BioCryst Pharmaceuticals, Inc. (BCRX) Earnings Call Transcript & Summary

Great. Good afternoon, everyone. My name is Jess Fye. I'm one of the biotech analysts at JPMorgan, and we're continuing the 2020 Healthcare Conference today with BioCryst. We're going to do a Q&A session with the management team right after this. It's just down the hall in the Yorkshire Room, so you can follow me over there if you want to hear more. But for the presentation, I'm going to turn it over to the company's CEO, Jon Stonehouse.

Thank you, Jess. Thanks for the invite to this year's J.P. Morgan Healthcare Conference, and good afternoon. I'm going to be making some forward-looking statements. Those statements have risks and our risk factors can be found on our website listed on the bottom of Slide 2. So what makes us different at BioCryst is bringing forward oral drugs for patients with rare disease. When I -- when we first started talking about this, I thought of it as some incremental improvement when we're competing against drugs that are given subcutaneously every 2 weeks, every month, every other month. But when we started to talk to patients, we found out that it was much more than that. Every time they inject themselves, every time they see their medicine in the refrigerator, they're reminded that they're sick. And the idea of taking a pill or capsule once or twice a day like their daily vitamin was mind-blowing to them. They had a shot at a normal life and not being reminded constantly that they're sick. It takes a discovery team that's able to go after some really challenging targets, serine proteases, kinases but we've got an extraordinary team down in Birmingham, Alabama, and we are well on our way to delivering our first oral drug for patients with a rare disease called hereditary angioedema. So on Sunday, as we were getting ready for our journey from Raleigh-Durham, North Carolina here to San Francisco, I'm sitting at the airport with our Chief Medical Officer, Bill Sheridan. And he leans over to me and he goes, "This is going to be a great year." And he's kind of looking at me. I guess he was waiting for a response and I didn't respond. He goes, "No, really, this is going to be a great year." And if you know Bill, he's not the kind of guy that makes projections and proclamations. He's a pretty conservative person by nature, by training. But he's right, it's going to be a great year. And here's why. Our priorities are about getting our drugs approved. So we filed the U.S. application in December and we expect the approval this year. We're going to file the Japanese application in the first quarter. We expect approval this year. We're going to file the European application in the first quarter. We expect approval in early next year. And our team is gearing up for launching this drug. You may have seen the press release this morning. We announced that Charlie Gayer, who has been with us as the Interim Chief Commercial Officer, has accepted the role of our permanent Chief Commercial Officer, and he's well on his way to building the commercial team, both in the United States and in Europe, and so a really important part of our priorities in 2020. In addition, we've got a pipeline. We've got an oral Factor D inhibitor. And we are completing a 3-part Phase I study where Part III is proof of concept. And we're going to study it in PNH patients, but it's more than just proof-of-concept in PNH. If an oral Factor D inhibitor knocks down the complement system, all complement-mediated diseases are on the table for us. And so we have a shot at having proof of concept for a platform in the first half of this year, and that's another critical priority for us. And then last but not least, we're continuing to move forward our ALK-2 inhibitor for an important disease called FOP through Phase I, and we're continuing to do discovery work to add to our pipeline. All of this was set up by the hard work of BioCryst employees in 2019, filing, getting filings ready and securing capital to be able to fund the priorities. So let me start with our 1 pill once a day kallikrein inhibitor for hereditary angioedema. We now refer to it as Berotralstat or it used to be called 7353, and I think it's important to share the latest data that we have with this drug. So a reminder to those that are familiar with the story. APeX-2 is our pivotal study. There was a readout. It was a placebo-controlled trial. There was a readout at 6 months and then we continued on for another 6 months, and we have now a readout for basically 48 weeks. And then the second study is an open-label study we refer to as APeX-S. It's a 48-week open-label study, and we had the 48-week readout and I will share that data with you as well. The reason we have 2 studies is that the regulatory agencies are requiring that we have 100 patients' worth of data over a year for a chronic dose drug. And so we have that in our file and the filings that we'll do later this quarter. So this is a really important slide. This is the rapid and sustained HAE attack rate reduction. What you see on the left-hand side is the 150-milligram dose. And you see the attack rate at baseline, and then you see the attack rate at each month. And