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

Thank you, everyone. My name is Gena Wan, I'm SMid-cap biotech analyst at the Barclays. In this very special situation, I first wish everyone stay healthy. And I would like to thank all the participants, including investors and companies and especially our event team and corporate access team, who made this virtual health care conference possible. With that, I would like to introduce our first presenters, Jon Stonehouse, Chief Executive Officer; Bill Sheridan, Chief Medical Officer; Charlie Gayer, Chief Commercial Officer; and John Bluth, Senior VP of IR and Corporate Communications from BioCryst. There will be a slide presentation. I just wanted to mention to everyone you need to click physically to move to the next slide. With that, I hand over to Jon.

Thanks, Gena, and thanks for everyone joining this morning. Really appreciate Barclays' flexibility in being able to adjust the conference so that we're still able to present to you and have one-on-one meetings with you today, but to have the caution to not be meeting face-to-face in this global health care crisis. So thank you for that. On Slide 2, I'm going to be making some forward-looking statements. Those statements have risks. Those risk factors can be found on the website listed on the bottom of Slide 2. If you turn to Slide 3, 2020 is set up to be an exciting and transformational year for the company. And the reason for that is that we have a number of applications for approval either in or about to go in, first in the U.S. then Japan and later this month, in Europe for our lead program, an oral, once a day therapy for hereditary angioedema we refer to as Berotralstat, and so we're really excited about that. We'll focus most of the discussion in the slides on that program and why we're so excited to be getting ready for approval and launch of this drug. We'll also be talking about another really important and perhaps even more exciting program in our pipeline, and that's our oral Factor D inhibitor that's in a proof-of-concept study in PNH patients, and we expect data from that proof-of-concept study in a handful of PNH patients in the second quarter of this year. And that's exciting for a couple of reasons. One, proof-of-concept in this -- these complement-mediated diseases is relatively straightforward because there's some really strong biomarkers that give you a sense of clinical benefit in these diseases; two, it's a small number of patients that you need to get the proof-of-concept; and three, if you have proof-of-concept in PNH or one complement-mediated disease that's driven by the alternative pathway, it's likely that we have proof-of-concept for all of the diseases that are impacted by the alternative pathway. So it's a pipeline in an entire molecule and a really exciting program. So if you turn to Slide 4, this is a start of a handful of slides I'll go over fairly quickly that set up why we're so excited about Berotralstat and the main punchline in the first few slides is the drug works. It works really well. And if you look at the data on Slide 4, you see the data from subjects on the 150 milligram on the left and their attack rate and you see placebo and then switching after 6 months to active therapy, the second 6 months in the graph on the right. And basically, what you see on the left is patients start at a baseline attack rate of around 3, drop very quickly to around 1 attack per month, and stay at that level on this once-a-day oral therapy for the entire 12 months that they've been on drug. So that's a very meaningful drop and a real benefit and explains why so many patients have stayed on study, and we believe when they try this drug, will stay on the drug. The right-hand graph is really interesting because you see there's also a drop in placebo, and that's not surprising because patients had an informed consent that said that the drug had shown a 70% reduction in the Phase II study. And so stress is a trigger in HAE, and so patients may have thought that they were on active drug and therefore, were less stressed and had fewer attacks. But you see it start to creep up from months 2 through 6, and then we offer, after 6 months, for patients to switch over to active drug, and you see that they're at about 2 attacks per month at month 6, and the patients that switch over to the 150 milligram go down to about half an attack per month. So again, a really impressive reduction in attack rate and, again, more evidence to support that this drug works. If you go to Slide 5, the APeX-2 data has 30 patients. That's the green dots that you see on Slide 5. That's just a replica of what we showed you in the slide prior, but we layer on the patients that are in APeX as this is the open-label safety study and adds another 73 patients. So we have a total of 100, and you see a very similar result where patients are down around 1 attack per month. If you go to Slide 6, we look at the median attack rate, both in APeX-2 on the left and APeX-S on the right. And if you look at APeX-S, you see that in 6 out of 12 months that patients on the 150-milligram dose were attack free, 50% or more were attack free 6 out of 12 months. So again, really impressive results and demonstrates that this drug works. If you go to Slide 7. The drug is safe and generally well tolerated. The most frequent adverse events that you see compared to placebo are transient and mild GI adverse events. And then when we move to Slide 8 and a few slides beyond, we get into the market research. So I just showed you all the clinical evidence of why we believe if we get patients to try our drug, they'll stay on it because they see a meaningful benefit. So then the question is, will they try our drug? And we did -- Charlie's team did some extensive market research in both 100 HAE patients and 175 HAE treating physicians, who have, on average, 6 to 7 patients, and it makes up about 10% of the overall HAE population. And what you see, we use a Likert