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

Welcome back to the Bank of America Healthcare Conference. I'm Tazeen Ahmad. I'm one of the senior SMID Biotech analysts at the firm. It's my pleasure to have our next presenting company with us, BioCryst. Sitting up on stage with me is Jon Stonehouse, who is, of course, CEO of the company. And next to him is Charlie Gayer, who is Chief Commercial Officer. Gentlemen, good morning still, and welcome to the conference.

Yes. Thanks for having us.

So I've been starting off these conversations with macro questions, which again is quite unusual in my space, but the times call for it. So I'll probably ask you from the most recent updates, and we can go from there. On Monday, the President made an executive order focusing on most favored nation status. Details are still coming in. It might be hard to give a concrete answer, but can you, to the best of your ability, talk about what the impact of this could mean to BioCryst in particular?

Yes. And Charlie and I are going to make some forward-looking statements, and they have risks, and you can find our risk factors in our filings on our website. Yes, it's a hard one, Tazeen, because it's short on detail. And I think people are still trying to figure out exactly what does it mean. Looks like it could be more Part B in Medicare than D, and we're in D. So that could be a difference. But it's -- we're going to continue to execute our plan, and we've got our ear to the ground on this, and we'll see how things unfold. But for right now, I can't really make a whole lot of forward-looking statements on that.

Yes. Sure. And then similar question on tariffs.

I'll let Charlie answer that.

Tariffs, we feel like we're in a good position. First of all, the cost of goods for ORLADEYO is low. Second, we have redundant supply chain. So we make API in Europe as well in the U.S. And then we also have finished goods made in the U.S. And so we have the ability to serve different markets. And importantly, all of our IP is in the U.S. as well.

And in terms of interactions with FDA, let's say, over the last 8 weeks, if you've had any, have they been any different from what they've been in the past in terms of type of interaction, people that you're interacting with, types of questions being asked, et cetera?

Yes. I don't know if you saw, but we got our PDUFA date this morning. So our file was accepted for the pediatric granules, which is really exciting. That was on time. So that's a good sign. And we have an open IND for BCX17725 that kind of went on the normal time line that you would expect. So, so far, so good. I can't predict the future, but so far, so good.

Okay. So let's move on to specific questions to BioCryst. So this ORLADEYO launch, it keeps getting better. And I think probably some people have been surprised by that. We've always viewed this as a pretty steady Eddie ramp. You've talked about your confidence in this market, in your product. Can you talk to us about some of the more meaningful dynamics that have been contributing to the results, most recently, your 1Q results, which allowed you to increase your sales guide?

Yes. And I think before, Charlie will answer that, but I think one thing that's really important is when you go into a rare disease with 7 other drugs ahead of you, it's a market that you've probably never seen before. And one of the things that I'll give Charlie and his team, I mean, a ton of credit for in the execution is just really understanding the data, making big moves early on that helped us gather data that was incredibly helpful and then making these tweaks and adjustments along the way to adjust to what we see. And that has led to this beautiful steady growth of the product.

So as you know, Tazeen, we had a great first quarter. It was 51% year-over-year growth. What I would say the most important baseline of that is really strong demand. So we had -- last year, we had as many new patient starts in the U.S. as we did back in 2021, the first year of the launch. And then Q1 of this year was actually just a little bit better than the best quarter of last year. So that's really important. If we didn't have the demand, the next part wouldn't matter as much, but the demand is really solid. Then the other big thing that happened in Q1 is we made a big jump forward in our paid rate. And so something that we thought we wouldn't get to until the end of 2027. We jumped 10 percentage points all the way up to 84% of our patients being paid all through in the first 4 months of this year. And that was 2 big components. One was the IRA is helping make ORLADEYO and other drugs more affordable for patients. And so patients who previously couldn't afford their co-pays and were on free product now can afford it. And so in our Medicare segment, the paid rate is up to 89%. And then the other thing is with commercial payers, we keep making progress. Jon mentioned the evidence. We've developed a lot of real-world evidence that is convincing payers that this drug isn't just a pill, it's a very effective preventative therapy. And so those -- all of that combined to make just a really great Q1 and sets us up on a strong path for this year and the next several years.

