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

Great. Good morning, everyone. My name is Jess Fye. I'm one of the Senior Biotech Analysts at JPMorgan. And we're continuing the 2021 Healthcare Conference today with BioCryst. This year instead of going across the hall to the breakout room, you can use that blue, ask a question button to submit questions to the portal. They'll pop up for me, and I can ask management those questions during our Q&A session after the presentation. But with that out of the way, let me turn it over to BioCryst's CEO, Jon Stonehouse.

Thanks, Jess, and thanks for inviting us to this year's JPMorgan Healthcare Conference. I'm about to make some forward-looking statements, and I want to remind you that those have risks associated with them, and you can find our risk factors listed on our website. What I'm about to tell you is a story about a small company with a big dream, and this dream recently became a reality. And this new reality is transforming the landscape of the company. The dream involved a simple strategy of bringing oral drugs to patients suffering from rare diseases, giving them a shot at an ordinary life. While the strategy may sound simple, executing this strategy is an extraordinary feat as evidenced by how few have tried and how even fewer have succeeded. This is a different biotech story. This is big. It's important to understand how big oral drugs are for patients with rare diseases. To do that, let me take it back in time to a presentation I made to over 500 HAE patients and their families. Take a listen. [Presentation]

This is an audio clip one of my colleagues recorded 7 years ago at an HAE patient summit. After that presentation, my colleagues from BioCryst and I were swarmed by the participants at our tiny little table outside the ballroom. For me, it culminated in a conversation with a patient who made a point to find me and tell me her story. She tells me she recently lost her son to a laryngeal HAE attack. She shares her son's passion for life, but also shares how his life was limited because of the burden of treatment. She says, he always asked, mom, why isn't there a pill for HAE. And she looks me dead in the eye and says, it's too late for our son, but not for others, go faster, patients are waiting. This is when I realized this isn't some small convenience improvement. This is big. When I got back to my office, I typed it out and taped it on my computer screen, as a daily reminder and a reminder of who we were working for. To my surprise, this quote has truly taken on a life of its own and become a driving force in our company. And I guess I shouldn't be surprised. It's not a slogan, it's a quote, and it has real meaning for our employees. And the result is we're going fast. 7 years from discovery to FDA approval when it takes on average 10 is evidence we've been going fast. But now we're going faster, and this is big. We are off and running to make sure that patients who want Orladeyo in the U.S. get access to it. And while we're only a month in, the launch is going well. We look forward to giving you updates on our launch progress throughout the year. Next up, patients in Japan, where we expect to get approval this month. This is really fast as we will be the first and only prophylactic treatment available to patients in Japan. Think about it, our partner, Torii Pharmaceuticals, is able to offer patients something more than treating attacks in a once-daily oral capsule. This is big. And then in early Q2, we expect approval for patients in Europe. Again, a different market where most patients treat attacks rather than take medicine to prevent them. Our European team is ready to launch and to offer patients a once-daily oral treatment option for preventing attacks. This is big. 3 simultaneous launches of our product, with global peak sales potential of north of $500 million is definitely big. This alone could be enough, but there's more to the story. We took advantage of all that we learned through our HAE experience and are applying it to other rare diseases to go fast for more patients. Our pipeline is full with what we see as an entire molecule or entire pipeline in one molecule with BCX9930, our oral Factor D inhibitor for complement-mediated diseases. There is strong scientific evidence why Factor D plays a role in a number of complement-mediated diseases. And we have recent evidence that 9930 works with the proof-of-concept data we presented last year in PNH patients. Now our goal is to go fast for these patients by advancing 9930 to pivotal studies in PNH and proof-of-concept in other indications this year. We also have early evidence that this is big in complement-mediated diseases, too. With market research in PNH patients telling us the same story we heard with HAE patients. They want an oral treatment. And it's understandable given the burden of injectable therapy for all patients suffering from rare diseases. But we have the opportunity to do even more for these