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

Great. Thanks, everyone, for joining us. I am Jacob Hughes, Specialty Pharmaceuticals Analyst at Wells Fargo. Next up, we have BioCryst Pharmaceuticals. From the company, I'm very pleased to have President and CEO, Jon Stonehouse. Investors can e-mail me questions via the platform, and I'll ask them on your behalf. Alternatively, you can e-mail me directly at [email protected]. Jon, I'll hand it over to you to give a little bit of an intro on your progress, and then maybe we can jump into Q&A from there.

Sure. Thanks, Jacob, and thanks for inviting us to your health care conference. Let me just make some real quick introductions of who's joining me. We've got Charlie Gayer, our Chief Commercial Officer; Helen Thackray, our Chief R&D Officer; John Bluth, our Chief Communications Officer; and Bill Sheridan, our Chief Medical Officer. And we're all going to be making forward-looking statements, and those statements have risks and you can find the risk factors on our website. So in terms of the progress of the company, there's never been a more exciting time at BioCryst and that's due to the fact that our strategy is really coming together. What we're good at is being able to make oral drugs for patients who suffer from rare disease, and that's really hard as evidenced by the fact that there are so few out in the marketplace. And our team is excellent at it. And the other piece that's really important is it's not some small incremental improvement in convenience that you think of in other diseases. In rare diseases, it's life changing. It's a really big deal for patients. And the evidence for that is the successful start of our launch with our first oral drug for a rare disease, Orladeyo, for patients suffering from HAE. We can get into a lot more discussion around how the launch is going, but it's going extremely well. We've said that we expect no less than $100 million on net revenue this year, the first year of launch, and that's in COVID. We're not making any excuses because there's COVID out there. And there are very few rare disease drugs that have hit $100 million in their first year. And so it's off to a great start. And why is that? It's a really good drug, a great drug. We've got an experienced and very effective team, and we made a lot of investment to get smart to be able to get patients to switch from other therapies to Orladeyo. So we're starting in the marketplace. We're generating revenue with Orladeyo and then behind that and right behind that, is another oral drug for rare disease is our oral Factor D inhibitor, BCX9930. And it's in pivotal studies in PNH and then 3 different indications for -- nephritis indications that are complement-mediated in a basket study. So it's the equivalent of having 3 -- or excuse me, 4 molecules in either pivotal studies or in proof-of-concept studies. So our pipeline is full, and we're just getting started. There are many, many, many more indications to go after with BCX9930. And then last but not least, is the discovery engine continues to produce other molecules for oral drugs for rare disease. And the next one is BCX9250, our ALK-2 inhibitor for FOP, a really horrible disease, a bone development disease and that affects kids and it's just very debilitating. And there's a huge unmet need in bringing an oral drug in that space as big. And then I guess one other point that I would make is financially, we're in a really solid spot. We've got a drug that in its first year will generate no less than $100 million and continue to grow from there. We've said it's $500 million plus, and we're putting a lot of emphasis on the plus because that's an old number. And we now have updated information and then we've got other ways of bringing in capital like the debt and royalty that we did last December. So very, very exciting time, Jacob, to be at BioCryst.

Okay. Perfect. Thanks, Jon, for that intro. Maybe we can just start there on the launch. The first quarter, $11 million, the $30 million in 2Q. It's really good sequential growth. You're talking about $100 million -- at least $100 million in your first year. Maybe -- and this is in a COVID environment, no doubt. Maybe just talk about what has gone right about the launch? How is it going? Any more details around that? And I think on the last call, you talked about 70% of the market have policies now in Orladeyo? How would you frame that payer response?

Charlie, you want to take that?

