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

Good afternoon, everyone. Thanks for joining us back here at the Bank of America Healthcare Conference virtually again this year. It's my pleasure to have our next presenting company with us, BioCryst. BioCryst actually has a special place in my heart. I've been covering you guys ever since I joined the firm over a decade ago. So we have a long history. And it's great to see that you guys have gotten the success that you deserve. So with that, I'll introduce CEO, Jon Stonehouse. Jon, welcome.

Thank you, and thank you for that nice intro, Tazeen. It's been great to work with you over the years. Yes, a really exciting time in the company, and thank you for inviting us to your conference. I wish it was in Las Vegas, but we'll do it virtually yet another year. And let me just quickly introduce the team that's with me. So our CFO, Anthony Doyle, is on; Chief Medical Officer, Bill Sheridan; Chief Commercial Officer, Charlie Gayer; and Chief Business Officer, Megan Sniecinski are with me. I'm going to -- 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.

Okay. So maybe we can start off, Jon. For those who may not be as familiar with the company, talk to us about what's going on. Obviously, there's a lot going on with HAE, but there's much more to BioCryst than that. So for a couple of minutes, just about top-level things that you're working on. And then we can go into a little bit more detail, if that's okay.

Yes. That would be great. So our company has got a really interesting strategy, which is oral drugs for patients suffering from rare diseases. And it is such an exciting time at the company because we're launching our first oral drug, ORLADEYO, to patients suffering from HAE. And the launch is off to a fantastic start. We reported the first quarter revenues of $10.9 million. I think we surprised a lot of people. We knew that people would be switching from prophylactic therapy and on-demand therapy, but I'm not sure others did. And that's what we see taking place in the marketplace. And I think the analysts agree. I mean the consensus for the year nearly doubled from where it was before the earnings call. And our goal is to continue to meet or beat those expectations. So really exciting time. And then we filed in 3 major territories. And if you count the U.K., which we got approval this morning, it's 4. And got approvals in the span of 5 months, which even -- that's difficult for big companies, and we were able to do that. So not only will you see the great success from the launch in the U.S., but you're also going to see the great success from other parts of the world, starting with Japan and our partner Torii, and then the team we've built in Europe getting going now that we have approval in Europe. So over the course of the year, you'll hear more about the launching around Europe and the success that we're having in Japan. And then lastly -- and I think this is a really important piece. A lot of times when companies go through what we've been through and get a drug to market, there's a big gap in the pipeline, right, because they were investing everything into the pivotal studies and getting ready for the launch. Well, guess what? We're moving into pivotal studies in PNH with our oral Factor D inhibitor, BCX9930, and proof of concept in other indications for rare nephritis diseases. And so it couldn't be a more exciting time in the company. Really solid balance sheet with the deal we did with Athyrium and Royalty Pharma last year -- I mean last quarter with, I think, Anthony, it was like $244 million?

Yes.

And then revenue coming in. So -- and then a discovery engine with Dr. Babu and team in Birmingham to keep filling the pipeline. So very, very exciting time at BioCryst.

Yes, indeed. So -- and as you correctly said, you're off to a very strong start with the HAE launch. You beat our expectations, for sure, right out of the gate. And given the strength of the launch -- you discussed a little bit about this on your earnings call, but just to remind folks, what kind of feedback are you getting from your commercial organization on what's making doctors and patients for that matter most excited about this particular option, which is an oral option for prophylaxis of HAE? And I guess in particular, are you getting any feedback from salespeople who say that patients are asking doctors specifically for this drug?

Yes. I'll -- Charlie, I'll start, and then you could take the rest. So let me start by saying what they're telling us is that patients are switching from other injectable therapies, whether it's prophylactic therapy or on-demand therapy. And that's because the burden of those therapies is so heavy, but the idea of taking a capsule a day is just life-changing for them. And so -- and I think the other misconception is that this drug isn't as effective as other therapies. It works in a lot of people. And we saw that in the clinical trials, with 75% of people staying on the trial for a year. And we're hearing that people are having great results in the real world. So it works. It removes the barrier of therapy. And so it's not surprising that people are really excited. But I'll let Charlie answer the direct question about patients.