patients. By helping PNH patients who have extravascular hemolysis and are not adequately controlled with their current injectable therapy, or patients with nephritis diseases that have no treatment at all. Advancing an oral Factor D inhibitor, that's big. And behind 9930, we have BCX9250 for FOP. This is a horrible disease with no approved treatments. This is a disease that affects children. And the only sign that they have at early in life is their big toes point inwards. Then when they reach the toddler stage, they begin to have soft tissue inflammation that turns into bone and these adorable children start to have bone growth through their bodies and joint freezing that can make them wheelchair bound by the time they reach their teens. It would be extraordinary to bring these patients a treatment and even more extraordinary, if it's oral. This is a really tough target. And it was once a very crowded and competitive space. But the need for a therapy still exists. And we have evidence from our Phase I that we may have a drug. And while there is much more to do, we need to keep going because these patients are waiting. I shared with you our strategy and evidence that we're changing. Now let's take a look at how we got here, how this transformation came about. It's much more than a strategy of oral drugs for patients with rare disease. As I said at the beginning, what makes it extraordinary is turning the strategy into reality. It starts with our drug discovery team. A team that builds these enzyme blockers, one atom at a time. So you not only have a potent inhibitor, but it's also specific to the target. These targets are part of large enzyme families like proteases and kinases. Getting them to bind to the target and not to others in the family, now that's extraordinary. Next, it takes a seasoned regulatory and development team that strives to do it better than the rest. A team that can design studies investigators contribute to and believe in. A team that finds patients to enroll, which is always a challenge in rare disease studies. But by taking care with investigators, their staff and patient advocacy groups, we're becoming the sponsor of choice because we are viewed differently. A team that has demonstrated that they can enroll pivotal studies and file in major territories simultaneously and doing it with high-quality and the need to go fast, that's extraordinary. And finally, you need capital. Yes, we'll be generating revenue from sales of Orladeyo this year, and that's very exciting. But we also completed a financing that provides the capital to focus on executing our plan and not the next milestone to do the next financing. Having investors like Royalty Pharma and Athyrium, providing access to $325 million in capital. We believe is evidence that this is a very good investment and even more evidence that this is big. I'm not one to adequately or accurately predict the future. But I hope you agree that our company is transforming, and this is big. So what's next? This year, the successful launch of our first oral drug for patients with a rare disease and advance our pipeline into multiple indications is what's big. The evidence of this will emerge over the course of the year. So until then, consider this, we invested years ago in drug supply and months ago in hiring the sales force to go fast. And the evidence is, we were calling on customers less than 24 hours after approval and started shipping product less than 2 weeks later. That's fast. This is not an ordinary time, and this is not an ordinary company. But at the end of the day, we are making extraordinary efforts to create the ordinary and deliver it to those who never thought it was possible. We look forward to updating you on our continued progress of approvals, launches and advancing our pipeline to the next big oral therapy for patients suffering from rare diseases. And our goal is not to only be able to say this is big, but this is bigger. Thank you. Now I'd like to invite everybody back for the Q&A portion, and Jess?

Great. Thanks, Jon. And just while the team is coming back online here. [Operator Instructions] Well, maybe first question I know it's super early in the launch of Orladeyo, but how is this progressing relative to your expectations? And how has the engagement with physicians been so far?

Yes. Charlie, you want to take yours off mute and answer that one?

Yes. Thanks, Jess. So you heard Jon say, we made investments to get out of the gates quickly. We were promoting the morning of December 4, and we've been really pleased with the excitement and enthusiasm we're seeing, both from physicians and from patients. So we've had numerous national promotional events for physicians and patients that have been really well attended. And we're just -- we're pleased with how things are going so far.

Maybe sticking with the launch, how did your thinking and plans for the launch evolve with the pandemic? And how do you plan to efficiently market the product in the virtual setting?

