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

Good morning, everybody. Thanks for joining us at the Bank of America Healthcare Conference. I am Tazeen Ahmad, one of the senior biotech analysts here at the firm. It is my pleasure this morning to have our next presenting company, BioCryst Pharmaceuticals. Speaking for BioCryst this morning will be Chief Executive Officer, Jon Stonehouse. Jon, good morning

Good morning, Tazeen.

Thanks for joining us, and we're looking forward to spending the next 30 minutes with you. As an introduction, maybe you can give a 2-minute summary of BioCryst, the purpose of the company and some recent accomplishments for anybody on the line that may not be as familiar with your story. And then we can start talking about some exciting upcoming catalysts.

Sure. Happy to. And thanks for the invite to the conference, and appreciate you doing it in a safe and virtual way. So the company has been around for a while, but we've never been in the position we currently sit in, which is about to launch our first real meaningful oral drug for a rare disease called hereditary angioedema. We're expecting 2 approvals this year and another one in the early part of next year. The first one is in Japan. We have a PDUFA date at December 3 in the U.S. and then expecting an approval in Europe sometime in probably the first quarter or so of 2021. And on top of that, we just, last week, achieved proof of concept with our oral Factor D inhibitor which is incredibly exciting because it's like a pipeline in a molecule. We can go after multiple rare diseases with one drug. And the data, we think, is incredibly compelling and exciting and could be a huge improvement for patients. And then lastly, we have some antiviral programs that have been a part of the company going back some time. But galidesivir, our broad spectrum antiviral, is currently in a COVID-19 study in Brazil. And we're really excited to see what we learn from that study in COVID-infected patients to see if we've got something that can help with this global health crisis. So we're in a fantastic position. These drugs are largely discovered and driven by our discovery engine in Birmingham, Alabama. And we think we're bringing really differentiated, meaningful drugs to the -- medicines to the market for patients that want to achieve a normal life. So we're really excited.

Okay. Great. So maybe let's touch upon some of the topics that you've mentioned, starting with HAE. For Berotralstat, can you provide some color on what your launch strategy is going to be? Where are you in terms of prepping for that, let's say, specifically U.S. launch? And can you talk a little bit about if COVID has impacted any of your thought processes on how you want to market that drug?

Sure. So what we did is with a lot of the preparation had started well in advance of the pandemic outbreak and the work-from-home kind of virtual status that we're currently in. So Charlie Gayer, our Head of -- Chief Commercial Officer, has made tremendous progress in building out his team. The marketing team's in place, the market access, payer piece is in place, the sales leadership, Head of Sales, the General Manager of the U.S. and the regional business unit heads are all hired. And so -- and then things like selecting specialty pharmacies, building out your hub services, all of that stuff was well underway in advance of the outbreak and continues to move forward in a virtual way. So we're in great shape there. Megan Sniecinski, our Chief Business Officer, leads the medical affairs supply chain. And her team is up and running and calling on key opinion leaders and was doing that in advance of the outbreak and doing it virtually now. And then on the supply chain front, we've got redundancy throughout the supply chain. So dual suppliers for everything. So we're in fantastic shape with regard to supply. And to your latter question, we're going to be ready whether it's face-to-face promotion or virtual. And we're doing virtual contact now. We're actually finding that physicians have more time because there's an efficiency gained by not having to go into the office, having patient's visit. There's a lot of telemedicine going on right now, which is just way more efficient. They're finally getting reimbursed for it. And so our access seems very good. And so we're planning to be able to launch in either situation. Chances are it will be some hybrid of that at the end of the day. And we feel like we're really well positioned for it.

Okay. So of course, HAE is a rare disease. And certainly, there's unmet need. But you will be in a little bit of an unusual situation where you will be launching it to a market that has a few options available to it. And I was wondering, Jon, if you can talk to what you think the most distinguishing factors of your product could be relative to what's on the market? And why you feel confident that, for example, patients that are on other therapies would switch?

Yes. We just -- I just participated in a virtual meeting with a bunch of our key opinion leaders from around the country this past Saturday. And one of the docs towards the end of the program goes, "One pill once a day. Who wouldn't want to try that?" And I think that sums up my answer to your question the best. But let me elaborate a little bit further. All these drugs work, and they work really well, including Berotralstat. And none of them are perfect. We see breakthrough attacks with all of them. So the expectation that patients have is, "I want a drug that works for me, that controls my disease." I realize it's not going to be perfect. And that's table stakes. But what they're now looking for and what physicians are helping them with is, "I want to forget I'm sick, right? I don't want to be burdened by my therapy. I don't want to be reminded that every time I stick myself with a needle, that I have this disease." I -- the idea of taking a capsule once a day and forgetting that I'm sick is just so liberating. And that's the approach we're going to take. This has been a switch market. We see that from Cinryze to Haegarda, from Haegarda to Takhzyro. And we're going to see it from all of those drugs to Berotralstat, our oral once-a-day drug. And then we're also seeing great movement from the acute-only patients moving to prophylaxis. So yes, we see real potential here.

