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

Great. Good morning, everyone. My name is Jess Fye. I'm a senior biotech analyst with JPMorgan, and we're delighted to be continuing the 40th Annual Healthcare Conference today with BioCryst. I'm joined by the company's CEO, Jon Stonehouse. He's going to give you a presentation, and then we're going to go into some Q&A after that. [Operator Instructions] So with that out of the way, let me turn it over to Jon.

Thanks, Jess, and thanks for inviting us to this year's JPMorgan Healthcare Conference. Before I start, I'd like to remind you that I'll be making some forward-looking statements, and those statements have risks and the risk factors can be found on our website. Not sure anyone's ever started a JPMorgan presentation with a 0 on the first slide, but a little more than a year ago, that's what we had from our rare disease oral drug portfolio. And then, well, then in December of 2020, we got the approval of ORLADEYO and everything changed. I share this with you to show you how far we've come, but more importantly, how far we'll go. We are creating and growing tremendous value in the marketplace right now with ORLADEYO. By all measures, the launch is a huge success. Even a global pandemic couldn't slow it down. This morning, in our press release, we announced preliminary net revenue for last year, and the result is, our first year sales are $122 million, and we are just getting started. What's even more exciting is what's ahead. Given this great start, we're now able to give guidance for 2022, and that guidance is no less than $250 million of ORLADEYO net revenue for the year. That's more than a doubling of a very strong first year of sales. Several factors will drive the strong growth. First is a chronic therapy, and we start the year with a substantial base of patients to build on; second, all the major payers and PBMs are now covering ORLADEYO, so we have a full year of many more paid patients in the U.S.; third, there are several things we started implementing late last year that we expect will have an impact this year, this includes patient activation. To this point, physicians have been driving the conversation with patients regarding ORLADEYO. We believe once patients engage with each other and their physicians, this will be another important driver of growth. And what we're hearing from patients is having a treatment option with a profile like the one we have with ORLADEYO is so much more than a minor convenience improvement. It's life-changing for them. [Presentation]

