BPMC - Exploring Blueprint's 'Blockbuster Opportunity' In Indolent Systemic Mastocytosis

2023-03-27 10:16:14 ET

Summary

• Blueprint Medicines' avapritinib demonstrated significant improvements in patient-reported symptoms and disease burden in indolent systemic mastocytosis (ISM).
• Avapritinib's safety profile in the trial was well-tolerated, with fewer serious adverse events and minimal discontinuation rates.
• Avapritinib may offer a new treatment option for ISM patients, addressing the current unmet need for more effective therapies.
• With an estimated 30% market penetration, avapritinib could generate peak annual sales of approximately $953 million in the ISM market.
• Blueprint's prospects in the ISM market look promising, and the successful development and commercialization of avapritinib could significantly benefit the company and its investors. Blueprint is a "Buy".

Introduction

Blueprint Medicines ( BPMC ) is a biopharmaceutical company that develops precision therapies for cancer and blood disorders. They use a targeted approach to stay ahead of disease progression and design highly selective and potent therapies. Their business model integrates research, clinical development, and commercial capabilities in oncology and hematology. The company has two FDA-approved drugs, Ayvakit (avapritinib) and Gavreto, and is advancing multiple programs for systemic mastocytosis, lung cancer, breast cancer, cancer immunotherapy, and other genomically defined cancers.

Recent events: Blueprint reported positive top-line results for avapritinib in a Phase 2 clinical trial for indolent systemic mastocytosis [ISM]. The trial showed significant improvements in patient-reported symptoms and objective measures of mast cell burden, and avapritinib was found to have a favorable safety profile. Based on these results, Blueprint Medicines submitted a supplemental new drug application to the FDA, which was accepted and granted priority review with an action date in May 2023. In addition, the European Medicines Agency validated a marketing authorization application for avapritinib in ISM.

The following article discusses avapritinib's prospects for the treatment of ISM.

Financials

Blueprint Medicines reported its financial results for the fourth quarter and full year ended December 31, 2022. The company generated $38.8 million in revenues for the fourth quarter, including $30.1 million from product sales and $8.7 million from collaborations. The total revenues for the full year 2022 were $204.0 million, including $111.0 million from product sales and $93.0 million from collaborations and licenses. The company's cost of sales decreased primarily due to lower costs related to collaboration product sales. Research and development expenses decreased due to the absence of in-process research and development compound expenses, while selling, general, and administrative expenses increased due to the expansion of the company's commercial infrastructure. The company reported a net loss of $158.6 million for the fourth quarter and $557.5 million for the full year 2022, and its cash position was $1,078.5 million as of December 31, 2022.

Understanding Indolent Systemic Mastocytosis: Symptoms, Treatment, and Prevalence in the United States

Indolent systemic mastocytosis is a chronic condition that is rare in occurrence, affecting an estimated 1-10 cases per 100,000 people . This condition is characterized by an abnormal accumulation of mast cells in various organs, resulting in symptoms such as itching, flushing, abdominal pain, and anaphylaxis. Treatment primarily focuses on symptom management, and options may include antihistamines, mast cell stabilizers, epinephrine, corticosteroids, leukotriene antagonists, and off-label use of tyrosine kinase inhibitors. Given the estimated population of the United States and the prevalence rate, it is possible that approximately 16,550 people in the United States may have ISM.

Potential of Avapritinib in Treating Indolent Systemic Mastocytosis: Analysis of the PIONEER Trial Results

The PIONEER trial is a randomized, double-blind, placebo-controlled study evaluating avapritinib's effectiveness in treating ISM. The trial consists of three parts: dose-finding (Part 1), registration-enabling (Part 2), and long-term treatment (Part 3). Patients completing Parts 1 or 2 could receive avapritinib in Part 3. The study focuses on patient-reported symptoms, mast cell burden, and safety.

In August 2022, top-line data from Part 2 of the PIONEER trial was reported. The study involved 141 patients receiving avapritinib with best available care and 71 patients receiving a placebo with best available care. Patients were allowed to continue symptom-directed therapies during the trial.

