BPMC - Blueprint Medicines: At The Forefront Of Groundbreaking Cancer Treatments

2023-08-03 11:40:42 ET

Summary

• On August 2, Blueprint Medicines, a pharmaceutical company developing medicines for treating cancer and blood diseases, released its financial results for the second quarter of 2023.
• Blueprint Medicines' revenue for the second quarter of 2023 was $57.6 million, down 9% from the previous quarter and up 57.8% from the second quarter of 2022.
• The company's revenue growth was driven primarily by sales of Ayvakit, a tyrosine kinase inhibitor approved for treatment in a number of rare diseases in the US and Europe.
• We initiate our coverage of Blueprint Medicines with an "outperform" rating for the next 12 months.

On August 2 , Blueprint Medicines (NASDAQ: BPMC ), a pharmaceutical company developing medicines for treating cancer and blood diseases, released its financial results for the second quarter of 2023. These results not only beat analysts' expectations but also showed that demand for innovative drugs such as Ayvakit (avapritinib) and Gavreto (pralsetinib) is growing much faster than many on Wall Street expected.

Blueprint Medicines' revenue was about $57.6 million, exceeding our expectations by $6.1 million. The company's EPS for the second quarter of 2023 was -$2.19 per share, which is $0.01 more than we had forecast. But despite this, Mr. Market negatively assessed Blueprint Medicines' financial report, mainly due to higher expectations by investors of sales of Ayvakit.

The five largest shareholders of Blueprint Medicines, with a combined stake of 51.94% in the company, have long been such Wall Street whales as FMR, Blackrock, Wellington Management Group, T. Rowe Price Associates, and Vanguard Group.

Over the past six months, Blueprint Medicines' stock price has seen gains of more than 10%, driven by the publication of positive Phase 1/2 clinical trial results and the approval of Ayvakit by the FDA as the first drug for the treatment of patients with indolent systemic mastocytosis at the end of May 2023.

We initiate our coverage of Blueprint Medicines with an "outperform" rating for the next 12 months.

The financial position of Blueprint Medicines and its prospects

Blueprint Medicines' revenue for the second quarter of 2023 was $57.6 million, down 9% from the previous quarter and up 57.8% from the second quarter of 2022. Moreover, Blueprint Medicines' revenue has beaten analyst consensus estimates in eight of the last ten quarters. This may indicate that Wall Street is underestimating the sales potential of already approved medicines and the company's product candidates.

At the same time, Blueprint Medicines' Non-GAAP P/S [TTM] is 18.76x, which is 357.86% higher than the sector average and 70.38% lower than the average over the past five years.

The company's revenue growth was driven primarily by sales of Ayvakit, a tyrosine kinase inhibitor approved for the following rare diseases in the US and Europe.

According to Seeking Alpha , Blueprint Medicines' Q3 2023 revenue is expected to be $42.52-$58 million, up 11.6% from analysts' expectations for Q2 2023. At the same time, according to our model, Blueprint Medicines' total revenue will be above this range and will amount to $60.1 million. The increase in Ayvakit sales will continue due to the acceleration of its introduction into clinical practice and the improvement of patient access to this revolutionary drug.

Although Blueprint Medicines is a mid-sized pharmaceutical company, the active R&D policy implemented under the leadership of Kate Haviland has positively impacted its revenue growth. The company's experimental drugs target chronic urticaria, non-small cell lung cancer (NSCLC), ER+/HER2- breast cancer, and more.

In our estimation, BLU-222 is the gem in Blueprint Medicines' product candidate portfolio. This experimental drug is a selective inhibitor of cyclin-dependent kinase 2 (CDK2). CDK2 plays one of the essential roles in cell cycle regulation and is also fundamentally linked to the proliferation of ovarian, breast, and endometrial cancers. Data from a Phase 1 clinical trial presented at the 2023 American Society of Clinical Oncology ( (ASCO)) Annual Meeting demonstrated a favorable safety profile and clinical response of BLU-222 in patients with breast cancer.

Blueprint Medicines' R&D spending was $110.1 million in Q2, or 191.15% of total revenue, which is exceptionally high in the pharmaceutical industry during a period of higher interest rates.

The company's earnings per share ((EPS)) for the second quarter of 2023 was -$2.19, up 18.3% year-on-year. According to Seeking Alpha, Blueprint Medicines' Q3 EPS is expected to range from -$2.69 to -$2.27, up 4.7% from the consensus estimate for Q2 2023. While we believe this is slightly underestimated, our model puts the company's EPS at -$2.07.

Given that Blueprint Medicines is a loss-making company, monitoring the rate of decline in total cash is critical to minimize the risks associated with a public offering. So, the company's total amount of cash and short-term investments was $722.6 million at the end of Q2 2023, or 22% of its market capitalization. At the current level of spending, Blueprint Medicines' current level of cash will last until at least the first quarter of 2025. As a result, we do not expect the company's management to pursue a more conservative policy in developing its pipeline and commercializing Ayvakit.

Conclusion

On August 2, Blueprint Medicines, a pharmaceutical company developing medicines for treating cancer and blood diseases, published its financial results for the second quarter of 2023. The company has two approved medicines for treating rare cancer types and cooperates with the pharmaceutical industry's mastodons, such as Roche Holding ( OTCQX:RHHBF ), Zai Lab ( ZLAB ), and Royalty Pharma ( RPRX ).

Blueprint Medicines' revenue was about $57.6 million, continuing its year-on-year growth trend and also beating our expectations by $6.1 million. We believe that the increase in Ayvakit sales will continue due to the acceleration of its introduction into clinical practice and the improvement of patient access to this revolutionary drug.

Blueprint Medicines continues to attract investors as a potentially profitable long-term investment, thanks to its extensive pipeline of experimental drugs, low total debt, and cash and short-term investments that exceed $700 million.

We initiate our coverage of Blueprint Medicines with an "outperform" rating for the next 12 months.

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