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

Hello, everyone. I'm Andrew Fein. I'm 1 of the biotechnology analysts at H.C. Wainwright. It's my pleasure for the next company -- excuse me, to introduce the next company speaking today will be BioCryst Pharmaceuticals. I've the whole gang here for us. So hopefully, we can cover a lot of topics. Maybe the best place to start just handing it off to the company's CEO, Jon Stonehouse, to kind of lay the landscape in terms of where things are and what we can kind of expect in the next few quarters from the company.

Sure. And, Andy, thanks for inviting us to your health care conference. I wish we were doing this face-to-face, but I guess we won't do it for now. So let me quickly say that with me today is Charlie Gayer, our Chief Commercial Officer; Anthony Doyle, our Chief Financial Officer; Bill Sheridan, our Chief Medical Officer; and John Bluth, our Chief Communications Officer. And we're all going to be making some forward-looking statements and those statements have risks and they can be found in our risk factors on our website. So it's just an unbelievably exciting time at BioCryst. And let me explain why. We have a really meaningful product on the market that we're well into the launch. And we've had -- I think we surprised a lot of people with the success that we've had so far. It didn't surprise us. We expected that we would be where we are and we couldn't be more thrilled. And it's -- Charlie can go into more detail on how we're getting -- generating the revenue and getting new patients to switch from other prophylactic therapies and on-demand therapy to ORLADEYO, but the launch is going fantastic, and we see this at no less than $100 million first year sales, which is -- I don't think there are many companies in the rare disease space that especially small biotech that have had that kind of success out of the gate. So that's one. The second 1 is that like ORLADEYO, all this stuff comes from our discovery research team in Birmingham, Alabama. And unlike a lot of other biotech companies when they are launching a new product into the marketplace, they have a big pipeline gap typically, because they put all their eggs into the lead program and then invest in the other. We didn't do that. We continue to invest in the discovery efforts of the pipeline. And so we have an oral Factor D program, which we think could dramatically outsize the potential of ORLADEYO, and we have high expectations for ORLADEYO because it's a pipeline in a molecule. And it's in a pivotal study in a disease called PNH that we expect to start enrolling patients later this year. And then we're moving into a basket study of 3 renal indications for proof of concept there. So incredibly exciting. Then -- in a really solid financial position, right, with revenue being generated, the opportunity to bring in capital on many different forms. It's just -- it's a completely different ball game for us at BioCryst and couldn't be more excited.

Great. Why don't we turn then to Charlie on the ORLADEYO front. I guess things seemingly have gone as well as could hoped. Were there any components of the work you guys did prelaunch that, for whatever reason, have been different than what's happened in actuality? So have there been any disconnects between what -- how you assumed the launch would go and how it has gone? And the context of that, are there areas to focus on for future growth? Or how should we think about what really drives growth -- further growth from here?

That's a good question, Andrew. And if you recall, we invested really early in the prelaunch period. So we had our sales team on board early. All of that was in a complete virtual COVID situation. And so some of the things that have changed, we really launched this in a virtual setting. By Q2, we were able to do a lot more in person. And I think 1 thing we've learned throughout the process not surprising to us is that being in person really does help. It adds extra fuel. And there's still things we haven't been able to do as much like meetings with patients -- in-person patient meetings. And so that's a key opportunity to come, as we get to that in the future. But largely, given that we launched it in COVID, given that we did all the preparations, things are -- as Jon said up front, things are going quite in line with what we expected. We expected patients to be switching to ORLADEYO. And in Q2, we had 60% of the patients starting on ORLADEYO, who were switching from other prophy drugs. The others were switching from acute-only. So that's going just like we expected. I think that's surprising to some people. It's surprising even to some physicians, but that's what the patients had told us that they wanted to do, and we expect that trend to continue.

I mean given how tight-knit and vocal, the HAE community has shown itself to be over the years, does positive patient feedback kind of feed itself in a way? I mean, as patients hear from other patients about their own experiences and obviously, the clear preference for most people to be on an oral therapy. Does that just feed itself in terms of convincing a lot of the patients to go ask their own physicians for the therapy?

