kate Haviland (CEO)

Yeah, Michael, thank you for those questions. And I think one thing is the, the European team has just done a tremendous job out of the gates with ISM approval at the end of December, with Germany really coming on, on strong in terms of getting patients onto therapy. And so they've, they've done a tremendous job there. Christy, how do you think about the overall contribution for Europe and its growth trajectory? And maybe also, could you take the BD cover question as well?

Christy Rossi (COO)

Sure. Thanks, Paul. Yeah, we're really pleased with the performance of the international team. As Kate said, they're very much off to the races, and I think it's been particularly encouraging to see that some of the underlying dynamics in the German launch early on have looked very similar to the United States, including where we're seeing prescribing, et cetera, lots of patient demand. So really encouraging to see. Of course, there's other dynamics in Europe that are different from the United States, and most notably, that would be price negotiations. So some of those cards will start flipping this year, and then into next year as well. You know, when I think about the overall opportunity in Europe, it's certainly significant. It's gonna be a contributor to our overall top line.

But for this year, as I said, you know, that 10%-15% of revenue as a rough estimate is probably not a bad place to be. This, frankly, is one of the levers that we think about when we're trying to set guidance ranges, right? I mean, this is a variable that informs how we may, may perform over the year. But I think 10%-15% is probably a good, a good estimate. And then at peak in markets like this, you know, we'll see, we'll see how things evolve in the coming, you know, years as we continue to grow the opportunity. But, you know, you often would see the U.S. still representing certainly the majority of the dollar value of, of the SM opportunity.

As Philina said, you know, it's very easy math to get to a multi-billion-dollar opportunity just in the U.S. based on what we are seeing. In terms of CDK2, you know, as we said in the prepared remarks, very, very excited about the dataset that we're gonna be sharing at ASCO. We really see this as, you know, the first data that will be showing that you can safely combine a CDK2 inhibitor with a 4/6. Our partnership discussions are progressing well. We've always been very clear that, you know, second half of this year is when it makes sense to have a partner on board strategically based on where the program will be heading, as we exit this year and into next.

Certainly, you know, as we think about the tenor of those conversations, our focus is on CDK2. That's where, you know, having a, a BLU-222, having a partner on board to advance the program makes the most sense. Of course, there's a lot of innovation in our pipeline that, you know, partners may be interested and excited by. We always have those conversations, and we'll continue to do that.

Operator (participant)

... Thank you. Our next question comes from the line of Laura Prendergast from Raymond James. Laura, your line is open.

Laura Prendergast (VP for Biotech Equity Research)

Hey, guys. Congrats on the great print today. Another one on CDK2. You know, thinking about how the cost of CDK2 impacts your OpEx flux throughout the year. I'm assuming you guys are looking to out-license and not cost share. If you could just provide any input here about how you're thinking about, you know, CDK2 moving forward.

Kate Haviland (CEO)

Yeah. Thank you, Laura. Maybe, look, Christy, will you start with just strategically how we're thinking about BD, and then, Mike, maybe you can weigh in on just how you... You know, any kind of impact on financially? Yeah.

Christy Rossi (COO)

Sure. So from a you know strategy perspective, we've always been very intentional using business development to advance programs and really complement you know what our own capabilities and our own sort of internal priorities may look like. And certainly at this stage as we've said we are very focused on continuing to really develop a broad portfolio in mast cell-driven disorders certainly executing the ongoing launch of AYVAKIT. We have elenestinib and BLU-808 coming behind that. CDK2 is a very very significant commercial opportunity and one that because it's primarily in breast cancer is obviously in a somewhat different space and so that's really the driver behind us having these conversations.

We'll be open as we go through, you know, in terms of what the exact structure will look like, but, you know, we have a partner on board because we think, you know, we think the capabilities of the partner brings are, are, are relevant to how we advance it. I always think about having, you know, co-development, co-commercialization make sense in places where you're trying to build and leverage scale. In the short term, that... You know, breast is not a place where we're trying to build and leverage scale. So again, we'll, we'll continue to advance those conversations, as they make sense, but we have a very clear idea strategically of what we're, what we're trying to accomplish.

Kate Haviland (CEO)

Yeah, financially-

Mike Landsittel (CFO)

Yeah, just I think with respect to the financials, you know, there's, you know... We obviously don't comment specifically on, you know, partnership structures or financials. At this point, it's too early. But for 2024, you know, we're continuing to execute on our phase 1 study. That's baked into all of the financial guidance that we've given. We feel very confident about that. And then longer term, you know, as Christy mentioned, strategically, it makes a lot of sense to bring a big partner on, you know, and part of that is driven by the fact that these studies to move forward in breast cancer are gonna be very expensive, and we want a partner to, you know, both strategically as well as financially, help support us there.