Another important message we've been communicating since late last year is ORLADEYO works. As we see from our pivotal trial at 96 weeks, the attack rate in patients treated with ORLADEYO was reduced by 86% compared to baseline, and many experienced attack-free months in 16 of the last 17 months, at least half the patients were attack-free. So no wonder patients are switching from their injectable therapy to ORLADEYO even when they've been controlled on that therapy. It doesn't matter what injectable therapy they've been on, as you can see from the bar chart on the right. Close to 80% of the patients switching from injectables in the first half of last year have stayed on ORLADEYO at least 6 months. No matter what your prior injectable therapy is, the conclusion is the same. You're controlled on your injectable therapy and you switch to ORLADEYO, it's highly likely you'll continue to be -- stay controlled. And so why wouldn't you switch? Now no drug is perfect and ORLADEYO is not for everyone living with HAE. But what we're seeing in the first year of launch is an overall patient retention rate of 70%. And with this profile, we believe we can build on an already strong market share. And the final input is what physicians are telling us. Late last summer we surveyed 60 physicians who are big treaters of HAE patients, what they told us is in the next 12 months ORLADEYO will be their #1 prescribed prophylactic therapy. Now we know physicians sometimes overstate things in these surveys so it can very well take more than a year but our market research has been very predictive of this market thus far. So we believe this survey will be predictive, too. When you add it all up, you can see how we can double revenue year-over-year and you can see how ORLADEYO will be the market leader. So now we've adjusted our peak sales number and we believe we will reach $1 billion in global peak sales. That's real value. But this is just the beginning, at BioCryst we have the ability to compound this value with the world-class discovery team and platform we've been perfecting for decades. Our drug discovery platform at BioCryst is based on structure-based drug design, meaning we design drugs based on what we see, the shape and charge of a target enzyme active site. We're the only company that has this capability, but what makes us different is how we've perfected our approach over decades, having built over 10 thousand molecules. With this experience our team is able to apply the art like molding clay to the scientific approach. The platform enables us to go after difficult targets like serine proteases and kinesis. And these are hard targets because as in the case of serine proteases, there are 300 in the human genome. And the challenge is blocking 1 without blocking the others. We're able to overcome this challenge because our scientists know how to build these molecules to not only be potent but also selective and bioavailable. I've talked in the past about the experienced team we have in Birmingham, Alabama and how they work together, structural biology, medicinal chemistry and the biology teams working collaboratively to build these oral drugs. But today, today, I'm going to show you how they took a challenging target, a serine protease, plasma kallikrein and made a potent, selective, orally bioavailable once-daily capsule ORLADEYO to prevent HAE attacks. So let's take a look at the enzyme active site of plasma kallikrein. It starts with an understanding of the site. Our scientists see it divided into 4 sections labeled S1 through S4 as you see here. S1 is the key to potency. This is a deep pocket which allows us to fit an anchor to our molecule. We tried multiple ring anchors to securely fit this site and figured out a 6-number ring gives the best fit. S2 through 4 are unique to plasma kallikrein and what differentiates it from other serine proteases. This is the key to developing an inhibitor that binds the plasma kallikrein and not the others. So we need to figure out how to build the molecule to bind tightly to these parts of the active site while maintaining the potency. Some additions to the molecule can cause a loss in potency while others maintain it. By going through a cycle of understanding the structure, making the molecule at the chemistry bench and then testing it in a biologic assay and then repeating this cycle is a critical part to the process and knowing what to try and persisting to improve until you get the best molecule is where we're experts. And lastly, bioavailability. To have an oral drug, 1 capsule once a day that gives the same effect as an injectable is the last and most difficult piece. Part of the solution, in this case, is a flooring group, seen here in green. But it's not just adding the group, but more importantly, where to add it to maintain a close and potent fit while giving a better bioavailability. So you can see the final molecule has a perfect fit, fits like a glove. The charges match, blue to red, gray to gray and the contour fits into the space perfectly into the active site. It sounds simple, right? But in practice, it's very challenging, as evidenced by the fact that no one else has achieved this when many have tried. What's the benefit of our platform? Our platform is what allows us to deliver oral drugs to patients when others struggle. Our platform is how we'll be able to repeat this over again and again and again. Our platform is what will compound our value. Imagine the value that can be created if we go beyond ORLADEYO. Well, that's exactly what we have with our oral Factor D inhibitor, BCX9930. And what's even better is this is 1 molecule to treat many, many patients with rare diseases, a pipeline in 1 molecule. Factor D is another example of a challenging target, another serine protease, and BCX9930 is another example of how far we've come and again, how far we'll go. Let's take a look at one of these many -- one of the many rare diseases 9930 will be able to address, PNH. A year ago, we had proof-of-concept data with 4 patients in PNH. Today, we have data from 15 patients with many on 9930 for well over a year. And that data has led us to start 2 pivotal studies in PNH. The data from these 15 patients give us great confidence will be successful in these pivotal studies as we see meaningful improvement in their anemia with increases in hemoglobin and reduction or elimination of the need for transfusions. So we're recruiting our pivotal studies as we speak, which will grow our data set to over 100 patients and ultimately lead to approval where we can reach many, many patients with PNH around the world. All of this with an oral therapy. And guess what? The value of an oral therapy is life-changing for these patients, too. Take a listen to how a PNH patient describes the burden of their injectable therapy, and what an oral would mean to him. [Presentation]

As I mentioned earlier, there are many more rare diseases to treat with our oral Factor D inhibitor. So in addition to PNH, we've started a proof-of-concept basket study in 3 rare renal diseases, IgAN, C3G and PMN. These are diseases where the unmet need is huge, and a targeted oral therapy would be a game changer. Fast forward 2 years from now and what do we expect? ORLADEYO is either at or on its way to becoming the market leader. With 9930, we expect to have data from pivotal studies and begin the process of preparing to file for approval in PNH. And we expect to have data and proof-of-concept in more rare diseases and starting to prepare for pivotal studies in those diseases, and we expect to be running more proof-of-concept studies in more rare diseases. Hopefully, you can see how we reach more and more rare disease patients with our oral therapies, and we layer on more and more value. We also have the capital now to invest and execute our plan. With the successful start of the launch of ORLADEYO and the rapid advancement of our pipeline, you can see how we're able to allocate this capital and successfully execute our plan. We have all the ingredients, the platform, the capital, the team and the strategy to build the next great biotech company. That creates meaningful value and that value is being created now. Everything changed a little more than a year ago when we got the approval of ORLADEYO. And the great news is there is so much more to come. Thank you.

Great. Thanks, Jon, for that presentation. [Operator Instructions] Maybe we can just start out with some of my questions, though. The ORLADEYO launch got up to a very strong start. What were the ingredients that led to that strong initial uptake?