scale, and the ratings that really indicate a change in behavior or action are ratings of 8, 9 or 10 in that scale and what you see on Slide 8 is when we ask patients after we show them our profile of our drug, are they willing to use our drug? You see very willing 60% patients say that they're very willing, which is an extremely high score. And then if their physician recommends it, it goes up to 71%. What's even more interesting, if you turn to Slide 9, is there have been 7 new therapies in the last 10 years for patients and a number of prophylactic therapies that are more convenient but still injectable that have been introduced in the last few, and these patients are very satisfied on their current therapies, but what this Slide 9 shows you is they want more. What we ask them in the green bars is, are they looking at our profile? Are they very willing to try our drug? And you see 60% to roughly 50%, depending on whether or not they're on Cinryze, Haegarda or Takhzyro. And then we ask those that are very satisfied on that specific therapy, the same question, and you see that half of them are very willing to use our drug. And as I said before, that's because they want more. Yes, they're very satisfied, but they're reminded that they're sick. Every time they look at their medicine, their refrigerator, every time they have to get it to room temperature, have to mix it, and then stick themselves with the needle, it's a reminder that they're sick. And taking a once a day oral capsule for this disease is, from many patients that have told us this directly, it's life changing. One of the important points on Slide 10 is that none of these drugs are perfect. I showed you in our clinical data, patients have on average about an attack per month at steady state when they're on drug. Here, and this is in clinical data, but we ask patients on these various medications how many attacks have they had in the last 3 months, and you can see, all of them are having some attacks. And for example, with Takhzyro, it's about 0.5 attack per month. So none of these drugs are perfect. And so then it's a matter of, "What's best and what fits my lifestyle the best." And many patients are telling us that they want a once a day oral. If you look at what physicians say on Slide 11, we ask physicians, and I had said before that they have, I think, I said 6 to 7, it's actually 7 to 8 patients on average. And we ask them to allocate their patients to various therapies, and you see that in the current treatment allocation. What's important to see there is that the market's already at close to 60% on prophy. And then we ask them what their future allocation is, and you can see that, that goes up to 80%. So it's going to be a prophylactic -- it is a prophylactic market, it's going to continue to be a growing prophylactic market. And what's really exciting to see is after physicians saw our profile, 41% of them or 41% of their patients would be put on our drug in the future. So we know that doctors overstate this, but even if you cut it in half, it's a significant chunk of the market. So very, very exciting physician and patient data that we believe and clinical data that we believe supports -- there'll be a high desire to use and to prescribe and then -- our drug, and then a real strong benefit that will keep patients on therapy. So switching gears. I won't get into a lot of the detail on our Factor D inhibitor. I'm sure Gena has questions on some of this, and I'll let Bill go into it in more detail. But Slide 12 just lays out some of the important reasons for why Factor D is a really important target for patients with diseases of the complement system. And so we think it's a great target, and there are very few companies that have gone after that, which puts us in a unique position. And then Slide 13, we're in a proof-of-concept study. This shows you the design. And again, Bill can go over this in more detail in the Q&A. But our expectation is that we'll have treatment-naive patients, and at least a handful of those to -- by the second quarter, to have proof-of-concept with this study, and we're really excited about that and looking forward to bringing that data forward sometime next quarter. And then lastly, on Slide 14 -- or I'm sorry, one more after this. On Slide 14 is the financial guidance that we shared with you in our year-end update last week. And so we've got enough cash to get us through all of this year, which is complete funding of the launch preparation and launch readiness for Berotralstat and also to get to proof-of-concept with 9930. And then the last slide, 15, is obviously, this being a virtual conference as a result of the concern about COVID-19 and this global health care crisis, we have a drug, galidesivir, that we've been working on for quite some time and have had a relationship with both NIAID and BARDA for almost a decade. And we've got data that's published in a nature article that shows that it works in a variety of nasty RNA replicating viruses. And we also have clinical data from a Phase I study. All of this was largely supported by the U.S. government, and we continue to progress it. And we've got an open clinical trial, Phase II trial in Brazil for yellow fever. Given this health care crisis, we're absolutely in a position to do our best to help in this situation. And so we are exploring with our government partners and taking their lead, in vitro testing with our drug, galidesivir, specifically on the COVID-19 virus. We're exploring, advancing into clinical trials to test galidesivir in patients with the COVID-19 virus infection, and we're also looking at increasing drug supply. We've felt this for a long time at BioCryst that there's a strong need for broad-spectrum antivirals in government stockpiles, and I think this current outbreak is great evidence that it's important that governments get drugs like galidesivir into the stockpile. So that's all I had, Gena, for prepared remarks, and we can open it up for questions now.

