Day One Biopharmaceuticals, Inc. Q3 FY2025 Earnings Call

Hello, ladies and gentlemen, and welcome to Day One Biopharmaceuticals Third Quarter 2025 Financial and Operating Results Conference Call. Please be advised that this conference call is being recorded. I would now like to turn the call over to your host, Joey Perrone, Senior Vice President of Finance and Investor Relations. Thank you. You may begin.

Thank you. Hello, everyone, and good afternoon. Welcome to Day One's Third Quarter Financial and Operating Results Conference Call. Earlier today, we issued a press release that outlines the topics we plan to discuss today. You can access the press release and the slides to accompany this conference call on the Investors and Media section of our website at www.dayonebio.com. An audio webcast with the corresponding slides is also available on the website. Before we get started, I'd like to remind everyone that some of the statements that we make on this call and information presented in the slide deck include forward-looking statements as outlined on Slide 2. Actual events and results could differ materially from those expressed or implied by any forward-looking statements. We encourage you to review the various risks, uncertainties, and other factors included in our most recent filings with the SEC and any other future filings that we make with the SEC. These forward-looking statements are based on our current estimates and various assumptions and reflect management's intentions, beliefs, and expectations about future events, strategies, competition, products and product candidates, operating plans, and performance. You are cautioned not to place any undue reliance on these forward-looking statements, and except as required by law, Day One disclaims any obligation to update such statements. Today, I'm joined by Dr. Jeremy Bender, Chief Executive Officer; Lauren Merendino, Chief Commercial Officer; Charles York, Chief Operating and Financial Officer; and Michael Vasconcelles, Head of Research and Development. I will now turn the call over to Jeremy.

Thank you, Joey. Good afternoon, and thank you all for joining us. Q3 was an outstanding quarter for Day One. We accelerated growth across every key dimension of OJEMDA's performance: new patient starts, total prescriptions, and net product revenue. Our early launch momentum and execution have led to steady and sustainable gains quarter-over-quarter, reflecting continued performance across the organization and growing confidence in OJEMDA's differentiated profile among the members of the pLGG prescribing community. In Q3, we delivered $38.5 million in net product revenue, representing a 15% quarter-over-quarter increase, our strongest quarter for both total revenue and sequential growth so far in 2025. This performance reflects not only increased adoption but also significant and durable treatment persistence, which we'll elaborate on further in a moment. The 2-year FIREFLY-1 data, which are now included in the OJEMDA label, continue to demonstrate a manageable safety profile and durable clinical benefit. The 2-year analysis demonstrated that growth velocity decreases resulting from OJEMDA treatment are reversible, with nearly all patients demonstrating catch-up growth post-treatment. The median duration of response to OJEMDA in this 2-year analysis also increased from 13 to 18 months. Three-year FIREFLY-1 data will be presented later this month at an oral presentation at the Society for Neuro-Oncology Annual Meeting, followed by a full manuscript we expect will be published in the first half of next year. With durable demand, expanding physician experience, and disciplined execution, OJEMDA is well positioned to build on its strong trajectory. With the strength we've seen across key performance drivers and improved visibility into year-end, we are raising the low end of our full year revenue guidance to a new range of $145 million to $150 million for 2025. This new guidance underscores our confidence in the trajectory of OJEMDA's launch and the durability of its growth story. Our pipeline also continues to advance. Our partner, Ipsen, anticipates a mid-2026 EMA approval decision, marking a key step toward bringing OJEMDA to patients in Europe. FIREFLY-2, our global Phase III trial remains on track for full enrollment in the first half of 2026, positioning OJEMDA to potentially move into frontline pLGG in the U.S. And DAY301, our PTK7 directed ADC continues to advance with dose escalation ongoing in the Phase Ia trial. Separately, tovorafenib was added to the National Comprehensive Cancer Network adult glioma treatment guidelines as a Category 2A recommended treatment option for patients with recurrent or progressive BRAF altered disease. Altogether, these milestones highlight both depth and momentum across our portfolio and reinforce Day One's value creation trajectory. As we look to the end of 2025, our priorities are clear. First, drive adoption of OJEMDA as standard of care in second-line pLGG. Second, continue to advance our pipeline. And third, maintain disciplined expense management to keep us firmly on the path to profitability. Our results this quarter strengthen our confidence in Day One's near-term and long-term financial and pipeline performance. The team remains energized by our progress and focused on continuing to deliver meaningful value for patients, providers, and shareholders. With that, I'll now hand it over to Lauren, who will provide further insight into our commercial performance.