Yes. So that's something we've been planning for all the way along in 2020. We figured we'd be launching into a COVID environment. And so we've got plenty of practice upfront. Jon mentioned, we had our sales force come in early last summer. And so many of them already had experience promoting in a COVID environment before they came to BioCryst. And then we're out there working with customers in a virtual sense ever since then. In some places in the country, we're able to reach people in person and others, it's virtual. But the excitement around Orladeyo really opens real doors and virtual doors. And so we're getting access, and we're pleased with the access that we're getting, the conversations we're having.

Jess, I think I'd add, there's been quite a bit of pent-up demand, I think, for an oral drug in this space. And that doesn't get affected by COVID, right? People have been waiting for years for this drug. And so patients are reaching out to their doctors. Doctors are reaching out to their patients. And so we're pleased with how things are progressing at this early stage.

Okay. Also, what caused the shift in timing for the Orladeyo approval decision in Japan to move into January from December?

Megan, do you want to take that one?

Sure. Jon. Thanks. Jess, so in December in Japan, the government had adopted a decision to implement a drug repricing in an off year in 2021, and that will be April of this year. So associated with that decision, they essentially shifted the approval that would have happened in December into the January time frame. But I would note that Orladeyo did clear an important step with a review panel, which essentially recommended Orladeyo for approval in Japan to the MHLW, and that occurred back in November.

Okay. Got it. We will take a couple of questions from the portal here. Thanks for sending those in. How are you planning to reach other markets outside the U.S. and Europe? I think we know how you're planning to proceed in Japan, but maybe you can elaborate on that one.

Charlie, I'll take that one. So the plan is that we've got 3 filings, right? One for the U.S., one for Europe and one for Japan. And so our intent is to take that around the world. And to be launching it for patients around the world. And prioritization will be filtered by these criteria. The first one is, we're not going to generate any new data. So being able to take the data that we have, and hopefully, one of the filings that we have, largely one of the filings that we have. The second is, is there a market there? And what effects does it have on pricing? And then third is how do we do it? Is it clear that we could use a distributor or a partner? Or is it a geography that we could do on our own. And so again, the plan is because every country matters here, right? As we continue to layer on more and more and more. And so we're really excited. And Charlie's team is already underway on the first wave post Europe.

Okay. Great. What do you see as the peak sales opportunity for Orladeyo worldwide? And how does that break down between the U.S. and other regions?

Charlie, you want to take that?

Yes, Jess. So the -- we see the peak sales being north of $500 million worldwide. And typically, U.S. is going to be the biggest market. It's the most advanced and highest priced. For existing therapies out there, it's usually around 80% or 90%. But the percentage of global revenue is going to be really meaningful, as Jon just described, and we look forward to taking this drug around the world.

Great. And as Investors track this launch, when do you anticipate guiding the street on sales? And what launch metrics do you anticipate being able to provide?

Yes. I'll take this one again, Charlie. So a couple of things. First off, remember that December 3 was the PDUFA date, and there was a holiday in there, and it takes some time, as Charlie has mentioned, around getting reimbursement. And so the month of December, you should really expect next to nothing. The first quarter, though, will be our first full quarter of sales. And the way we're thinking about -- we're not going to provide guidance, but we will provide sales when we report out the quarter. And if the sales are very clear, and we're performing at or above expectations, then unlikely we'll provide more. If it needs some clarity, then we'll add more information to help provide that clarity.

Can you talk about how quickly you expect to secure reimbursement? Maybe just walk through your thoughts on the timing of payer decisions as well as the expected payer mix?

Charlie?

Sure. Yes. So that's something we're really focused on, particularly this quarter. Our market access team is out there actively engaging with payers. Some of that is just the blocking and tackling you have to do, make sure they have their NDC codes loaded, et cetera. But then we're trying to make sure that they understand the value proposition. And when payers look at the proposition for Orladeyo, what they've always told us, and it continues to be true. They say, this is a product that they see reimbursing. So we expect a lot of progress there this quarter.

And what about the potential mix?

Sorry, the mix. So looking at claims data in the past, it's about 70% commercial amongst reimbursed patients. And early days, we think the same will apply to our payer mix.

Okay. Great. Let me go back to the formal questions here. When is the next Factor D update and what specific data will we see? How will the data be shown?