Thank you, Jon. I'm pretty sure you're getting a lot of questions on galidesivir. Just wondering if you can give us a high-level comparison or compare and contract of the drug profile of galidesivir versus remdesivir.

Yes. It's really difficult. I mean, there's a similar mechanism of action, and but -- that's about as far as we can go, and I'll let Bill talk more about it from a technical perspective. I think what's important for investors to understand in this situation, though, is that this is not like the commercial market where we're competing for market share in the marketplace. This is stockpiling and trying to help with a global emergency and getting patients treated. And as you know, there aren't very many options for patients that are getting the COVID-19 disease right now. So all the conversations that we've had with the government is that they want multiple weapons in their arsenal for any kind of outbreak. You've seen that with things like smallpox and the like, where they have multiple therapeutics in the stockpile, and I see no difference here. So it's not a competition. It's -- can we get multiple weapons into the arsenal. And Bill, I don't know if you want to talk about the technical.

Sure. I mean, both of these drugs are adenosine nucleoside analogs, and they both work by being taken up into infected cells, converted into the triphosphate nucleotide and interrupting viral RNA synthesis. The -- I would like to inject a note of caution about interpreting in vitro assays of sensitivity because that type of work is done in cell lines that are immortalized. They're not normal cells, and most of that work is not done in respiratory epithelial cell lines. So any activity is activity, then actual numbers are not that meaningful.

Okay, great. So given the similarity of the mechanisms of action, do you think a positive data from remdesivir that could actually expedite the galidesivir clinical development?

I don't think we're waiting on that. I think that -- we're in frequent communication with our government partners on doing the 3 things that Jon mentioned, progressing it through in vitro testing, progressing, thinking about clinical trials with galidesivir specifically, and increasing drug supply. So I think that interpretation of any clinical trial result has to be relevant to that drug in that clinical trial, and there are a lot of factors going on. So I would not use that as a gating factor for our drug.

Yes. I think the other thing, Gena, is clinical development in this kind of setting is not like clinical development for other programs that you're familiar with. What's important here is that they get data that shows that it's safe and has some benefit, and then they can go to emergency use authorization. So it's not a Phase I, Phase II, Phase III, go through FDA review. We know, we did this in 2009 with peramivir when we hadn't even started a Phase III study, and we got emergency use authorization and that outbreak in the fall of 2009. So it's very different. So what we're focused on are the 3 things that Bill talked about and getting any clinical data that shows some benefit, I think, will be helpful in getting it more broadly used.

Great. And any thoughts on potential clinical trial design?

I think it's premature to speculate there. And obviously, Gilead has put out their designs for the studies that they're conducting but we look forward to working with the government on that.

Okay. And one thing is, well, maybe that situation would change very soon. I think in U.S., the incidence is relatively low. And it was -- when we look at the other companies, they all go to the country with a high incidence to conduct clinical trials. Any thoughts, when you do clinical trial, would that be a global trial? Or would that be mostly U.S. trial?

Yes, that's a tricky one because you want to go to places where they know how to run clinical trials with really sick patients, a lot of times in the hospital. And so -- and we saw, in the Ebola outbreak a few years ago, some of the challenges associated with that in countries where it's -- they're not as experienced. We're certainly open to go into other places in the world. I think the important thing is, is it a study design where there's high-quality investigators and the ability to design a trial to see if the drug really works?

Okay. And then also, any thoughts on the supply in the future if this drug gets approval for both clinical trial and a future commercial facility?

Yes, that's one of the things we're working on with the government is working to increase drug supply. And so we'll continue to put energy and effort into that. This is where it's better to have all this thought out and preparedness rather than response, but we'll do our best to get drug supply up as quickly as possible.

How many patient population or patients you think you will be able to supply by that time?

We're working through a number of different scenarios on supply right now. So it's -- I'm not in position to comment on the exact numbers.

Okay. And then the other part, very quickly on this program that you said the government will fund some of the trials, would that be 100% funding? And also, what will be the consequence of government funding? Would that -- would they have a say on the -- in the future on the drug price once drug becomes a commercial product?

