Q4 2023 bluebird bio Inc Earnings Call
Participants
Courtney O' Leary; Investor Relations; bluebird bio Inc
Andrew Obenshain; President, Chief Executive Officer, Director; bluebird bio Inc
Tom Klima; Chief Commercial Officer, Chief Operating Officer; bluebird bio Inc
Chris Krawtschuk; Chief Financial Officer, Principal Accounting Officer & Treasurer; bluebird bio Inc
Jason Gerberry; Analyst; BofA Securities, Inc.
Danielle Brill; Analyst; Raymond James & Associates, Inc.
Jack Allen; Analyst; Robert W. Baird & Co. Incorporated
Gena Wang; Analyst; Barclays Bank PLC
Eric Joseph; Analyst; JPMorgan Chase & Co.
Mani Foroohar; Analyst; Leerink Partners LLC
Jeff Hung; Analyst; Morgan Stanley & Co LLC.
Salveen Richter; Analyst; The Goldman Sachs Group, Inc.
Sami Corwin; Analyst; William Blair & Company L.L.C.
Yanan Zhu; Analyst; Wells Fargo Securities, LLC
Presentation
Operator
Good day, and thank you for standing by, welcome to the bluebird bio fourth quarter and 2023 annual results conference call. (Operator Instructions)
Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Courtney O'Leary, Investor Relations, please go ahead.
Courtney O' Leary
Good morning, everyone, and thank you for joining our fourth quarter and 2023 annual results call today. My name is Courtney O'Leary, Director of Investor Relations at bluebird bio.
Before I begin, let me review our safe harbor statements. Today's discussion contains statements that are forward-looking under the Private Securities Litigation Reform Act of 1995, including expectations regarding our future financial results and financial position.
In addition to statements of the company's plans, expectations or intentions regarding regulatory progress, commercialization plans and business operations. Such statements are based on current expectations and assumptions that are subject to risks and uncertainties and involve a number of risk factors that could cause actual results to differ materially from projected results.
A description of these risks is contained in our filings with the SEC, which are available on the Investor Relations section of our website, www.bluebirdbio.com.
On today's call, Andrew Obenshain, bluebird bio CEO, will provide a general corporate update, and then Tom Klima, Chief Commercial and Operating Officer, will discuss progress on the commercial launches of LYFGENIA, ZYNTEGLO and SKYSONA. And finally, Chris Krawtschuk, Chief Financial Officer, will provide a financial update before opening the call up for Q&A.
With that, I will turn it over to Andrew.
Andrew Obenshain
Thanks Courtney. And thank you, everyone, for joining our call this morning to provide an update of our fourth quarter 2023 annual results, discuss our strategic outlook and planned milestones for 2024.
Earlier this morning, we put out an 8-K announcing that we will be restating financial information for 2022 and for the first three quarters of 2023, that we've submitted an extension on our 10-K filing we now anticipate filing the 10-K inclusive of that restatement no later than April 16. Importantly, the restatement does not impact our cash position or revenue. Chris will discuss this in greater detail later in the call.
2023 was a year of significant progress for bluebird. We established ourselves as a commercial gene therapy leader with a validated commercial strategy that brought both ZYNTEGLO and SKYSONA to patients across the US.
Our recent commercial progress for LYFGENIA builds on that foundation, with the only -- with the FDA approval of LYFGENIA for sickle cell disease last December, bluebird is currently the only commercial gene therapy company with three FDA approved products.
Since then, our commercial team has hit the ground running to position ourselves for a strong LYFGENIA launch. We have talked before about the benefits of our significant commercial head start with [tagline with syntego] and today we are seeing the fruits of that labor translate into real momentum for LYFGENIA.
We have activated 62 qualified treatment centers and assigned our first outcome space agreement for Medicaid, extending access to LYFGENIA to this critical patient population. In 2024 is off to a fast start with nine patient starts already this year. Tom will dive deeper into our commercial progress momentarily.