Bill, you want to take that?

Sure. Jess, the next data update will be in this quarter, in the first quarter of 2021. Our dose-ranging study is fully enrolled now with 16 subjects. The majority of those have no past background of being treated with C5 inhibitors. And we're using 9930 as monotherapy. And we have some patients who have inadequate response to C5 inhibitors as well. So you can expect that we'll put out quite a bit of information from the study, haven't decided exactly what forum yet. But in the first quarter, it will be more than a press release. It will be a detailed run through.

Bouncing around here a little bit. Can you maybe just remind us where you stand with galidesivir?

Sure. So we finished Part 1. We put out the data the tail end of last year. Remember, it was the dose-ranging part of the study. And it was nice to see that the drug appeared safe and generally well tolerated. And there was some activity on the virus, the COVID virus. And then we also said that there were some animal work done in hamsters that also showed activity of galidesivir against the COVID virus. But given where we are with the pandemic, the fact that the vaccines are rolling out, and there are a number of other therapeutic options, NIAID clearly communicated to us that they prefer that we go after a different virus in order to get this ultimately stockpiled into the SNS. And so we're pursuing Marburg. And I think the data that we got on the clinical side will be valuable in this program. And we still strongly believe that there's a need for multiple broad spectrum antivirals to protect us for the next outbreak that occurs.

Okay. Great. And going back to Orladeyo, do you expect initial uptake to be driven by patients new to therapy, those switching from parenteral alternatives or some combination?

Charlie?

Yes. So it's early days in the launch, but let me tell you what we saw in our APeX-S long-term safety program because I think that's indicative of what we expect in the marketplace. So since we opened up APeX-S in the U.S., in the spring of 2019, 50% of the patients enrolling have been coming off an injectable prophy therapy. And then the other 50% are stepping up. Previously, they were on acute only, but they're stepping up to prophy when they see that there's an option to do it with an oral once-daily. So that's consistent with all of our market research with physicians and patients. And so we expect about half coming switches from prophy and half people stepping up to do prophy for the first time with an oral.

Okay. Great. Another one here. With 2 larger pharma companies developing Factor B and Factor D, how can your drug differentiate from others?

Let me start, Bill, and then maybe you can provide some more color. Big companies in rare disease is not an advantage. These are not arms races where the more you spend, the better you do. This is -- we think there's a lot of applicability to what we learned in HAE, both in the launch we're currently going through, but also in the development of Orladeyo and the filing and approval. So we're going up against Takeda and CSL and HAE, those aren't small companies. And so we're not worried about competing in these rare disease spaces, and we think it's a core to our strategy. But Bill, I don't know if there's anything else you want to say about it?

Sure. I think that targeting either Factor D or Factor B makes perfect sense. At the end of the day, it's going to be the benefit risk profile of each new medicine that gets evaluated by regulators. And the label as a result of all of the work we do. So the fundamental characteristics of our drug that we know about so far, I'm really pleased with. It has linear and dose proportional PK, safety profile is excellent. We've now dosed chronically for over 40 weeks and some of the subjects on our dose-ranging study in PNH. And the enthusiasm from the principal investigators and the ability to fully recruit that study in the face of a worldwide outbreak of COVID, I think, speaks to the recognition by PNH hematologists that they're blocking the alternative pathway is a great idea. So very, very promising.

Jess, one other thing I would add that I think is an advantage for smaller companies is, we do things differently than big companies. The amount of attention that we give investigators, advocacy groups, the importance that we place on that at all levels in the company. I mean, Bill and I and Charlie and Megan and others travel all around the world, meeting with investigators, meeting with patient groups, we haven't been able to do that with COVID, but we hope to get back to that when we're all vaccinated. But that, I really want to stress to investors that, that kind of care and approach helps you enroll studies faster, helps you build relationships that get you advocacy and support, and it makes a difference, for sure.