Thanks, Jeremy, and good afternoon, everyone. Q3 was our strongest quarter since launch, with impressive double-digit acceleration across all key parameters of our business. Net product revenue rose 15% to $38.5 million for the quarter. Total prescriptions grew by 18%, with over 1,200 total prescriptions. And new patient starts accelerated by almost 20% quarter-over-quarter. These results underscore the continuing momentum with this brand. Let's take a closer look at what drove our business this quarter. We've driven double-digit growth quarter-over-quarter for the 5 consecutive quarters since launch. In the first 3 quarters of this year, we delivered over $102 million in net product revenue, reflecting an 89% increase over full year 2024. This was driven by underlying patient demand reflected in our prescription trends. Since launch, we have continued to drive an increase in total prescriptions each quarter. In Q3, this accelerated to 18% with over 1,200 total prescriptions and was fueled by 3 main drivers. First, an acceleration in new patient starts. The release of the 2-year follow-up data from FIREFLY-1 meaningfully enhanced physician confidence in OJEMDA's durable efficacy. We have also demonstrated that the large majority of growth velocity delays are reversible following treatment. Physician feedback on the data has been strongly positive, and we believe these data contributed to achieving our highest ever new patient starts this quarter. We've also seen increased adoption in the second-line, confirming the increasing confidence in our brand. The second important driver is persistency. A high percentage of pLGG patients stay on therapy each month, building our active patient pool over time. The experience of our EAP patients is an important leading indicator here, and we have some learnings on their persistence that I'll share in a moment. The third driver of our success has been OJEMDA's excellent payer access. About 90% of pLGG patients are receiving payer approval on their first request, enabling rapid initiation post prescription for most patients. Over time, as physicians have gained experience with OJEMDA, we've seen increased adoption in the second-line. Second-line adoption grew more than 60% over the past 12 months based on physicians' self-reported prescribing behavior. Additionally, through our engagements, we are hearing more and more physicians reporting that OJEMDA is their treatment of choice in the second-line. Though this is encouraging progress, considerable opportunity remains for continued adoption of OJEMDA as it becomes the standard of care in second-line. While the persistency data for our commercial new patient starts is still maturing, our EAP cohort is a helpful leading indicator. U.S. EAP patients had a median duration of treatment of 20 months, which is consistent with what we expected based on our FIREFLY-1 trial results. Additionally, we've seen that for those EAP patients who have completed 24 months on OJEMDA, 3/4 of them received treatment beyond 24 months. While EAP patients have provided valuable insights, they currently represent a small fraction of our business today. In fact, commercial new patient starts now account for roughly 90% of our active patients at the end of Q3. Another pillar of our growth has been expanding both breadth and depth of our prescribing base. The graph on this slide demonstrates the increase we've seen in both breadth and depth over time based on commercial new patient starts only, excluding EAP patients. Over 60% of prescribing accounts have treated multiple patients with OJEMDA. Notably, the number of accounts treating 4 or more patients grew 28% quarter-over-quarter, and over 80% of our Priority 1 accounts have now treated 4 or more patients. We're excited about the substantial opportunity which remains for OJEMDA. Our commercial team continues to focus on two principal levers: driving new patient starts and optimizing persistence. Through disciplined execution against these priorities, we are confident that we will continue to yield double-digit growth over time. I'm incredibly proud of what the commercial team has delivered since launch and especially this quarter. It shows that we execute with excellence across all facets of commercial and continue to deliver for our customers, and most importantly, for pLGG patients. To better reflect this momentum, we are raising our guidance range to $145 million to $150 million for 2025.