Yes. So yes, patients are asking for it, and this is what we expected based on all the market research we did. We knew that there was always going to be demand. ORLADEYO is the ninth -- I think it's the ninth targeted HAE therapy to launch in the last 12 years. But as you said, it's the first oral. And so that makes a really big difference to patients. The great thing about this space is doctors tend to know their patients really well. And so what we're hearing is there's a really good conversation going on between doctors and patients. Sometimes it's the patient bringing it up. Sometimes it's the doctor bringing it up. But there's conversation about ORLADEYO. And as Jon said, patients are switching from all the different therapies, from the other prophy therapies and then from acute-only. So we're pleased. And it's really just getting started as we're nearing, I will say, the end of COVID. But as we're getting more ability for patients to see their doctors, for us to see doctors, we expect these conversations to actually increase over time.

Okay. Great. So given where you are so early in the launch, do you think that you would be in a position to have a sense about providing sales guidance in the near term?

Yes. We want to -- if we're going to give guidance, we want it to be pretty accurate. And so in order for it to be accurate, I think we need more than a quarter of experience under our belt. Whether that's 2 or 3 quarters, we'll see. But I think at this point, to properly guide you, we need more information to make sure that what we're seeing is being sustained and continuing or getting better, for all we know. So for right now, our view is -- even with the doubling of the consensus, our goal is to meet or beat expectations. And we believe that this drug could be a $500 million plus peak sales global product. So a lot of opportunity.

Going back to your statement on your earnings call about more than 50% of patients so far are switch patients. You talked about it coming from a wide range of other drugs around the market. How long do you think this dynamic will continue? Is this sort of -- I think people try to ask if it was kind of a bolus effect because you were just newly launching. But do you think that switch patients will be the trend at least for the first few quarters of the launch?

Charlie, do you want to take that?

Sure. Sure. Yes. So first of all, we think that switch patients is absolutely the trend. And there's -- it's important, there's 2 parts of that switch. So more than half of it was switching from other prophy products. But then the other part of the switch is patients switching from acute-only over to prophylaxis. So this -- HAE is a pretty mature market. So we expect that trend to continue. And this is consistent with, again, what we saw in our market research, what we saw in our clinical trial enrollment. So predicting the exact split between those 2 types of switch, we'll see how that evolves. But so far, it's been exactly as we expected, based on our research experience.

Okay. And I guess over time, do you think that there will be a particular agent that becomes the primary source of patient switches?

Well, what we're seeing right now is that patients are coming from all the products pretty much in proportion to what you would expect from their market shares. So from the prophy switches, the one that has switched the most is Takhzyro. And it kind of -- it goes in order. So it's Takhzyro, Haegarda and then Cinryze, and then a few androgen patients as well. So patients were doing well on these other therapies. But it's really back to that burden of disease that Jon was talking about that is causing them to switch over to an oral, and we expect that to continue.

And Tazeen, I'd add, the other piece of the market that we're getting is these folks that didn't want to go to injectable prophy that are on on-demand treatment, and we're shrinking that market. So the acute therapy market, we believe, is going to get down to 20% of the market when we get to our peak. And we're seeing that playing out in the marketplace as we're launching this drug.

So is there anything, Jon, from the early feedback that could be described as a bottleneck for pickup? Is it reimbursement? Is it doctor education? Maybe it's none of those issues. I just wanted to get a sense of -- you're strong out of the gate, but could it even accelerate more as you kind of tweak through issues that are commonplace to find at the beginning of a launch.

Yes. I think you touched on 2 really important ones. And that's what makes this result even more remarkable, right? As we -- as Charlie said, we're just getting started. So reimbursement, Charlie mentioned on the call that the bulk of it was medical exception. That takes work and time, right? When we start getting the drug on formulary, on policy, on a number of plans, those sitting on the sidelines, whether it's a patient or a doctor, can say, "Oh, it's a lot easier now for me to get on. And I know that I'll have coverage because my insurance company covers it." I think that's going to open up an opportunity for us, for sure. And then COVID, I mean, nobody wants to launch a drug in COVID and -- but we were ready. We were absolutely ready. We had our sales force in place 6 months in advance of the PDUFA date. And I think as people get vaccinated, as doctors' offices open up, more patients are going to be going to see their doctors, so they can have that conversation. And our reps are going to be able to have face-to-face conversations. So I think those are 2 opportunities that I think could expand the early success even further.