Last week, we also announced that we encountered -- we entered into a five year term loan with Hercules Capital for up to $175 million. This transaction provided bluebird with an infusion of capital, there's expect to extend our cash runway beyond the next 24-months.
Last August on our Q2 earnings call, we said at a five year vision for bluebird as a stand-alone commercial gene therapy company, we outlined our near-term path to profitability and our expected additional growth and scale in the next five years. This funding forward that vision to capitalize on the multibillion-dollar opportunity in front of us in the US.
I will now hand the call over to Tom to highlight the significant progress happening in our commercial launches.
Tom Klima
Thanks, Andrew, and good morning everyone. As Andrew noted, 2023 was a pivotal year for bluebird, which we built our commercial foundation was ZYNTEGLO in beta-thalassemia and SKYSONA for cerebral adrenoleukodystrophy.
Today, we're capitalizing on the head start to accelerate the launch of LYFEGNIA for sickle cell disease. As a reminder, our launches are focused on three core elements for success. First, establishing a robust network of qualified treatment centers or QTCs. These are transplant centers with significant experience in cell and gene therapy. As Andrew mentioned today, we have 62 activated QTCs unparalleled compared to others in the field.
Second, ensuring the value of our therapies are recognized in the patients have timely equitable access. In a moment, I'll dive deeper into our progress on access and reimbursement. And lastly, optimizing the patient and provider experience, gene therapy is a high-touch business where transparency, collaboration and understand the needs of patients, families and providers is paramount.
Our deep understanding of the gene therapy process. Our dedicated focus and our experience over the last 18-months allow us to be a strong partner to our activated QTCs as we help them bring life-changing therapies for their patients.
Three months into the LYFEGNIA launch, patient demand is strong. I'm very excited to share today that we expect our first patient start will be scheduled imminently, and we are extremely encouraged by the number of enrollments and patients preparing for treatment for multiple treatment centers across our QTC network. We anticipate starts for LYFEGNIA to grow quarter over quarter with the majority occurring in the second half of the year as momentum builds, we anticipate that the first revenues for LYFEGNIA will be reported in Q3.
Moving to ZYNTEGLO, we continue to see strong linear growth with seven patient starts since the beginning of 2024. In addition, to the 20 patient starts completed ZYNTEGLO 2023. Additionally, we've completed 2 patient starts for SKYSONA since the beginning of 2024. In addition to the 6 patient starts completed for SKYSONA last year.
And as a reminder, patient starts, which is when cell collection occurs, remains the key commercial metric to watch in the early stages of our launches as this is the value-creating moment for the company with revenue being recognized when the patient has a few -- infused. For modeling purposes, you can expect that patients are infused one to two quarters following cell collection. And in our experience, once a patient goes through the cell collection, they continue on treatment journey. To date, every patient who has started the process has either completed the process or remains in the process.
Going forward we plan to provide quarterly updates on patient starts for each of our therapies as we work towards the 85 to 105 patient starts we guided to in 2024.
Turning to access and reimbursement, gene therapies are one time transformative treatments and bring tremendous value to the healthcare system into patients for years, bluebird has led the way in articulating the value of gene therapies to payers and charting paths to access for patients.
We continue to see timely access was ZYNTEGLO and SKYSONA was zero ultimate denials for either therapy across both Medicaid and commercial payers. Payers are recognizing the value of these therapies and the high burden of disease.
And today we're seeing the same early success with LYFEGNIA, where our goal is timely, equitable access for patients and our approach is working we have designed outcomes-based agreements there you need to LYFEGNIA offering payers, meaningful risk sharing tied to VOE related hospitalizations with patients typically followed for three years.
In addition to a commercial offering, we've designed an offering specifically for Medicaid that addresses the need for predictability and operational ease that is essential for states grappling with resource constraints. Earlier this month, we announced that bluebird signed its first outcomes-based agreement for LYFEGNIA with Michigan's Medicaid program demonstrated support from government payers for these types of innovative arrangements.