Yes, sure. So what's going right, there are a lot of things going right in the launch. And I think that's, as Jon said, kind of we're not making any excuses around COVID. We knew we were launching in COVID. And so I think our team has done -- did a great job preparing for that and really being able to reach customers in all different ways, including virtually. And so we launched in kind of the height of COVID last December and January and still got off to a great start. And to the extent that things get better on that front, I think it just creates more opportunity going forward. Some of the things we're really pleased about in terms of the early launch metrics is we expected patients to switch to Orladeyo from other drugs, particularly injectable prophylaxis products and that's exactly what's happening. So with 60% of patients in Q2 who were new to Orladeyo switching from other prophylaxis products and then the remaining 40% switching from acute only. So the prophylaxis market is continuing to grow and Orladeyo is contributing to that. The payer process is really important. It's going well. What doctors and patients have told us is if we don't get that piece right, that would be real trouble and they've seen difficulties in the past. And the key there is the demand that the patient -- or sorry, the payers we're seeing from patients really brought them to the policymaking table sooner. And our market access team is just really good at working with payers. And so to have 70% of patients having access to an Orladeyo coverage by midyear, that is way ahead of expectations for a rare disease launch and we expect continued success in Q3 and in Q4. And that just gives doctors and patients more confidence going forward.

Okay. Maybe just to add on to that, consensus wasn't there at $100 million for the first year, no doubt, when you launched this drug. What do you think the street got wrong? And do you think there's still -- you mentioned there's still upside to the $500 million in peak sales, what's going to drive that? Is the payer piece, something of that was misunderstood or maybe just some additional color around that?

Yes. Let me take this one, Charlie, and then if I miss something, you can jump in. I think what people missed was that what we said was this is a switch market and that we were going to get patients that were well controlled on injectable prophy wanting to come on our drug and they were going to do well and they were going to stay on our drug. And that's what we said 2.5 years ago, and people looked at the top line results from our study and compared it to the top line study data from other products, and they said, no, that's not going to happen. And what did we show you in the marketplace, that's exactly what's happening. 60% of sales or new start forms are coming from prophy switches and 40% are coming from on-demand therapy. So it's exactly what we expected, and the team has done a great job of executing on that. What gets us more excited is the bulk of this demand is coming from docs asking patients if they'd like to switch. We haven't activated the patient-to-patient -- patient coming in and asking the doc yet because of COVID, it's just harder to get people together. So when we get that rolling, we expect that you'll see even greater growth in the future. And so there's some headwinds with COVID. We're not making excuses for it. We're very pleased with where we are, but the upside opportunity here is significantly higher. So people think they missed the window here. I mean, no way. We're 2 quarters in. It's only $100 million in the first year. This is a lot bigger. There's a lot more value to be created here.

We're still just getting started for sure.

Okay. And will you look to update your peak sales estimate in the near future or what kind of forum would you like to look to do that?

Yes, I don't know exactly the time frame, but you can figure around a year of launch experience is a good time to start to give people an idea of what the peak sales is. So -- and like I said, it's an old number. We've been putting a lot of emphasis on the plus because we think it's bigger.

Okay. Okay. And then just on the logs, how many of your visits with prescribers is face-to-face versus still virtual? And is there -- putting that in context of -- you talked about COVID challenges for this watch and it's still going well. Can you hear me?

Yes. We're good.

So put that in context of what other challenges are you encountering that [ there hasn't been an issue hindering ] the adoption of this drug?

Yes. So by Q2, the majority of our calls were in person as COVID really improved broadly across the country, but it also is very much a region territory by [indiscernible] and others. What's been the response and who are you taking share from?

So we're in the switching, we're taking share, we believe, in proportion to general market share. So the #1 product that patients are switching from is Takhzyro, then Haegarda, Cinryze and some Androgen patients. So that's what we expected. Those are all good drugs, but patients really appreciate the -- many of them appreciate the opportunity to control their attacks with a lower burden of therapy on an oral once daily. They're big companies. They're competitive. I think they've noticed us. And what -- they emphasize their benefits, and we emphasize our value proposition, and we think that we'll continue to do well.

Yes, big is not better here, honestly. Doing smart market research like Charlie did to really understand how to get switches, bringing a product that patients really want and then the size of this stuff is something a company like BioCryst can really manage. So being smarter is more important than being bigger.

Okay. Fair enough. Maybe just on the ex-U.S. opportunity, you have a partnership in Japan. How are you thinking about ex-U.S.? Is that something you go after yourself? Or would you partner that?

