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

Okay, everybody. Good morning. Thanks for joining us. I'm Tazeen Ahmad, I'm one of the senior to biotech analyst here at Bank of America. It is our pleasure to welcome you to the BofA Healthcare Conference back live after 3 years, since forever. And I've covered BioCryst for probably the longest time I've covered any company. So I think it's fitting that BioCryst be first on the agenda for us. Gentlemen, good morning.

Good morning.

So Jon and Charlie. I think everybody knows you, but I'll let you guys introduce yourselves. And maybe, Jon, you could give us a 2-minute overview of the company, and then we can go into general Q&A that works.

You go first.

Sure. Good morning. I'm Charlie Gayer, I am the Chief Commercial Officer.

And I'm Jon Stonehouse, CEO, and we're a company that works on oral drugs for rare diseases. And when we first made a decision to make that move, I think some of us, including me, thought it was some incremental convenience improvement. And then we started talking to patients that suffered from HAE. And we found out that it was a shot at them forgetting they were sick. If they could take a capsule a day, like their daily vitamin, it was much, much more than some incremental convenience improvement over twice a week or once a month injection. And so that really drives us at BioCryst, and we've got our first drug on the market, ORLADEYO. It's off to a great start. I think there were -- weren't many people that thought this would be a commercial success we did. And Charlie and his team have done a spectacular job in the first year and the first quarter of the second year. And we're on a trajectory for no less than $250 million this year in revenue and $1 billion of peak sales. So something that we think is really valuable. Something that not many biotech companies have these days and something that we're going to build our company around. And beyond that, all our molecules have come from our discovery engine. So we've got a really interesting platform called structure-based drug design that looks at the target enzyme active site based on shape and charge and builds molecules, builds drugs, chemical segment by segment based on that shape and charge to build potent specific and bioavailable small molecules. And that allows us to go after validated targets, but tough targets like serine proteases in the case of plasma kallikrein, where there's 300 in the human genome. And so you got to get it to be potent, but you also have to get it to be specific and bioavailable and that's the tricky part. So we've got a full pipeline and quite a bit of cash on the balance sheet. So it's great to be here after, I don't know, 15 years or so to be in the spot that we're in because it's a very different company.

Had a great move with the HAE launch. I was going to ask about ORLADEYO in a second. But since you started with that, let's make you stay on that topic and then we can move on. So as you mentioned the launch has been extraordinarily great. I mean it's beat everybody's expectations. When you came up with the $250 million or better number for this year, can you go into a little bit of detail on how you got comfortable because there are moving parts obviously, that will start to look at certainly at the beginning of the year and can evolve as the year progresses? So we started off with an Omicron wave at the beginning of the year. Apparently, we now have another wave. Hopefully, it won't be as dramatic. But there's also other factors that come into play. So how do you get everybody comfortable that $250 million is in fact the floor?

Yes. I mean, maybe I'll start and then you can get into more detail. We ended the year at, what was it, $46.2 million for the fourth quarter. So just do the math and draw a line from there and you're on a path that's getting you close. And as you said, we've launched throughout the pandemic. I mean we don't know anything different than the pandemic. And one of the things that's really impressive about Charlie and the commercial team is, they've never made excuses about it. They just figured it out, right, figured out how to get the doctors, figured out how to launch this drug in a situation where you had to do it by Zoom instead of seeing people face-to-face.

And is that still the case that you...

No.

Access is much better.

Yes, access is much better. But some of the big symposia are still a mix of virtual I think EAACI, the European meeting is a hybrid and the First Patient Summit in the United States won't take place until 2003. The last one was in 2019 -- 2023 -- last one was in 2019. So there's just things that we would really get nice tailwinds from that we are getting. I'll let you describe more about the $250 million.

So I think there are a number of things that give us confidence that some of the biggest things is just the underlying trends we saw in 2021 that continued into the first quarter of this year. So the remarkably consistent new patient starts each quarter of last year, the number of patients starting on ORLADEYO, and that shows no sign of slowing down. The source of those patients has been really consistent. So half or more each quarter have been switching from other prophylaxis therapies, injectable prophylaxis and then the other mostly coming from patients treated with acute only. We're in really good spot with payers. At the end of last year, we signed up a final major PBM. And what that means is now about 80% of patients have -- in the HAE market would have access to coverage for ORLADEYO. That's what we're seeing with the patients on ORLADEYO, about 80% are on paid therapy now. And then patients are doing really well. That's what we're seeing is the patients, particularly those who are switching were well controlled before on another prophy switching to ORLADEYO, they're doing really well. And then we're very market research database, and we do these consistent quarterly surveys with patients and doctors and with the doctors every quarter and again, in our most recent one, the doctors anticipate prescribing more. So they've told us that -- 60 allergists told us they're treating about 13% of their patients already on ORLADEYO. They see that going to 23% over the next 12 months. That may be getting a little ahead of themselves. They always are a little rosy, but it shows where we're headed. So all of these things give us great confidence in no less than $250 million for this year.

