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

All right. Good morning. Thanks so much for joining us at TD Cowen's Healthcare Conference. My name is Stacy Ku, one of the biotech analysts, and I'm here with my colleague, Vishwesh Shah. We'd love to welcome Jon Stonehouse, CEO of BioCryst; Helen Thackray, Chief of R&D, to our fireside chat. And of course, we have Nick Wilder there in the audience. So thanks so much to all of you for joining today.

Thanks for having us.

So ahead of our Q&A discussion. Jon, do you want to just very briefly share any color on the announcement that we saw yesterday morning for Anthony?

Yes. Before I do that, Helen and I are going to be making some forward-looking statements. They have risks. You can find our risk factors on our website. Yes. It's sad to see Anthony go, but we're super grateful that he gave us a transition to April 9th. He's built a fantastic team. He added a ton of value to the company through a lot of the debt and royalty financings. And as a result, the company is in the strongest financial position we've ever been in. And so I think the profile of our company now to attract a really good CFO is fantastic. And the search has started. We're looking externally, and I'm real confident we'll find somebody great.

Okay. Well, wonderful. Obviously, the fundamentals have been incredibly solid. Jon, ORLADEYO is obviously now entering the fifth year of launch. And what struck us when we were kind of preparing for this chat is company is now guiding '25 revenues that are above the original peak sales estimate that you all initially issued. So clearly, well on your way to $1 billion in overall global peak sales. To be backwards looking for just a moment, kind of walk through the different drivers of growth as we look at ORLADEYO's performance in '24, which actually grew on a year-over-year basis. And then, of course, as we look to '25, what gives you conviction in your guidance of global ORLADEYO sales, which you recently increased to $535 million to $550 million, up from $515 million to $535 million just a few months after kind of -- 1.5 months after giving initial guidance for the year?

All right. So if I forget some of these questions, you guys just remind me.

Absolutely, [indiscernible].

All right. So let's start with the -- your statement. It is pretty wild to think that the original guidance was $500 million and then $500 million plus. And then the emphasis on the plus. But I mean, we're extremely confident in the $1 billion peak sales. And so let's explain what we're seeing in 2024. I think the first piece is the underlying growth, new patient starts was the same as it was in the very first year launch. That never happens in a rare disease launch 4 years out. And so why is that? I think one of the things, the strategy that we had is to put out data to show that when ORLADEYO works, it really works like injectable therapies, right, 90 -- high 80s, 90% reduction in attacks, a lot of attack-free months. So people are controlled this. This myth of people will sacrifice efficacy for convenience is just not true. It's a myth. And so we put out a conference after conference after conference going through this last weekend in Quad AI and Helen can talk about it, more and more really large real-world studies, 450 patients in Type 1, Type 2, 350 patients in C1 inhibitor. And so what docs are seeing from that data is it works. It really works. And so that's caused them to try it. And then they have their own experience and their practice and they see it work in their practice. All of that has led to an increased confidence in the drug. And one of the things we're talking about in one of the investor meetings earlier this morning is this -- there's 2 things that cause HAE attack, low C1 inhibitor and trigger and stress is a trigger. When you're controlled on an oral once a day, you forget you're sick. And so everything just gets better and people have this ease of life that is less worrisome about their disease or their therapy. And so that's what's caused -- and the other piece that we made progress on the commercial side was improving the free drug to pay drug. We're now in -- a couple of years ago, we were in the low 70s, high 60s. It's 60% of our business. And now we've moved paid to 80% by the end of last year. So that was a big improvement. And then to answer your question about '25, we put out guidance at the beginning of the year, and we said what wasn't in that guidance was what would happen with the IRA and the paid rate on Medicare. And what we've seen now, and that's why we increased it last week, is that it's snapping back a lot faster. And we believe that we could be at 80% paid by the end of the year with Medicare, which makes up about 20%. We were at 55% at the end of last year.

Wonderful progress. And kind of a quick comment on something that you brought up. The KOL feedback is -- I think it's begrudgingly become more and more positive. And a lot of it is coming from the patient demand and the patient satisfaction. And if patient's coming back and saying, "I'm feeling better, this is the drug I want", then clinicians are actually more willing to prescribe it to others because they are hearing that real-world evidence of those that respond very well to ORLADEYO. Let's drill down a little bit into kind of your other comment for '25 for the IRA Medicare redesign. So are you seeing kind of in Q1, a lot of HAE patients that are Medicare successfully signing up and converting over to paid drug? Are we kind of still in the knife fight of Q1 right now? How are you thinking about charity support, the transition? I know you've talked about a lot of different factors.