Yes. So we've always talked about stickiness of the market. So Jon, you talked about entering a sticky market, but now you're part of the sticky market. What do you think is particularly -- particular about ORLADEYO that you think will help you keep the patients that you have now as well as continue to add on even potential new competition coming?

I think, Tazeen, the key is, of course, patients love the idea of an oral therapy. But in HAE, they will not accept a drug that doesn't work as well. And so getting efficacy is primary. And what patients have discovered is they can do really well and do, do really well on ORLADEYO. If they don't, that's fine. What we've learned is no drug works perfectly for every patient. They try it and they move on. But the patients who stay on, they stay on because it's convenient, but also because they have a very low rate of attacks relative to what they might have experienced at some point in their past. And so that makes it sticky. That is what they're looking for is just to take a pill and almost forget that I have HAE. And that's why we think it's -- those patients will be so sticky because what could any new therapy offer them that is better than that. They've already found what they're looking for.

And I think one other thing in the marketplace, and we saw this from the start, and we still hear it today, the #1 objection from a doctor about switching to ORLADEYO is if it ain't broke, don't fix it. And so if you're on ORLADEYO and you're controlled, as Charlie said, there is nothing more that you can do for that patient, right? So that's where the stickiness comes from.

What is the definition of controlled because sometimes different people -- different doctors actually have different ways of looking at it. But what is the most standard way of thinking about control? Does that mean you don't have occasional breakthrough attacks?

Well, that would -- what everyone would love to be is completely attack-free. That's an admirable goal. What I think physicians really know and patients very much understand is that is almost unrealistic for most patients. And so control means rare breakthrough attacks, and when you have an attack that you're able to deal with it more easily with a rescue medicine. And so what our long-term, and our real-world evidence is showing is the median attack rate for patients on ORLADEYO is getting down to about 4 attacks per year on a rate. So that is great control. We have a decent percentage who are effectively attack-free. Some have a little bit more. It's all relative to what the patient expects based on their past history. And we've looked at other therapies and what they've reported on drugs, really good drugs like TAKHZYRO, HAEGARDA, the same types of patterns are seen where some people are attack-free, but most people do have an occasional breakthrough attack. So that's expected. But as long as they can deal with it quickly with the rescue medication, they're comfortable with that.

And Charlie, you might want to talk about the data that we gathered through claims where the persistence of other prophy therapies bears that out.

Yes. I think this kind of shows and also what I said earlier that no drug is perfect for absolutely everybody. So we did work identifying patients starting ORLADEYO, starting TAKHZYRO and starting HAEGARDA and followed them through their first year of therapy. And what it showed is there is no difference between those 3 products, they all end up with about a 60% retention rate at 1 year. And I think that just shows patients need to find what works for them. And we, at the moment, have the most differentiated product in the market.

So Jon, you've talked about being able to achieve at least $800 million in sales. But at the trend that you're at now, it seems like it's not that far away. So how are you thinking about it now in terms of where this could peak?

Yes. I mean, our confidence in the U.S. and hitting that $800 million number is really high. And it's because when we first put it out, we gave you the steps of things that we needed to hit, and we're ahead of plan on all of them. And I'll let Charlie describe them.

Yes, there are 3 big components. And what I said in the first answer is really key. The number one is the demand. And so as long as we average, and this was from 2024 through 2028, average a net of 200 patient additions per year. We would -- that's the biggest piece to getting to $800 million. We were well ahead of that in 2024. The first quarter shows we're on that same strong pace. The next piece was getting to an 85% paid rate. And we expected that would take 3 years. We basically -- we're there at the end of April with 84%. And then the final piece is modest price increases. And we've been able to increase price by 5% the last -- each of the last couple of years. We net about 3.5%. So we're ahead of that pace as well. So we feel really good about peak of 800 -- at least $800 million in the U.S. and then global sales of $1 billion in 2029.

Okay. Can I just ask you how you expect to be impacted from launches of new on-demand therapies in the nearer term? What percent of your patients do you think would opt for something that's fast acting if they need it rather than be on a prophy, if it all?