It's a really important part of this community, like you said, they're tight-knit. The history of other drug launches in the space is that the patient word of mouth is really important. We see that starting to happen, but it really hasn't gotten going in the same way, because of COVID. And so what I'm really excited about is how well we've done up to this point with that kind of headwind that we were facing. If -- in normal days, we would have this summer, the HAEA would have had their big National Patient Summit, where they typically get 1,000 or more patients and family members. That didn't happen in a live setting this year. So that's a deferred opportunity. And I think as well as we've done, once that word of mouth starts to spread more with those kind of peer-to-peer, patient face-to-face interactions, that's something that's going to push this launch for a long time in the future.

Yes. I would add, Andrew, considering how well we're doing so far, imagine what could happen if word of mouth is really spread. I mean, oh my god, this potential is really significant.

I guess along the lines of maybe thinking back, right, there were some probably misplaced focus on part of some investors, the nuances of efficacy versus the extent to which that's largely outweighed by the oral convenience that ORLADEYO offered. And people got bogged down in all sorts of debates before the commercial launch about how that will get played out. To what extent do you think we're seeing kind of the same phenomenon in so far as 9930 goes? There are debates about what the bar for efficacy is. When meanwhile, efficacious enough combined with oral has seemingly shown itself to be a powerful combination. So just broad thoughts there.

Yes. Let me start with that one, and Bill, you can jump in and Charlie feel free to it as well. I think with 9930, I'm not sure anybody has shown better data than we have. I think we stand tall in terms of what we've seen with 9930 thus far in terms of efficacy. And is it better than the other drugs that are out there? Certainly it takes care of extra vascular hemolysis. And so that's a real benefit compared to C5 inhibitors. But the hemoglobin changes and the fact that a lot of people are transfusion-free is -- I don't think it's -- anybody's beat that. Maybe they're similar performance, but I don't think anybody has done better than that. So I just think people are giving us any credit for 9930 period. I think that's the bigger problem or the missed opportunity, honestly, is that here's a drug that has -- is a pipeline in a molecule that has fantastic efficacy. It's oral. We know how it's a switch market. We know how to make that happen and what's the potential of that, right? So Bill, I don't know if you want to add challenge that or have a different perspective?

I was wondering whether the question was also about the ORLADEYO launch. But anyway, the 9930, I think that the evidence is this overwhelming that the alternative pathway of complement drives the pathology as PNH and controlling it with proximal complement inhibitors is going to be an advantage. And we've seen with the Apellis program already that a C3 inhibitor can provide control of extravascular hemolysis. The oral proximal complement inhibitors have a big advantage with the oral route. We've learned that with ORLADEYO, right? So oral drugs for rare diseases really matter. And the -- our expectation to the 9930 program is that we'll be able to replicate what we've seen already in our pivotal study. And so that...

I think the other thing we've learned is with ORLADEYO in particular, is that the pivotal studies don't represent the benefit of the drug. I'll never forget the day Bill came into my office and gave me the top line results. And I said to him why are so many people staying on our study. And we didn't have the immediate answer, but what we found out is they were doing really well, right? That's why they stayed on our drug. And so the longer patients have been on our drug the better than they do, right? And so this is all -- it always comes down to whether it's a doctor making that decision or a patient, it's a risk benefit, right? What's the risk that their disease won't be managed? And what's the benefit of the therapy that you have? The burden of therapy, I think, is clear to patients for sure, and we're convincing doctors every day. And the risk of controlling the disease is -- there's very little risk here based on what we've seen. Sure, no drug is perfect. No drug works in everybody. But what we're finding is that if you go on that, the vast majority of people stay on it, right? And that's -- so why wouldn't you try it.

And from a market phenomenon perspective, I guess, to Bill's point, the fact that it's a switch market. Presumably lessons learned via the ORLADEYO launch can be repurposed, if you will, ultimately for the 9930 potential launch down the road.

Yes, Charlie, you should talk about what you're already doing on -- in PNH and other diseases.

