Blueprint Medicines: Precision Medicine Pioneer Shines At ASCO, Further Upside Ahead

|
About: Blueprint Medicines Corporation (BPMC)
by: Jonathan Faison
Summary

Shares have risen by 240% since my December 2016 article, but are up just 16% since my 2017 update piece.

I provide an overview of the company and recap of management's presentation at Jefferies.

Impressive showing at ASCO for BLU-667 in RET altered cancers sparked a recent rebound in the stock (including activity in patients previously treated with LOXO-292).

Management has built up significant trust given prior track record of execution - thus, I look forward to new programs unveiled in the company's first R&D day.

The stock remains a Buy and is a high potential M&A candidate as well. Multiple clinical and regulatory catalysts are coming up in the near and medium term.

Shares of Blueprint Medicines (BPMC) have risen by 240% since my December 2016 article called the company "a nascent leader in the targeted oncology space". The stock has gained just 16% since my December 2017 update suggested that readers "buy the secondary".

Lately, I was impressed by data shared at the ASCO (American Society of Clinical Oncology) Annual Meeting for BLU-667 in RET-altered cancers, showing activity even in patients who'd already been treated with LOXO-292 (from Loxo Oncology which was acquired by Eli Lilly (NYSE:LLY) in an $8 billion deal). Couple that with management's visionary "2020 Blueprint" shared at the recent Jefferies Healthcare Conference and it was clear this name deserved a revisit.

Chart

Figure 1: BPMC daily advanced chart (Source: Finviz)

When looking at charts, clarity often comes from taking a look at distinct time frames in order to determine important technical levels to get a feel for what's going on. In the above chart (daily advanced), we can observe the stock's rebound in early 2019 after management unveiled a plan for aggressive advancement of the pipeline and targeted oncology peer Loxo Oncology was swallowed up by Eli Lilly. After a few months of consolidation, the stock broke out again after promising data was presented at ASCO in June.

Overview

In Chief Operating Officer Kate Haviland's presentation at the Jefferies Healthcare Conference, she starts by describing Blueprint Medicines' current mission of building a fully integrated, global company bringing its transformative precision treatments to patients. The company's "2020 Blueprint" consists of having 2 marketed products in the US by the end of 2020, as well as at least 4 pending marketing applications in the US and EU. Also, they expect to have 6 clinical candidates in development and eight research programs as new assets are ushered into the clinic.

Figure 2: Pipeline (Source: corporate presentation)

In Q4, the company will be hosting its first R&D Day where the science behind preclinical programs will be discussed and certain targets will be disclosed.

Lead program avapritinib selectively inhibits KIT and PDGFRA, common genomic drivers in GIST and systemic mastocytosis with very convincing data across multiple indications so far. As a result, development of avapritinib is being expanded into earlier lines of treatment and additional patient populations. GIST (gastrointestinal stromal tumors) are initially well served by Gleevec (51% ORR, PFS of 19 months), but as patients relapse, they rapidly progress through remaining lines of therapy (4th line patients have no approved therapy and PFS expectation of 1.8 months). For PDGFRA driven GIST, no therapies are effective for this patient population and PFS is just 3 months with 0% ORR. In contrast, for 4th line GIST, avapritinib was able to achieve 22% ORR with 10.2 month duration of response. For PDGFRA exon 18 mutant GIST, the drug received the coveted Breakthrough Therapy Designation as ORR reached an impressive 86% and median duration of response has not yet been reached. For these settings, the company is submitting its NDA this month. Enrollment is expected to finish up in the second half of 2019 for the VOYAGER study in 3L/4L Stivarga-naive GIST with initial data looking quite promising as well (26% ORR). Plans are in the works to initiate the COMPASS study in second line GIST in 2H 2019 as well.

As for systemic mastocytosis or SM, consider that current therapies treat symptoms and not the cause (KIT D816V mutation which 95% of patients have). Data so far has shown impressive impact across all patients treated with avapritinib - in the advanced SM indication, ORR was quite high and well tolerated (received Breakthrough Therapy Designation, updated data coming soon at EHA). As for phase 1 data for indolent or smoldering SM patients, impressive improvements were observed as well (initial data from PIONEER study will be presented in 2H 2019). For the advanced SM indication, NDA will be submitted in Q1 2019. Consider that there are over 30,000 GIST and SM patients in major countries.