Okay. Great. Just to give folks a sense of how big of an opportunity this could be, you said several times in the past that you think this could be at least around about a $500 million market opportunity for your drug. Can you give us a little bit of color on the assumptions you're using to get to that?

Sure. So I think it was late last summer when we shared with you the analysis we've done in the U.S. on how many patients are there really in the United States, right? Everybody had been applying prevalence numbers to the population, and these prevalence studies were not conducted in the U.S. So it wasn't the best in terms of really understanding how many there were. So what we did is we took claims data, and we know that, that's not perfect data. And so we triangulated it with recurring HAE medicine prescriptions and then also diagnostics testing for HAE, and through that triangulation, came up with 7,500 patients diagnosed and treated in the U.S. So the simple math that you can apply to get to north of $500 million, just in the U.S., you could get there is -- we also have done physician market research surveys, and you can see that in our current slide deck. Let me find the exact slide. It is Slide 14 in our current deck that says physicians expect to prescribe BCX7353 over 40% of HAE patients. And you see in there, we ask docs -- 175 docs to allocate their current patients. They have on average 7 to 8. And we say, "Allocate them currently. What are they currently on?" And that's the bar on the left. And then we show them a blinded profile of Berotralstat and ask them to reallocate. And you see that they put 41% of their current patients on to Berotralstat. And so listen, they always overstate their preference. And so we didn't use this technique, but you could cut that in half to get your market share. And then the drugs are priced currently in the $500,000 to $600,000 per patient per year. So you apply that cut in half market share to the 7,500 patients and apply the price range, and you could easily get there.

Okay. Great. So we're looking forward to seeing how that launch goes. But you have many other things going on at the company as well. And I just want to touch upon some recent data for an indication called PNH. You showed data last week about that indication, initial data. So I'm wondering if you could tell us a little bit about it. I guess maybe tell us what PNH is, what you think the undermet need is? And then we can go from there with a couple of questions on that.

Sure. And I believe Bill Sheridan, our Chief Medical Officer, is on the line as well. Bill, are you on?

Yes.

Yes. Why don't you take Tazeen's question?

Sure, Jon. So PNH is a very serious illness, and it can affect people of any age. It has aspects of self-destruction of red cells that's called hemolysis and also aspects of inadequate production of promyelocytes. And the current treatments deal with part of the issue, and they're given parenterally by injection, life-long therapy. So there's a big medical need for both improvement in treatment and also better routine administration. So really, we're really thrilled with the data from our oral Factor D inhibitor. And the proof of concept that we have in our initial patients on study, very encouraging dose response, very good safety tolerability profile. And we're looking forward to moving ahead to some fleet study at higher doses and meet with regulators and develop adequate and well-controlled study program to get this drug approved.

Okay. And maybe, Bill, can you just elaborate a little bit about -- on treatment-naive patients, which we're going to have some data in -- later this year, I believe. What kind of improvement in things like hemoglobin or LDH would you feel would be important in order to move the molecule forward?

Tazeen, I think that's a great question. And if we look at Slide 30 in the current deck that has, for each individual, the starting LDH, particular sites deliver even hemoglobin in clone sites. And then what happens during 2 weeks of 50 milligrams twice a day followed by 2 weeks of 100 milligrams twice a day. And LDH is really a very sensitive marker of hemolysis, and the magnitude of reduction and the dose response is incredibly encouraging. And this is already the magnitude that we wanted to be able to see. The next step is to get complete control of hemolysis. And I expect that's going to happen based on our data in healthy subjects shown on Slide 34, much better consistency in addition of the alternative pathway of complement in 2 different assays that tell exactly the same story for doses of 200 milligrams twice a day and 400 milligrams twice a day. The other very interesting point here is that those doses, the duration of effect after the last dose of drug sets us up to really want to test once-a-day dosing of this drug. So all of the indicators look very good here.

Okay. I think it's important to note also that your platform, which is rare disease-focused, of course, is also known for developing oral molecules. And maybe a question for the both of you is how has your company been able to succeed at doing it, developing oral compounds for a wide range of rare diseases?