Okay. And so as we look ahead, how are you thinking about what kind of new patients are going to be added? I guess, what are you defining as new patients? Are these patients that are diagnosed to choose not to take any prophylaxis? I mean are -- what percent of HAE patients do you think are not yet diagnosed? Like is this an underdiagnosed market?

And Charlie, you might want to touch on the market research and some of the feedback that we're getting since we've launched because I think that will help give her some insight to that question.

Yes. So the -- Tazeen, this is -- it's a pretty mature marketplace. So the number of truly new diagnosed patients, I think, is small. It will always be there. But really, like we're saying, the majority of this is coming from patients who are already diagnosed. They're already on a therapy. They may even be doing well on that therapy, but they want to treat their disease differently. And we expect that to continue. In other markets around the world, there will be different dynamics. But from the U.S. marketplace, that's what we see. We're probably being repetitive, but it really is -- it's a switch marketplace.

Yes. So you brought up Europe and the sort of transition to that, just given your news about getting approval. So what are the next steps in terms of countries that you plan to launch in? And should we expect to see the same level of excitement in Europe as we're clearly seeing here in the U.S.?

Charlie?

Yes. So the -- there is a lot of excitement. The rollout will be different just because of Europe, you have to go through the market access process, of course, in each of the markets. But the first market you'll see us launching in is Germany a little bit later this quarter. And what we -- we do the same kind of research and preparation in Europe as we've done in the U.S. And what we see is there is a lot of excitement both for expanded prophylaxis options but, in particular, an oral once daily. So we'll launch in Germany first. Next big markets will be U.K. and France, where we already have early access programs underway. And then the commercial launch will come later this year into next year in those markets. Ultimately, we expect to launch all around Europe.

And would you expect sales from Europe to be meaningful this year?

So this year, I think the ramp-up will be different. And it will be a little bit slower just because of that access process. So what we do expect is -- we've said that this is a $500 million plus global opportunity for ORLADEYO. And Europe is going to be a meaningful part of that opportunity.

Okay. And so how are you thinking -- or how should we be thinking about modeling price in Europe? We know, historically, Europe does command a discount to U.S. price points. Germany happens to be one of the more [indiscernible] in terms of reimbursement. But for an average price, is there a range of discount we should keep in mind?

Well, Tazeen, we'll announce our price when we actually -- we do launch. But you're absolutely right. It's a lower percentage. I think some of the other HAE products, probably 50% to 2/3 of the U.S. price is a good range. But we'll announce a price when it comes out. What we're really trying to make sure is like in the U.S., patients have access to this drug, and physicians and patients can decide what's the right drug for each. And we're confident that ORLADEYO is the choice in a lot of those cases.

Yes. Okay. So maybe let's move on to PNH, which is your next big indication. Can you just remind us on where you are in prepping to movement to the pivotal phase of development here and what the main gating factors might still be?

Bill, do you want to take that?

Sure. Tazeen, we're super excited about where we are. We've completed our dose-ranging study, settled on a dose, had great conversations with the regulators, including the FDA, about the selection of the dose, the primary end point and the secondary end point and the design of the studies. So the primary end point is going to be change from baseline in hemoglobin. That's very straightforward laboratory measure of anemia, of course, and directly related to patient benefit. And the key secondary end point in our studies will be about transfusions and relieving the burden of transfusions in patients with PNH. So we're planning 2 studies. They'll both start in the second half of this year. And we're working hard to complete all of the steps we need to do to get sites ready and to get them activated in the second half. One study will be in patients who are not doing so well on C5 inhibitors, so they had not an adequate response. And they're still anemic, they might still be transfusion dependent. And in that study, it's a randomized comparison of our drug versus the current C5 inhibitor. Our goal here is monotherapy. So that study will be monotherapy with BCX9930. The other study will be in patients with PNH who are not on a C5 inhibitor. And there are lots of places around the world where there's even no access or very limited access to the C5 inhibitors. So we'll be -- it will be in a lot of countries around the world, just like we were in the HAE program. And that's going to be a placebo-controlled trial. So it's all set. And we have the foot right on the gas pedal all the way to the floor to make this happen.

Okay. So Bill, thanks for that description. For the study that you're doing for patients who have not had experience on the C5, should we assume that, that would be primarily ex U.S. patients just because of the price point for Soliris or is there a group of patients in the U.S. for whom that would also be true?