Earlier today, we reported our Q3 2025 financial results. For today's call, I'll highlight a few key takeaways that demonstrate the strong commercial execution and durable growth trajectory of OJEMDA, along with our continued focus on financial discipline and operational excellence. We're very pleased with the progress we've made this year. Following OJEMDA's April 2024 approval, momentum continues to build, fueled by growing physician confidence and compelling longer-term follow-up data from our FIREFLY-1 study. These results are translating directly into performance, with double-digit growth across revenue, prescriptions, and new patient starts this quarter. For Q3, U.S. OJEMDA net product revenue was $38.5 million, which grew 15% compared to the second quarter. Our Q3 results bring our year-to-date net product revenue to $102.6 million. Additionally, revenue from OJEMDA exceeded the combined cost of sales and SG&A for the first time this quarter, highlighting both its growing contribution to the enterprise and the scalability of our operating model. Based on the continued strength of underlying demand and improved visibility into Q4, we are raising our full year 2025 revenue guidance to a new range of $145 million to $150 million. This revised range reflects our confidence in the trajectory of the launch and assumes continued double-digit sequential growth in the fourth quarter. Turning now to expenses. We continue to manage operating costs effectively with total operating expenses of $59.6 million, which includes $9.6 million of noncash stock-based compensation. This is the second consecutive quarter with declining expenses, approximately 9% compared to Q2. This continued trend reflects our data-driven approach to capital allocation. We prioritized investment in the areas with the highest potential return and intentionally scaled back where we don't see a clear path to value creation. That said, we do expect Q4 expenses to increase modestly, reflecting the timing of planned commercial and clinical activities. We also continue to closely manage channel stock levels to align with demand. Historically, we've guided to maintaining approximately 2 to 4 weeks of product on hand. In this quarter, we finished at the lower end of the range. This reflects timing of orders and growing demand for OJEMDA rather than any supply constraints, and we'll continue to actively monitor channel stock to ensure unconstrained product availability for our patients. On gross to net, we continue to guide to a range of 12% to 15% for the year. Due to the price increase we implemented in July, we're at the high end of that range for this quarter. We ended the quarter with $451.6 million in cash and no debt, reflecting only a slight decrease from the prior quarter as we continue to invest in advancing our commercial and pipeline priorities. With strong revenue growth translating into higher cash flows and expenses holding relatively steady, we are seeing continued improvement in quarterly net cash burn. While we are not guiding to profitability, maintaining financial discipline and advancing long-term value creation remain top priorities for the organization. Overall, Q3 represents another strong step forward, both commercially and operationally with accelerating demand, expanding prescriber depth and important upcoming data disclosures; we believe the foundation we've built positions us well for advancing our long-term objectives.

Our first question comes from Tara Bancroft with TD Cowen.

So I guess I'm curious to what extent you could possibly describe even qualitatively what impact you're seeing on both the rate of discontinuations and duration of therapy, especially in non-EAP patients now that physicians have had a good amount of exposure this year to various data sets. I know previously you had mentioned that some proportion of discontinuations were driven by off-label use in settings with lower duration and also improper treatment of rash. So just curious to get an update here considering that you saw a really great level of increased demand this quarter that was driven mostly by that data.

Tara, thanks for the question. This is Jeremy. So first off, it was a great quarter. I think you captured it appropriately. And that was really on both the new patient start dimension, but also the persistence as noted. So let me ask Lauren to comment on the sort of non-EAP commercial use group.

Yes. Thanks, Tara, for the question. At this point, the data is still maturing on our commercial patients. So what I can say is it's consistent with our expectations. But I really can't give any details beyond that. But I do think that the median duration of therapy in the EAP patients of 20 months is significant and is a leading indicator for us. That data is not final. There still are a number of patients who remain on therapy who have not yet reached the point of receiving OJEMDA for 24 months yet. So that number may evolve. But the median will likely stay the same, but the additional duration beyond 24 months is an evolving data point.

Yes. And Tara, I would really emphasize that latter point because it's very much what we expected and hoped we would see for patients, and that is that for those patients that have tumors where small changes in the growth can impact function, it makes sense to keep them on therapy. And we're seeing that in the real world through the EAP program to date. For the non-EAP commercial group, it's really just too early to say at this stage.

Our next question comes from Anupam Rama with JPMorgan.

I just wanted to focus a little bit on the 3-year data for pivotal FIREFLY-1 study that's coming out at SNO later this month. Can you just expand a little bit more on what you're looking for in that data that could inform how we think about treatment duration or other commercial levers for OJEMDA moving forward?