Yes. Maybe, Bill, I'll start, and you can jump in with more technical aspects of it. So it all starts with the discovery team in Birmingham, Alabama, who's been working on rational drug design or structure-based drug design for decades. And it's a team that's stuck together and has really refined their craft. And it basically is finding enzyme blockers that affect a disease based on shape and charge. And it's not so hard to find a potent inhibitor. But in these rare diseases that we've chosen, the difficult part -- the really difficult part is that they're in families like serine proteases for both kallikrein, plasma kallikrein and/or Factor D. And so making it potent and specific so that you don't have unintended consequences on other serine proteases by inhibiting them, that's the real unique piece to our capability. And when we first started talking about it, we thought it was a convenient improvement. And when we started talking to patients, we realized it was way more than that, that this is -- the idea of taking a capsule or a pill once or twice a day for your rare disease is just mind blowing to these people. And so that -- it really differentiates us. Bill, I don't know if you want to add anything.

Yes. I would just add that the serine protease biome, if you like, has hundreds of different enzymes in human body. And specificity is the art form here. And the evidence from our development of Berotralstat and now 9930, they're both targeting serine proteases that are different, meaning that the discovery group at BioCryst is now the best in the world at creating potent-specific based on effective serine protease inhibitors.

Okay. Great. Maybe we could spend a minute actually on 9250, which, of course, is in development for FOP. Can you just talk to us about your plans for that molecule and when you think the earliest it would be when we could see data for that?

Sure. You want to take that or you want me to?

Yes. I can take it. So FOP is a very dramatically horrible disease, with abnormal bone formation in sites where you don't need it and don't want it. And I think that it's a tragedy that there are no approved treatments. The kinase involved in the disease is very clearly the cause of the illness, and our investigational kinase inhibitor is now in Phase I study. We still anticipate having that completed and the data in there by the end of this year.

Okay. Great. So we'll look for that as well. So let's also now switch topics to COVID. You guys have a molecule called galidesivir, which you started developing before the pandemic started as a pan-viral. And now with the situation at hand, there could be the potential, of course, that this molecule could sort of to help meet the needs that we have in treating patients and even -- maybe even being prophylactic for patients if data over time shows. Can you talk about this molecule and maybe compare it? Because we hear a lot about the Gilead drug, obviously, remdesivir. Can you give us an idea of how this molecule might be similar to remdesivir and what you think the potential would be for positive data here and when we should expect that?

Bill, let me start, and then you can jump in with more detail. So they're both adenosine nukes. So mechanistically, they work similarly in terms of stopping the replication of the virus. And so that's where they're similar. They're different in that they're structurally very different molecules. And I'll let Bill go into more detail in a minute. The thing that I'd say though that people should really understand about a public health crisis and how drugs play a role in that, is it's very different than a normal market where there's market share and competition. I've said repeatedly, we're cheering on Gilead to be successful for a whole bunch of reasons, including helping us get out of this crisis. And -- but governments around the world, and especially with broad spectrum or pan-viral medicines like you described, governments around the world will stockpile more than one weapon, right, because you don't know what's the next virus. You don't know if one or the other works better in a certain setting and another works better in a different setting. And so they -- we see this with smallpox, we see it with a bunch of other diseases, that they stockpile with multiple medicines. And so our goal is that we determine whether or not the drug has an effect on the virus in patients. And if we're successful with that, it's a huge step forward for the program in terms of further advancement and ultimately getting it into the stockpile to help protect the world.

Yes. I would just add that the emerging positive evidence for remdesivir is just very good for the field of nucleoside analogues for coronavirus infections and other RNA viruses. And the molecules are different structurally. They're bound to have different distribution and behavior in the body. And we're looking forward to progressing the clinical start trial that's up and running in Brazil and getting that data and go into the next step. So the clinical evidence is going to be the most important here.

Okay. So when should we expect to be able to draw any kind of conclusions on efficacy for this drug? And as you pointed out -- sorry, Jon. As you pointed out, whether it would be great to see it have an effect on the coronavirus. But also what's the longer-term plan for this molecule as well?