Laura Prendergast (VP for Biotech Equity Research)

Thank you.

Kate Haviland (CEO)

And then Jeffrey.

Operator (participant)

Thank you. Our next question comes from the line of Salveen Richter from Goldman Sachs. Salveen, your line is open.

Brad Canino (Director and Equity Research Analyst)

Hi. Thanks. This is Matt on for Salveen. On BLU-808, could you talk about your strategy for determining which indications to expand into after proof of concept has been established in chronic urticaria? Thanks so much.

Kate Haviland (CEO)

Well, do you want to start and talk about 808?

Fouad Namouni (President for Research and Development)

Thank you. Yeah, I mean, for BLU-808, and I actually would encourage you and others to really go back and listen to the live replay of our powerful mast cell from last week, where we really treated this topic in depth. The way we are thinking about it is, as we said, chronic urticaria is our leading indication. On the other hand, given the profile of the molecule, we believe is really a very good profile, and we are filing the IND and taking it to the clinic this year, is to really look at a number of other indications. Because the involvement of mast cell in the biology of numerous diseases is clearly and well established now.

We'll be doing a lot of preclinical work in other indications, but also we're doing proof of concept clinically for a number of indications, and we see where we really think the full scope is and how to line up the additional indication beyond chronic urticaria. So we believe this molecule, if the clinical profile is consistent with the preclinical data that we are seeing, has the opportunity to really tackle a number of diseases, and therefore, we'll have to look at the POC for many of them.

Kate Haviland (CEO)

Thanks, Matt, and maybe we'll just add that we also believe that the profile of the compound and the fact that we have an oral therapy here is gonna enable us to be able to kind of tune the therapy to address different patient populations across all these different disease states. We think we're really well positioned in terms of the target product profile of the compound to evaluate this and bring forward what will truly be a pipeline and a pill opportunity.

Brad Canino (Director and Equity Research Analyst)

Got it. Thank you.

Operator (participant)

Thank you. Your next question comes from the line of Ren Benjamin from Citizens JMP. Your line is open.

Ren Benjamin (Managing Director and Senior Biotechnology Analyst)

Hey, good morning, guys. Thanks for taking the questions, and congrats on an amazing quarter and really good guidance. I guess the question for me is, of the top 400 or so, you know, prescribing physicians, how many are prescribing, and what's the split between allergists and hematologists? And as we think about reasons that eligible patients might not be being prescribed AYVAKIT, can you, you know, are there any reasons? Is that a potential group of patients that, you know, is incorporated into that kind of headroom calculation of how the area could grow, and how do you plan on addressing that? Thank you.

Kate Haviland (CEO)

Yeah. Thanks, Ren. I mean, Philina, maybe to address both how we see kind of demand coming from the physicians who have the most patients, as well as out of, you know, physicians from the tail, and how you see that kind of dynamic in terms of demand and penetration, as well as talking a little bit about kind of the cadence of new patient starts, right? And how that is informing our growth into the future.

Philina Lee (Chief Commercial Officer)

Yeah. Thanks for the question, Ren. I would start with, you know, the initial breadth and depth of prescribing that we've established in these-

... first three full quarters of launch in ISM sets a really strong foundation for us, both in terms of the breadth of the penetration. You know, what you want to see in rare disease is not that it's concentrated in just a handful of centers. Like, what really fosters, you know, plants the seeds for sustainable growth and continued growth is that breadth of prescribing and the fact that we're seeing adoption across both hematology, oncology, as well as allergy, immunology, and split across academic and community settings is extremely important, and is a great lead indicator for continued growth. When we look at the top 400, that's really something that we laser in to, to illustrate what we see as more the kinetics of prescribing.

It doesn't speak to the full penetration, 'cause that's really just a snapshot of the highest volume providers. But so what's really important, I think, to see from that, is that first prescribing is really leading to positive experiences that lead to subsequent repeat prescribing for two, three, or even more patients. You know, even within that mix, we see a really great mix of allergists, immunologists, hematologists, but you know, I think headroom just across all segments and deciles of providers to continue to grow there. In terms of your question around eligible patients and prescribing there, you know, the most important thing we're focused on is identifying when a patient is not well controlled, and that is really...

That's sort of like a crux across both our provider engagements as well as patient engagements. From a patient perspective, you know, patients can also become acclimated to living with a new normal. They may be avoiding triggers, and so it's really important to make them aware of a new treatment option, and that reclaiming some of the freedoms of their prior life is actually possible. And so really, our direct-to-consumer efforts are really focused on driving that, and again, there are a lot of headroom to grow.