And can you give us, Charlie, some color on how the process goes for a patient. So the patient goes to his/her doctor and the doctor provides a prescription for ORLADEYO. From the time that it initially launched to maybe now, can you talk about the turnaround time from writing the prescription to actually the patient having it in his or her hand? And how long does a script last? Because I think I get that question a lot?

Sure. Yes. That's a really good question. It is an important thing for both patients and doctors because their history in the past is these are expensive therapies for rare disease and the access process has been challenging, and that's stressful for the patients in a disease where actually the #1 reason for HAE attacks is stress. We wanted to make that as easy as possible for patients. So one thing we did right from the beginning is we've got this Quick Start program. So as soon as the script goes into the specialty pharmacy, once that clinical decision is made, within 24 hours, usually, we will ship out that first 28-day shipments while helping the patients through the market access process, the prior authorization. The PA process has been getting better and better. And now typically, a patient will move to paid product within the first 30 days. So they get this product right away, they get to paid therapy quickly and that gives both the patients and doctors confidence. As far as how long does the prescription last, the teams had really good success getting 1 year. The predominant is 1-year scripts. It's always going to require a reauthorization. And for some patients, it's going to be -- the #1 time is at the beginning of the calendar year. So sometimes, it will be end up being less than a year. But the typical is about a year, and then we help them through the reauthorization process.

Okay. So basically, for the first year, if the person is on ORLADEYO, specialty pharmacies mailing them their monthly supplies uninterrupted.

Exactly.

And in that time period, do the patients go and see their doctors?

It depends. What we know is patients have access to so many more therapies than they used to. So what it means is they're doing better than they were, say, 10, 15 years ago. And so the typical patient only goes in to see a doctor once or twice a year. And so as long as they're doing well, they follow up with their doctors often on the phone or even via e-mail. But they typically will not go in more frequently than once or twice a year.

Okay. And you talked about discontinuation rates being close to what you saw in the study around 30% or so, is that right?

Through the end of last year, 7%, 8% of patients who had started remained on ORLADEYO. And then through the first quarter, it's about 2/3 now that you going all the way back to the beginning of launch.

So one question that we get is if the script last for a year, how do doctors get comfortable or confirm that a patient is being compliant with taking their daily doses and not skipping or something like that?

It's a great -- yes, because it's an oral drug, right? That is -- that's something we put a lot of emphasis on. And so the service model that we created, it's called Empower Patient Services. There's a sole source specialty pharmacy. And we chose them because their expertise is working with rare disease patients like HAE patients. And we wanted to provide excellent service on the access process like we've just discussed, but then the ongoing care. And we've seen great patient compliance. So it's been in north of 90% compliance rate for patients. And that's something we communicate to doctors is that this is something that our care coordinators to pharmacists there will really focus on. And then they'll let the physicians know if there's a problem, if there's a patient who seems to be drifting away, then we can go back to the providers and let them know that they may need to intervene.

Okay. Now as we look beyond this year, going to Jon, your view that you'll be able to get to $1 billion in sales. And also more importantly, that does not require you to own the entire market. So when you do your math, what percent of the HAE market does BioCryst need to have in order to get to that $1 billion? And do you think that once you get to that $1 billion, it's sustainable over multiple years, just given that HAE is pretty crowded already, might get more crowded, how do you think about that?

So the math is both simple and realistic. So to get to $1 billion, we think we need about 2,000 patients in the U.S. And to put that in context, we did some work about 3 years ago, really detailed work with U.S. health care claims that showed about 7,500 diagnosed and treated patients in the U.S. So to get to 2,000, that's just 25% to 30% of the U.S. market at the current ASP. And I assume a 15% to 20% gross to net. That gets us to about $800 million at peak sales. And then the other 200 plus would come from Europe and the rest of the world. So we think it's realistic. And then patients, if they're doing really well on 1 pill a day, if they're well controlled, one thing we learned in all of our research and preparation and then we're learning in the market is for patients to switch, there has to be a real benefit to a new drug. And so if you're controlled on 1 pill once a day, what can a new drug offer. That's a real piece. So we think, yes, it is when we get 2,000 -- in the U.S. 2,000 patients who are stable, doing well on ORLADEYO, what's required for them to switch to another drug? It's a pretty high bar.