Results demonstrated significant improvements in primary and secondary endpoints for patients receiving avapritinib, including symptom relief and reduced disease burden. At 24 weeks, avapritinib patients experienced a 15.6-point reduction in symptom scores, deepening to 20.2 points at 48 weeks. In comparison, the control group experienced a 9.2-point reduction at 24 weeks. Over half of the avapritinib-treated patients saw a reduction of at least 50% in serum tryptase levels, while none in the control group experienced such a reduction.

The safety profile of avapritinib was favorable, with adverse event rates of 90.8% in the avapritinib group and 93.0% in the control group. Serious adverse events were lower in the avapritinib group, with only 5.0% of patients affected compared to 11.3% in the control group. Treatment-related adverse events were minimal, with the most common being headache, nausea, peripheral edema, and periorbital edema.

Analysis

Based on the PIONEER trial data, avapritinib demonstrates potential in the indolent systemic mastocytosis market due to its significant improvement in both primary and secondary endpoints, as well as its favorable safety profile. Here is a detailed analysis of the drug's potential in the ISM market:

1. Efficacy: The PIONEER trial results showed that avapritinib led to clinically meaningful improvements in patient-reported symptoms and objective measures of disease burden. With a statistically significant difference in the mean change in Total Symptom Score [TSS] at 24 weeks and a continued improvement at 48 weeks, avapritinib stands out as a potential treatment option for patients with ISM. The significant reduction in serum tryptase levels for over half of the avapritinib-treated patients further supports its efficacy, which could attract physicians and patients seeking more effective treatments for ISM.

2. Safety: The safety profile of avapritinib was favorable in comparison to the control arm. The lower occurrence of serious adverse events and the minimal discontinuation rate due to treatment-related adverse events suggest that avapritinib is a tolerable treatment option for ISM patients. A safe and well-tolerated treatment may encourage patients to consider avapritinib as a preferred option for managing their ISM symptoms.

3. Unmet need: Currently, treatment options for ISM primarily focus on symptom management and improving the quality of life for patients. Given the limited number of effective treatments, there is a need for novel therapies that can provide better symptom relief and potentially slow disease progression. Avapritinib's demonstrated efficacy and safety may address this unmet need, positioning the drug as a promising candidate in the ISM market.

4. Market differentiation: The PIONEER trial results provide evidence for avapritinib as an effective and safe option for ISM patients, which may differentiate it from existing treatments. This differentiation could help the drug gain market share, particularly among patients who do not experience sufficient symptom relief with current therapies.

Estimating the Peak Annual Sales for Avapritinib in the Indolent Systemic Mastocytosis Market

To estimate the peak annual sales for avapritinib in ISM, several factors need to be considered, including the number of patients, the drug's price, market penetration, and the competition from other treatments.

Assuming that there are 16,550 people in the United States with ISM, let's consider a hypothetical market penetration rate. Market penetration is the percentage of potential customers that a product or service is able to reach. Given the unmet need for effective treatments in ISM, let's assume a market penetration of 30%.

Number of potential patients treated with avapritinib: 16,550 * 0.3 = 4,965

Next, we need to estimate the annual cost of avapritinib treatment per patient. As I do not have information on avapritinib's pricing specifically for ISM, we can use the price of avapritinib for another indication as a reference. Avapritinib is marketed under the name Ayvakit for the treatment of gastrointestinal stromal tumors [GIST], with an estimated annual cost of around $384,000 per patient . The cost of avapritinib may vary for ISM compared to GIST. This is because ISM is a chronic disorder and patients usually have a normal life expectancy, unlike GIST. In my view, it is reasonable to believe that Blueprint will not be able to price it as aggressively for ISM as they do for GIST, due to logistics. Assuming this, it can be estimated that avapritinib will cost half as much for ISM as it does for GIST.

