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

Great. Thanks, everyone, for joining us for the BioCryst fireside chat. We're real happy to have Jon, John and Bill joining us today. It's -- we at Cowen just picked up coverage on Monday and with an outperform, a much higher price target than it is today, we think there's a lot of room here for value creation amongst the team. So we'll get into some of that commentary. Before I turn it over to Jon, one comment I wanted to make is in our initiation, if you look at our survey work, no pressure on the team here, but the consultants talk about ultimately potential 50% penetration of the market in oral. So real enthusiasm from our consultants. And then obviously, we have conversations outside of just doing the survey work with our consultants. And really, what we love about the way they're thinking about is the beauty is in the simplicity, why not try the oral? We have such fantastic injectable products as well, but why wouldn't we try and why wouldn't we see if we have success? And you really get a situation as you kind of think through it, sometimes when we look at stories like this, what seems very obvious can be true. And so that's at least our belief here at Cowen. And I'm taking a little bit of the thunder away from the team, but letting the folks know that we couldn't be more enthusiastic at Cowen. So with that as a backdrop, why don't I turn it over to Jon to run through some slides and maybe set up a little bit broader perspective before we get going.

Well, thank you, Ken. With that kind of intro, I think we're done. But anyway, thank you so much for that nice introduction and for inviting us to this year's Cowen healthcare conference. It's been a while, honestly, since we've been invited to Cowen. And so it's great to be back and really excited with the fact that Ken, you and your team are covering us as well. Next slide, John. So we're all going to be making some forward-looking statements. Those statements have risks, and the risk factors can be found on our website. So I'm just going to go through a few slides to talk about where we are -- where we're going and where we are. And so let me start with our strategy and what makes us different. It's summarized in the pretty simple statement, and a bit of a play on words, delivering extraordinary by empowering ordinary. And what we mean by that is we go after really difficult targets to make medicines or make drugs. They're validated targets. So we take the risk away by going after only validated targets. But these targets are often enzymes that are in big families, like kinases and serine proteases. And so what's important is that you're able to both make it a potent inhibitor and binding tightly to the enzyme, but also be specific to that member of the family and not other members of the family. And we've perfected structure-based drug design for over the last almost 3 decades, and we've gotten really good at it. And so we've now been able to focus it on bringing forward oral drugs to patients that suffer from rare disease. And that's where empowering the ordinary comes. And this isn't some small incremental convenience improvement. This is enabling patients not only to control their disease, but remove the burden of therapy off of them as well, so that they're able to do ordinary things in life that the rest of us take for granted, but are life changing for these patients. So this is our strategy, and that's our focus, and that's what we aim to deliver. Next slide. So the result is that we have a really full pipeline. If you had looked at our company a few years ago, this chart would look a lot different. And what's even more interesting is this pipeline chart is going to change, and it will continue to get more full and more interesting. And so you see at the top with Orladeyo, we have approvals in the U.S. and Japan. We have filed in Europe and the U.K. We're expecting to get an answer in Europe in the second quarter. So we've got a marketed product, and that's extremely exciting in our first foray into bringing an oral drug into a space for patients with a rare disease. But behind that is equally as interesting, and our oral Factor D Inhibitor BCX9930, you see 2 lines for both PNH and renal diseases. But over time, this chart will change, and you'll see many arrows for many different indications because a Factor D inhibitor can be applied to a number of different complement-mediated diseases. And then after that, we've got BCX9250, an ALK-2 inhibitor for FOP, and our discovery team continues to work on other interesting and validated targets to bring more new discoveries forward and ultimately, into the clinic. So this is an exciting pipeline chart to look at, but it's going to get even better. Next slide, John. And so the last point that I'd make before we get into the Q&A is if -- one of the things that we hear from some investors is, I knew BioCryst a decade ago. I knew you guys. I was following you guys 3 years ago. Well, what I can tell you is this is a very different company. And we are transforming at a very rapid pace. It started basically the fourth quarter of last year with the approval of Orladeyo, additional financing, more data readouts, but it's going to continue throughout this year as well. We got the Japanese approval in January. We've got a really exciting R&D Day focused on PNH and data that we'll readout from 9930 on March 22. We'll report out our first quarter sales in the earnings call for the first quarter, and then we'll be reporting sales at each following earnings session. And then a number of additional launches and approvals. And so this is a very different company than the BioCryst a couple of years ago, and it's going to get even more interesting as the year progresses. So that's the high-level overview, Ken. I think we're ready for your questions.