Charlie, do you want to take that?

Well, Jess, thanks for the question. I think the ingredients start with a great product that patients wanted and we recognized that early by doing a lot of market research, and then we really prepared. We've got a great team, a very experienced commercial team on board early so that they'd be ready to launch. And that's the start that they got off to at the beginning of late 2020, beginning of 2021, continued all the way through 2021. And that's something I'm really pleased about. We've seen no decrease in patient or physician demand throughout the year. And I think it's all because of the product plus the preparation.

Okay. And you mentioned coverage during the presentation. Have you completed your goal of having the vast majority of patients under insurance coverage by the end of 2021? And can you remind us of the tier status you achieved in different formularies?

Yes. So we have achieved our goal in terms of getting major payers -- all the major payers and PBMs to establish coverage policies for ORLADEYO. And what our goal is, is to get parity access. We want patients and physicians to be able to choose the right product for them. And we've been successful in doing that. ORLADEYO is at parity or better across the board. And it's really important to patients and physicians because this gives them confidence that the payers are going to reimburse for ORLADEYO, that gives them even more confidence in trying ORLADEYO, and I think will serve us well in 2022.

Okay. You talked about the same number of patients, I think, starting ORLADEYO in 1Q, 2Q and 3Q of '21. Obviously, there was different revenue associated with each quarter as patients continue on therapy and also converted to paid drug. Can you walk us through how the patient adds the move to paid drug and the quarterly revenue line up? And maybe now that we have Q4, was that sort of on the same pace as the other quarters?

Yes. So Q4 was a very similar number of patient adds again as Q3 and the other quarters in the year. And the trends have been very consistent as well. So in each quarter and for the whole year, more than half the patients switching to ORLADEYO switched from other prophylaxis therapies, mostly injectable, prophy therapies. And then the rest of the patients -- most of the rest of the patients switched from acute only. The fact that we've got the better reimbursement situation, constantly improving reimbursement situation means those patients are just moving to paid drug more quickly and will continue to do so in early '22.

Got it. We've got a question on the portal here, and thanks for asking questions. [Operator Instructions] How should we think about the ramp to your peak ORLADEYO sales of $1 billion? How many years will it take you to get there?

Well, I think you can -- one thing you can start with is just the market research that Jon showed in his presentation. The U.S. is going to be the majority of that $1 billion. And you can make it pretty easy. You can say what we need is about 2,000 patients in the U.S., gets you to close to $800 million. You see from the market research, physicians already believe that ORLADEYO will be their most prescribed oral drug within the next 12 months. They sometimes get a little bit ahead of themselves, but we think that this will go quickly over the next few years. And then long term, international sales will add about 20% to 30% of that $1 billion.

Okay. Got it. So I guess relative to your thinking before when you said it would be north of $500 million, is the source of the upside, is it geography? Is it different assumptions on penetration or persistency or something else?

I think that -- Charlie, I'll try to start the answer, and then you can -- if I don't get it complete, you can finish. I think it's the first year of success of the market unfolding like we thought it would. We always had the plus. We always emphasized the plus. And now seeing the switching that's going on seeing the retention of patients that we're maintaining and recognizing that there's still so much more in the U.S. alone, to get more physicians, getting patients to interact with each other and their physicians and go into the office and ask to try ORLADEYO. All that stuff leads us to believe that it's -- the plus is way bigger and really a doubling of what the peak sales was before.

Jon, the only other thing I'd add is the data that Jon showed, the 96-week data over 2 years ago when we said $500 million plus, we didn't have the long-term data. Having the long-term data show and how well patients do after 2 years on therapy, just gives us and we believe physicians and patients that much more confidence in the percentage of patients who will use ORLADEYO.

Okay. Got it. What's the current composition of ORLADEYO patients in terms of new to prophylaxis patients versus switchers?

Well, that's why I'm really pleased with the good consistency of what we've seen since launch, Jess. It's been consistently over half switching from other prophy therapies. And as I said, most of that is switching from injectable prophylaxis. Most of the rest are coming from acute only. And then as you saw in Jon's slides, across the board, these patients are having a really good experience. They're staying -- close to 80% of them are staying on for 6 months plus and regardless of where they came from.

It's bigger picture, would you consider some newer injectable therapies with either monthly or even every 8-week injection schedules that are in Phase III now to be serious competitors to ORLADEYO?