what you see is it goes from 3 attacks per month down to 1 attack per month, and it stays at that rate over the course of the 48 weeks and that's really important. That's a 2/3 reduction in attack frequency. That's fantastic for an oral once-a-day drug. And what we hear from patients is that they're doing very well. Occasionally, they'll have a breakthrough attack. Sometimes, they have to treat it with rescue medicine, sometimes they don't. And in general, they are shorter in duration. What's also important is the graph on the right, this looks at placebo in that same trial, patients on placebo. And what you see is attacks go from a little less than 3 attacks per month down to about 1.5 attacks per month. In our Phase II, that line was flat. There was no placebo benefit in our Phase II study, and thus, the difference in the result when comparing to placebo between the Phase II and the Phase III. You may ask, well, why is there a placebo effect? Well, in the Phase II, all they saw in the informed consent was PK/PD data and preclinical data. What they saw in Phase III is a 70% reduction, and stress is an important trigger for HAE attacks. So they take a capsule, they believe it's going to give them a 70% reduction in attacks. I'm stress-free, and lo and behold, they're not having attacks. You see that attack rate start to creep up as you get closer to month 6, and then we offer patients the opportunity to switch over to active therapy. And you see a really nice drop from around 2 attacks per month at month 6, down to 0.5 attack per month when they're switched over to the 150-milligram dose. So again, really compelling data that patients are doing very well on our drug. Then we have the open-label safety study I referred to, APeX-S. There's no run-in period, this is an open-label study but we do measure attacks on a month-by-month basis. And what you can see is that is very consistent with the APeX-2 data where patients are at around 1 attack per month over 12 months. And then lastly, we looked at median attack rates, both in APeX-2 and APeX-S. And what you can see is there are a number of months in both -- in particular in APeX-S, where 50% or more of the patients aren't having an attack in a given month. So again, more evidence that people are doing very well on our drug. So our conclusion, and I'll show the safety data as well, no new news in the 48-week safety table, so no new issues in terms of safety, tolerability, and people are doing very well on our drug. And so we believe this data supports that if we can get people on the drug, they're going to stay on the drug because they see a real benefit. So we spent the summer trying to get to the truth of what do patients and physicians think about our data and think about our drug. So we spent time, first off, understanding the population, how big is the HAE population in the United States. There have been epidemiology studies in small Nordic countries and other countries in Europe that we've taken the prevalence from those and applied it to the U.S. population. But it was time for us to get the real answer on how many patients are there in the U.S., and so I'll go through that in a minute. We also did market research with 100 HAE patients and 175 HAE-treating physicians who had, on average, 7 to 8 HAE patients. That's 10% of the overall U.S. population, so these are robust sample sizes in terms of market research. And then lastly, we started some initial payer research to get a sense of where we need to be to get reimbursement around pricing. So in terms of the market size, what we did is we took claims data. We took Symphony data, ICD-9 and 10 codes. Sometimes, they aren't as accurate as you'd like them to be so we triangulated it with diagnosis of HAE. And we also looked at recurring prescribing of HAE medicine over a 6-month period. And what we came up with -- and so this is very accurate data, what we came up with is there are 7,500 diagnosed and treated HAE patients in the U.S. That's a big, big population. Remember that number when I come to the preference share. So the way we conducted the surveys with the patients in this chart that says strong HAE patient demand for BCX7353 is we used the Likert scale, it's an 11-point scale, 0 to 10. And the reason we use it is that 8, 9 and 10 in the scale are very indicative in surveys of action. And so we asked patients their willingness to use BCX7353 after we showed them the profile from the 6-month readout, not the data I just showed you. And what you see is that on the 8, 9, 10, very likely or very willing, 59% of patients said they were very willing. And if their physician recommends it, 71%, say they're very willing. That's a very large preference towards 7353. What's even more interesting is when you look at them by what they're on currently. When you look at the 100 patients, almost 80% of them are on existing prophylactic injectable therapy: Cinryze, Haegarda and Takhzyro. And when we asked that same question, you see that 63% of the Cinryze, 60% of the Haegarda and 47% of the Takhzyro patients are very willing to use our drug. That's extremely high preference and a strong signal of willingness to switch. But what's even more interesting