Thanks for the question, Anupam. Mike will answer that one for you. Mike?

Thanks, Jeremy. Anupam, Mike Vasconcelles here. Yes, we're really excited about these data coming up at SNO. I think given the nature of the disease, the long-term follow-up data in our clinical development program is going to be important for a variety of reasons for the foreseeable future. So of course, in addition to update on safety and duration of response, I think what's going to be important to keep an eye out for are the time-to-event analysis that will be shared specifically around the time to next treatment and a treatment-free interval as well as progression. The reason that's important is because it will be important in second and subsequent lines of therapy to really understand that in the context of other available therapies where we know there may be some biologic sort of events that occur when patients come off therapy that we want to see if are going to be distinguishable for OJEMDA. I think we'll also get a sense of perhaps early retreatment information that could be meaningful for clinicians and patients.

And what I would focus on within the category of events that happen off treatment for other therapies is really that there is, to kind of add to Mike's answer, some rebound growth that physicians observe with use of MEK inhibitors in particular, when patients come off therapy. That's rebound tumor growth. So we'll be looking at that as part of the 3-year analysis as well as those time-to-event points that Mike mentioned.

Our next question comes from Morgan Lamberti with Goldman Sachs.

This is Morgan on for Andrea Newkirk. Can you speak how the addition of the FIREFLY data to the label has impacted rates of off-label MEK inhibitor usage? And then on the payer side, you noted 90% plus rates of coverage approval on first submission. Is there a reason to think that favorable coverage could impact the rates of off-label MEK inhibitor usage as well?

Let me ask Lauren to address the second part of your question. For the first part, I want to ensure I understood correctly. Were you asking about the NCCN listing we received for OJEMDA in adult gliomas and its off-label uses?

Yes.

Okay. Yes, I'd say, first off, we weren't aware that that was a listing that was going to occur. And of course, we're interested. We think there's potential utility there based on data that we've seen in the past for OJEMDA. It's a little early to say whether or not it will have any material impact on off-label use, but it certainly could, given that in particular, in adult settings, those NCCN listings can be influential as far as physicians electing to try treatments that are not necessarily approved for a specific tumor. So I think it's a 'stay tuned' story. And Lauren can comment on your question around reimbursement.

Yes. So just remember that NCCN is an independent organization. And so although they've made their recommendation, that is not reflected in our label in any way. And so the commercial team must remain strictly within our label. So we have no ability to engage with physicians on that topic at all. But I will say that payers do sometimes leverage NCCN guidelines to inform their policies. But again, this is nothing that we can participate in, and that would be completely up to those payers.

Yes. And I would add that our rates of reimbursement for both on-label and off-label have been so high already that I'm not sure that reimbursement has been a barrier to use. So it's probably more likely to be a circumstance where that recommendation itself could lead to use based on physician decision-making that's really outside of our control.

Our next question comes from Alec Stranahan with Bank of America.

Congrats on the strong quarter. Two from us. Curious if you saw any gross to net changes in 3Q? Just trying to pair the different growth rates that you mentioned, both on revenues and scripts. And then second, on DAY301, I guess how has enrollment been going? Is it sort of proceeding as you would have expected? And any updated thoughts on PTK7 as a target given the shifting development landscape for ADCs against the target?

Alec, thanks for the question and comment. Let me ask Charles to comment on gross to nets and then Mike regarding 301 and PTK7.

Alec, this is Charles. So on the gross to net, you should hear from us that we were definitely at the high end of our 12% to 15% range that we've guided on. That's consistent with what we expected going into the quarter. As you recall from previous conversations, we did take a price increase as of July 1, and the result of that is CPIU penalty, which does drive up our gross to net rates. We would expect in Q4 to get some relief on that CPIU. That's pretty consistent with what we've seen in previous quarters, but we were definitely at the high end for this quarter.

And again, this is Mike. Regarding the DAY301 program, we have a strong group of investigators, and the program is progressing well, not just with dose escalation but also with the initiation of dose optimization and backfill cohort. There are really no issues to report. I would frame it a bit differently. I don't believe there's an issue with the target at all. In fact, the target is very viable for oncology development. There are differences between some of the other therapeutics targeting this, particularly concerning the payload. However, we are concentrated on our own program, which is advancing smoothly through early development.