Operator (participant)

Thank you. Our next question comes from the line of Derek Archilla from Wells Fargo. Your line is open.

Derek Archila (Managing Director for Biotechnology Equity Research)

Hey, good morning, and, congrats on the quarter. Was hoping maybe you could discuss some of the assumptions behind the updated guidance. It seems to suggest a slowdown in net patient adds relative to the prior quarters, and I guess trying to reconcile that with the very bullish commentary in the prepared remarks. Thanks.

Philina Lee (Chief Commercial Officer)

Yeah, thanks, Derek. I think, you know, just to start there, when we think about... Mike kind of talked about our philosophy on guidance, and, you know, we are in the early days of building a brand-new market. And so as we think about the low and high end of our updated range, it's driven by, you know, ranges around a multitude of different inputs across numerous variables. I don't know, Salveen, if you wanna talk a little bit about how you think about all those variables, but, you know, we certainly expect continued growth and the overall opportunity. Yeah, Derek, I think the first answer to your question is no, we do not expect a slowdown in net patient adds.

You know, we see strong and steady growth in the net patient adds, and we expect that to continue. You know, this past quarter, we saw that really driven by a strong cadence of new patient starts, very low discontinuation rates, which really bodes well, I think, for chronic durations of therapy. And, you know, that's also the... There are a number of additional key revenue drivers that contribute to our guidance, in addition to that continued strong and steady growth of net patient adds that we expect. So it's things like our compliance, the proportion of free goods, which exceeded for this quarter and is something we'll be looking to see how that evolves over the course of the year, as well as things like our ongoing European launch.

And so it's the inherent variability in these key revenue drivers moving forward that factor into our guidance range. All of that said, you know, if we look at sort of the midpoint of that range, that represents nearly a doubling of the revenue that we achieved last year, and we believe it firmly does put us on that trajectory towards the peak.

Derek Archila (Managing Director for Biotechnology Equity Research)

Got it. Thank you.

Operator (participant)

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

Peter Lawson (Managing Director and US Biotech Equity Analyst)

Hey, thanks.

Philina Lee (Chief Commercial Officer)

Your line is open.

Peter Lawson (Managing Director and US Biotech Equity Analyst)

Thanks so much. Thanks for taking the questions. Just as we think about the ISM patients, you, you mentioned there was kind of a low discontinuation rate. Anything else you can kind of comment around those patients, whether there's any shift in compliance after, you know, essentially 10 months of use and, any sense of drug holidays, for instance? Thank you.

Philina Lee (Chief Commercial Officer)

Yeah, thanks, Peter, for the question. I think, you know, one of the things I think the team has just done a tremendous job in Q1 is and we know that Q1 can often be very challenging, kind of across, you know, as Philina mentioned in her prepared remarks, across pharmaceutical industry and biotech. And they just did a tremendous job on executing, you know, in the reverification process and making sure that the compliance, you know, stayed very high. But I don't know, Philina, since launch, have you, you know, thought about, seen anything that you would say that's thematic from, from patient discontinuation perspective? Yeah, thanks, Peter. So what we've seen in terms of discontinuation rates so far has been very much in line with what we've expected when we see AYVAKIT's really favorable benefit-risk profile from PIONEER.

So discontinuation rates have been low. You know, the very early trends towards duration of therapy have been very, very positive, and, you know, we've even seen a lengthening on the advanced SM side. You know, to your question around sort of compliance and holidays, like, in fact, that has also trended extremely positively in terms of patients staying on therapy. When we think about this patient population, you know, they're very sticky, right? Like, they have a regimen that they are adapting to, and they're really not taking dose holidays.

And so, you know, this is a really important point because as we progress in the launch and we increase the total number of patients on therapy, it's not just new patient starts anymore, but also the cumulative effect of these patients remaining on therapy that will contribute to overall revenue growth.

Kate Haviland (CEO)

Yeah, I think that last point's really important in the sense that as that pool of patients on therapy gets so much larger, you know, point changes in compliance and/or free goods make a big difference from a revenue perspective. So, I think that, you know, we're certainly seeing that.

Operator (participant)

Your next question comes from the line of Matt Biegler from Oppenheimer. Your line is open.

Matt Biegler (Senior Analyst)

Hey there. Congrats from us as well in the quarter. We're curious if you're seeing any signs of growth in advanced SM, maybe because of the increased prescriber awareness from the indolent launch, or I guess, should we just still think of advanced as pretty flat going forward? Thanks.