We take every competitor seriously. And our view is what's the incremental benefit that they offer compared to what we offer. And so if you're controlled on a once-daily oral, why would you switch, right? If the difference is 86% versus 90% efficacy -- none of these drugs are perfect. I don't expect that the new ones will be perfect. There'll be an occasional breakthrough attack here and there. So Charlie's job is to get that market share as fast as possible, get these people locked in. And then whoever comes to the market after us -- and it will take a while, right, these guys have got a ways to go, are going to have to show some meaningful benefit to get people to switch off our drug.

Got it. Great. We have an investor question here. How -- it's kind of related, how are you factoring in competition in that new long-term ORLADEYO guidance?

Well, the beauty, and Charlie said this earlier, is that to get to the $1 billion, you can get there with 2,000 patients in the U.S. And remember that about 2.5 years ago, Charlie told you that there are 7500 treated and diagnosed patients in the U.S. So you don't need over 50% market share to get there. In fact, you don't need over 30% market share to get there. And so we're factoring in that competition may come in. Maybe some people are interested in that, but I think it's going to be really hard for these folks to show a benefit to get people to switch.

Okay. Maybe turning to BCX9930. What's the status of the Phase III REDEEM-1 and REDEEM-2 studies?

Jess, I'll take that. So we are proud to say that we are enrolling in both studies, REDEEM-1 and REDEEM-2 have now each enrolled. And we're expanding globally with continuing activation of sites. And what you'll see with those over the next 2 years, we'll complete enrollments, we anticipate having top line data and proceeding with that data to planning for submission of market approval applications.

Sorry. So when can we expect enrollment to be completed?

So I didn't say. So we would complete enrollment and have top line data and proceed to preparations for regulatory approval filings within 2 years.

It's hard for us to predict, Jess, because we're just starting the study, and we really don't have a sense of the pace yet of enrollment. But we're pretty confident that within 2 years, we'll get to the point Helen just described.

Got it. And is there any expectation that COVID is going to affect enrollment?

Bill, do you want to take that one? Because you've been in recruiting trials in COVID for a while now.

Sure. COVID has affected all clinical research for everybody all around the world. Nevertheless, we were able to complete our proof-of-concept study in PNH during the initial year of the pandemic and complete that enrollment and have people continue on study. It's definitely a challenge. We've learned some of the tactics that you have to implement in order to continue research, as we've all seen recently with the huge surge in Omicron affecting staffing in every industry. I mean you can expect that it's going to impact sites but with multiple sites in multiple countries. That's the best way we can move forward in dealing with it.

And Bill, one of the examples we've seen is the use of telemedicine and trials, right, that helps with study visits and things like that.

Yes. Right. So to the extent that regulators and sites are allowing and capable of doing that, especially in the longer-term follow-up that will be required for the filing, we'll take advantage of those tools where we can in order to minimize travel and maximize our ability to recruit and have patients continue on the trials.

Got it. Besides PNH, what are the additional indications you're planning to pursue with 9930? And when could we expect to see initial data from some of the nephrology indications you're pursuing?

Helen, do you want to take that?

Yes. So we are in that nephrology basket. We have a basket trial that is screening now, up and running and screening. And that's the 3 indications that we're pursuing next, C3G, IgAN and PMN. And we expect to continue with that trial, it's enrollment. We have 14 patient cohorts for each of those diseases, and we will be talking about data once we have reached proof-of-concept for each of those. So again, that's another 1 within the next 2 years, we expect to be getting to proof-of-concept and initiating planning for pivotal trials with those indications. Beyond that, we are also looking at indications where the alternative pathway is critical to the disease, and there are many outside of hematology -- within hematology, nephrology but also outside. And those indications where there's more being learned about the role of the alternative pathway and it may be critical or perhaps significantly contributing even if it's not critical to disease. So what you'll see is more information from us about proof-of-concept readiness to start with new indications going forward.

And the capital that we brought into the company at the tail end of last year allows us to go pretty broad, and we're scaling, and we're going to be moving into other indications in the not-too-distant future.

Great. So how do you think about differentiation for 9930 from competing products like iptacopan from Novartis or danicopan from Alexion or I guess now AstraZeneca? And what's your strategy to compete in the future if we envision a time when all of these products are approved?

Charlie, do you want to tackle that one?