We've also signed a total of four commercial outcomes-based agreements for LYFEGNIA covering more than 200 million lives. In three short months, we've already seen close to 90% of coverage policies covered LYFEGNIA at parity, including policies from major national insurers such as Aetna, Anthem, and Cigna.
We continue to be focused on access for Medicaid patients in 2024 and discussions are ongoing with more than 15 Medicaid agencies, representing 80% of individuals sickle cell disease in the US. We are also actively engaged with CMMI on its cell and gene therapy access demonstration that is slated to begin in 2025, which could serve as a bandwidth extender for states who do not have the ability to implement outcomes-based agreements on their own.
Moving to our QTC network, one of the most significant advantages of our commercial head start has been our ability to build our synergistic QTC network, we now have 62 activated centers, the largest network of qualified treatment centers for hemoglobinopathies, 49 of which are already ready to receive refers for LYFGENIA today.
This means that approximately 95% of people living with sickle cell disease are within 200 miles or less of a bluebird QTC. We anticipate additional QTC expansion across our portfolio in 2024. We also recently signed agreements with QTCs and geographies with important proximity to sickle cell patients, where we are meeting patients where they are in Georgia, across Florida and throughout the New York metropolitan area.
Additionally, five centers have also been activated to administer SKYSONA for patients with CALD. We were able to quickly activate our LYFGENIA QTC due to both learned experience of setting up these centers for ZYNTEGLO and the strong relationships we have built with these centers throughout 2023.
From onboarding through infusion, our QTCs are comfortable with our process and have grown to expect the transparency and the partnership that bluebird brings to the table. To recap, ZYNTEGLO and SKYSONA launches continue to progress as planned, and we anticipate strong linear growth from -- ZYNTEGLO in 2024.
We've made incredible early progress in our LYFEGNIA launch building at our validated commercial [platform] we are seeing clear demand from patients and physicians, payers are recognizing the value of LYFEGNIA and providing access and our QTC network is fully ready to help patients start their journey with the curative therapy.
And now I'd like to turn the call over to Chris.
Chris Krawtschuk
Thanks, Tom and good morning, everyone. Before discussing the details of the restatement and the filing extension we announced this morning, I want to highlight the financial results, we reported in our press release.
In the fourth quarter, we reported $7.8 million in total revenue, primarily driven from product revenue from ZYNTEGLO and SKYSONA. As a reminder, we recognize revenue upon infusion of the drug product. Additional drug product for several patients were delivered at the end of December and infused in January.
So this revenue we recognized in the first quarter of 2024. For the full year 2023, we reported $29.5 million in net revenue was $16.7 million of revenue attributable to ZYNTEGLO and $12.4 million of revenue attributable to SKYSONA. With cumulative gross-to-net discounts across the portfolio of two products of approximately 19%, in 2024, we anticipate gross-to-net discounts in the range of 20% to 25%, with fluctuations based on product and payer mix as well as utilization of our outcomes-based agreements.
Going forward bluebird plans to provide revenue by product on a quarterly basis and as Tom shared earlier, we expect the first LYFEGNIA patient infusion and revenue recognition in the third quarter of 2024. We ended the year with cash and cash equivalents, marketable securities, and restricted cash of approximately $275 million, which includes $53 million of restricted cash.
We're very pleased to announce that we entered into the five year term loan with Hercules Capital for $175 million. This financing provides an infusion of non-dilutive capital for bluebird, helping fuel the launch of LYFEGNIA and deliver on our mission as a company. The loan provides for up to $175 million in the aggregate and it's available in four tranches. The first tranche in the amount of $75 million was drawn on closing.
We may draw additional two tranches over the next 18-months in aggregate of an amount up to $50 million and this is subject to the achievement of commercial milestones tied to LYFEGNIA patient starts and gross profit.