Kate Haviland (CEO)

Yeah, maybe I'll just start quickly to say, I mean, we are so pleased to see the duration of therapy in advanced SM being at 25 months. I mean, I think these are patients with very, very aggressive disease, and I think that bodes well for both the advanced SM opportunity as well as the research, the ISM opportunity. But do you want to talk about the growth and number of new patients in advanced SM, Linda?

Philina Lee (Chief Commercial Officer)

Yeah, Matt. So I would say we do continue to see growth on the advanced SM portion of our business. That's obviously relatively moderated compared to ISM, which is our primary growth driver, and now represents the majority of patients on therapy with AYVAKIT. But you know, we do see, I think, a potential kind of halo effect that you know, with the now the awareness of AYVAKIT for ISM, as our breadth of prescribing increases, what's happening you know, not just in allergy, but also with a number of new hematology, oncology prescribers as well, who are activated and interested to get involved through ISM.

Matt Biegler (Senior Analyst)

That's great. Thanks.

Operator (participant)

Your next question comes from the line of Ami Fadia from Needham. Ami, your line is open.

Ami Fadia (Senior Analyst)

Thanks. Congrats on the quarter. My question is on BLU-808. What data do you need to generate to understand your go-forward clinical development plan for indications beyond chronic urticaria? And how soon can you start to initiate clinical trials on those indications? And separately, if you could provide any additional color on how you're planning to develop elenestinib. Any update from previous? Thank you.

Kate Haviland (CEO)

Ami, thank you for those questions. And Becker, do you want to talk about the data you want to see at 808 and how we're thinking about getting those broad proof of concepts, as well as, you know, the plan for HARBOR study with elenestinib, which, as we've said before, I mean, elenestinib is really positioned to maximize the long-term performance of our SM franchise. And so we certainly are going to be spending more time talking about that in the second half of this year, but.

Becker Hewes (Chief Medical Officer)

Yeah. Ami, so, BLU-808 being our exquisitely targeted wild-type KIT inhibitor, is one that we're taking into healthy volunteers first, and that's obviously to get the initial PK and tolerability, but it also gives us an opportunity to see the ability of the drug to reduce tryptase even in normal, healthy volunteers. And we believe that that'll give us a good steer of what the therapeutic range may be in patients. And as Kate mentioned earlier, this is a very tunable drug where we expect to be able to use it across a wide range of therapeutic doses. And that may be in... as a single agent, as we illustrated in our mast cell webcast last week, where the mast cell is really the driver, like chronic urticaria.

And then, you know, we've shown in our BLU-222 program, in our EGFR program, that we make highly combinable molecules. And that's gonna be the essence of that next wave of investigations, where we're looking in more complex diseases, where the standard of care is well established, such as asthma, where the combination is gonna be necessary to really forward the field in those indications. And so as we enter in the patients next year, that'll give us a sense of what our dose range is for patients who have mast cells that are causing disease. And then we'll be able to look at, as Fouad said, in a number of different, more complex indications and understand where that therapeutic range is and get a quick proof of concept in those indications.

And then with respect to elenestinib, as we've said, we are getting more and more data as we study the patients on PIONEER, and we learn more from commercial patients about the really complex nature of systemic mastocytosis and the broad breadth of patients that can benefit in many different ways. And so we look forward to sharing more before the end of the year about our design of HARBOR and really our holistic approach to the development of elenestinib and SM.

Operator (participant)

Your next question comes from the line of Colleen Kusy from Baird. Colleen, your line is open.

Colleen Kusy (Senior Research Analyst)

Great. Thanks. Good morning. Thanks for taking our questions, and congrats on the quarter. Any commentary on the, how you're measuring the early success of your DTC campaign and what your plans are to invest further in the second half of this year?

Kate Haviland (CEO)

Yeah, so, I think I'll hand it to Philina. I think our direct-to-consumer campaign really is evidence of our conviction that we have a tremendous opportunity to help just a vast array of patients with ISM. Selena, how do you wanna think about, you know, those efforts and how we make sure that we understand their bearing fruits?

Philina Lee (Chief Commercial Officer)

Yeah, Colleen, one of the most direct things that we look at is the patients' awareness of AYVAKIT, and we've been really encouraged that the efforts to date have already increased the unaided awareness of AYVAKIT eightfold, while continuing to have a lot of headroom to grow. So this is really an area that we will continue to lean into in a highly targeted way. We know where these patients are looking for information on the disease, and we're really targeting both our media campaigns, and you know, another thing we've talked about is the monthly sort of opportunities we have for patients to come together with other patients to share their experience on AYVAKIT.