Yes. So and there's plenty of room for other competitors, right, 25% to 30% market share. It's not like we need 60% market share to get to $1 billion. I want to add one more thing that people might not pick up and drugs don't sell themselves. And we have a good drug, but they don't sell themselves. And so why is it that BioCryst has been so successful. And it's because of the little things that we thought of in advance of the launch and then did during the launch. And so the market research is a really good example. I mean getting inside the heads of doctors and patients because in the last 12 years, there have been 8 new drugs. So there's a lot of switching going on. We learned what our good switch look like, what a bad switch look like. And so we got really, really smart about how to create the message and the plan on working with doctors and patients to have successful switches. This whole Empower Patient Services, making sure that the drug gets there fast when the decision is made making sure that there's a lot of follow-up, so patients are taking their drug, making sure that there's a bit of handholding through this was just absolutely critical, Hiring the right team, right? I mean these are small sales forces. You get that wrong, you're in deep trouble. And so getting people with 20 years of industry experience selling, 10 years of rare disease experience selling, I mean, all those little things add up to $122 million in the first year when people thought it would be 30. And I think will lead to $1 billion in peak sales because we keep making those adjustments. We're not sitting back and how this is easy, drug's going to sell us up. We're working our butts off every day, and they're doing the little things that I think make a real difference in a launch.

Well, what are some of the little things that you're working on now since you mentioned that?

Yes. I think patient engagement and patient activation is a big one. I'll let Charlie describe that. But that, to me, is a big piece of upside. And then the other piece is getting to the docs that haven't prescribed it yet. There's still a decent chunk out there.

Yes. So the patients are really key in this space because again, as Jon mentioned, there have been 8 drugs launched, so some of these patients are doing very well on other therapies. And so to -- they need to be able to hear about this new drug and hearing from their peers, other patients who are doing really well is important. And this is something they've been missing for the last couple of years with COVID as those in-person patient meetings. So we're doing a lot of local patient meetings. And then we've added to our team as well, patient-facing team out there in the regions to really work with patients early on in therapy to make sure that the right expectations are set, to make sure that they understand what to look for in this drug and what could happen from an AE perspective, but that you need to get it several months to see if this is going to be the right drug for you. And so those are kind of the tweaks that we're putting in place to make sure that we keep all the patients, no one gives up on anything too early because they can do great over the long term.

For doctors who haven't prescribed, what's the main reason they give?

If it ain't broke don't fix it, it is the biggest thing. My patient is already stable on one of the injectable therapies, which again, is great for patients. And so it's our job to convince them the likelihood is they're going to do great on ORLADEYO. We started this in Q4 with the 96-week data from our pivotal trial, showing that patients in the last -- 16 out of the last 17 months of that trial, the median attack rate was 0. And for many doctors that caused them to kind of look again because they thought, oh, an oral drug, maybe it doesn't work as well. This drug works really well, and patients won't take less efficacy. And so we're starting to show that there are reasons to give this a try. We help them with the access process. So why wouldn't you give your patient a chance to try ORLADEYO.

And how do you reach the patient? So you're detailing to the physicians, but how important are HAE patients well informed about options even before they are talking to the doctors?

They're pretty well informed, yes, but that's where these -- some of these patient meetings are key to is to get the word out there more because they want to hear -- they may hear different bits through the great mind or on the Internet or what have you. But they want to look in the eyes of the patient and say, how are you doing on this drug?

That advocacy group in this disease is amazing. There's one in the whole world that manages the efficacy for the whole world for these patients, which is unheard of. And I just go back to 8 new drugs in 12 years. These guys played a big role in how to make that happen. But we've had a relationship with them, a deep relationship with them since 2013. Again, these are the little things that we did that really helped us in the relationship with the patient community and continue to help us.

So maybe just to round on this particular topic. So when you say 2,000 patients is what you're going to need, is that 2,000 patients continuously on drug? Or does that include people who try it and then drop off?

No. So that would be a stable base of patients who are doing great on the product. And the drug is not going to be for everybody. But we're trying to get physicians and patients to get to this point of like why wouldn't I try it? And so it won't be for some people, but those 2,000 patients are going to do really well, and we think stay on long term.

Just one more piece of simple math. Even if you -- even if only 50% of the patients stayed on the drug, you only need slightly more than half of the 7,500 to try it to get there. And his goal is get everybody to try it. And why wouldn't you? If you had a shot at being controlled on 1 capsule once a day, what's the downside risk? We're super helpful with the insurance process. There's rescue medicine. It's not like you're going to have an attack that you could die from, right? So these patients know how to manage their disease. So if you had a shot at that kind of control, why wouldn't you try.