is these patients are very satisfied, and I'd point you to the Takhzyro numbers. So we also asked them, how satisfied are you on your current therapy? And you see in the light-shaded bar of Takhzyro, 27 out of 30 are very satisfied, 8, 9, 10. And then we asked them the same question, are you willing to try BCX7353? Half of them say yes and that surprised us. And so we dug deeper into the data and one of the survey questions that we asked them is, in the last 3 months -- and this is survey data, not clinical data, the last 3 months, how many attacks did you have? So this is real-world data. And with Takhzyro, they say that they had, in the last 3 months, 1.8 attacks on average. That's about 0.5 attack per month. So when you're comparing the 2 treatments, one's an injectable, one's a once a day oral, one has 0.5 attack per month, one has one attack per month. It's pretty similar. And so now we start to understand the benefits of our drug and oral and having that shot at taking a once a day capsule and forgetting you're sick. When we talk to physicians -- and this is a slide for those of you on the webcast, physicians expect to prescribe BCX7353 with 2 columns of data, 2 bars. And you see on the left, we asked -- remember, I said 175 physicians, they have between 7 and 8 patients each on average. And so they know with each patient what they're on. So we asked them to allocate each patient to a therapy, and you see the breakdown currently on the left. And one surprise to us is that the prophylactic market is bigger than we thought. We thought it was around 50%, it's actually closer to 60% straight up and then another 10% added on top of that. And so you're getting closer to 70%. And then we showed them the profile of 7353, and we asked them to allocate again and you see 41% allocated and you see a much higher percentage of prophylaxis in the future. And so physicians always get show a preference greater than they really do. And so we have a model that adjusts that preference rate, but you could cut that in half and still have a 20% preference and you apply that to the 7,500 HAE patients, and you've got a lot of patients in a good chunk of the market. And then last, in terms of figuring out the value here is pricing. So we went to payers, big insurance companies that cover 80 million lives in the United States and PBMs that cover 110 million lives. And what we heard back from them is, "Yes, we get it. A once a day oral, when you have all injectables in the prophylactic market, is something that will be really attractive to patients. But these are expensive drugs. Don't charge a premium to that for that benefit." And remember, this is a market where, at the high end for prophylaxis, Cinryze, Takhzyro, they're charging close to $600,000 per patient per year. On the lower end with Haegarda, it's more around $500,000 per patient per year. So if we're -- they told us if we're in that range, that we would get reimbursement and that we would be on formulary at their various plans. So all of that combined, patients are really interested in trying our drug. Physicians are really interested in putting their patients on our drug. And our clinical data says they do well when they're on our drug so they'll stay on our drug, and we're going to get a good price for our drug, leads us to conclude that we have a market opportunity of north of $500 million in peak sales globally. So it's a real drug. So from an approval perspective, I mentioned to you before that we're expecting approval in the U.S. this year. We'll get some notification of our PDUFA. We expect sometime in the month of February. We have Sakigake designation in Japan. This is important, I'll come back to that in a minute. And then we have Orphan Drug Designation in Europe, and I said that we'd be filing in the first quarter. So Sakigake designation is an effort put forth in Japan to encourage companies to launch first in Japan. And so we came up with a plan to get approval in Japan by starting to study -- a small Japanese study that's designed similarly to APeX-2 that we refer to as APeX-J where we look for trends because they're such small numbers in comparison to the drug-treated folks versus placebo. And then we integrate that data into APeX-2 and do an integrated analysis for statistical significance. Well, we just got this data, we put it out on Sunday. And we're excited to say that we actually hit statistical significance 0 -- P equals 0.003, with about a 50% reduction in attacks in 7 patients on the 150-milligram. So this is a fantastic result. We are going full speed ahead with the filing. If you look at the separation, you see very nice separation between placebo and active. You see a very similar attack rate over 6 months between this study and APeX-2. The safety profile looks similar. And so it's full speed ahead to filing in Japan. So we'll do that in the first quarter. They try to shoot for a 6-month review so this could be the very first approval in the world in Japan. And so we're excited to get that submitted and go through the review process. Japan is a different market. It's about 10 years behind Europe and the U.S. in that the diagnosis rate is lower and the treatment options are