I think your assumption is almost certainly correct. There will be very few patients in the U.S. with PNH for the treatment that don't have access. If they do exist, we'd like to find them and put them on the study. But you can expect the majority of patients in that study to come outside the U.S.

Yes. And so for patients -- so Soliris has been on the market now for a bit. And so you have some good market data available. What percent of patients are [indiscernible] with that? And is there a specific profile of patients that might be more amenable to your therapy versus [indiscernible].

I think that's a great set of questions. Let me start and then hand it to Charlie because our market research also is very informative here. The publications vary, but up to half of patients who get a C5 inhibitor in the randomized trials remain anemic and/or transfusion dependent. So they are ideal candidates. So they certainly exist. And Charlie, please.

Yes. Tazeen, so in -- at our Investor Day back at the end of March, we presented some of our first market research with U.S. PNH patients. We talked to 23 patients. And by some measures, the patients were doing pretty well. I think only 3 or 4 of them were having regular transfusions. Their average hemoglobin was just over 9. And then we showed them a profile very consistent with the profile of 9930. And 90% of them were highly interested in switching to 9930. And I think that's a 2-part -- it's sort of like the HAE story but even better. Part of it is to get better outcomes from raising their hemoglobin, maybe better controlling their transfusions. But also the burden of treatment is really high for these patients. Soliris, every 2 weeks, several hours of infusion time, Ultomiris every 8 weeks, but even more time spent with infusion. So that adds a lot of burden to patient's life. And so we're really excited, again, of a future switch market where all the patients on these infused therapies will have an opportunity to switch to 9930.

Okay. And is it the case for more mild PNH patients, they choose not to get therapy because of the way the therapies currently deliver or is that not the case?

We have heard anecdotes of exactly that.

Okay. So I would [indiscernible] a low-hanging fruit [indiscernible].

Yes. I think you're touching on something interesting, right? The burden of therapy here, and Charlie mentioned it, is way bigger than what we're seeing with the injectable therapies of HAE. I mean we've heard patient stories where, between the blood test that you have to get and waiting for the results and then the infusion, it could take a half a day. A half a day to get your infusion, that's just nuts.

Yes. Agreed. So before we leave the topic of PNH, I just want to mention that there could be another competitor entering the space. Apellis actually has a PDUFA this week for its drug. I wanted to get your thoughts on what it would be like to enter market potentially with another player before you guys would have [indiscernible] production. Clearly, you're already experienced because you've done this with HAE. But I'm wondering if there's anything that would be different to your approach with PNH.

Yes. I don't think it changes it, honestly. It's every 3- or 4-day subcu with a pretty a significant volume. It reminds us a little bit of Haegarda in the HAE space and maybe even bigger volume. And so we think that those are patients that are going to want to switch to a twice-daily oral. So our strategy is very clear. Bill and Charlie worked to get as broad a label -- designed the trials to get as broad a label as we can so we can get people that are controlled on C5 inhibitor, controlled on C3 inhibitor or not controlled. And we want all of them because we've got a twice-daily oral.

I mean if you do get your -- reach your goal of getting a -- it being a monotherapy drug basically, how should we be thinking about pricing? Because this is a market which, at least in the U.S., needs to support a high price point.

Yes. I don't know, Charlie, if -- I'll take a stab. It's early, Tazeen. So it's a little bit early to talk about pricing, but I think you hit the nail on the head. The competitive pricing right now gives us a ton of flexibility, right? And so I don't think that's a real huge worry to us. And then it's about access. As Bill said, there's parts of the world where we think that we could find good markets and get access to patients who have never had anything. So this is a global market that we're really excited about. I don't know, Charlie, if you have anything else.

Yes. I mean I'd say that right now, we believe the PNH market is -- as we said, it still hasn't been tapped out, but it's already about $2 billion. So there's a lot of space there for us, and we're really excited. And obviously, this would just be the first indication for 9930. So many opportunities beyond that, which makes this a really exciting product.

Yes. So maybe we can spend a couple of minutes on what you're thinking beyond PNH for this molecule? Maybe subpopulations, maybe related indications? Would love to hear your thoughts on where you think it's worth investing.

Bill, it might be good to just talk about what targets -- or what diseases are more interesting, based on alternative pathway and that kind of thing.