Yes. I mean -- so we definitely see it as a switch market. And I think one of the lessons from the -- from ORLADEYO that's working well is we never believed in the idea that this was a drug to niche to certain patients. We saw this right from the beginning that there was a patient demand across the spectrum, and we were very strong with that messaging coming out. And that's working. That's a big reason that patients are switching. In the future, where we've got not only the oral, but as we're talking about here, an MOA that adds more for the patients, the whole market again is going to be open to us. And so that, plus what we've learned about -- we knew this -- an important part of the ORLADEYO launch is just a really excellent service program for patients in a rare disease, and providing patients a really good experience while they are switching from whatever therapy they're coming from. That's working really well with ORLADEYO. Our team is getting really good at it, and we will carry that forward to the launch for 9930 in PNH and beyond.

How much of a road map do you have to give physicians from a switching perspective in terms of going from the current therapy onto the new therapy? I guess, do they know how to do it? Or to what extent are you providing instructions and how has that kind of helped thus far?

Well, I think it's an important thing. In HAE, we do give them suggestions based on how it was suggested in our clinical trials for 1 thing. And then sometimes physicians -- once they get the experience, they're comfortable. But ORLADEYO is a drug that works quickly. So when you're switching from another prophy drug, you don't need much of an overlap. It's -- sometimes patients have comfort reasons, they might want to overlap for a period of time, but there's the flexibility to do that. And Bill, in our 9930 trials, it's going to be very clear what the road map is based on our pivotals there.

Sure. It's a similar situation. I think hematologists are very used to adjustments in therapy like most specialty physician groups. They're very used to it. So the concept of switching from 1 therapy to another is not novel. And similarly, 9930 acts within minutes actually after the first oral administration. So I think there's a ton of flexibility built into the nature of the molecule about how physicians choose to switch patients from what they're currently on to the new treatment.

One of the things that Charlie's team did really, really early on, I think over 2 years prior to the launch, was they invested heavily in the human psychology behind switching, both from a doctor and a patient perspective. And our goal is really simple. We want to be the smartest about what causes good switches and what causes bad switches, people to go back to their old therapy. And so we were really prepared and we trained our teams. We built the support services. We did all the really little, but very important things when you add them all together that made us successful quickly in getting that switching. So that's what we love about complement-mediated diseases is, guess what, we're going to do it again and again and again.

In the context of the complement-mediated disease space and 9930 in PNH in particular, given the Phase II results you've shown and the plans for the pivotal study, maybe, Bill, can you just remind people of the endpoints and the data, and how the company has done everything to seemingly derisk the program ahead of the pivotal program?

Sure. I trained in hematology oncology-originally, and it's fun being back in the field, because there are so many laboratory measurements and clinical measurements that really matter that are so easy to collect. So it's not very hard to do these evaluation. So the primary endpoint of the pivotal studies, both of them, is change from baseline and hemoglobin. Totally simple to measure. You do have to take care of the effect of transfusion, so that's built into the analysis, but very easy to measure. And the data we have already generated both in patients getting 9930 as monotherapy in the setting of not being on a C5 inhibitor and also getting it so far in addition to their current C5 inhibitor treatment that isn't doing very well, looks really good, right? So you can easily see clinically meaningful and pretty rapid changes in hemoglobin that stabilized after 4 to 8 weeks to 12 weeks or so. And that's easy to measure. Similarly tracking transfusion is easy, and we had a massive effect in both patient populations compared to historical experience being supported by transfusions, practically universal transfusion-free. So that sets up a very strong expectation of success. So why is that so? Because the target is fully validated, right? So I think this is what's making this whole thing so attractive. You're starting off on the right foot with a scientifically validated target that you're very, very confident that you have a potent, safe, specific inhibitor, you can get the job done, and that's what we've seen so far. Like Jon said, there's always a patient distribution, there will be some variability in response. That's okay. That's exactly what we see with every other drug. But the average response is easy to measure. It's easy to power studies with relatively small samples. And it's a rare disease now that -- now we've got to get cranking and get the studies up and recruited, and that's our plan for the remainder of the year. They're really focused on that.