The fourth tranche of up to $50 million may be available at the sole discretion of Hercules. Importantly, and to reiterate Andrew's comments, based on our launch estimates in our current business plans and assuming the first three launches are executed. The transaction is expected to extend our cash runway beyond the next 24-months and puts us in a durable capital position as we approach profitability.
Lastly, this morning, we announced we restate financial information for the full year of 2022, and for the first three quarters of both 2022 and 2023. The restatement relates to the application of our accounting policies for contracts with our contract manufacturing organizations and suppliers, which did not consistently combined lease and non-lease components and was discovered by our internal finance team during the preparation of our annual financial statements.
For 2022, we estimate the understatement of lease assets and lease liabilities of approximately $100 million to $200 million for the full year as well as an estimated understatement of lease assets and liabilities of approximately $30 million to $125 million for the first three quarters of 2022 and 2023.
While still working through the exact details, the lease will be reclassified as finance leases as a result, and we anticipate the increase of non-cash interest expense on our P&L. The restatement is not expected to have any impact on our cash position or revenue, in consideration of the time, we will take to complete the restatement, we have filed for an extension of our 10-K, and we anticipate that our 2023 10-K, inclusive of the restated periods will be filed April 16.
And with that, let me turn it back over to Andrew.
Andrew Obenshain
Thank you, Chris. And to summarize bluebird is deploying a validated commercial gene therapy strategy with three FDA approved therapies taking place in 2024, and delivering on our promise to patients and their families. We expect 2024 to be a transformative year for our company and we look forward to providing more updates in upcoming quarters as our commercial launch of our LYFEGNIA progresses.
And with that, I'd like to open it up for questions. Operator?
Question and Answer Session
Operator
(Operator Instructions) Jason Gerberry, Bank of America.
Jason Gerberry
Hey, guys thanks for taking my question. I was wondering maybe if you can just speak to in the fourth quarter, the quarterly step-down in revenue and what you're seeing there to what extent that maybe speaks to sort of the conversion dynamics of the starts to an actual revenue recognition event? And then can you comment at all just as a follow-up, just directionally the flow of new starts first half versus second half in your outlook for the full year? Thanks.
Andrew Obenshain
Yeah, good morning, Jason, thanks for the questions.
I might actually, Tom just talk a little bit about the patient dynamics and how they're coming in and the flow both for the fourth quarter was and ZYNTEGLO and then for the first and the second half of this year with LYFGENIA go ahead Tom?
Tom Klima
Yeah, good morning, Jason, thanks for the question. So we saw strong demand in building demand over the course of the year last year for both for ZYNTEGLO and then as we expected, we started 6 patients for SKYSONA.
With ZYNTEGLO, we actually collected a number of patients at the end of the year, that elected to be treated after the start of the new year. So although the collections were on track in Q4, many of those patients went on to be infused in Q1.
So that was the reason you saw a little bit of a dip in Q4, but we remain very positive on patient demand for us in ZYNTEGLO. We also are seeing just very strong demand force for LYFGENIA. We expect the linear build over the course of this year with the vast majority of the LYFGENIA starts happening in the second half of the year.
Andrew Obenshain
And Jason, just to reiterate, we said on [earlier too], we had some drug products that were delivered to the QTCs in Q4. But actually, we're not using those infusions will happen in Q1 and we recognize there and I would also say the quarter to date where we've had our best strongest quarter to date on starts nine total.
Jason Gerberry
Got it thanks.
Operator
(Operator Instructions) Danielle Brill, Raymond James.
Danielle Brill
Hey, guys, good morning thanks so much for the question. I guess as a follow-up to Jason, do you still have LYFEGNIA to make up over 50% of the total volume this year. And then I know you said that the first patient start imminent, but I believe in the past you communicated that multiple patients would start in 1Q? Just curious with -- getting those patients started? Thank you.
Andrew Obenshain
I'd ask Tom to answer that Tom?
