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Day One Biopharmaceuticals, Inc. (DAWN)·Q3 2024 Earnings Summary

Executive Summary

  • OJEMDA net product revenue reached $20.1M, up 145% quarter over quarter, with total Q3 revenue of $93.8M driven by a one-time $73.7M ex‑U.S. license revenue from the Ipsen partnership .
  • Quarterly prescriptions (TRx) surged to 619 (+159% q/q), and payer approval rates remained ~80%, underpinning strong commercial traction in the first full quarter post launch .
  • Net income was $37.0M ($0.38 diluted EPS) versus a net loss of $(46.2)M a year ago; the positive swing reflects the Ipsen license revenue and investment income; cost of sales expected to rise to 9%–12% of net product revenue in early 2025 as post‑approval inventory begins to be expensed .
  • Management highlighted updated FIREFLY‑1 efficacy durability (Arm 1 median duration of response 18 months) and reiterated catalysts: FIREFLY‑2 (frontline pLGG) enrollment and DAY301 first‑patient dosing targeted for Q4 2024/Q1 2025 .
  • Stock reaction catalysts: strong sequential demand, durable efficacy update, clarity on cost of sales trajectory, and near‑term DAY301 clinical start; however, absence of Street comparisons limits beat/miss assessment this quarter (S&P Global consensus unavailable).

What Went Well and What Went Wrong

What Went Well

  • Strong commercial adoption: “Our OJEMDA net product revenue for Q3 was $20.1 million, more than double what we reported last quarter” and momentum from new prescribers and high continuation rates .
  • Durable efficacy narrative: FIREFLY‑1 Arm 1 median duration of response updated to 18 months, reinforcing treatment durability in real‑world usage per management .
  • Balance sheet strength and external validation: $558.4M cash, cash equivalents and short‑term investments post Ipsen licensing and equity financing, supporting pipeline and launch investments .

What Went Wrong

  • Reported revenue composition is non‑recurring heavy: Total revenue of $93.8M includes $73.7M license revenue, which is not reflective of ongoing product sales run‑rate—investors should focus on the $20.1M product revenue trend .
  • OpEx intensity remains elevated with SG&A at $29.0M (launch spending) and R&D at $33.6M (clinical activity), compressing operating leverage absent license contributions .
  • Coverage data inconsistencies: management cites commercial published coverage at 62% and Medicaid at 67% (majority covered), while the slide deck references slightly different coverage snapshots (~64% commercial, ~64% Medicaid); reconciliation reflects evolving payer policy publication timing .

Financial Results

Summary Financials (USD)

MetricQ1 2024Q2 2024Q3 2024
Product Revenue, Net ($USD Millions)$0.00 $8.19 $20.07
License Revenue ($USD Millions)$0.00 $0.00 $73.69
Total Revenues ($USD Millions)$0.00 $8.19 $93.76
Total Operating Expenses ($USD Millions)$66.77 $122.999 $64.13
Net Income (Loss) ($USD Millions)$(62.41) $(4.41) $37.04
Diluted EPS ($USD)$(0.72) $(0.05) $0.38
Cash, Cash Equivalents & Short‑Term Investments ($USD Millions)$317.94 $361.87 $558.38

Margins (Derived)

MetricQ1 2024Q2 2024Q3 2024
Net Income Margin %N/A (no revenue) -53.8% (−$4.41M / $8.19M) 39.5% ($37.04M / $93.76M)

Revenue Composition

Revenue ComponentQ1 2024Q2 2024Q3 2024
OJEMDA Net Product Revenue ($USD Millions)$0.00 $8.19 $20.07
License Revenue ($USD Millions)$0.00 $0.00 $73.69
Total Revenue ($USD Millions)$0.00 $8.19 $93.76