What about treatment-naive patients? Can you just talk a little bit about how that penetration profile is going?

So naive patients, there are always going to be some, but the U.S. is a pretty mature market from an HAE perspective. So we think that, that's a small percentage. And it's a natural, If a patient is newly diagnosed, they need to be on prophy. So oral drug is the natural place to start. But the biggest chunk of our business is coming from prophy switchers a little over 50%, and then most of the rest is coming from acute only, now switching over to prophy.

Other parts of the world, though, that we'll be working like Japan, for example, is a place where the diagnosis is still pretty poor. And so newly diagnosed patients getting the word out, that's actually where competition is helpful because more companies getting the word out, I think, gets more patients diagnosed and treated.

So for the acute patient population that subgroup that you just talked about, do they tend to have relatively speaking, fewer attacks or they felt historically comfortable just having on-demand therapy available for them?

Not to some extent, but not as much as you might think. Some of these are patients who've just resisted going on prophylaxis because their options before were twice-a-week IV infusions or subcu infusions or even every 2-week injections. They just didn't want to deal with that. They said, I'd rather just take -- got it out, take care of my attacks when they happen, but they see things differently with an oral.

But here is something that's also, I think, a miss that and is really interesting is all the prophy patients are pretty well controlled, right? So they're not having attacks. And the fact that they're switching to our oral drug is amazing, honestly, because normally, they'd be really sticky and loyal to their therapy. But it's not like they have in tons of attacks, they're controlled, and they're switching.

And does the doctor has to provide any kind of meaningful paperwork, office hours, like didn't do a lot of the leg work in order to get a patient onto therapy, even though you were being reimbursed more now than you were before?

So what they perceive, and this is really key is they perceive from past experience that there is a lot between the physician and their staff, a lot of paperwork. They've done most of this paperwork before, as things like lab tests, it's clinical histories. So that's where our service model really helps them, which is here's the checklist of things you need, you've already got it, you just provide that to Empower Patient Services, and they'll help you do the rest. So it's not as much work as they think it's going to be. And a lot of that typically does the -- there's always a key person in the office, who need to convince of that as well that we're going to help make this easier for you.

I'm amazed at how the insurance companies says, oh, you forgot this, and they just stretches the process on further and further and further.

Right. Is that -- going back to a few minutes ago, is that part of the reason why doctors who have not tried to yet talk about? Is that in the conversation?

It is. It actually is as big a factor -- almost as big a factor as drug profile itself. So it's like I got this -- I've got this patient stable, I don't want to go through that process again. And so that's part of our job is just to say, don't worry about the process, we'll really help you with that. Let's focus on the clinical value to patients.

All right. So let's transition maybe to your next product, 9930 which is focused on PNH. So maybe just to back up a little bit, why did you think PNH would be a good second indication to pursue? That's also relatively speaking a crowded [ fees ]. And maybe just kind of give us a summary of where you've been so far -- sorry, 9930? And then what the next steps are just following the update that you had a couple of weeks back?

Yes. It was speed, honestly, with PNH because it's not the biggest disease for complement-mediated rare diseases that were a Factor D inhibitor in the alternative pathway play a role and really good biomarkers, right? And really clear objective endpoints, hemoglobin lack or decreasing in need for transfusions, things like that. So it was a really good first place to go. And that's why we chose it, but we always felt that -- for this to be a real commercial success. We had to go into many more complement-mediated diseases with Factor D inhibitor.

And so you started out of the gate with strong data for PNH, and it gave you confidence to move into an expanded study with patients. And you had just started enrollment. And then you had a safety observation observed whereby you voluntarily decided to stop enrolling. So kind of just walk us through what you saw? Why it was concerning enough that you wanted to voluntarily stop enrollment? And why it wasn't serious enough that you didn't need to take patients off therapy and kind of how you're thinking about it just after the update?