Tom Klima
Yeah, so again, we're excited about the momentum in the demand we're seeing with LYFEGNIA, we do expect roughly half or more of the volume to come from LYFEGNIA, obviously, it's a much larger patient population and we should see a lot of the starts, starting to pick up in the second half of the year as we build momentum.
We did say that we would have a patient started in Q1, we believe that we'll have our first patient started very soon imminently. We've seen, again, very strong demand and what we see so far as a number of patients who have enrolled in the process and who are going through the process of getting ready for treatment across a number of different QTCs.
And keep in mind that if you look at just refer you to the package insert for LYFEGNIA. It takes about two months on average for patients to be medically ready as they have to wash out there hydroxyurea or disease modifying therapy, they might be on for at least two months. They have to also go through two rounds of transfusions one month each. So it just takes patients a little longer to get ready for therapy.
Danielle Brill
Got it thanks so much.
Operator
(Operator Instructions) Jack Allen, Baird.
Jack Allen
Thanks for taking the question. I wanted to ask about your manufacturing capacity and how you think about [potential] influx patients in the quarters and potentially second half as well.
Can you provide some color, it relates to what capacity you have and how could you meet demand as it comes in different kind of waves as we think about the second half being really the build here as it relate to LYFEGNIA?
Andrew Obenshain
And so and good morning, Jack. I'll take that one. So the first of all, I think important to understand is that the supply change for ZYNTEGLO, SKYSONA one supply chain and as a side supply chain LYFEGNIA. So the two don't impede upon each other. And the way we've designed it and obviously that we've designed our capacity for LYFEGNIA to be larger than our capacity for ZYNTEGLO, SKYSONA anticipation of a larger demand there.
And we do on both sides, both a factor and the drug product. We do anticipate that we have the volume or the capacity to meet the initial launch expectations. Our and what we also have in place is plans to expand that capacity as we see demand coming in. So we do anticipate that we do have capacity for this year and the launch phase of all our products.
Jack Allen
Well, thanks.
Operator
(Operator Instructions) Gena Wang, Barclays.
Gena Wang
Thank you for taking my questions. I wanted to know that now you have a little bit early real-world experience, what is your expected from start to finish for LYFEGNIA?
Andrew Obenshain
Good morning, Gena Tom go ahead.
Tom Klima
Yeah, good morning, Gena. So we what we're saying is that obviously from so collection to infusion is a one to two quarters. The biggest part of that time is just the manufacturing time and range in the package insert is between 70 and 105 days plus two weeks. So that's the vast majority of time and then we obviously ship it back to QTC and then it's up to the QTC, when they infuse it. So we're saying for modeling purposes one to two quarters.
Gena Wang
Thank you.
Operator
(Operator Instructions) Eric Joseph, JP Morgan.
Eric Joseph
Hi, good morning thanks for taking the question. I guess just if we're looking back at 2023, can you just -- provide a little more color on how many of the 24, I think total sell collections contributed to revenue generation and whether there, yeah, explicitly how many patients actually contributed to revenue recognition? And then how average time to treatment between collection and treatment has trended? What avenues do anticipate there being to sort of improve conversion rates going forward? Thanks.
Andrew Obenshain
So Eric, good morning. So it's 26 collections in 2023. Every single patient that has gone through the process is still in the process of either been infused or had the drug product delivered or where the product is in process all still in the process.
And we haven't actually given numbers of confusions, so I'm not going directly, but we have said, we have we infuse a number in 2023. We have some products that we've delivered in Q4 but not refuse you'll see that revenue in Q1 and I guess that those patients will be infused early this year.
In general, you'll see that the time from collection to infusion is one to two quarters there will be some outliers there just as a hospital's chooses, refuse late or something else happened. But in general, it's one to two quarters as we get more collections and as we get more data, we'll be able to narrow that number down for you and give you kind of a more precise number. But still we're still dealing with relatively small numbers.
Eric Joseph
Okay -- to remain in process, I guess is there a -- I guess, a bracket timeframe? I guess how long can a patient kind of be in process as it is or ultimately have a 9, 12-month window.