Sure. Well, I think the first thing is the clinical trials for all these products are early, so we have to see what the clinical profile is. But we feel like we can compete. We -- rare disease, in particular, is perfect for a company like ours. We're showing we can do it in HAE. We don't need huge teams. And we're getting really good at switching patients from injectable drugs, and we expect to do that the same in PNH. And we're going to apply all of our learnings from HAE to those future launches, and do the same thing that we did with HAE, which is to really prepare and really understand the markets better than anyone else. And I'll put our team up against anyone. I think we can compete very effectively with the type of profile that we see coming out for 9930.

I'd add on danicopan, a twice-daily oral that you can dose to levels that you can control disease is way more effective than a 3-times-a-day that has challenges in dosing up and having to be used in combination. So monotherapy is going to be the offering here. And if you don't have that, it's going to be really hard to compete. And the last thing I would say is if you're going into an injectable market where you had to understand the patient burden in order to get switching, what company would you choose? What sales force would you choose to -- who's recently demonstrated their effectiveness in doing that in another market. I'd put my money on Charlie and his team.

Got it. So you maybe kind of answered this question, but would you consider partnering 9930 just given the competitive landscape and the potential size of that product?

Yes. We've always said if somebody can show us how they can do it better or broader, we'd certainly be open to it, but we haven't found that yet. I think we can do it pretty well, both from a development and regulatory perspective and from a launch perspective. And so -- and we have the capital. We're expecting to generate no less than $250 million of revenue this year with ORLADEYO, and we've got a really solid balance sheet. But we're going to be making some big investments in the 9930 program, but I don't see a need at this point in time, but I'm always open if somebody can show us that they can do better or bigger.

Got it. Maybe switching to BCX9250. Can you remind us where this program stands right now? And should we expect any updates on it in 2022?

Yes. Let me start, Helen, and then you can jump in. So this program, we're still in drug manufacturing and supply buildup and then next will be tox and then moving into to treating patients. And so we made a lot of progress on the drug front last year in terms of supply. But this program goes slow because it's -- as you've seen in the market or in the clinical space, there have been a lot of challenges with these programs and a lot of steps backwards that companies have taken. And so I don't think anybody is going very fast, but the unmet need is massive in this disease. And so we hope to make really good progress over the course of this year and then shortly thereafter, start to look to get into patient studies.

And FOP just appears to have been a tough indication with some setbacks for other companies and their attempts. Do you think 9250 can succeed where others have failed and why?

Bill or Helen?

I'll take that. That's -- so we do. This is -- going back to what Jon was describing in the presentation earlier, we have specific ability to design molecules that are good for tough targets. This is a difficult disease. It's also a tough target. And our ability to design a molecule that's potent and specific, which is important with the kinase, and is one that can be bioavailable, then that's our strength. That really is our strength. And so we'll have to see the data as we go. But what we like with the data so far, our Phase I data has been excellent. And so we think we're in an excellent position to advance this molecule and to have a molecule that may differentiate for FOP.

Great. A couple more questions coming in here. You provided top line guidance for the year. Should we expect you to provide operating expense guidance, maybe when we get to 4Q results?

Anthony?

Yes. I think when we get into late February at that point, we'll give an indication of investment. And like the team have said, at this point in time, I think from a cash perspective, best position the company has been in bio stretch and from an investment perspective, really making sure that we are investing in the globalization of ORLADEYO. And then investing in the programs that Helen talked about. So versus where we were, yes, we will continue to invest in those programs. But the revenue as well that we're generating in ORLADEYO makes it a lot more palatable. And the areas that we're investing in, whether it be 9930, 9250, the potential for value creation further down the road is phenomenal.

Got it. And what about gross to nets? Where do they stand now with ORLADEYO? And where will they go?

Yes. So Charlie's team has done a great job of getting payers and PBMs up and running and confirmed that the vast majority are now -- all the big players of the PBMs are covered. So I think if we exclude free product, then that 15% to 20% that we've talked and guided to is pretty much there. The free product in terms of the quick start program, which has been a huge success as we get to our peak. Overall, our gross to net will be up 15% to 20%. But when we just look at the paid component, the reimbursed component, that 15% to 20% is already there.

Okay. Got it. Let's see here. No more questions from the portal. So I think we can wrap it up there. Thanks so much guys for the presentation and the helpful Q&A.

Thanks, Jess. Thanks for having us. Have a great day.

All right. You too.