Okay. Great. Can you talk about the next steps for development of 9930, how many studies do you need to support a filing in PNH? And would you pursue to treat native patients, C5 corresponders or both? And what would the endpoints look like in a registrational trial?

Jess, we'll talk about the detailed design of those studies and the endpoints and sample sizes and so on. When we start the studies, there's no need for us to advertise to our competitors in advance. But in general, I think that our goal is monotherapy, a broad label and superiority to C5 inhibitors. And one of my goals is to make the C5 inhibitors obsolete in PNH by introducing monotherapy with BCX9930. The precedents are there. There have been several controlled studies in PNH, and we've had great discussions with regulators. Our dose-ranging study will determine the dose based on the evidence from that study in PK/PD modeling, and then we'll finalize the designs and get going. So I think that likely, we'll need more than one study, but this is a rare disease. The study is a small, though highly efficient. Power is not difficult to come by. And we look forward to really get moving on that program this year.

And I'd add to Bill's comment that I made a statement in the prepared remarks beforehand around market research we've done with PNH patients, Charlie started. And the story is the exact same as what we saw in HAE. These people want something more than an injectable therapy. There's a real burden. I mean the -- don't get me wrong. They're super grateful to Alexion for having a treatment when they had nothing, but they want more. And it's completely understandable that an oral option would be attractive.

Okay. So if you can't kind of provide the development plan just yet, can you lay out the time lines for future updates beyond the data -- detailed data you're talking about in the first quarter?

Sure. So beyond the first quarter, this year, starting pivotal studies in PNH. Also this year, starting a proof-of-concept study in selected nephritis indications. So the scientific evidence that validates disregulation of the alternative pathway in those diseases is also very strong. So it's very attractive. There are no approved therapies in those illnesses. Medical need is huge, and they're serious and life-threatening diseases. So that is exciting, too. We had great discussions with nephrologists last year, and we are proposing what to do with regulators. And once we have their feedback, again, that will start. So this year, you can expect to hear about our pivotal studies in PNH, proof-of-concept study in nephritis. And probably later in the year, an update on the evolving long-term data coming from the dose-ranging study. So we already have patients beyond 40 weeks. And later in the year, it's going to be a really nice body of evidence. And probably we'll be able to withdraw the C5 inhibitor as time goes by and be able to share that data too.

Yes. And I'd just add -- I mean, think about it for a minute. We just got approval of our first oral drug for a rare disease in December, and we're launching it and we're about to enter into pivotal studies in the next rare disease, the following year. That's pretty impressive. That's going fast.

Okay. Great. Another question on the portal. How are you thinking about the -- I think this is on Orladeyo, how are you thinking about the magnitude of pent-up demand relative to the pent-up demand for the prior prophylactic therapies?

I mean, we see a lot of pent-up demand. So it's been great for the HAE patients. If you think back to 12 years ago when they pretty much had nothing. And then there were 7 injectable drugs launched since then. So that's great. But what -- as Jon talked about earlier, what we're all talking about here is, there's such a demand for an oral therapy because with those injectables, there's a treatment burden that's associated with it. And it's not just, I'm afraid of needles. But there is a needle fatigue, there's preparation, storage of the products, how do I travel with these products, all of that creates a burden in people's lives. And an oral once-daily is what they've always wanted. You heard the crowd applauding in Jon's audio earlier. There's -- amongst people who are doing well on prophy products as well as those who've been afraid to step up to prophy, there's pent-up demand in both those places.

Yes. And Jess, if the question is, should people use the previous injectable prophy therapies as markers. I wouldn't do that because there's differences. One difference is, we don't know how many people they transferred from clinical trials onto commercial therapy compared to what we're doing. And the other is that they use multiple specialty pharmacies to distribute, which there's some buildup of inventory where we're using one. So when we report out sales, you're going to know exactly what we sold rather than any kind of inventory build-out.

Got it. Maybe we can move to 9250 for FOP. What were the key learnings from the recently announced Phase I results? And how do you plan to advance that asset for FOP?