Andrew Obenshain
So there's really no end date for that being the process except to the expiration of the drug product is just about a year, right once you manufactured it that the drug product will expire after a year a little bit longer. So that would be the in process. We don't anticipate we're going that far.
But again, remember this is an election that the patient mix to get treated. So very often, they will schedule that around life events, et cetera, that's why it's somewhat unpredictable once we deliver the product back to the hospital when they will get them to use.
Eric Joseph
Okay thanks for taking the question.
Operator
(Operator Instructions) Mani Foroohar, Leerink Partners.
Mani Foroohar
Thanks, guys. On a pivot a little bit into thinking about broader market dynamics. You've obviously talked about finding patient demand volume demand out there for LYFEGNIA, you said that's going to be perhaps half or more of the 85 or 105 patients.
Can you give us a little bit of sense of how deep that backlog is, how much clarity you have into it. I know you can't give us a numerical guidance number of patients currently, but can you give us some can you put some color around exactly what that backlog of identify of any potential of LYFEGNIA patients looks like? And I guess the separate follow-up, can you give us a sense of exactly what demand metrics and other data was available to Hercules as part of your engagement with them prior to their transaction with them? Just trying to extend their due diligence process as well?
Andrew Obenshain
Yeah. So I shall pass it to Thomas to talk about the backlog or the interest in LYFEGNIA and Chris, I'll talk about just what we provided Hercules, go ahead, Tom.
Tom Klima
Yeah, good morning Mani, keep in mind that if you look back a year, people were asking questions around, could we get to our goal of 40 to 50 QTCs, which was a factor in making sure that patients had access to therapy.
People are also asking questions around reimbursement and then lastly, people were asking about patient demand. And now we have 62 qualified treatment centers up and running. We've seen reimbursement happen we have positive coverage policy so far, we LYFEGNIA so that box has been checked and now you're looking at patient demand and we've seen historically in market research that over 70% of patients who have more severe sickle cell disease have said they would seek a gene therapy if recommended by their physician.
And now we're seeing that play out in real life. We have multiple enrollments already just in the few months after approval across multiple QTCs, we wouldn't expect a huge bolus because patients, as Andrew mentioned, can treat get treated for their schedules that also I think QTCs are going to want to treat a handful of patients first before they go through their list of patients.
But anecdotally, we've heard of long wait lists at QTCs of patients who have sickle cell disease that are looking to be treated. So we're again, I can't overemphasize how excited we are about the early demand that we're seeing.
Andrew Obenshain
Chris could you comment on (inaudible) provided Hercules?
Chris Krawtschuk
Thanks to the question. With respect to what Hercules receive. So Hercules receive customary information as it relates to projections, not just 2024, but beyond that and the confidence that having a third party come in and scrutinize our projection should provide confidence to the marketplace on the achievability of those considering they entered into the arrangement for the $175 million finance.
What I would say though, is that the patient start guidance that you saw there for LYFEGNIA should not be viewed as consensus, right? That's viewed as progress. So that milestone associated with that not consensus. We provided our guidance, which is the 85 to 105 starts.
Mani Foroohar
Okay that's helpful, guys. Thanks guys.
Operator
(Operator Instructions) Jeff Hung, Morgan Stanley.
Jeff Hung
Thanks for taking my questions, for LYFEGNIA with 49 QTCs already receiving referrals, what proportion of these sites might have their first patient cell collections in the first half of the year. What are the gating factors that might result in different timelines, particularly for the 35 sites that were online at the beginning of year? And then I have a follow-up.
Andrew Obenshain
Go ahead Tom.
Tom Klima
Yeah, sure we haven't really given specific guidance for QTC, but needless to say, a lot of QTCs were coming on board late last year in anticipation for LYFEGNIA launch and approval. So we would expect most of our QTC seems to be pretty excited about getting patients started on with LYFEGNIA.