Moving onto BLU-667 in RET altered cancers, data presented at ASCO was quite promising and the company is going after several indications (starting with US regulatory submissions in Q1 2020 for second line RET-fusion NSCLC and in 1H 2020 in second line RET-fusion MTC). Consider that RET fusions are present in 1-2% of NSCLC, 90% of medullary thyroid cancer, 20% of papillary thyroid cancer and also in less than 1% of several other cancers as well. The ARROW phase 1 study consists of dose escalation and dose expansion cohorts - data at ASCO came from the second portion where patients were treated at the recommended phase 2 dose. Importantly, safety and tolerability profile appeared solid with low discontinuation rate. Confirmed ORR was 60% for RET-fusion NSCLC patients with prior platinum chemotherapy and 82% of responders remaining on treatment for up to 15.6 months. Activity in NSCLC brain metastases was also very encouraging (78% shrinkage with no progression for any patients due to new CNS involvement). 63% ORR in RET mutant MTC previously treated with an MKI was promising as well. What stuck out most to me with the program was activity in patients previously treated with LOXO-292 and I imagine this helped spur the stock to its recent rebound. NDAs for multiple indications will be submitted next year, starting with 2L RET-fusion NSCLC. Of note, more treatment naive patients are being enrolled in the ARROW study with the goal of pursuing accelerated approval in the front line setting.

As for BLU-554 in TKI-naive HCC, first patient has been dosed in China phase 1 trial (partnered with CStone Pharmaceuticals). The product candidate has also been cleared for an anti-PD-L1 combination study as well. Also, a phase 2 trial will be initiated in FOP for BLU-782 (intriguing rare disease indication, keeping in mind that peer Clementia Pharmaceuticals was acquired by Ipsen Pharmaceuticals for a deal value of $1.31 billion).

As mentioned above, a key catalyst to look forward to is the company's first R&D day where new programs could be unveiled. As they say with drug development, once you're lucky but multiple times you're just good. Given the success of lead programs in multiple indications, I believe management team should be commended here and I look forward to future unveiling of targets they will pursue in the future.

Other Information

For the first quarter of 2019, the company reported cash and equivalents of $415.9 million as compared to net loss of $87.4 million. Research and development expenses totaled $74.3 million, while G&A rose significantly to $16.6 million. Management is guiding for operational runway into mid-2021 with current cash position.

As for institutional investors of note, Perceptive Advisors and Casdin Capital own significant stakes. History of insider selling is not encouraging but doesn't raise alarms either.

Final Thoughts

To conclude, the bullish thesis for this precision medicine pioneer continues to strengthen as it transitions to a global, commercial-stage entity. Management has now achieved a track record of success and should be commended for pursuing development for each asset in the pipeline in a very efficient, logical manner. A steady stream of important clinical and regulatory catalysts are expected across the near-term and multi-year time frame, which should drive upside for the foreseeable future. Additionally, Blueprint Medicines appears to be a prime M&A candidate given success in the clinic and large market opportunities being targeted.

For readers who are interested in the story and have done their due diligence, I suggest patiently accumulating dips while adopting a multi-year time frame. For those who've realized a significant profit since initial articles, I see no reason to sell shares at this time.

Risks include disappointing data for multiple assets across several indications, setbacks in the clinic, negative regulatory guidance, competition for certain indications and dilution at some point in late 2019 or 2020 (cash burn should continue to increase as the company gears up for commercialization).

For our purposes in ROTY, I consider this one to be a long-term idea at this point whereas we look for near- to medium-term upside in stocks that are often relatively underfollowed. That said, if the stock pulled back substantially (perhaps due to a correction in the market or biotech sector), I'd be more inclined to revisit.

I greatly appreciate you taking the time to read my work and hope you found it useful. Consider clicking "Follow" next to my name to receive future updates and look forward to your thoughts in the Comments section below.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Disclaimer: Commentary presented is NOT individualized investment advice. Opinions offered here are NOT personalized recommendations. Readers are expected to do their own due diligence or consult an investment professional if needed prior to making trades. Strategies discussed should not be mistaken for recommendations, and past performance may not be indicative of future results. Although I do my best to present factual research, I do not in any way guarantee the accuracy of the information I post. I reserve the right to make investment decisions on behalf of myself and affiliates regarding any security without notification except where it is required by law. Keep in mind that any opinion or position disclosed on this platform is subject to change at any moment as the thesis evolves. Investing in common stock can result in partial or total loss of capital. In other words, readers are expected to form their own trading plan, do their own research and take responsibility for their own actions. If they are not able or willing to do so, better to buy index funds or find a thoroughly vetted fee-only financial advisor to handle your account.