That element of patient storytelling is so important in a rare disease where, you know, in many cases, an SM patient hasn't yet met another patient. So the opportunity to connect, hear about their experiences, and you know, what the journey to AYVAKIT has been like for them, we believe will be really compelling. So we do expect to continue growing on these initiatives through the second half of the year in a highly targeted way.

Colleen Kusy (Senior Research Analyst)

That's helpful, thank you. As a follow-up, just in your early market research, what's resonating most with patients to keep them on treatment, and what gives you confidence in maintaining this low discontinuation rate in the future?

Kate Haviland (CEO)

Yeah, Colleen, I mean, I think that really is a testament to AYVAKIT's clinical profile. I mean, patients, it's a highly tolerable drug, easy to take. I mean, we saw in the PIONEER study that the side effect profile of AYVAKIT was, you know, superior to standard of care and the kind of cocktail of symptomatic treatments that patients are on. And then it's a testament to the activity and the fact that we see clinical impact across a wide range of symptoms in patients. You know, I think, you know, with such a heterogeneous disease, that is absolutely critical, and that a patient, regardless of what their most bothersome symptom is, is seeing great impact in AYVAKIT.

You know, I think that is just a profound kind of equation for people that we see as resonating and patients are staying on. Becker, do you have something you wanna add?

Becker Hewes (Chief Medical Officer)

Yeah, I think this is... You know, a couple of questions have piqued my interest, the one about drug holidays and then this one about convincing patients to stay on the drug. You know, as Kate said, when they feel better, they don't need to take holidays, they don't need to be convinced to stay on the drug. And so that really speaks to also the way that allergists think about treating this disease and having a very tolerable therapy and treating patients, see how they do, and this—it just speaks to why there's consistent treatment duration. And I also wanted to comment on the advanced SM duration. You know, we're into two years in a leukemia-like disease, and that really bodes well for the indolent situation as well.

Kate Haviland (CEO)

Yeah, Philina, do you wanna add?

Philina Lee (Chief Commercial Officer)

Yeah, maybe I would add on, Colleen, these are patients who are really highly motivated to regain quality of life. And just to share, I think even just some soundbites from engaging customers across the country who have shared some of their patients' experiences is, what we hear is patients getting their energy back, being able to go back to work at the jobs that they had to pull back on previously due to symptoms of SM. The ability of patients to, you know, go participate in activities with their kids, or friends, or loved ones, going to camp for the first time, and really reclaiming and starting to remember what normal looks and feels like.

So it's really kind of a profound thing, and I think we really are even just at the beginning of this journey.

Colleen Kusy (Senior Research Analyst)

Great. Thanks for taking our questions.

Operator (participant)

Thank you. Our next question comes from the line of David Lebowitz from Citi. David, your line is open.

Vandana Sharma (Chief Risk Officer)

Hi, this is Vandana on behalf of David. So, on the free patient proportion, I wanted to ask that, like, the levels went from 25% to 20%. How should we think about patient growth versus actual sales growth? And what proportion of patients will be on free drug by the end of the year? And I have one more follow-up.

Kate Haviland (CEO)

Unfortunately, we have to limit to one question just 'cause we're coming on close to time here. But I believe the question is around: How are we thinking about just the overall dynamic relative to free goods? Again, being very early in the launch of a new therapy and building a new market, Selena, how are you kind of thinking about that as you kind of gave this view of around 20% since launch? And how do we think about that as a driver of top line versus some of the other, you know, variables, including compliance, new patient starts, our European launch, all the other things that are adding into top line?

Philina Lee (Chief Commercial Officer)

Yeah, so to your question, I think there's really a couple things that factor into our free goods mix, as we saw, that decrease to 20% this quarter. So it's both the payer mix of patients with ISM, which trends more towards commercial. The second piece is that more patients were able to access paid therapy. You know, in terms of what to expect, through the rest of the year, free goods mix is really something we'll need to continue to watch, because, as you said, more patients will continue to add on and be treated with AYVAKIT. So we're in the early days of the IRA, and so we'll need to watch how that plays out.

Our expectation continues to be continued strong and steady growth in the number of patients on therapy, favorable low discontinuation rates, high compliance. We'll watch the free goods mix and continue to watch our international launches.

Operator (participant)

Thank you. There are no further questions at this time. I will now turn the call back to Kate.

Kate Haviland (CEO)

Thank you, operator. We feel great about the progress we've made in Q1, and we recognize that there's a lot of work up ahead of us this year. And as we move forward into the middle of the year, we do so from a position of strength. We are well positioned to build on the momentum we've achieved here coming out of Q1, and we look forward to updating you on our progress. So thank you all for taking the time to join us today and for your continued support to Blueprint Medicines.

Operator (participant)

This concludes today's conference call. You may now disconnect.