In most cases, they are waiting for patients to come in for their regular appointments. And in some cases, they know if they have a waiting list, stay for a patient that wanted to drive a gene therapy through a clinical trial, then those patients might go faster. So we have really the dynamic will play out, but we're excited about the early enrollments that we've seen and across multiple QTCs not one or two QTCs, and we're excited about the excitement for gene therapy.
Jeff Hung
Okay, thanks. And then for the third tranche of the term loan facility, but what would you need to see in patient starts by the end of the year? To be on track to reach the $30 million gross profit milestone by the end of the first half of '25, thanks.
Andrew Obenshain
Go ahead, Chris.
Chris Krawtschuk
So -- we haven't commented on that, we commented on was the exact metric associated with that, but we're not going to comment on the patient start number. Remember, our patient start guidance that we provided in the second tranche was the $35 million by September, the $55 million by the end of the year for LYFEGNIA. And then there's a gross profit metric also. And then the third tranche, but we're not going to provide that level of detail associated with the number of equivalent patient starts to get to the gross profit.
Andrew Obenshain
Sorry, Jeff you were asking about the first tranche, you said a third tranche of thinking that the second?
Tom Klima
Yeah, I was talking about the third tranche, yeah.
Andrew Obenshain
So the first tranche of $50 million second tranche is $25 million, which is that it's keyed off of either the that $35 million of the $55 million us starts by the end of the year. And then there's a third tranche, $25 million that is that is keyed off a different metric, really just dropping the gross profit.
Chris Krawtschuk
Just to be clear, the first tranche was the $75 million. The second tranche is the $25 million and $25 million is attributable to LYFEGNIA patient starts as I said $35 million by September, $55 million by December 31. And then the third tranche is associated with gross profit.
Jeff Hung
Right.
Chris Krawtschuk
And then of course, as (inaudible), the fourth tranches that $50 million, that's at the discretion of Hercules?
Jeff Hung
Yes, thank you.
Yeah, you said that you wouldn't comment on the number of patient starts for the $30 million gross profit?
Yeah okay thank you.
Chris Krawtschuk
That's correct, that's correct.
Operator
(Operator Instructions) Salveen Richter, Goldman Sachs.
Salveen Richter
Good morning thanks for taking my question. I'm just in line with the trajectory that you're seeing right now and the understanding of -- the various onboarding dynamics, reimbursement dynamics? How are you thinking about the peak opportunity here for the drug? And just maybe an update on ex-US commercialization. Thank you.
Andrew Obenshain
Yeah, so Salveen you got I was a little hard to hear, but I think you asked what the peak opportunity is for the drug?
Courtney O' Leary
Yes and ex-US commercialization outlook.
Andrew Obenshain
Actually okay got it so muted. So if we do see is a multi-billion dollar opportunity at peak in the US alone ex-US, we do think there's a very attractive opportunity there as well. There's a right now we as a company are focused exclusively on the US. If we go ex-US, we most certainly do that with a partner. We are watching very closely to the reimbursement dynamics of gene therapy in Europe as well, such that's kind of it key dynamic they'll determine the opportunity there.
Salveen Richter
Thank you.
Operator
(Operator Instructions) Sami Corwin, William Blair.
Sami Corwin
Hi there thanks for taking my questions. I was curious if you could speak a little more as to the cost of good near gross margins and how you expect them to change as your launches across the portfolio continue? And then can you provide any granularity in terms of your assumptions for the LYFEGNIA launch this year and the percentage of patients you expect to be covered for -- covered by Medicaid versus private insurers?
Andrew Obenshain
Yeah, Sami good morning, so let me have Thomas assist the second part first, and then I'll go to Chris Thomas, that percentage on LYFEGNIA on Medicaid.
Tom Klima
Just to give you the stats again, about 50% of patients or people living with sickle cell disease are covered by Medicaid, about 45% are covered by commercial insurance and then a small portion of Medicare. It's hard to predict too early patients will be, but we would expect over time that the payer mix will play out like we've seen historically.