Annual cost of avapritinib treatment per ISM patient: $192,000

Now, we can estimate the peak annual sales for avapritinib in the ISM market:

Peak annual sales = (Number of patients treated with avapritinib) * (Annual cost of avapritinib treatment per patient)

Peak annual sales = 4,965 patients * $192,000 per patient = $953,280,000

Assuming the aforementioned factors, it is estimated that avapritinib could generate peak annual sales of approximately $953 million in the ISM market. It should be noted that this estimate is subject to several uncertainties, including potential fluctuations in the drug's price, competition from alternative treatments, and the actual extent of market penetration. Furthermore, it is worth mentioning that only patients with moderate-to-severe symptoms of ISM were enrolled in Blueprint's PIONEER trial, and many patients with ISM require only regular monitoring. In line with my projections, Blueprint estimates targeting 7,500 ISM patients with moderate-to-severe symptoms - a "blockbuster opportunity".

My Analysis & Recommendation

Blueprint has shown promise in its recent Phase 2 clinical trial results for avapritinib as a treatment for indolent systemic mastocytosis (ISM). The positive top-line results and favorable safety profile, combined with the unmet need for effective treatments in the ISM market, make avapritinib a potential game-changer for both patients and the company.

The company's financials show a strong revenue stream, with $204.0 million in total revenues for the full year 2022, including $111.0 million from product sales and $93.0 million from collaborations and licenses. This revenue generation, coupled with a cash position of $1,078.5 million, suggests that Blueprint is well-equipped to support the development and commercialization of avapritinib in the ISM market.

Considering the estimated number of patients with ISM in the United States, a hypothetical market penetration rate of 30% could result in peak annual sales of approximately $953 million for avapritinib. This significant revenue opportunity, along with the drug's potential to address the unmet needs of ISM patients, could make Blueprint Medicines an attractive investment option.

However, it is essential to acknowledge the uncertainties in this projection, including potential changes in the drug's price, competition from other treatments (namely, Cogent's bezuclastinib in a Phase 2 trial for ISM), and the actual market penetration. The FDA's decision on avapritinib's supplemental new drug application, with an action date in May 2023, will also play a critical role in shaping the drug's prospects in the ISM market.

In conclusion, Blueprint Medicines' prospects in the ISM market look promising, and the successful development and commercialization of avapritinib could significantly benefit the company and its investors. Subsequently, Blueprint is rated as 'Buy'. It is advisable for investors to closely monitor the regulatory progress and market developments related to avapritinib to make informed decisions.

Risks to Thesis

While my bullish thesis on Blueprint Medicines has merit based on the promising clinical trial results and potential market opportunity for avapritinib in treating ISM, it's important to consider some key risk factors that may impact the company's future success.

1. High expenses: Blueprint's financials indicate high expenses, with a net loss of $158.6 million for the fourth quarter and $557.5 million for the full year 2022. The company's selling, general, and administrative expenses have increased due to the expansion of its commercial infrastructure. As Blueprint continues to grow its commercial presence and invest in research and development, the expenses might continue to rise. This could impact the company's profitability and potentially affect the stock price.

2. Regulatory risks: The FDA's decision on avapritinib's supplemental new drug application, with an action date in May 2023, is a critical factor in the drug's prospects in the ISM market. If the FDA does not approve avapritinib for ISM, it could negatively impact Blueprint's revenue potential and stock price.

3. Competition: The biopharmaceutical industry is highly competitive, and new treatments for ISM may emerge, potentially impacting avapritinib's market share. Competing therapies could offer better efficacy, safety, or pricing, which may limit avapritinib's success in the market.

4. Pricing and reimbursement challenges: The estimated annual cost of avapritinib treatment per patient, based on its price for another indication, is $192,000. Blueprint may price avapritnib for ISM much higher than my estimate. High drug prices can lead to challenges with insurance coverage, reimbursement, and patient affordability, which could affect avapritinib's market penetration and sales.

5. Uncertain market penetration: The estimated peak annual sales for avapritinib in the ISM market is based on a hypothetical market penetration rate of 30%. The actual market penetration could be significantly different, depending on factors such as physician and patient acceptance, competition, and pricing. If the market penetration is lower than anticipated, the revenue potential for avapritinib could be less than projected.

In summary, while there are promising aspects to Blueprint Medicines' prospects in the ISM market, it is crucial to consider the potential risks and challenges associated with the company's high expenses, regulatory hurdles, competition, pricing and reimbursement issues, and uncertain market penetration. Investors should weigh these factors against the potential rewards when evaluating Blueprint as an investment opportunity.

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