Yes. So let me be clear. The government -- we have a contract with the government of $82 million when you combine both NIAID and BARDA, of which, I think, we've consumed about half of that money. So -- but that program is focused on things other than COVID-19. So it's either got to be modified or there's got to be a new contract with additional money to fund. Our view is that we're taking the U.S. government's fleet. I don't want to speak for them and say that they've committed funding. They committed $82 million thus far. And if there needs to be more, we're ready to accept that and do the work that's necessary to broaden this to COVID-19. And in terms of what rights does the government have and pricing, I think it's premature to talk about any of that right now. What we're trying to do is the 3 things we said, get it tested against the virus, explore clinical trials and increase drug supply.

Okay. Very helpful. Maybe we'll switch gear. We have a few minutes left, talk about HAE. I know the PDUFA date is December 3. Just wondering, do you have any thoughts on the possible label?

The labels are pretty similar in the prophylactic drugs that are on the market right now, and it won't be identical, but we expect it to be roughly similar. So I think that's about all we can say at this point. We have -- we've submitted a draft label and then you negotiate with the FDA on the final label.

Okay, good. And then you also shared quite some color on the launch prep. Just wondering if you could give a little bit more details regarding number of sales reps and hospitals and clinics you were targeting for the initial launch?

Yes. I'll let Charlie -- I mean we don't want to give too many specifics to tip our hand to the competition, but I'll let Charlie give you a sense of ranges of things.

Yes. So our -- we believe our competition has sales forces in kind of the 30- to 50-rep range. So HAE treatment is pretty compact among specialists, and we think we'll fit into that range, and we can reach all the customers we need to pretty effectively with that number.

We've got medical science folks out there right now, market access folks, so we're moving full steam ahead.

Okay. Okay. And also based on the peer feedback, I think you also commented they are okay to have the similar -- the price comparable to the current standard of care. Would that be your strategy going forward? And how is the -- also the pricing strategy for Europe and Japan?

Yes. So let me start with the U.S. So yes, you're correct. The payers have given us, as long as it's in the range of current therapies, which are between $500,000 and $600,000, we'll get reimbursed. What we have not done yet is the final pricing elasticity research, which basically shows, can you get more access with a discount? Or are you leaving money on the table? And what's the elasticity in those decisions? And so we won't do that until much, much closer to the launch date, and so we haven't made those decisions yet. With regard to Europe and Japan, the 2 markets are very different. There are next to no therapies in Japan. And we've got Sakigake designation, and we think it's a really innovative medicine. So we'll see -- and it's likely to be the first approval in the world for Berotralstat. So we'll see where that leads us to in terms of pricing. And then in Europe, generally, the price for HAE medicines is lower, although the recent pricing for drugs like Takhzyro, excuse me, have shown that it's a pretty significant price and much closer to the U.S. price. So a lot to see unfold over the course of the summer and beyond, and we'll make decisions based on what we see in the marketplace.

Great. And then in Japan, you guided to like mid- teen to 40% royalty. Can you share with us what number roughly that would trigger like a high double-digit, like 30%, 40% royalty?

Yes, we didn't disclose the tiers on it, but you can imagine it's a sales tier structure. What's important is, I don't think in my entire career, I've ever seen a 40% royalty. And what that reflects is that we're in it with Torii, and we benefit meaningfully with Torii. So if they're successful, we're successful. And I think that's the takeaway investors should have from that.

I just wanted to push, like are we talking about billion-dollar sales or would that be like $3-plus billion sales to trade at that 30%, 40%?

Yes. No, definitely not that high. And -- but again, I'm not going to get into the specifics. Remember that there's only 500 patients currently diagnosed in Japan, and so this is a find-the-patient market because the prevalence should be around 2,500. And that's one of the reasons we chose Torii is they have both the experience and the infrastructure to be able to put the effort behind education and finding patients. And so we think they'll be very successful at it.

And one last question regarding Factor D inhibitor. So the data disclosure will be second quarter. What will be the bar for you to consider as successful?

So our goal with 9930, our potent, specific Factor D inhibitor is monotherapy in PNH. And I'll remind you that proof-of-concept in PNH is translatable into other Factor D-driven alternative pathway diseases. So what we expect to see is, of course, is improvement in hemoglobin and LDH. They're the 2 key parameters. So I don't think it's necessarily helpful to have specific numbers there, but we'll be obviously closely monitoring the study, and we look forward to reporting our proof-of-concept data in the second quarter.

Thank you very much.

You're welcome. Thanks for having us.

Sure. And this concludes our call.