TSVT - 2seventy bio Prospects

• Abecma, a CAR-T myeloma therapy, is rapidly ramping revenue.
• 2seventy has $398 million in cash.
• Multiple advanced T-cell platforms could generate many more successful therapies.

2seventy bio ( TSVT ) was spun off from bluebird bio ( BLUE ) in November 2021. It started with an approved cancer therapy, Abecma, which is partnered with Bristol-Myers Squibb ( BMY ). This article will cover the potential of Abecma and 2seventy's pipeline and platform. Then I will look at the current stock price and market capitalization to consider if the stock is a justifiable buy for longer-term investors.

Abecma

Abecma (idecabtagene vicleucel) is a CAR-T therapy approved by the FDA for the treatment of Multiple Myeloma in March 2021. It is directed at BCMA antigens. It is for use only after at least four prior lines of therapy. While the final development and commercialization of the therapy are by Bristol-Myers Squibb, Abecma was originally developed by Bluebird Bio. In May 2020 the two companies amended their agreement, with Bristol paying Bluebird $200 million for ex-US. milestone and royalty obligations. However, the agreement allowed for continued equal sharing of profits in the U.S. Abecma was then spun off with 2seventy in November 2021.

Abecma revenue for 2seventy for Q2 2022 was reported as a loss of $4.3 million, despite Bristol reporting $72 million in Abecma revenue. That would be because the agreement is for profit sharing, so commercialization and other costs must have exceeded Abecma sales. Q2 represented an improvement over Q1, when Bristol reported $56 million in Abecma revenue, and 2seventy's share of profits was a loss of $5.4 million. Note the rapid q/q growth in BMY Abecma revenue.

Recently a Phase 3 study of Abecma for relapsed and refractory Multiple Myeloma patients with two to four prior lines of therapy reported positive topline results compared to standard regimens. Progression-free survival showed significant improvements. This could allow for an earlier line of therapy to be on label, and should generally give physicians, patients and payers more confidence in the efficacy and value of the therapy. The company sees possible FDA label extension approval in 2023 or 2024.

2seventy Bio platform

2seventy received several technologies when it split from Bluebird Bio. The central piece is CAR-T and TCR (T cell receptor) technologies. These extend to the ability to target multiple antigen receptors with one therapy using DARIC (Dimerizing Agent Regulated Immunoreceptor Complex). It has technology for viral gene therapy and the megaTAL genome editing system for T cells. It claims it can potentially reverse immunosuppression in tumors by rewiring molecular pathways.

2seventy Bio pipeline

With the 2seventy Bio Q1 2022 results the company gave some updates on its pipeline. The first patient was dosed with SC-DARIC33 for relapsed and refractory pediatric Acute Myeloid Leukemia. This is the first in-human use of the DARIC T cell platform.

BBT369 also enrolled its first patient in a Phase 1/2 Study for relapses/refractory B-NHL (non-Hodgkin lymphoma). This will also serve as proof of concept for the megaTAL platform, dual targeting, and split co-stimulation. Preclinical data were presented at the American Association for Cancer Research meeting on April 10, 2022.

2seventy Bio Q2 results

2seventy Bio Q2 2022 results were released on August 10, 2022. Revenue was just $13.5 million. As is typical for an early commercial stage biotechnology company, expenses greatly exceeded revenue, leading to a net loss of $77.4 million or $2.02 per share.

It will take time for Abecma to ramp revenue and even longer for the therapies currently in the pipeline to mature and possibly gain regulatory approval. 2seventy Bio is cash-rich, with the balance at the end of Q2, including equivalents and marketable securities, at $398 million. The company believes it has a cash runway into 2025. It expects total Abecma revenue in the U.S. for 2022 in the range of $250 to $300 million, with profit and loss split evenly with Bristol-Myers Squibb. It could also have potential license pipeline products to generate cash, as was done by Bluebird with Abecma.

Valuation and Conclusion

At the close on Monday, August 22, 2022, 2seventy had a stock price of $15.35 and a market capitalization of $559 million. The 52-week low was $9.97, while the high was $64.00. With Abecma revenue reported by Bristol-Myers ramping rapidly, I would expect the net loss on the product reported by 2seventy to turn to a gain soon, perhaps as early as Q3. It would take quite a bit more ramping to cover 2seventy's other R&D and administrative costs as well, but I could see that happening as early as late 2023 if the ramp does not flatten out. CAR-T therapies have now been around for a few years, so doctors and even payers are gaining confidence in them. Longer term I see 2seventy Bio introducing a string of T cell and other therapies that will become profit generators. Therefore, for long-term investors like myself, I see it as attractive, certainly at the current price or anywhere in the $10 to $20 range. But I expect it to remain volatile until the profitability issue becomes clearer.

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