Andrew Obenshain
Chris?
Chris Krawtschuk
I am just covering on the cost of sales and maybe I'll answer it a slightly different way, which I think is what you're intending is gross margin. So the gross margin for the company will improve as we scale. And we've said that we would get to a 70% gross margin. And as we scale the company not only with filling the capacity with infusions and then continuing to kind of scale the capacity in a gated fashion over time as needed. And the gross margin will continue to improve to achieve that 70% that we discussed.
Sami Corwin
Great thanks.
Operator
(Operator Instructions) Yanan Zhu, Wells Fargo.
Yanan Zhu
Hi thanks for taking our questions. So just curious, when you say multiple patient enrolled for LYFEGNIA does enrollment imply approval of inference and the time from enrollment to cell collection is the main gating factor those washout period and also the -- pre transfusions, if not, what might be the gating factor you see. Also as a quick follow-up if you can talk about the 19% gross-to-net to date, is that different significantly between than ZYNTEGLO and SKYSONA?
And any expectation for the gross to net for LYFEGNIA to be very different from that 19% number? Thanks.
Andrew Obenshain
Thanks for the questions Tom, why don't you address the enrollments and then we'll have Chris address that gross-to-net question.
Tom Klima
Yeah again, we're very excited about the multiple enrollments across multiple QTCs, I think is an indicator of strong demand. The road to yes, as we call it is multifaceted in the two big components there are, obviously, as you mentioned, making sure that they're covered by their insurance and that's taking approximately what it was ZYNTEGLO we're saying on average about two.
And then second part of being ready is being medically ready and this is a little bit different with LYFEGNI than it was for ZYNTEGLO with LYFEGNI there's a washout period of their other medications. For example, hydroxyurea has to be discontinued for at least two months before they start therapy, and they're also supposed to go for transfusions at least two transfusions one month apart.
So once they're enrolled and once they're going through the process, if they're not already doing transfusions, if they're already doing transfusions and they're not on one of the medications that needs to be discontinuing that can go a lot faster.
So I'm a little hesitant to give you an average right now because it's just going to depend on the patients and we provided enrollments today. Enrollments is an early indicator of patient demand. The thing to watch going forward is number of patient starts that continues to be the value creating moment for the company.
Andrew Obenshain
And Chris, want to comment on.
Chris Krawtschuk
So the 19% that we discussed between the combined two products just characteristically the difference between ZYNTEGLO and SKYSONA. ZYNTEGLO has an outcomes-based agreements, SKYSONA does not. And then what to expect on a go forward basis as LYFEGNIA comes into the fray is a higher increase Medicaid population associated with LYFEGNIA. And that's where you saw that we provided guidance to 20% to 25% associated with the combined gross to net population of all three products.
Yanan Zhu
Got it thanks.
Operator
(Operator Instructions) Luca Issi, RBC Capital Markets.
Hi, this is Reena for Luca Issi. Thanks for taking my question. I just wanted to ask during the last approval call after not receiving the PRV you mentioned that you're engaged in discussion with the agency and attempt to achieve a potentially positive outcome, like ultimately meaning receiving a PRV, just wondering if there was any update on that?
Andrew Obenshain
Yeah thanks for the question, we have submitted a request for reconsideration and we have discussions with the agency we're not going to elaborate on ongoing discussion with the agency now, but we believe we have a clear and compelling rationale for why LYFEGNIA, to be a word of PRV will provide an update when we conclude our discussions.
Thanks for taking my questions.
Operator
Thank you and this will now conclude today's question and answer session. I'll now turn the call back over to Andrew Obenshain, for closing remarks.
Andrew Obenshain
Great thank you, everyone for joining our call this morning and for your questions. Our management team is available for a follow-up call today and please reach out to Courtney, if you would like to connect thank you very much.
Operator
This concludes today's conference call and thank you for your participation you may now disconnect everyone, have a wonderful day.