Do you think ASH will be a good kind of a forum, if you will, which to gauge some physician excitement for the program as investors try and continue their diligence process?

Yes, I think that the whole field is exciting to hematologists of proximal complement inhibition. You've seen that with our competitors as well with the Novartis program, with the Apellis program, with our program. The fact that we've been able to move from Phase I proof of concept straight into pivotal trial is exciting. We've had tremendous cooperation from world experts in the treatment of PNH as we've developed the program and developed the protocols and submitted them to regulatory agencies. So I have to say, similarly, the engagement from regulatory agencies confirms the medical need here and the -- you don't get this opportunity to accelerate from Phase I into pivotal studies by accident, right? So both the characteristics of the drug on the study and the evidence for that drug and also the medical need. So that's really all to the good. We shouldn't underestimate the challenge of recruiting the subjects, of course. That's always a challenge to get people to join clinical trials, especially in the context of rare disease, but we're confident we can do it.

Maybe we can just spend a couple of minutes on financing of the company going forward. Now obviously, you guys announced a financing and then pulled it back. So maybe you can just speak about where the company is at from a financial perspective and how you're thinking about things going forward?

Anthony, do you want to tackle that 1?

No, we're in a really strong position. Before the offering we had said, we have cash into 2023 in a really strong cash position with revenue coming in and nothing has changed, right? We -- I continue to believe that we're in a really healthy position. And we have numerous options available to us, right? So the equity raise we withdrew on the basis of, a, the financial strength that we have and; b the options that we continue to have available to us and we've talked at length previously about whether that's -- we have equity, we have convertible debt. There's term debt. There's royalty and the deal that we did last December, I think put us in a really good spot where people took a look under the hood, and were willing to invest healthily in the business on a go-forward basis. And it gives us a really good position to build on, on a go-forward basis to utilize those additional options that are and continue to be available to us. So we'll continue to do what we always do in terms of looking at additional ways of bringing capital into the business to accelerate the programs that we have that are going to add value to the company, but those options and the flexibility on a go-forward basis are going to be key to growing the company.

When you generate revenue, Andrew, at the rate that we're generating revenue, it just puts you in a completely different spot. There was a time where we would have been desperate to have said we got to do this deal no matter what. Not this time, right? And honestly, the market is not that attractive, right? I'd much rather go to other sources right now than that. The cost of capital is just different. And so the market spoke, that's fine. We'll go in other places, and we'll keep generating meaningful revenue while we're exploring other options.

Yes. It's frustrating, I guess, from the outside looking in to see you guys constantly not get the benefit of the doubt insofar as your pipeline goes. I mean we saw it take a while with HAE, right, where you have the data for a while, took really a successful launch to get the valuation to at least approach a more normalized level than it did for a long time during the development process. I guess what do you feel as though you need to show from the 9930 program to kind of proximate what you're hearing investors want to see, so that they buy in further.

Yes. First, let me say we're patient and we can be, because we're in a strong financial position, and we have a lot more value to create and invest in. And I think it's more than the 9930 program, honestly. I think it's all about execution, right? And there's a tipping point here somewhere. I'm not going to even attempt to predict where that is, but there's a tipping point where people go "Oh my god, this is a way bigger product than we thought it was in ORLADEYO" And there's a tipping point when people say "Oh my god, it is a pipeline in a molecule, and it's way bigger than ORLADEYO", right? And then there's a tipping point where they say, "Oh, and they can keep filling the pipeline with more stuff." And there's a tipping point where we don't have to go back to the market anymore, because we're self-sustainable from a cash perspective. So we'll just keep doing our job and keep executing and one by one, we'll win them over. There's no chip on my shoulder on this 1, because I've never had more fun in this company that I'm having right now. And it's because what's in front of us is so exciting. And the team that we have to get there is very inspiring.

That's great. I think that's an excellent spot to probably leave things. I don't know whether you'd like to add anything to that, but that's pretty powerful ending, I think.

Yes. No, we're done. Thank you.

Well, thank you, guys very much. It was great speaking with all of you.

Yes. Thanks, Andrew.

Always a pleasure. Thank you.