Yes. I mean, honestly, the piece that we see that gives us the confidence is that the paid rate goes up, and it's gone up in what, the first 2 months of the year. And so -- and it's gone up a lot. So we thought this was going to be a gradual kind of 3-year process. And what happened is it snapped back. And I think we can speculate why, but the 2 main charities that provide co-pay assistance for HAE patients are open for business, and they weren't. The last 2 years, they have waiting list, and so that's changed. So we feel that IRA had contributed that because it's a lower total amount. So money can go further.

Okay. Understood. Understood. And then kind of last near-term discussion on '25. Maybe talk about the ex U.S. contribution really briefly. And again, another really short-term question. You all talked about Q1 being kind of flat or maybe a touch below or somewhat in line with what we saw in Q4. Last year, you all gave very detailed quarter-over-quarter commentary. Is that going to be a similar pattern this year?

Yes. I think we did, and I'll do it again here. But let me -- well, let me go to that. Because of all the effects of co-pay assistance on the commercial side, right, and deductibles having to pay that off upfront. And so that hits the gross to net. 60% of our business is commercial and a lot of those plans have reauthorization at the beginning of the year. So there's some period where patients are on free drug. We'd like it to be as short a period as possible to get them on to paid, but the offices have to go through the reauthorization. So it could be 1 month, 2 months, 3 months, 4 months. We try to push it as short as we can with the offices. And so it's inevitable. And when you have more patients on therapy, you're going to have more of a hit on co-pay assistance. You're going to have more patients that have to go from prior-auth back to paid. And so yes, to be really clear, our guidance in the first quarter is flat to down. Overall, we're going to have a very strong year, but our guidance is flat to down. And then on the ex U.S., your first question, it's just steady, nice steady growth. It's -- the fourth quarter is always a little bit larger in terms of percentage because of some distribution arrangements that we have. But -- and I think it was around 13%, 14%. But if you look at the full year of what contribution ex U.S. had, it's about 12%, and it will grow 1% or 2% each year roughly.

Okay. Understood. So you all were just at Quad AI. Just maybe talk about the patient demand. Is it you all going after new clinicians? Are you all trying to kind of have clinicians write more? What is the dynamic now as we're kind of thinking about a more mature launch?

Yes. I'll let Helen -- because she was there, talk about Quad AI because it sounded like it was a lot of excitement, and then I'll come back to what are we seeing in terms of prescribing.

Yes. So Quad AI, we had some great data come out, and that drove some of the conversations. So we had these 2 large data sets on real-world evidence looking at Types 1 and 2 HAE and then C1-normal HAE. That drives a lot of the discussions around how well patients are doing. It's over 800 patients worth of data. So it really drives the discussion with physicians around this is a drug that's working for patients who are taking it doing well, they're doing really well. And so we get to the physician conversation. We also have the interest of patients. So I think to your question, I think it's both. I think there's new patients and there's the increasing prescribing by physicians. And we're seeing and hearing things that are very consistent with that as we talk with physicians about their excitement at Quad AI.

Okay. So source of business, 52% coming from switches, and this has been pretty consistent. It probably will change because on-demand will change over time. We believe that on-demand or prophy will go to 85%. It's probably more in the 75% to 80% now. 32% switches from on-demand and then 17% treatment-naive patients. And then on the doc side, there's 500 of the top prescribers that make up 50% of the prescribing for HAE. We're at about 80%, but we're continuing to chip away at that 20% and then get them to go broader because they have larger practices. And then on the other 1,200, we're continuing steady growth. We're adding 60 new prescribers every quarter. So that tells you something.

Okay. That's -- I mean, that's incredible. If the 60 prescribers each write one prescription, that is very meaningful adds. Okay. Wonderful. Helen, you kind of alluded to this a little bit, but the size of the HAE market is actually rapidly evolving, rapid at least in the last few years. You last spoke about the number of HAE patients that are diagnosed and treated is actually closer to 8,500 with around 7,200 prophylaxis patients. Correct me if I have the math wrong, which should grow to over 9,000. So as we think about your opportunity and maybe even the growth of prophylaxis treatment, how are you thinking about within your estimates and expectations, the growth of the market and put that in context of your $1 billion peak sales?