Alec, I wanted to add one more point while considering the larger part of your question. It's important to note, in addition to the gross to net calculations, where we stand with channel stock during the quarter. For this quarter, we were at the low end of our channel stock range. This was primarily due to the timing of shipments and the calendar alignment. However, it was also influenced by a strong demand this quarter, as reflected by our high NPS and strong duration. As you work through your calculations, please keep in mind that we are at the low end of that range.

Our next question is from Kelsey Goodwin with Piper Sandler.

Congrats on the quarter. Two from me. First, maybe just any commentary that you could provide in terms of how the patient population breaks down in terms of line of therapy? I know you had some commentary on increases in second-line specifically, but any color there? And then second question. In terms of gaining uptake with a particular physician, how impactful do you think having the longer-term data is, for example, the ASCO data set versus the prescriber just gaining that firsthand experience?

Thanks for the questions, Kelsey. Good ones, and I'll ask Lauren to respond to.

Thank you for the questions. From a line of therapy perspective, our view on primary data is limited, so we don't have a comprehensive data set to analyze it. We have to gather information from other sources, primarily through market research with physicians. The data I shared earlier comes from self-reported physician prescribing behavior, which has shown a significant increase over the past 12 months, specifically about 60% growth in their reports of using OJEMDA in the second-line therapy. This is the most reliable data we have at the moment. In terms of uptake, it's challenging to analyze physician behavior in terms of why they made specific choices. You asked about the impact of long-term data versus firsthand experience. It’s often a blend of the two. I want to highlight the importance of the ASCO data that was recently released regarding growth velocity. While many physicians were already confident in the efficacy of OJEMDA and were not surprised by our efficacy update, some may have been more cautious in their usage due to lingering questions about growth velocity. The ASCO data addressed those concerns by demonstrating reversibility in a large majority of patients. Many physicians who reviewed that data indicated it was significant for them, which increased their confidence in prescribing OJEMDA.

Our next question comes from Ami Fadia with Needham & Company.

Congratulations on a strong quarter. I have a question regarding the upcoming 3-year update. You mentioned that in EAP patients, there is a median duration of use of about 20 months. With the 3-year update approaching, do you anticipate seeing an increase in that median duration in the study? Or is the intention more about determining when to restart treatment and assessing growth velocity during periods when patients are off treatment? Please clarify what aspects we should focus on when reviewing that data. Additionally, I have another question I can ask later.

No problem, Ami. Thanks for the question. So let me walk you through what we know today already from the FIREFLY-1 study and then what we're expecting from the 3-year data. And I'll ask Mike to add anything to my comments. In the trial of FIREFLY-1, we know already that the median duration of treatment was just under 24 months. And we've known that for some time. And that's an important data point. That actually informed our expectation around what we may see as a median in the commercial setting. We're not there yet in the commercial setting, but we are for that EAP component, and that's why we reported out that 20-month median for the EAP cohort. And that's highly consistent with our expectations and benchmarks. So really encouraging. For the 3-year data set, we're really focused on what happens as you follow patients out for longer periods of time. In particular, what we're focused on, as Mike noted earlier, are these time-to-event kind of end points. But to make it really simple, what we're really laser pointed on is what physicians have been asking us, which is what happens after you give patients 24 months of therapy of OJEMDA once they come off treatment. And they can come off for a bunch of reasons. It can be they simply want a break. It could be some focus on releasing that growth velocity delay. But regardless, in this physician community and in this patient population, there's always a desire to limit treatment if it's at all possible. And their specific question for us, there really are 2, has been: one, do you see tumor rebound growth? Meaning short-term increases in the tumor growth right after you stop that therapy after 24 months? And the reason they're focused on that question is because of their observations reported to us, this is not published, but their own observations around what happens with MEK inhibitor treatment when you stop MEK inhibitor treatments. That's the first question they're interested in. The second is independent of that growth rebound, do you also see stability of the tumor for a significant period of time after that 24-month treatment period. And the way they think about that is: what do you see 1 year after you stop treatment? So patient is treated for 24 months and then followed for another year, what portion of those patients that have that 3-year time horizon have required another therapy? And what patients have not required another therapy? And what they report to us is that any percentage greater than about 50% not requiring therapy in that 1-year period is very encouraging. So that's what we're really focused on at the 3-year data cut that you'll see at SNO. I think that frames the two big things that we're looking at. I don't want to minimize the substance of what Mike also mentioned, which is the more detailed assessments of time to next therapy as well as treatment-free interval. Let me pause there. I know that's a lot. Mike, anything you want to add?