Yes. So in REDEEM-1 and REDEEM-2 studies, these are the 2 pivotal studies for PNH. We had 3 patients that had pretty high elevations in their serum creatinine. So 2 to 4x the upper limit of normal. And it happened pretty early on in the treatment. So a pretty big spike pretty early on and that could lead to kidney injury. And so obviously, it was concerning to us to pause the enrollment. When we got into digging into the study a bit further, we had this cohort in the rollover study from our proof-of-concept study. And we look more closely at that data, and you could see a slow kind of gradual increase, much more mild to moderate increases in serum creatinine, but price is, nonetheless. And so that was concerning to us as well. And so I think this drug has pretty remarkable efficacy so far. You're seeing really nice increases in hemoglobin. And one of the populations we saw 0 transfusions in the treatment period. And we got a lot of feedback from patients and physicians that -- or patients through their physicians that this drug was really working and people didn't want to stop even -- I mean 1 of the 3 people that had 2 to 4x the upper limit of normal is actually still on drug because they're doing so well on the drug. And so there's this benefit/risk challenge that we have with this drug. And one of the reasons -- one question we get from investors is why did we go to 500 if 400 looked like a good dose? And the reason was, in PNH, if you look at the PK, we got a longer tail with the 500 milligrams in terms of drug coverage. And at that time, we didn't have a safety signal. And so we just felt like if patients had skipped a couple of doses having a little bit more drug onboard would have been a good thing because you can get breakthrough hemolysis if you don't control your PNH. And so now we have a safety signal. And so -- and we haven't seen that same elevation, albeit for a shorter period of time in a smaller number of patients at 400 milligrams, but we think it's a plausible hypothesis to test.

Okay. But you do have backup compounds, right? And you've shown in the past that you're clearly capable of having multiple backups. And if you need to, you can go to the next gen. So why at this juncture you still want to see a 400 is the way to go? Why not just go to the next molecule, which just might be overall cleaner and maybe they time in that process?

Yes, I think the way we look at it and the way we made the decision is, we can get to these answers pretty quickly without spending a lot of capital, investing a lot of capital into the programming. One major milestone that we have to get through is, do the regulators agree with us on this. If they don't, then the program could be stopped. If they do, then there's some sort of benefit/risk that we believe that -- the benefit outweighs the risk, it can be monitored. And so this idea of starting at a lower dose like we did in the proof-of-concept study and then stepping up to 400 milligrams might be the dose that's effective and safe, we don't know for sure, but we think it's a plausible hypothesis. That's where it's running by the regulators. And if they say yes, it's worth testing, so.

So when do you think you have resolution on that?

We hope by the end of the third quarter, we would have a decision and be able to move forward. But back to your question around backups, we -- as you said, we have a history working on lots of backups. And for those of you that don't remember, we had a drug of oral which was our first-generation, oral plasma kallikrein inhibitor before ORLADEYO. And we got into a Phase III study -- got through the Phase III study, and it was an unsuccessful trial on efficacy because it was a poorly bioavailable drug. And we ultimately stopped that program. But shortly before we got the data from the pivotal study, we had Phase I data on 2 backups. Actually 7343 and 7353, and we decided to move 7353, which is now ORLADEYO. And backup is -- I guess it's the right term, but we always look for improved version.

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Yes, yes, yes. And so in the case of plasma kallikrein, we came up with 1 pill once a day with really good efficacy. And so I don't know if we'll get there with that today? It's a really hard target, but we're working on improvements on earlier generation program. So we're doing that. It's too early to talk about it at this point in time. But when we're ready to talk about it and get credit for it and not tip our competition too early, we will tell you more about those.

So if you did decide to move to the second next-generation molecule, how far away from being able to move that into the clinic with patients would you be relative to now?

Yes, we haven't said. So more on that later. But it -- here's how you should think about it. The more time we have between us and our competition, the better the drug has to be, and it has to be incremental, I mean, back to Charlie's point. If somebody is going to switch, it's got to be better, and there's got to be a reason for it. So that's what we're thinking about bringing a better molecule, maybe the best molecule forward that inhibits the alternative pathway for complement-mediated rare diseases.

Yes. I mean I guess the reason I ask is even if you do decide to move forward, let's say, with the 400, I just say people being people, it'll still be an overhang until it's not. So how do you balance that decision with, you know what, we'll just start from scratch with this other 2 or 3?

Yes. I think it's a reasonable investment to test the hypothesis. And if we can keep moving forward, then it was -- I think it's a good investment. If you can't, then we'll stop. And the competition is another important piece that we look at, how does the competitive landscape and Novartis will be having their data from their Factor B inhibitor later this year. That will be an important input into our decision-making on do we go forward with that.

Yes. I was going to say, we won't bring out a drug forward if we don't think we have the profile that can compete, that's an important part.

That's a big difference from BioCryst of the past, right? We were very dependent on 1 molecule and binary events. We're not now. Now we have a drug that is on its way to $1 billion, a really solid balance sheet and a really full pipeline with backups and other targets and other molecules.

Yes. Well, we could probably talk for another hour, but we are out of time for today.