Yes. It varies from region to region. But let me just talk about it in general. And the contribution to the global peak sales, the way you should think about it is there's a number of patients we're going to get in terms of the 7,500 in the U.S. We're going to get some share of that. And then our expectation is that we're going to get a similar share in Europe and a similar -- or number of patients in Europe and a similar number of patients outside of Europe and the U.S. And when -- but the price will be a lot different. So it will be a volume play in other parts of the world but you add them all together and you can get to a meaningful number. And so right now, we've got a partnership with Torii in Japan. We just felt that because that market was a little bit less developed, that it made more sense to have more resources to find patients. It's almost like the Cinryze days from 12 years ago. And then in Europe, Charlie has got a very experienced, talented team that's launching in Germany and getting ready in the U.K., France and other parts of Europe. You saw this week that we've got a partnership with NewBridge and we've got approval in UAE. And we're going to keep going around the world, continuing to get approvals and it may be a distributor or a partner and maybe a BioCryst team. It all depends on how -- what value a partner brings versus us doing it on our own.

Okay. Fair enough. Congrats on the lot. Maybe we can move to the pipeline first on 9930, can you just review the data on that program to date?

Bill, do you want to?

Sure. So we don't have time to go over all of the details. But for those of you who would really like to do that, I'd refer you to our website at March 22 R&D Day. And what we showed there was a really nice clinical benefit in terms of reduction in transfusions and increase in hemoglobin. So the goals here are to control the anemia and get rid of transfusions, and that -- both of those things help patients by reducing symptoms. So really pleased with the data. We had data in both C5 inhibitor naive patients with PNH and also patients who had an inadequate response to C5 inhibitor and very consistent with predictions in terms of what a proximal complement inhibitor to do -- would do on alternative pathway inhibitor. And that information set us up to design pivotal studies, and we negotiated those with regulators. And we're now in the process of setting them up. So very strong data.

Okay. And how does that data in PNH compared to competitor data we've seen from [indiscernible] and Apellis.

It's hard to make direct comparisons, of course, across studies because of differences in eligibility criteria. I think that a fair conclusion would be all of the data emerging in the proximal complement inhibitors in PNH is very encouraging for patients with the disease. And we're very pleased with that data.

Yes. I mean when you get hemoglobins close to normal and you stop seeing transfusions, it's hard to get a whole lot better than that. It's not a perfect drug, but the data is very impressive.

Okay. I guess to add on to that, why do you believe patients on competing drug or Apellis would switch to 9930?

Yes. This is really interesting, right? Because it's repeating what we just learned in HAE, only it's better with complement-mediated diseases. And I'll use PNH as an example. The infusion burden there is x100 what it is at HAE, I mean patients tell us they spend half a day in the infusion center from the time they have to get tested to the time it's got to be prepared to the time they got to be infused. So talk about a burden, that's crazy. And then on top of that with the C5 inhibitor, you have extravascular hemolysis, right? And so with the proximal inhibitor like a Factor D Inhibitor, you don't have that. So we expect better efficacy at the end of the day. So we will do -- Charlie will do -- he's already doing it, gathering as much information as he can in the market to understand in the heads of patients and docs what makes a good switch and how do we get people to switch, and that will be a competitive advantage when we get into the marketplace.

Okay. All pressure on Charlie.

I have a good team.

Lots of confidence in Charlie and his team. Lots of confidence.

Of course. Maybe beyond PNH, what's your plan for 9930 and additional diseases, which could complement it there?

Helen, do you want to take that one?

Yes, I'd be happy to. So with the work that Bill has done with 9930, we have a dose that is effective as a Factor D inhibition dose. So we intend to continue to move forward in alternative pathway driven disease. You've seen that with the introduction of our basket study for renal indications, looking at complement-mediated nephritis indications. And there are a number of additional indications either driven by the alternative pathway or for which the alternative pathway contributes to the disease that we can continue to advance this molecule and assess for proof-of-concept and eventually for indications.

Okay. And do you plan to partner this program?

We haven't needed to this point. And honestly, I'm really impressed by what the team has done thus far in terms of the speed of movement from a Phase I study to a pivotal study in PNH. We're in a basket, and we're in 4 different indications or heading into 4 different indications this year. And one of the reasons we brought Helen on, is how do we scale this to manage, maybe triple that, right? And so I think we've shown that we can do this. It's a matter of scale. I mean we'd always be open to somebody that can show us they can do it better than us, but we haven't found that yet.

Okay. And maybe frame it for folks, how big is the opportunity in PNH? And what's the full scope of addressable diseases that you could go after?