Yes. Yes. No, that's a really important point. So I think there's going to be a steady beat of information over the course of the summer on multiple fronts. So we've talked about looking at in vitro testing against this SARS-CoV-2 virus. We're looking at it in multiple academic institutions where there's a variety of different cell lines that will give us unique information about our drug's effect that I think could be helpful. We're also, and we said this last week, are looking at animal models. And we've seen with both studies we've done in monkeys in Zika virus and animal models we've done in yellow fever that, that's really helpful. The yellow fever data actually really was helpful in determining dose and what we do going forward in COVID. And so those -- that data will be extremely helpful. And there'll be a series of studies that will probably pulls out information over the course of the year. And then, of course, the clinical trial. And that's a hard one to predict. The study design is dose-ranging to begin, with 3 different sequential dose cohorts. And once we have that completed, we'll unblind the data and choose a dose. So at that point, we'll release data saying we've chosen these doses is what we see. And then we'll move on to part 2, which is a 2:1 randomization with 42 subjects. So hoping to see some of that stuff over the course of the summer.

Okay. And do you have any kind of learnings that you're taking from the types of studies that Gilead is doing for remdesivir? Is there anything, based on what you're seeing from any kind of initial results from them, that give you a higher level of confidence in your molecule? And is there anything that makes you decide to tweak trial designs or a number of patients or anything along those lines based on what they're doing?

Yes. No, we have learned a lot. And this is where it's really helpful to be supported and funded and in partnership with the government. And the folks at NIAID have been extremely helpful in the design of the study that we're doing. And Bill always reminds us that in acute viral infections, treating early with an antiviral is your best shot at really altering the course of the disease. And so one of the things that we've learned from the studies that have been done before is, if you're in patients that have an immune reaction that creates a cytokine storm or you have end organ damage, an antiviral at that point is not really going to be helpful. And so catching them earlier in the inclusion criteria in our study was modified in order to see if we can catch people at an earlier stage and really have an effect on the disease.

Okay. Great. So we'll keep our fingers crossed on that one. Maybe as an overlapping question here, Jon. What do you think are the potential long-term implications of COVID will be? Is there anything that you're changing in the way that you're doing business or in the way that people might interact with BioCryst that you think will persist even after things return to, I guess, some level of normalcy?

Yes. I think when do we get back to normal is a tough one to predict, right? So I think you got to plan for being in this mode of virtual for a while. So the impact has been, in large part, we're all working from home. And we'll continue to do that until we believe that it's safe to go back to the office and it's safe to get on an airplane or have people travel again. We're not there yet. And so we're working from home. I think that productivity actually surprised me. It's been much higher. It's amazing, when you're not traveling, how much extra time you can get real work done. And so I would say the productivity has actually maybe even gone up. As a result, in our labs in Birmingham, Alabama, we're doing staggered shifts to keep people spread apart and a good distance. And so we -- that's worked out fairly well so far. I think looking forward, we're actually making contact with customers on a virtual basis now with the medical science liaisons, the market access folks and some of the regional business unit leads. And so being able to do that in a launch period will also be really important. And I think when you have a new drug and something new to talk to a health care provider about, it generally gives you better access than if you're coming in for the 30th time to talk about a drug that they already know a lot about it. So we'll try to get as smart as we can about the effectiveness of working in a virtual world with a potential launch. And I'm really confident that either way, we'll be ready.

Okay. And then not to sound pessimistic, but let's say that the COVID environment leaves us into some sort of a recession, and if that recession lasts a while, how do you think your company will be able to adapt under those circumstances? Are there any opportunities for cost offsets as we sit here now and try to prepare?

Yes. I think it's more of what are the alternatives in terms of inflow rather than reductions in outflow. And so we've been saying repeatedly that what are the things that we could do to bring in capital if, for example, the capital markets are in a spot where we just can't raise money, right? And so things like royalty financing for the launch of Berotralstat, partnerships for advancing 9930, are things that we've been exploring and will continue to explore because -- and the good news is we think we have 2 really good assets that are attractive, right? And so that makes it a lot easier. But in terms of -- there'll be travel cost reductions and stuff like that. We'll keep an eye on how things evolve in terms of the launch. But we're launching a drug, and we want to invest in it. And it has the potential to generate real revenue for us, which also is a key element. If we're starting to generate $50 million in revenue in a given year, that's real money to BioCryst, right, in terms of fueling costs. So the more patients that we can get on our drug and the better the launch goes, the stronger financial situation we're in.

Okay. Great. Well, thanks so much, Jon and Bill, for giving us an overview of the company. We've learned a lot. We're looking forward to seeing the upcoming catalyst readout in the next several months. And we look forward to speaking with you again soon.

Yes. Thanks, Tazeen. Thanks for having us. Stay safe.

Of course. Thank you. You, too. Bye-bye.

Bye.