fewer. There's no other prophylactic drug approved. We'll be the first. Takhzyro's behind us. And so there's a real opportunity for our partner that we secured in November, Torii, to be able to identify patients and build market share and build the prophylaxis market. So we're very excited to have them on board. We have tremendous confidence in their ability. They're very hungry to be successful. They're thrilled with the APeX-J data and they're getting ready to be the first launch in the world for Berotralstat or BCX7353. We get an approval milestone once we get not only approval, but the pricing secured in Japan of up to $20 million, so that will be an important event as well in terms of bringing capital in the company. So that's it for HAE. Now on to our oral Factor D inhibitor for complement-mediated diseases. It's a big market. You probably talked to 5 companies this week that are working in this space, but my guess is most of them are injectable, and we have an oral twice a day drug. As I said before, it's a pipeline in 1 molecule. There are -- and if you knockdown complement diseases, rare diseases that are affected by disorders of the complement system could benefit from that inhibition of Factor D and knocking down complements. So we've designed a 3-part Phase I study. The part 1 is a single ascending dose. Part 2 is a multiple ascending dose and part 3 is proof of concept in a small number of PNH patients. The PK couldn't be any better, linear and dose proportional. And when you look at the suppression based on measuring the alternate pathway hemolysis or the Wieslab assay for the alternate pathway, you see that even with doses of just 50 milligrams twice a day and 100 milligrams twice a day, you really knock down the complement system. So this translates very nicely into clinical benefit into patients. So we gave an update on Sunday as well on this program. So we do have a tolerability issue with a drug-related rash with this drug. And we saw it in the MAD with 2 out of 10 patients in the 50-milligram dose for 7 days having this rash and 7 out of 10 in the 100 milligram. It's a benign red, maculopapular rash, looks like a penicillin rash. And so we wanted to get more information to determine if we had a path forward with this. So we decided to do a third cohort with the 50-milligram dose and dosed them for 14 days. Now these are healthy volunteers, so the protocol is very strict that if they had limited rash, they could continue on through dosing because we wanted to see if we could dose through. And we also used a vaccine instead of an antibiotic to prevent any Neisseria infection from the knockdown of complement through Factor D. And what we found out is there is still a rash. We had 7 out of 10 had the rash, but we were able -- the protocol allowed for 2 patients to be dosed through, and the rash resolved before they took the final dose on day 14. So we could dose through. That was a very important piece to this. What was equally important is 6 out of the 7 patients agreed to do a skin biopsy and we had, based on the characteristics of timing and how quickly it resolved, we thought it was a benign generic rash. And when we did the biopsies, it was confirmed through the pathology that it was a benign generic rash. So we now believe that the tolerability issue is for 4 or 5 days, you're going to have to deal with this rash. Sometimes, it's an itch, sometimes it isn't. You'll -- give you Benadryl if you have the itch, but then it's gone. It disappears. And this is a chronic therapy, lifelong treatment and so small molecules always have some sort of liability. If this is the only one we have, we think we're in great shape. And we are shooting for excellent efficacy. And so we're also prepared to go to higher doses if we need to. So full speed ahead to the PNH proof-of-concept study with a data readout in the first half of this year. The last program is our ALK-2 inhibitor. It's a kinase inhibitor for FOP. We're in Phase I. This space looked really crowded a year ago, but we decided we would continue to move forward and make a small investment in Phase I. It looks a little bit different based on some recent data from our competitors, and so we'll continue to push this forward and we expect data from the Phase I study later this year. From a financial perspective, with the addition of the $100 million we brought in, in the fourth quarter, our pro forma at the end of third is $170 million. We'll probably end the year around $140 million to $135 million and that's enough to fully invest in the launch and into the proof of concept for PNH this year. So let me end where I started. I agree with Bill. This is going to be a great year. The risk profile for our company has changed. We're now moving into filings and approvals, and we're building a world-class team to launch this drug. And patients are telling us they want it and our clinical data is saying that they want to stay on it. You couple that with a pipeline, and we're moving into the territory where very few biotech companies go, which is a marketed product of meaningful revenue and a pipeline that's even more interesting. Thanks for your attention, and we'll see you in the breakout.