Yes. Let me start with just correcting you slightly. So the market, we believe now is around 11,000. And we see prophy around 73 -- I think it's 7,500 last year. It will grow to about 9,300 and so -- in 2033. So steady, steady growth and that's not surprising. It's about 5% growth per year. And that's not surprising in a rare disease, even in one that's established and has so many therapies because C1 -- normal C1 inhibitor is another really interesting population that we've produced, as Helen said, a really robust data set that shows marked decreases in attack rates from baseline. And that's a population, I think, in general that physicians had trouble with and therapies weren't as effective. And it's 1/3 of our business. And so that's lumped into that number now and is contributing to some of the growth.

Okay. Wonderful. Helen, can we talk a little bit more about the pediatric study results, APeX-P, clearly, I believe you had all said submitting the pediatric NDA this year.

Yes. Yes. So we -- at Quad AI, we had our pediatric dataset presented in a late-breaking abstract last Sunday. And it's that dataset that is the basis of the sort of the information that we'll be putting into -- for the NDA, which will be this year. We learned a couple of things in that dataset. So first, we were assessing the safety, tolerability, exposure levels of oral granules of ORLADEYO in the pediatric population. So we gathered the data that we need to be able to submit and talk about dosing with the agency. Secondly, we saw a clear impact on that population, patients who are doing very well, the pediatric patients. This is a large data set. It's 29 patients of whom 25 are continuing therapy at the end of the time frame. So great continuation rates and very good improvement in attack rate. Thirdly, we learned with that, that the pediatric population, in fact, has very severe disease starting at very young ages. And that seems to be a surprise in the field that the conventional wisdom is that this is a disease that really is seen more starting in adolescents. What we saw was a median age of onset of swelling at 2. So there's a very high need in the youngest patients. There's also very severe disease with hospitalizations in the youngest patients. And so we're very pleased to have an oral granular formulation that may be coming for those patients to be using as prophylaxis.

And this halo effect, I think, is going to be really interesting to see because we see it with adolescents, 14-, 15-year-old kid in a family of HAE patients does really well on ORLADEYO and the parent starts to think, "Hey, maybe I should try it". And so we think we're going to get that with the pediatric population as well. And none of the pediatric numbers are in any of our guidance or in our $1 billion. So that's plus.

That's going to be one of my questions. And it's interesting you talk about the 25 patients that stand -- stayed in the study, it could be interpreted in 2 different ways. Either the tolerability is incredibly kind of better than expected, I would say, or these clinicians are getting a lot of experience with ORLADEYO and being able to guide kind of patients through that initial few months of trial and error and then realizing how to recognize it.

But the rate of AEs was different though, was it, Helen? Yes. So it's not just the dropouts, it's the rate of [ GA ]...

It's the actual [ GA ] [indiscernible].

The actual -- the experience or the tolerability. Because the tolerability is significantly improved. We think tolerability is very good with oral granules.

Wonderful.

And just one last point. I did have a conversation at Quad AI with Raffi Tachdjian, who's an expert and a pediatrician expert in HAE, he's at UCLA. He was able to give some color to the -- how physicians in the field look at the pediatric population, how they look at the overall population and the changes that are seen with oral prophylaxis. That was a really interesting conversation, and I point you to the -- that's available on our website as well.

Yes. That's a great transition to kind of the overall KOL perspectives on the need for oral agents in HAE, especially for prophylaxis, just given kind of the [indiscernible] of treatment. What are your overall views in terms of the injectable market, the oral market, those that kind of transition and are well controlled on orals. How should we think about maybe the moat that you all have when it comes to ORLADEYO. And of course, I know last fireside chat, we spoke at nauseam about the compliance rate and retention rate of patients on ORLADEYO, but it's something that continues to come up, and we do think it's very underappreciated.

Yes. The retention rate now is -- we've got 4 years of it, and it's solid, right? It's 60% stay on therapy at a year, and we lose very little after that. And so -- and the #1 reason for somebody going off is, unfortunately, with some, the drug doesn't work, right? But when it works, it works as well as injectable therapy. So in terms of the evolution of the marketplace, there's always going to be a need for rescue therapy because no -- not a single one of these drugs, even the ones under investigation, are perfect and everybody has breakthrough attacks. And remember, what causes an HAE attack is low C1 inhibitor and a trigger and stress is a trigger. So sometimes life gets in the way and you have an attack even when you're on a really good therapy. So -- but clearly, things are moving to prophylaxis. I mean we're hearing that around the world now. And it was less so in Europe and in Asia and in Latin America. And the exciting thing is that the worldwide guidelines now are very clear. There are contributions from physicians all around the world, and it's -- the recommendation is you should be offered prophylactic therapy because that just makes complete sense because why would you suffer from an attack and treat it versus prevent it. So I see that continuing to move more and more towards prophylaxis. There'll be competitive injectables coming out this year that will create more noise around that. And we think if you're ready to switch, of course, you would try ORLADEYO first to see if it works for your patient.

