TSVT - 2seventy bio: An Overload Of Troubles At This Small Pharma

2024-01-09 16:27:39 ET

Summary

• 2seventy bio has experienced a significant decline in stock value, down 70% since June 2023.
• The FDA has delayed the approval of TSVT's CAR-T cell therapy Abecma for earlier lines of multiple myeloma due to a planned advisory committee meeting.
• TSVT faces multiple challenges, including safety concerns, low cash balance, and the absence of a new CEO.

The last year has been a disaster for many cell therapy companies with plunging valuations, among them being 2seventy bio ( TSVT ), which is down 70% since my June article . TSVT is a co-developer of CAR-T cell therapy Abecma, along with BMY; the plan, in my view, was for Abecma to generate sufficient cash to fund the rest of its pipeline. However, Abecma, on the one hand, has stubbornly stuck to 5th line therapy, refusing to move along to higher and more lucrative lines; on the other hand, among the general failure of BMY topline last year, Abecma has secured a top position, failing to meet estimates at least twice in a row. Since TSVT derives all of its revenue from the 50-50 split it gets from Abecma sales, TSVT has suffered.

In 2023, Abecma had a PDUFA on December 16 for Abecma (idecabtagene vicleucel) for earlier lines of triple-class exposed relapsed or refractory multiple myeloma (RRMM). The NDA was based on data from the pivotal Phase 3 KarMMa-3 study. However, on November 20, BMY/TSVT announced that the FDA has now decided to have an advisory committee meeting, whose date was yet undecided. Hence the approval did not happen.

As to the reason for the change in decision, here’s what the companies say :

The companies anticipate that the committee will review data related to the secondary endpoint of overall survival ((OS))...The ODAC meeting has no impact on the currently approved indication for Abecma for adult patients with triple-class exposed RRMM after four or more prior lines of therapy… The KarMMa-3 study met its primary endpoint, demonstrating a statistically significant improvement in progression-free survival ((PFS)) compared to standard regimens, significantly reducing the risk of disease progression or death versus standard regimens in patients with triple-class exposed RRMM. Safety results were consistent with the well-established and generally predictable safety profile of Abecma. Final PFS data and interim OS data from the KarMMa-3 study will be presented on December 11 at the 2023 American Society of Hematology ((ASH)) Annual Meeting and Exposition.

While the companies do not think the review is related to safety concerns, such concerns for the CAR-T space in general continue being raised. A developing problem with Abecma (and other CAR-T therapies) is a recent scrutiny from the FDA on concerns of safety. Let's quickly recap the safety discussion from the FDA for Abecma:

Treatment with Abecma has the potential to cause severe side effects. The label carries a boxed warning for, cytokine release syndrome ((CRS)), hemophagocytic lymphohistiocytosis/macrophage activation syndrome (HLH/MAS), neurologic toxicity, and prolonged cytopenia, all of which can be fatal or life-threatening. CRS and HLH/MAS are systemic responses to the activation and proliferation of CAR-T cells causing high fever and flu-like symptoms, and prolonged cytopenia is a drop in the number of a certain blood cell type for an extended period of time. The most common side effects of Abecma include CRS, infections, fatigue, musculoskeletal pain, and a weakened immune system. Side effects from treatment usually appear within the first one to two weeks after treatment, but some side effects may occur later. Patients with multiple myeloma should consult with their health care professionals to determine whether Abecma is an appropriate treatment for them.

Because of the risk of CRS and neurologic toxicities, Abecma is being approved with a risk evaluation and mitigation strategy..

In late November, there was news that the FDA was probing risks of T-cell malignancies in CAR-T cell therapy patients. This is not just for Abecma, of course; the FDA’s concerns are related to many CAR-T cell immunotherapies, including Abecma, Carvykti and Yescarta, directed towards the proteins BCMA and CD19. While the FDA does say that “.. the overall benefits of these products continue to outweigh their potential risks for their approved uses,”

Data I saw on FierceBiotech turns up some scary figures:

Abecma is actually on the lower range of the trouble zone, with 60 deaths reported, however, this is still a big worry for the entire space, and has doubtless contributed to TSVT’s list of troubles.

There are other troubles at TSVT as well. One, a patient death in a phase 1 trial of its acute myeloid leukemia treatment SC-DARIC33 targeting pediatric patients, which paused the trial and tanked the stock. The FDA put a formal clinical hold on the trial in August. In the 2nd quarter earnings call, the company said they are amending certain trial protocols which may mitigate the issue:

This investigation has provided insights into the pathobiology of this toxicity leading to several study protocol changes, which the team believes may mitigate this toxicity and allow for the continuation of the PLAT-08 study. As a result, our collective team is actively amending the protocol.

However, the company declined to share details about these protocol changes:

Kelsey Goodwin

Hey good morning. Thanks for taking my question. Maybe shifting gears off of Abecma. Maybe could you just provide some more color on the toxicity root cause analysis in the PLAT-08 study. And maybe could you provide some color on what protocol changes were made post analysis. Thank you.

Nick Leschly

Kelsey, this is Nick. Great question. And I'll save my colleague, Steve, here – Steve from a painful sort of non-answer. Right now, we're very much – like you said, we have done the root cause analysis. We're confident that we have some proposals in collaboration with the FDA to get this study sort of back up and enrolling. We can't get into the details of that right now because we want to make sure we honor the relationship not only with the study and the patients but also with the FDA. So that's about as far as we can go at this point in time. So that was – the wording that we chose there was pretty specific that its ongoing. We have a plan. It's shared with SCRI and the FDA engagement has begun. And so we're confident, but we will share details at a subsequent date. [This was corrected by the author by listening to the actual call]

In September, the company announced that it is pausing "financial commitment" to this program as part of its restructuring efforts:

2seventy plans to limit financial commitment to the current Phase I trial. The Company will provide the next update on the PLAT-08 study upon completion of the Phase I dose escalation.

Going back to my second point from the list of troubles at TSVT, this is its low cash balance, prompting a restructuring (which did help the stock a bit) in order to extend their cash runway. Three, the same low cash balance prompting a culling of their pipeline, forcing them to focus on near term value. Four, some comments about the former CEO (for example, from activist shareholder Engine Capital). The comments centered around the idea that ex-CEO Nick Leschly needed to step down, which he did, but first, he didn’t step down entirely, retaining the odd designation of Chief Kairos Officer; and two, he has not been replaced with a new CEO, although activist investor Engine Capital has asked for Chip Baird, the recently promoted Chief Operating Officer, to do the honors. That’s a lot of non-essential things for a small biotech to handle properly while also working on R&D; and hence, TSVT is in a miserable shape right now.

Financials

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