Leerink Partners has adjusted its outlook on 2Seventy Bio Inc. (NASDAQ: TSVT), raising the stock's price target to $25.00 from the previous $15.00, while maintaining an Outperform rating.
The adjustment follows the discontinuation of the KarMMa-9 trial, which was anticipated to be a significant contributor to revenue growth for the autologous BCMA CAR-T therapy, Abecma.
According to Leerink Partners, despite the setback from KarMMa-9's discontinuation, 2Seventy Bio, in collaboration with its partner, is expected to achieve a stable and profitable position in the treatment of third-line and beyond (3L+) relapsed/refractory multiple myeloma (r/r MM). The firm cites the therapy's differentiated safety profile and consistent real-world efficacy as key factors supporting this outlook.
The slow enrollment in the KarMMa-9 trial, indicating a shrinking addressable market with limited return on investment, was a signal to 2Seventy and its partner that market dynamics were changing. The uptake of the PERSEUS regimen in first-line multiple myeloma (1L MM) could be a contributing factor to these enrollment challenges, as it potentially offers patients a better response post-transplant.
Leerink's assessment suggests that 2Seventy Bio's future now relies entirely on Abecma's current indication in 3L+ r/r MM, where it could maintain a niche due to its superior safety profile. This includes lower rates of movement disorders, such as Parkinsonism, and emerging evidence suggesting comparable real-world efficacy to its competitor, Carvykti.
The importance of the upcoming quarters for 2Seventy Bio cannot be overstated, as they will serve as a critical test of Abecma's market value. The firm anticipates the next significant data point to emerge this Friday, September 27, from a presentation at IMS comparing real-world outcomes of Abecma and Carvykti.
In other recent news, 2seventy bio and Bristol Myers Squibb have announced the discontinuation of enrollment in the Phase 3 KarMMa-9 study, a decision expected to save 2seventy bio over $80 million and accelerate its path to breakeven in 2025.
Despite this, 2seventy bio reports a 30% increase in third-quarter revenue from the second quarter's $54 million, indicating a re-acceleration in Abecma's U.S. revenues. The demand for Abecma is also projected to show double-digit growth compared to the previous quarter.
In its Q2 2024 earnings call, 2Seventy Bio reported significant developments, highlighting modest revenue growth, double-digit patient growth in apheresis for ABECMA, and a reduction of $28 million in operating expenses. The company also recorded collaboration revenue of $4.4 million with Bristol-Myers Squibb (NYSE:BMY).
Looking ahead, 2Seventy Bio anticipates further reductions in operating expenses into 2025 and projects a revised net cash spend range for 2024 between $40 million and $60 million. However, the company refrained from providing specific revenue guidance for ABECMA sales.
InvestingPro Insights
While Leerink Partners has a positive outlook on 2Seventy Bio Inc., recent data from InvestingPro offers a more nuanced perspective on the company's financial health. The market cap of 2Seventy Bio stands at $246.68 million, reflecting its scale in the biotech industry. However, the company's revenue has seen a substantial decline over the last twelve months as of Q2 2024, with a 70.04% decrease, indicating potential challenges in generating sales. This is in line with the InvestingPro Tip that analysts anticipate a sales decline in the current year. Furthermore, the company's stock price has experienced significant volatility, with a 20.0% return over the last three months, yet a 12.9% decrease over the last six months, which may concern investors looking for stability.
Additionally, 2Seventy Bio's gross profit margin is deeply negative at -304.66%, suggesting that the company is facing difficulties in maintaining profitability. This aligns with another InvestingPro Tip that the company is not expected to be profitable this year. Despite these challenges, the company does have more liquid assets than short-term obligations, which may provide some financial flexibility in the near term.
For readers seeking a deeper analysis, InvestingPro offers additional tips on 2Seventy Bio. These tips provide insights into the company's cash burn rate, debt levels, and stock price movements, among other metrics. With 11 more InvestingPro Tips available, investors can gain a comprehensive understanding of the company's financial position and potential investment risks.
Overall, while the strategic focus on Abecma for 3L+ r/r MM could provide a niche for 2Seventy Bio, the InvestingPro data suggests that investors should be mindful of the company's current financial metrics and market performance when considering its future prospects.
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