Sure. So Jess, BCX9250 is a kinase inhibitor. And the very first thing we want to understand in our first-in-human study in healthy subjects is the safety profile. So we're really, really pleased with the safety profile we saw with 9250. There were -- in essence, there's nothing there. So not only is there are no dose-related findings, but there are basically no findings that lead you to believe there's any safety defect with this drug. The second important outcome is the PK profile and the exposure of the drug in healthy subjects. And as we increase the dose, we get linear and there's proportional increase in exposure. That's always a good thing to see. And finally, at the 20-milligram dose, we had exposures that were similar to the drug exposure in rodent models of abnormal bone formation, heterotopic ossification, which is the hallmark of FOP. So all in all, it was a very successful experiment. Kinase inhibitors can be difficult to discover and develop, and we couldn't be more pleased. The next steps are to make more drug and conduct longer-term toxicology studies. So that will be occupying us this year.

Yes. I would add to what Bill said that we didn't get many questions about FOP or our ALT-2 inhibitor until we put out this data and now that people realize we've got an ALT-2 inhibitor that's got really nice PK, and so far, it looks like a really good safety and tolerability profile. And then the competitive landscape dramatically changing that we've got a shot. And as I said in the presentation, this is a horrible disease. And so to bring forward a therapy, and it's a really tough target. As evidenced by how difficult it's been to find a therapy that we think we've got a real shot.

Can you maybe elaborate a little bit on the competitive landscape, the other assets in development for FOP and how 9250 is differentiated?

Bill, you want to tackle that?

Sure. It's been sad to see that palovarotene has had problems with premature closure of the bone growth plates. So that makes it very difficult to use that drug in children, who are the -- that's where the target is in this disease, in children. Similarly, it's been sad to see the active antibody program essentially come to a halt because of deaths in a clinical trial. There are other companies working on kinase inhibitors. They're all at an early stage. We haven't really seen any data in any FOP patients yet with any of those compounds. So I think that this sort of teaches you that until there's a successful therapy, you should keep going.

Okay. Great. And maybe lastly, just a financial question. How have the recent $325 million of royalty and credit financing deals affected your cash runway? And are those proceeds enough to get you to profitability? And are the 2 additional tranches totaling $75 million factored into that calculation?

Anthony, you want to?

So Jess, I've been -- the financing has been transformational to Jon's point, allowing the company the opportunity to focus on delivering and executing on our strategy is a really big deal for us. In terms of what it does for our runway. So as of Q3 on a pro forma basis, it puts us at a $350 million in cash. Based on the guidance that we've given previously, that would get us out into 2023. Now obviously, this year, we'll be generating revenue. And we'll also be investing in moving 9930 quickly along from a development perspective. So I would expect that guidance not to change, right? Now the variables will change in terms of the revenue and the investment, but I would still expect this to get into 2023. Our focus is not necessarily on how quickly can we get to breakeven, it's how quickly can we invest in these products. And then in terms of the $75 million. So the big thing about the $75 million is that, A, it's at our option. So if we need it based on revenue milestones that we need to achieve, then we can draw it. And if we don't need it at that point, then we wouldn't have to take it down. Does -- would we factor it in? Again, it would be based on those variables, based -- more than anything, based on revenue and how we achieve revenue targets going forward. But the option to have it, the option to draw it down on our own discretion is a big deal in ensuring that we have flexibility on a go-forward basis.

Yes. And I'd add, it wasn't that long ago that the only source of additional capital we had was our shares. And when we put out data, investors would wait for the next financing, we're not in that spot, right? We're in a very, very different spot with a number of different -- well, first off, a very nice balance sheet and then a number of different levers to pull. And just from operating the company, it puts us in a different mindset, right? It's about focus on launching -- moving -- as one of your first questions, moving into other countries, successfully launching there, advancing the pipeline, advancing FOP and 9930. And it's just different than worrying about the next data event and the next financing.

Great. Well, with that, we are out of time. So I want to thank everyone for tuning in, and thanks to the BioCryst team.

Yes. Thanks, Jess.