KPIs

KPIQ1 2024Q2 2024Q3 2024
Quarterly Prescriptions (TRx)N/A239 619
TRx Growth q/qN/AN/A+159%
Net Revenue Since Launch ($USD Millions)N/A$8.2 $28.3
Payer Approval RateN/AN/A~80%
Published Coverage (Commercial)N/AN/A62%
Published Coverage (Medicaid)N/AN/A67%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cost of Sales as % of Net Product RevenueEarly 20259%–12% (as stated last quarter) 9%–12% Maintained
Ipsen License Revenue Recognition (Deferred R&D services)Ongoing (per quarter)N/A~$0.3M–$0.5M per quarter New
Inventory Channel StockOngoing~2–4 weeks on hand ~2–4 weeks on hand Maintained
DAY301 First Patient DosedQ4 2024 / Q1 2025Q4 2024 / Q1 2025 Q4 2024 / Q1 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2024)Current Period (Q3 2024)Trend
Product performance (OJEMDA)Q2: $8.2M net product revenue in initial 2 months; launch underway; median duration of treatment 23.7 months $20.1M net product revenue; +145% q/q; 619 TRx; high continuation rates low single‑digit discontinuations Strengthening sequential demand
Payer coverageEarly awareness & support program; launch infrastructure ~80% approvals; published coverage now majority: 62% commercial, 67% Medicaid Improving policy publication
R&D executionFIREFLY‑2 enrollment; PRV sale; pipeline adds (DAY301 IND cleared June) FIREFLY‑2 enrollment ongoing; FIREFLY‑1 DOR now 18 months; DAY301 dosing imminent Advancing per plan
Ex‑U.S. strategyIpsen deal announced (approx. $111M upfront) $73.7M license revenue recognized; ex‑U.S. registration plans aligned Execution progressing
Financial postureQ1 cash $317.9M; runway into 2026 Cash $558.4M; cost of sales % outlook; deferred license revenue cadence Strengthened liquidity
Clinical durability & care paradigmQ2: 23.7‑month median treatment duration Arm 1 median DOR 18 months; “treat patients, not scans” Building prescriber confidence

Management Commentary

  • CEO: “Day One had a remarkable third quarter... Our OJEMDA net product revenue for Q3 was $20.1 million, more than double what we reported last quarter... the median duration of response... has now extended from 13.8 months to 18 months” .
  • CCO: “Volume in Q3 grew by almost 160%, reaching over 600 total prescriptions... high percentage of patients continuing on therapy each month... high payer approval rates” .
  • CFO: “We recorded $73.7 million of license revenue in the third quarter... we expect cost of sales to increase to 9% to 12% of net product revenue early next year... cash position of $558.4 million” .
  • Head of R&D: “Pediatric neuro‑oncologists treat patients. They don’t treat scans... the responses that we’re seeing are really remarkably durable” .

Q&A Highlights

  • Inventory/channel stock: Company targets ~2–4 weeks of channel stock; not contributing materially to revenue; specific inventory numbers will no longer be disclosed, only guidance if off band .
  • Patient adds cadence: Adds were consistent and linear with no significant seasonality; continuation rates strong with low single‑digit discontinuations five months into launch .
  • TRx definition: TRx roughly equals a 28‑day supply; quick‑start second shipments (2 weeks) count as a TRx but usage is minimal due to high payer approvals .
  • Coverage breadth: Uptake across academic and community settings; majority of prescribers had no prior OJEMDA experience pre‑launch; coverage growth reduces appeals burden .
  • Pipeline clarifications: DAY301 first dosing Q4/Q1; no guidance yet on 2025 data timing; Ipsen ex‑U.S. launch approach coordinated, distinct type II RAF mechanism vs adult type I precedents .

Estimates Context

  • S&P Global consensus EPS and revenue estimates for Q3 2024 were unavailable at time of analysis; therefore, a beat/miss assessment versus Street cannot be provided this quarter (S&P Global data not retrievable within current access limits).
  • Given the one‑time $73.7M license revenue, headline total revenue is not a clean proxy for ongoing commercial performance; investors should focus on the $20.1M product revenue trend and TRx growth to gauge run‑rate .

Key Takeaways for Investors

  • OJEMDA demand inflected: +145% q/q net product revenue and +159% TRx growth signal early adoption breadth and depth; continuation dynamics suggest durable treatment persistence .
  • Revenue quality: The quarter’s profitability was driven by Ipsen license revenue and investment income; watch the underlying OJEMDA trajectory for sustainable growth normalization .
  • Payer momentum: Majority published coverage (62% commercial, 67% Medicaid) and ~80% approval rates reduce friction; expect further gains to compress time‑to‑therapy and support paid drug mix .
  • Cost structure evolution: Cost of sales stepping up to 9%–12% of net product revenue in early 2025 will trim gross margin; model mix shift as post‑approval inventory begins to flow .
  • Clinical durability supports uptake: FIREFLY‑1 Arm 1 median DOR now 18 months; prescriber confidence and earlier‑line movement (second/third line) emerging in the field .
  • Liquidity and catalysts: $558.4M cash enables continued launch investment and pipeline expansion; near‑term catalysts include DAY301 first‑patient dosing and ongoing FIREFLY‑2 enrollment .
  • Trading setup: Near‑term sentiment supported by sequential commercial momentum and durability update; lack of Street comparison limits “beat” narrative, but coverage progress and catalysts could sustain interest into Q4/Q1.