Thanks, Jeremy. Now the only thing I'd add is just please keep in mind that any measure of rebound growth of tumor or progression is really an early clinical surrogate for needing to intervene in some way in a disease where, as Jeremy mentioned, the balance of intervening with therapy versus managing the chronicity of the disease is very important. And so that's why this rebound question is clinically important, but really in the context of what's even more important, which is how long are patients off therapy and what's the interval before their next therapy.

That was very helpful. My second question is just sort of around the commercial landscape and that Slide #11 is quite helpful with understanding kind of the depth of prescribing. Can you give us a sense of what is sort of the concentration of patients in physician offices, when you're at, say, 9 plus patients, does that mean that you've sort of exhausted a big percentage of the number of patients that that physician might be treating? Or does that still mean that there's sort of a long way to go in terms of deepening that prescribing at that particular physician?

Sure. Ami, I'll let Lauren answer. But the short answer from my perspective is: no, we're just scratching the surface, and this greater depth is fabulous, but there's a long way to go. But Lauren, maybe you can talk in more detail.

Yes, I absolutely agree. So remember, there is variability as in any market with how many patients are at each account. That's why we have different priorities of accounts. You've heard us, in past calls, we didn't really talk about it much in this one, but in past calls, that we have Priority 1, 2, and 3 accounts. A significant number of those 9 patient accounts are our Priority 1 accounts. They have a considerable volume of patients and have a lot more potential to prescribe. So we're not worried at all at this point of kind of capping out; the physicians report to us many more patients. And so we continue to see opportunity.

Our next question comes from Andres Maldonado with H.C. Wainwright.

Congrats on all the progress thus far. Two quick ones from us. I want to dig into a little bit the new patient starts as a key revenue driver. Obviously, the question is, do you guys view all new patient starts as equal? And are you seeing differences in persistence or dose modification needs based on particularly the reason for switching, elective switch toxicity or progression? And then the second question. On the FIREFLY-2 study, given that it includes rechallenge and crossover, curious how you're framing expectations on efficacy if the crossover leads to a potential compression of the perceived delta versus standard of care for that study?

Thanks, Andres. Let me ask Mike to start with your FIREFLY-2 question, and then we'll come back to the question about the commercial setting and Lauren can address.

Thanks, Jeremy. Yes, I want to highlight a few important points regarding FIREFLY-2. The main initial performance measure is the objective response rate between the two study groups. Additionally, the primary time-to-event measure assesses progression. It's also important to note that the opportunity for patients to crossover and receive tovorafenib is carefully controlled within both the study design and its execution. We anticipate that this aspect of the study will yield valuable and significant clinical data regarding the subset of patients who receive tovorafenib after first-line treatment. However, regarding the primary endpoints of the study, we have no concerns considering how we have designed and managed the study.

Regarding your question about NPS, it's a significant revenue driver for us beyond just the current quarter. Patients often remain with us for extended periods, so while some may begin treatment this quarter, their effect will be felt even more in upcoming quarters due to receiving multiple refills. NPS is vital for our long-term growth. As for your inquiry about patient categorization and dose modification, we evaluate patients based on their treatment line. We prioritize second-line treatments because they generally involve less complex health issues and a larger patient pool compared to later lines. We aren't classifying patients in other ways. I’d also like to emphasize that our pricing remains unchanged regardless of dosage. Dose modification is crucial for managing adverse effects, and we observe that patients who undergo dose modifications tend to have better outcomes. Therefore, we believe it’s essential for physicians to feel at ease with this practice, as it doesn’t negatively affect our financial performance.

We have reached the end of the question-and-answer session, and this concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.