Key EHA datasets will shape consensus views on the Gen2 manufacturing process and sickle cell updates later in the year at ASH. Morgan Stanley believes 3mo HbA ≥8g/dL in non-β0/β0 thalessemia would be viewed positively, but sees the read-across to sickle cell as limited. It also updates its PT for ASCO BCMA data.
There will be four presentations relevant to Bluebird at EHA. The most important will be new data on non-β0/β0 thalessemia patients from the Northstar-2study. These patients will have product from the new manufacturing process and investors are focused on how the Gen2 process influences hemaglobin (HbA) production. Mgt. will also present a poster on additional sickle cell patients using the Gen1 manufacturing process; however, these patients will be pretreated with higher busulfan pre-conditioning. Investor expectations are low for any significant updates on sickle cell. Finally, on BCMA, Bluebird will represent its bb2121 data from ASCO, and potential competitor Nanjing Legend will represent its BCMA data as well. The firm will primarily be focused on the consistency of the Nanjing data across the ASGCT, ASCO and EHA presentations.
At ASH 2016 Bluebird presented data from the PhI/II Northstar study which included 18 patients with Transfusion-Dependent β-thalassemia of which 10 with had non- β0/β0 Genotypes. The LentiGlobin product in this trial was created using the Gen1 manufacturing process and in the non-β0/β0 the median VCN was 0.8 (range 0.3-1.1). Exhibit 2 displays the relationship between vector copy number and HbA at both 3 months (blue) and 6 months (red). While the relationship may not be linear there does appear to be a correlation between VCN and HbA levels. There also appears to be an upward shift between 3 months and 6 months, which corroborates management's previous statements that HbA levels generally increase for the first 9 months then stabilize. The firm also notes that most patients are on the lower end of both VCN and HbA levels. At EHA it will see data from two female patients with β0/βE genotypes that are treated with LentiGlobin manufactured through the new process with VCNs of 2.9 and 2.4. Mgt. has indicated that the first Northstar-2 patients was dosed on Dec-14, 2016 so the firm would expect 3 month follow-up to be available for at least the first two patients. The firm believes 3 month HbA ≥8g/dL would be viewed positively. For reference the best fit line would predict HbA of ~9.8g/dL (VCN of 2.4) and ~11.9g/dL (VCN of 2.9), but the firm sets 8g/dLas the bar given the low R value (~20%).
At ASH 2015 and ASBMT 2016, mgt. presented two additional sickle cell patients (1301 and 1303) beyond the prior successful 1204 patient (5.5g/dL or ~50% anti-sickling Hb). Patients 1301 and 1303had very low Hb (0.3g/dLand 1.0g/dL, resp.) representing <20% anti-sickling Hb. At EHA patients will receive much more myeloablative busulfan to preconfidition patients (one characteristic of the 1204 patient). However, mgt. has previously downplayed the role of busulfan, so the firm has low expectations for these patients.
At its Oct-13, 2016 R&D update mgt. described 4 key issues it faced with sickle cell. In particular mgt. changed the HGB-206 protocol to include (1) ~2 months of pre-harvest transfusions to reduce marrow inflammation, to improve HSC harvest; (2) Revised cell purification process, which has demonstrated a ~50% CD34+ cell yield improvement, to increase cell dose; (3) Implementation of VCN enhancers through Process 2to improve transduction; (4) Increased exposure to myeloblation agent busulfan to enhance marrow niche receptivity for improved engraftment. Additionally, mgt. is also studying the safety and efficacy of plerixafor as a mobilization agent in HGB-206. Given that the data at EHA will only address issue 4 directly in sickle cell patients and issue 2in thalassemia patients, the firm sees the read-across as limited. However, if there are signs of improvement over prior data, it would expect BLUE to move higher given consensus views. It sees the read-through to sickle cell data as the largest driver of BLUE at EHA and would expect consensus to drive BLUE>10% higher if the data is viewed as supportive.
The firm has refined its assumptions for bb2121 following ASCO, now assuming ~$550,000/patient for bb2121 with >50% market share and >50% penetration into the 4th line myeloma market. These revised assumptions increase the firm’s PT to $105 from $91. It remains EW as it continues to believe sickle cell, which is the major driver of further upside, is a multifactorial problem where the firm has limited visibility into the probability of success.