Yes. There's a huge list. We break it down as follows: based on target validity and the evidence of the disease. But the alternative pathway is a major driver of the pathology and the disease. In academia, there's been a ton of research published in the last 30 years, which has accelerated in the last decade. And there are many nephritis conditions, there are many vasculitis conditions, for example, that are clearly driven by the alternative pathway. As you then expand the universe from there, there are other illnesses that also -- there's a contribution from the lectin pathway, with a [indiscernible] pathway or -- that appear to be predominantly driven by one of those other pathways. So the approach we're taking is go after the most validated alternative pathway diseases first. And in the second half of this year, we'll be starting a proof-of-concept trial in selected nephritis indications that fit that set of criteria. And in the future, I think it would be very interesting to test a drug like 9930 in these other diseases that appear to be driven by these other pathways of complement because of the role of the amplification loop of the alternative pathway in supporting a major component of the activity of those other pathways. So we certainly wouldn't rule that out. Diseases like myasthenia gravis, for example, fall into that category. But that's not an immediate priority for us. The immediate priority in indication expansion is selected nephritis indications that really do have evidence through AP-driven pathology.

And I guess, Bill, are you trying to do the pipeline-within-a-product approach, similar to what [ argenx ] is doing?

Absolutely.

Or would you want to use different molecule [indiscernible].

No. I think that the explosion in knowledge about the role of the AP in these diseases sets us up perfectly for a pipeline-in-a-molecule approach for the development of 9930. It's an amazing opportunity.

And I guess, Bill and Jon, how are you thinking about the overall profile of 9930, including safety? Does this have the right balance of efficacy with tolerable side effects?

Absolutely. So we've now got experience of administering this drug for over a year in subjects on the Phase I dose-ranging study that have PNH. So having that data so early in the program is hugely beneficial and gives us a lot of confidence in the benefit-risk profile of the drug. Obviously, we need to complete the pivotal trials to more fully understand it. But so far, so good. I mean we've -- there are no significant safety signals that are appearing with the drug so far.

Yes. And I think one thing Bill talks about occasionally is the feedback he's getting from the investigators and their conversations with patients. And they're feeling a lot better, right? I mean this drug really, really works. And it's a twice-a-day oral. And if other orals are in the market, as Bill -- or Charlie said, $2 billion PNH market and about $1 billion on each of these other markets that we can pursue, there's plenty for us to compete. And we're showing that we can compete with the likes of Takeda and CSL. So we're not worried about that in complement-mediated diseases either.

And so if we think about how long it might take to enroll these 2 studies, assuming that COVID [ first improve ] and we are, in fact, moving to reopening, what will be a ballpark timetable for us to think about potentially seeing pivotal data?

I think it's really hard to predict at the moment. We need to get some sites activated to see -- to be clearer about how long it's going to take to recruit these studies. But the regulators, of course, want to see 1 year of safety data. So ultimately, that's going to be a rate limiter in collecting the data and putting together the applications for marketing authorization. So it's a bit too soon to predict.

Yes. We don't know the rate, Tazeen. So we'd be guessing at this point in time. I mean, size-wise, it's similar to HAE. But I'm not sure that we can use HAE as an analog because it might have enrolled faster in HAE than here, I don't know.

Okay. So I guess before we -- I'm sorry, Charlie. Did you want to say something?

No. I'm sorry.

I thought you were about to say something. So is there anything else that's in your pipeline that you think investors should be starting to pay attention to or should be doing more work on, on a go-forward basis?

Yes. I mean one of the things that we were really proud to highlight in the Investor Day was our drug discovery capability and how we make molecules 1 atom at a time based on shape and charge of the enzyme active site. These are world-class scientists in Birmingham, Alabama, led by Dr. Babu. And there's a lot more coming, Tazeen, right? The opportunity to just keep filling the pipeline with our own homegrown discovered BioCryst molecules that have a differentiation by being oral drugs for rare diseases, there's a lot more to come.

Okay. Great. So we'll be looking forward to it. With that, thanks, guys, for spending the last 30 minutes with us. We really appreciate it. It's good to see you virtually. We hope to speak to you [indiscernible].

Yes. I hope to see you soon. Take care.

Thanks.

Thanks, Tazeen.

Thanks, Tazeen.

Bye.