Charlie, why don't you talk about PNH first and then how you see the rest of the indications kind of on a macro basis rather than one by one?

Yes. So I mean PNH itself globally, we believe, is $1.5 billion to $2 billion, somewhere in that range and the full market isn't even addressed yet. So that alone is a really attractive opportunity. And then each of these additional indications that are rare diseases, some a little bit larger than others, that each of them can be $1 billion plus. I mean the global opportunity for this whole portfolio could easily be $10 billion. And so -- there's a lot of room to compete here, and we think we've got a great product, and we're ready to compete in a lot of different spaces.

Yes. You get 10% or 20% market share on then, you got a $1 billion to $2 billion drug. That's value.

That's exciting. Okay. Well, maybe just on the pivotal trial for 9930, maybe walk through the design of that trial, the enrollment time lines and some of the key catalysts that the street should be looking for. And ultimately, what's your expectation for [indiscernible] that trial?

Bill, do you want to take that?

Sure. Very excited by these studies. The primary end point -- we have 2 studies. The primary endpoint in both studies is change [indiscernible] hemoglobin, and we're studying 2 populations with PNH that will be very nice to have in the label. The first population is patients who are on a C5 inhibitor but not having an adequate response, and there's still anemic. And so that's going to be an open label comparison to their current C5 inhibitor treatment compared to our drug and the duration of that efficacy component is 24 weeks. The second study is in people who are not on a C5 inhibitor, and that's a placebo-controlled trial and duration of that comparison is 12 weeks. Overall, for an application for an NDA, we need to keep following patients on our drug for 1 year. So the overall duration of the study is 1 year. It's very exciting. We're in the process of implementing sites around the world in many centers, and we look forward to initiating patient enrollment this year.

Okay. Maybe beyond that, Jon, you talked about additional areas you can go into 9250 and a bunch of other different ways you can go. Maybe talk about how you're balancing all those priorities and maybe some additional details on what you could do?

Yes. It's mind blowing, honestly. I mean there's a lot -- we just -- it's too early to share with you, but there's a lot going on and there's a lot more molecules to come. And so that is the beauty of this strategy is -- and the beauty of the drug discovery capability that we've built is that I can't even see the end to it. I mean it's really impressive. And so then it goes back to what I said about why we brought in Helen not only to help us prioritize what to go after and -- but also how do we scale to go after as many of these as we can. And when you start to move into the financial position that we're moving into with real revenue being generated by our lead program, it's a matter of just getting people and our ability to attract people, good talented people right now is the best I've ever seen in my 14 years. So that's why when we hear from folks that say, we missed out. It's like we're just getting started. And the value here is really significant because of all the things we have, everything we've learned and the people, the great people that we're attracting to this company.

Okay. Maybe just on the financial side of things, what's the runway you have now? What's the run rate for your cash to -- what-[indiscernible] I get you through?

Yes. I mean what we've said publicly is that we've got cash to get us into 2023. But as you can imagine, there's variables here. There's how much do we invest in 9930 and how much do we generate in revenue from Orladeyo. I think rather than -- I worry a lot less about cash runway now because of the fact that we're generating revenue, it just puts us in a different position. And then it also gives us access to sources of capital we didn't have before, right, like the debt, like royalty, revenue or capital. And so we're in a really solid financial position, and it will only get stronger with time due to the launch of -- successful launch of Orladeyo.

Okay. Maybe lastly, just it sounds like a lot of this is organically driven on your drugs discovery platform, but is there an interest as well to kind of go out and in-license assets or whatever the case might be in varying stages of development [ across all disease? ] Or is that not an interest for you at this time?

We don't need it, right? We have plenty to bring forward that can create real value and it's under our control, right? We know the molecules because we made them. We don't have to due diligence on somebody else's and be worried about what we don't know, right? I mean these are ours. It's based off a really solid strategy and a great team that understands structural biology. And so no, not really. I mean the capital that we have or that we'll bring in, we're going to put into our own discovery and our own pipeline.

Okay. Well, I think we're bumping up on time, so we'll leave it there. But I really appreciate you and the team's time and congrats on your progress and good luck for the rest of the year.

Thanks, Jacob.

Thanks.