Yes. That's great. Thanks, Jon, for that. And I start the conversation making everything seems so simple. But obviously, when it comes to execution and drug launches, nothing is such, right? There's usually a lot of interesting complications. We like to call it the plumbing in the system. And not all companies approach launches the same way, not all launches are built the same way. And in this case, I guess it would be interesting to take a little bit of time to talk about how you've prepped for a launch of a product like this. We often find from a clinician who wants to use it to a patient who eventually takes it, there's some complications in-between. And in an orphan launch like this, and obviously, an expensive one, oftentimes a little bit of things get lost in the mix. So can you talk about the way in which you've prepped for this launch? Can you talk about the individual nature of how you're approaching, dealing with clinicians and then dealing with patients, helping them through the process, so we can understand the oil that you're putting in the system to ensure a good launch?

No. That's a really interesting question because one could say that it started shortly before we got approval, but it goes much further back. We made investments in this space, goodness, going back into 2010. And really, one of the top priorities was to get to build relationships and understanding with physicians and patients. And so since 2013, we've been going to patient summits in the U.S. and overseas. And Bill and I could spend the whole half hour just telling you stories that patients have shared with us about their desire for a more normal life and then wanting an oral drug. But the investment continued in really developing relationships with the clinical sites and the key opinion leaders, and that started with Bill and his team. And then was passed over to our medical affairs team about 1.5 years ago. And I would argue that we have one of the best relationships of any company in this space with both the patient community and with physicians. And then we made investments in advance of the PDUFA date that was -- that some companies don't do, right? They say, "Yes, we'll wait until it's certain, and then we'll make offers to our sales force." We didn't do that. We made offers to our sales force back last summer to get them trained and ready, especially in this COVID world where promotion is very different than it is when we weren't in a pandemic. And we made significant investment in them, and then they would get around their territories, get to meet their customers, adjust things because they can't be face to face or figuring out where they can be face to face. And I think it paid off in us being able to hit the ground running. And then the last thing I'd say is we've been spending probably the better part of 5 years trying to gather insights into how patients are switching from one medicine to the other. And we invested a lot of money in market research, really trying to get inside the heads of both physicians and patients on what makes a good switch, what makes a bad switch, right? And I think as a result, we -- again, we hit the ground running way faster. And as Charlie said in our earnings call last week, there was some real pent-up demand, and we're trying to capitalize on that.

So I know I'm going to make you chuckle a little bit when I say this, but on a product like this and the number of patients that are out there and the number of clinicians who are dealing with these patients, we've seen this happen before, where literally the inability to have one-to-one interactions, to be able to walk a patient through the managed care, be able to help the clinician through the process. And I always joke around with a patient size like this, does everyone have the CEO's phone number. Again, if there's a problem, if there is something happening, to what degree is the sensitivity within the organization. So not looking to harp on it too much or to know to what degree your phone number is out there for folks to be able to access you. But just to ensure to the investor base, the level of kind of individual care that both patients and clinicians are getting during a launch like this.

Yes. It's really high. I mean -- and it goes all the way to the top in the company. I mean we all treat this like every single patient is precious to us. And so yes, you're right, there's a lot of things that could go wrong. And no launch is perfect. We've hit some speed bumps along the way. But in general, it's going extremely well. And I think this is the beauty of being a small company, too, is how quickly do you pivot when you do run into a speed bump? How quickly do you adjust? And I've been really impressed with the team. And I haven't been able -- or haven't been needed to be pulled into too many things, but I have been pulled into a few. And it's helpful when you're a small company and patients know me, physicians know me. I mean I had a doc. We were in a call with a doc last Friday, and he ended it by saying I've never met the CEO of a company before. And so we take great pride in that.