Our KOLs do tell us that additional injectable entrants are very unlikely to impact the oral prophylaxis options in HAE. But maybe as we think about that switch market, you kind of alluded to the injectable entrants, maybe agitating some more of these patients that have been on twice-weekly injections or even every 2 or every month injections. So just maybe talk about your views on what the other entrants are going to do in more detail.

Yes. We put out some pretty extensive market research that we've talked to you about, and it's in our slide deck, and it's the most robust market research that I've seen in this space in terms of numbers and then methodology, doing both conjoint preference share and then putting it in a market simulation and doing Monte Carlo analysis on 6,000 simulations. I think -- so it might be worth a little bit of time to just talk about the dynamic we see in the market. In general, the #1 obstacle that we get when somebody is on prophylactic therapy is if they're controlled, why would I change? Like if it isn't broke, don't fix it. And so getting a physician to understand that there's very little downside to trying ORLADEYO, and they could get that same control on a once-daily capsule is our job. And because patients don't see doctors more than once or twice a year, your opportunity to influence that is very infrequent. So that's why you see this kind of steady trajectory versus a hockey stick. It's only going to get harder for the next people that come into the market, right? It was easier for TAKHZYRO. It was harder for us. It's going to be harder for the next one and even harder for each one after that. And so when you look at the output of our market research, you see that slow chipping away of the new entrants. It's not a hockey stick for any one of them. And it's taking largely away from TAKHZYRO. But not so surprisingly, at the end of '23 -- or '33, excuse me, we -- you look at the market leaders in terms of patient share, and it's TAKHZYRO and ORLADEYO. And why is it? Because it works. And so you have to have something really disruptive to get people to say, yes, I'm ready to switch. And oral therapy is disruptive. And we'll have years of opportunity to keep chipping away at that.

Yes. And of course, you have durability to 2039. And again, to your point, you are doing a lot of different work to make sure ORLADEYO remains relevant, switch studies. I think it's all within the competitive landscape, really, really compelling. So kind of hit on the peak sales opportunity for ORLADEYO. So we do want to make sure we leave enough time for pipeline. So we -- as we are heading into kind of the second half of this year, we've been getting a lot more high-level questions on BCX17725. So Helen, if you could talk a little bit more about this asset? And what are you looking for specifically to move forward? And then we'll obviously then move into the kind of the market opportunity?

Yes. So this is our next drug in the clinic, where our goal is to have a drug that is -- comes to market as a success behind ORLADEYO. So we have several opportunities to do that. BCX17725 is a fusion protein and a KLK5 inhibitor. And our goal with that is to deliver a functional cure for Netherton syndrome, which is a genetically driven disease. It has a missing protein function. That missing protein function is a regulator of KLK5, and our product is intended to deliver replacement of that missing regulation of KLK5. Netherton syndrome is a severe disease. It's an ultra-rare disease. It is genetic. And it's a skin condition in which the pathology is disruptive peeling of the skin, disruptive separation of the skin. So the skin is not normal, and it is thin, it scales and peels and it is highly inflamed. So there's both skin peeling and inflammatory components. Those stem from KLK5 activity being unregulated. And what we're going to be doing with our program is moving forward, we're now in healthy volunteers, moving to patients to assess 17725's ability to get into the skin and to have activity in suppressing KLK5. And then finally, this year to look at the skin healing as a result of suppression of KLK5 and suppression of that -- both the cascade of skin separation and then the associated inflammatory cascade. And our goal is to have data in patients this year showing all this, penetration to the skin, activity on target, activity in the skin and then finally, healing of the skin as a result of this functional replacement of the missing protein.

Okay. You all had maybe previously discussed starting to dose patients by Q3. And the healthy volunteer patient study, is that going to happen around the same time as you're getting -- collecting information from healthy volunteers? Or are you going to finish healthy volunteers before then moving on to the study?

So this is all one study. And that's one of the things about an ultra-rare disease is you want to get into patients as soon as you can. For us, that means in the same Phase I study. So we're currently dosing in healthy volunteers, dose escalating through a standard approach. And our plan is to open sites to enroll patients in that same study this year and have that first experience in patients. We would then go to a larger study once we have information around the dose, so that will be next year, in which we're assessing a larger number of patients with durability of effect to look for long-term healing.