Yes. It's good to hear, obviously, keeping the system running as smoothly as possible or early launch. Can you frame out for us -- obviously, there is a price, and the competitors are priced as well. Can you talk about maybe how we should think of as we think of net value per patient going forward? How you try to frame that for investors?

Yes. So the list price's in the public domain, $485,000 per patient per year. But we're the lowest of the prophylactic therapies and quite a bit lower than the most expensive. And so the way -- we haven't given any guidance on gross to net, but here's how you should think about it. So first off -- it will probably be the highest in our first year and for these reasons. First off, one of the things that's really important in our strategy is fill the funnel with as many patients as possible. And then, as quickly as possible, get drug to them. When a doctor and a patient make a decision that they want this patient to go on our drug, we want to capitalize on that and get the medicine to them quickly. So we have a program called quick start, where they immediately get free drug, and then we work with them through the process of getting their insurance coverage along the way. So that free goods upfront affects some of the gross to net. And then there's not a ton of rebating and negotiating in this space, but there's some. And so that has some effect as well. And then we also are assuming that with COVID and the number of people that are laid off, that there's going to be more people that don't have insurance. And so that will affect the gross to net, too. So Charlie's advice to people who have asked is take a more conservative view on gross to net in this first year, and then it will probably level out to what would be a normal range for a rare disease drug.

As we think about, and obviously, we're going to be getting the real metrics when you report the numbers in Q1. But can you talk about other metrics that you're looking at? Do you have enrollment forms? Or is there some level of patient engagement that gives you a leading indicator? And to what degree are we going to be turning on more direct to the patient promotional effort? Obviously, a small population. They're captured in smaller groups. But can you just talk about that metrics and engagement that you're already seeing pre even prescribing?

Yes. Well, let me describe what we're shooting for. So again, get as many patients into the funnel. The source of that comes from 2 different places. We have our APeX-S study, which was an expanded study for safety. And then we have an expanded access program as well. So that's about 50% of what's filling the funnel is getting those folks converted off of clinical trial material or the expanded access program and into quick start and commercial supply. The other half is coming from patients that are brand-new to Orladeyo. And that will be the sustainable part going forward. At some point when we convert everybody that was in our clinical trial and on expanded access, we'll be solely focused on patients new to Orladeyo. So that's one piece of color. I think the other piece is for those people that were in our clinical trial, we said about half of them came from prior prophy and the other half came from acute therapy. Well, believe it or not, that's what we're seeing in the new patients as well from the information that we've gathered in these early days, it's about 50-50, again, switching from prophylactic therapy or switching from acute on-demand therapy. In terms of other metrics, of course, we know start forms, and we have a sole source specialty pharmacy. So we get really good information quickly. But we also did a lot of digging. And what's the best way to guide Wall Street and our analysts. And here's how we look at it. There's a consensus view out there by all of our analysts. And our view is if we could meet or beat that, probably what we're going to give you is just revenue on a quarterly basis. If it needs more explaining because we haven't met it or beat it, then it's probably things like start forms and that to give you a better idea of how the launch is going. But we think revenue is the best indicator. And one of the beauties of a sole source specialty pharmacy is the numbers we're going to give you are not stocking warehouses and supply, right? It's real-time going to patients.

Yes. So I hate this part of my job where I push a little bit further than I even would like. But when you talk about or think about looking at the analyst models, and obviously, we feel you're referencing the near term, which you are, can you give us some sense of, as you look at the long term and you hear folks like me, and Stacy and Georgi say, look, our survey work is saying, we think, ultimately, this could be 50% coming from, obviously, our thought leaders. Is there any pushback you want to give or any encouragement you would want to provide in terms of the way you view the out-year numbers or you view kind of a very bullish commentary from folks like us?

No. I agree with you. I look -- I mean, we've said this publicly. We believe this drug is north of $500 million peak, globally. And we expect that we will deliver on that. So no, I agree with you.

I guess, lastly, then, maybe in your work, which would be better than ours, the hesitation of some patients to engage in a prophylactic treatment because of the options that they had available that maybe is not being captured as we look at the kind of the current treatment base and try to always do our metrics off of what we're seeing. Can you talk about those patients that likely now would want to join into the prevention market that previously had not?