And Helen, you might want to just talk about the difference in KLK5 and what you see in healthies versus what you see in patients.

Yes.

That will give us information about do we see activity or not?

Yes. So there is a difference in what we can gain with this in healthy volunteers versus patients. KLK5 is our target, of course. It is normally regulated in healthy skin. And so it doesn't bind to the drug. We wouldn't expect it to bind to the drug. We wouldn't expect to see skin levels or skin activity because there's no abnormal activity of KLK5. However, in patients, abnormal KLK5 activity is the target. And so that's our opportunity to, in the course of the same study, assess the drug's activity as well as clinical outcomes.

I know it's still early days, but -- are these patients -- I know you had it's around 1,600. Are they essentially diagnosed and available to be enrolled in a clinical trial like this? Is it going to take time to kind of go out and find these patients? I know you all are doing a lot of work around kind of trying to understand the true prevalence of Netherton as well.

So we certainly have patients identified and available for clinical trials at this point. However, this is a disease where there's no targeted therapy available. It's a disease for which the genetic test is necessary to get to diagnosis, and it's also a disease that's treated with standard of care for a larger sort of category of conditions that are ichthyosis conditions or scalely, very severe skin disease. We think that there are about -- we've estimated about 1,600 patients in the U.S. based on looking at a term which is specific to Netherton syndrome, and that's bamboo hair. It's how the hair looks under the microscope. But that -- we think that significantly under-recognizes the actual population with Netherton syndrome. And as a targeted therapy becomes -- comes into trials and then becomes available, we would expect physicians to be doing testing on patients who have ichthyosis to see if they have the subcategory of Netherton syndrome. And we may see enlargement of that patient populations identified. This is not uncommon for rare disease. It's certainly what happened with HAE at the advent of targeted therapies available for HAE, the population started to be understood to be much larger than originally. I think there are 2,000 patients originally, and now we're at 11,000 patients. And I would expect something similar to happen with Netherton syndrome once a targeted therapy is available that makes it important to then diagnose in this patient, why do they have ichthyosis.

And you all are trying to go for every 2-week dosing or better?

Yes or better. Yes. So this is a potent therapy. It has very high affinity, which means once it's stuck to the target, it doesn't come off. And we expect it to be in the skin for the duration of the KLK5, that level of skin being there. So we expect to dose, we're targeting every 2 weeks. We will have to see in the patient data, whether that's actually the range or whether it's something longer as skin turnover takes place. But this would be a subcutaneous dose and it will be about every 2 weeks to start.

Okay. And we're also expecting some updates for your additional pipeline program in DME. Very briefly, do you want to just discuss avoralstat, what you've seen so far that gives you a lot of excitement and maybe the cadence of updates?

Yes. So this is our next program after Netherton syndrome, and it will be in the clinic this year. It's a program that will go -- we'll be dosing patients initially rather than needing to go through healthy volunteer studies. But it's a program with a plasma kallikrein inhibitor that has unique properties that make it appropriate to instill in a depot-like suspension in the suprachoroidal space in the eye. We -- I'm excited about this because we now have some evidence starting to build to show that this could be really -- this could be a differentiated mechanism of action. We have a drug that could be delivering sufficient exposure to the right place in the retina to get activity and enough to have improvement in clinical outcomes with a plasma kallikrein inhibitor, where that's been elusive in trials so far, and we think that's probably a result of having inadequate exposure in the right place. So we will be in patients this year. Our very first few patients will be looking for the outcomes that will tell us if we, in fact, have a therapy to take forward. We'll be looking for the edema and changing the edema this year and then next year, we'll be looking for improvement in vision.

Okay. In the last few moments, obviously, you are advancing the pipeline, but also being conscientious stewards of your capital. So maybe just remind us your guidance on the next few years in terms of growth of OpEx spend versus ORLADEYO sales.

Yes. So the guidance for this year, revenue, as I said before, is $535 million to $550 million. OpEx is $425 million to $435 million. And then we also gave the compound annual growth rate of 25% through '27. So on revenue, it's 20%. On expense, it's 5%. And so what that gets you to, if you do the math, is $750 million in revenue for ORLADEYO, $450 million in OpEx. And so operating profit of $300 million. Below the line, it's around $100 million-ish with the interest and royalties. And so that's $200 million in cash flow. So we're really excited about moving towards profitability, and we're going at a really good clip.

Wonderful. Well, as always, a pleasure to have you all. Thank you.

Yes. Great to see you. Thank you.