Yes. I've met patients that are managing their disease by injections of bradykinin blocker. And what -- and they don't want to go on to the injectables because of their concern about, back in the days of Cinryze, finding a vein and the frequency. It's got better with Takhzyro and the frequency there, but there's still people that -- the pain of that injection is just something that they dread. So yes, we've said it before, and I'll say it again, the acute market is going to shrink. And -- I mean, every day, it's shrinking more because we're getting scripts from people that are switching from on-demand therapy. And they've been waiting to be able to take a capsule once a day to prevent their attacks. So that market will get smaller and smaller. And we've said, ultimately, it could be as low as 20% or lower.

And I would think from a managed care perspective, good that fear of yours is generic now. It only helps you in terms of causing a little bit less pain by being able to use you and still have kind of the on-demand treatments.

Yes. And none of these drugs are perfect, Ken. All of them have some level of breakthrough attacks. We've shown that in some of our patient survey work. And so -- and they all work pretty well, right? And so this burden of therapy is a big deal. And what we're seeing is that people would prefer an oral. It's like you said at the beginning, why wouldn't you try to see if it worked for you?

Yes. Well, good. Why don't we talk about then ex U.S. before we go to the pipeline? And you touched on it, Japan. And then hopefully, we're going to have Europe. Can you just walk us through expectations or how we should be viewing those markets?

Yes. Two distinctly different markets. So let's start with Japan. We've got approval. We're in the process of negotiating the pricing with the Ministry of Health. And that takes about 60 to 90 days post approval. So we're saying second quarter's when you should expect that we'll complete that process. This market is just -- the best way to describe it is it's about 10 years behind the United States market, both in the number of drugs that are available, the diagnosis and the organization of the patient community. But it's getting better. If you'd ask me that -- to give you that number 5 years ago, it'd be more like 50 patients diagnosed instead of 500. And it should be 2,500 when you apply the prevalence numbers to the population. So it is a find patient market. And one of the things that we've been told by the advocates is you need a good patient advocate group, and they're building that in Japan and it's really growing and getting network. You need KOLs that really pay attention to this disease and understand it. And the third is drugs. And so they tell us with an oral that that's going to -- that's really going to help in the identifying patients. And we chose Torii Pharmaceuticals as our partner because they showed back in their partnership with Gilead in HIV that they could find patients. And so it will be interesting to see how quickly and how that evolves. But we're the only prophylactic treatment at this time in that market. So there could be real opportunity there. And then on the European front, so diagnosis is much more similar to the U.S., where patients have been identified. But on-demand therapy is the majority of use. Prophylactic therapy had some struggles back in the day when prophy therapy was being introduced. And so there are way more people on on-demand. So we hope with an oral that we can convince doctors and patients to, as you said, again, why not try it, right? And really switch the market from a largely on-demand to a largely prophylactic market.

Great. Okay. With that, why don't I turn it over to Stacy to talk a little bit about the pipeline.

So for Factor D 9930, can we first talk about the decision to first look in PNH? And then maybe the potential opportunity you see there as it relates to the current FDA-approved options and the other products in development?

Bill, you want to take that?

Sure. Stacy, the decision to look at PNH first was a combination of medical need and opportunity as well as how quickly the biomarkers change, especially in patients who are naive to C5 inhibitor therapy when you start a complement inhibitor. So that latter point allows us to rapidly step through a dose-ranging study and figure out doses -- or a dose that we'd like to take forward into pivotal trials. There's certainly a medical need. So in the original licensure studies for eculizumab, half the patients were still transfusion dependent. And we've learned since then that extravascular hemolysis is a really important complication of the disease after it's being treated with C5 inhibitors. And we think that the opportunity there to control extravascular hemolysis as well as intravascular hemolysis with BCX9930 is really strong.

So maybe you could provide a teaser for the upcoming R&D Day in terms of those that are C5 experienced and the naive patients, and we should expect in terms of disclosures.

So we're excited about the opportunity to have an R&D Day and talk about the way we discover specific potent enzyme inhibitors and bringing them forward into development. And most of the focus will be on BCX9930 program. We'll have some leading experts in hematology and nephrology as well as a patient advocate to help us explain the types of questions that you're asking around the landscape and the opportunity, the medical need and what it's like to suffer with one of these diseases. And with regard to the data, we'll go through the summary data for all 16 subjects. 10 of whom have never had a complement inhibitor before. So they're naive to complement inhibitor therapy. Six of whom haven't done so well on the existing C5 inhibitor. So the response has been inadequate. And the type of information that is the most relevant here is -- this is an anemia, right? So the type of information that's most relevant is, are the patients still needing transfusions and what happened to the hemoglobin? And there's also symptoms to take into account and there are also biomarkers. So of course, we'll also be talking about the safety and tolerability. And on that front, we now have patients that actually pretty soon, they'll be coming up to almost a year. So quite a long time on therapy with the patients who came on to the study from the start. So I think it's going to be a really rich set of data and should answer a lot of questions.

As it relates to the highest dose, what's the range of time that you expect these patients to have already been on therapy? And maybe if another teaser on the onset of action?

Sure. So in the data we presented last year, actually, with regard to your last question, you can see that the onset of action is quite quick. That also applies actually pretty early on into things like change from baseline in hemoglobin. And there's a chart in our deck for today that is the same as the one we presented in September last year that plots the hemoglobin, for example. So you can see it quite quickly. With regard to the length of time on the higher doses, many patients have had -- in that set have had many months. And the doses of interest here are 400 milligrams twice a day and 500 milligrams twice a day. The minimum that we'll be looking at there is about 6 weeks.

Got it. And moving on to the nephrology indications. Will these be similar diseases that some of the other alternative complement inhibitors are going to be looking at? And what are you guys thinking in terms of a basket trial? Or if it's going to be a very specific indication for the first proof of concept?

So what I really love about the whole idea of an alternative pathway inhibitor and a Factor D inhibitor, in particular, is just the breadth of indications we can go after. And I think that there are certainly approaches to look at more than one disease in proof of concept studies. And we won't be getting into the details of the design of that or indeed, of the pivotal trials in pivotal -- in PNH until we start those studies later this year. But the opportunity there is absolutely remarkable because of just the growth of knowledge about the role of disregulation of the alternative pathway, the role that, that plays in the pathology of these diseases and driving ill health and bad patient outcomes. A lot of these diseases have no treatment at all. And many are very serious and life-threatening diseases.

And Bill -- I'm sorry.

Got ahead.

All right, Stacy. Bill, isn't there a lot of good precedent to learn from on what to do or not to do in both those areas as well?

Sure. Everybody reads the same literature. So yes, you can have a look at what other sponsors have done. And I don't think every -- not every individual disease has been studied with a proximal complement inhibitor yet. But I think that there's pretty broad agreement that there's a really great opportunity across lots of indications.

In the last few moments, a final question on 9250. What's the timing for results?

So 9250, we completed a Phase I study. We're very happy with the results. So that's also included in our deck today. And we saw linear and dose-proportional increase in exposure with increasing dose. So when we double the dose, we double the exposure. And it's also true with repeated doses. And there was really nothing to see in terms of an adverse effect profile that -- there weren't any safety signals. And so that's a good result, especially for a kinase inhibitor in its first in-human study. The exposure we got to at the highest dose of 20 milligrams once a day is similar to the exposure we saw in rodent models where we officially stimulate heterotopic ossification. So that's abnormal bone formation. So there's quite a lot of work to do now in making drug supply and conducting longer-term toxicology studies to set up the next phase of development. So that's -- that will be occupying us this year.

Okay. With that, thanks for this discussion. We really appreciate it. Jon, Bill and John, it's very helpful. A lot going on. Obviously, still early in the launch and pipeline broadening, just a lot of good things coming together at the same time. So continued good luck as you introduce Orladeyo. And obviously, we'll be tuning in for the R&D Day. We really appreciate this discussion. Thanks. So thanks, again.

Thank you. Have a great day.

Thanks. Bye-bye.