Yes, I think there's maybe a couple of parts to your question, which is will -- what we expect to launch very soon is an oral on-demand therapy. And we know that, that's something that patients would really like. We're paranoid about this. So we've done a lot of market research to figure out what will they actually do, what will physicians do. And we see very little idea that the patients would go backwards and say, I'm just going to treat my therapy as attacks come because that puts a lot of burden on them to be ready. As easy it is to take a pill, you have to constantly be ready. They'd rather prevent and then have a pill for the occasional breakthrough. And to be able to do that with a fully oral regimen of oral every day to prevent attacks and then occasionally oral for breakthrough attacks is something that we think will be very attractive.

I think there's another piece, too, which is what is the characteristic of an attack if you're treating it on demand without prophy versus a breakthrough attack if you're on prophy. And what we've seen and what other companies that have prophylactic medicine is that the attack is shorter in duration, less likely to grab for rescue medicine, fewer body parts. And so who wants to go through that, right? And then the other piece is that you need 2 things to have an attack, low C1 and a trigger and stress is the #1 trigger. Who wants to have a patient that's worrying about, Oh my God, if I have an attack today or that -- a lot of times that will trigger an attack. And so it's just way better to prevent. The guidelines suggest that everybody should have the opportunity to have prophylactic therapy. And so this idea that we're going to go backwards and treat more on-demand, I think -- like Charlie said, no drug is perfect. There are breakthrough attacks. There will always be some people that are on-demand only. And so there's a place for these medicines, but prophylactic is here to stay.

To Jon's point, we've put a big study that we did with ORLADEYO patients. We put this data out publicly. 80% of them report less severe attacks on ORLADEYO and only 5% say their attacks are the other way or worse. So people really do, do better when they're controlled with ORLADEYO. And I think this would be true controlled on any prophy therapy.

Okay. So I did want to have a good amount of time to talk about your pipeline, because there's a couple of exciting things upcoming later this year. So maybe, Jon, can you give us an overview of those?

Yes. So we're back in the clinic, which is great. With 2 programs, BCX17725, which is a fusion protein, our first biologic that we're moving into the clinic for Netherton syndrome patients. And this is a horrible disease where you have uncontrollable KLK activity that causes uncontrollable skin shedding. And the more we learn about it, the sadder we get about having patients not having anything to really treat the underlying cause of their disease. And so we're really excited to be in the clinic and moving that forward. And then the second one is avoralstat, which you remember back in the day, was our first-generation kallikrein inhibitor, poorly soluble, poorly permeable. So it wasn't a great oral drug. But in DME, we believe that given with a suprachoroidal injection could be really interesting for patients that have DME and are continuing to progress even when they're on VEGF therapy.

Okay. So let's go into a little bit more detail about Netherton. So can you talk about mechanistically why you're excited about this particular approach?

Yes. So the disease in a simple layman's explanation is faulty gene, missing protein, overactive enzyme, KLK5. And what it does is it starts to gobble up skin cells and you shed uncontrollably. And so like I said, it's a horrible disease. So what we're able to do is replace the protein and control the KLK5. So what we're shooting for is restoring normal turnover of skin, which would be just unbelievable for these patients.

And so in this first stop that you're looking at, just tell us how we should be thinking about what the data could show us?

Yes. I'm going to get to a slide, I believe, yes, here we go. So this is a Slide 13. Yes, I don't know if it's 13 in the deck, but it was recently presented in our earnings deck, and it's the Phase I healthy volunteer and patient study in Netherton. And so we're in Parts 1 and 2 right now, which is your standard healthy volunteer SAD/MAD study. And what we're looking for in that portion of the study is PK and getting a sense of dose and also safety and tolerability. Because of normal skin turnover and having the protein, not missing the protein, you can't get great measurements in skin. We are doing biopsies, but it's going to be harder to get a sense of is the drug getting there or not. So what we're really excited about, and this is where the IND in the U.S. opened up to treat patients in Part 3 is really exciting. This is a 4 weeks of treatment, so 3 doses, weeks 1 or starting day 2 weeks and then 4 weeks. And then we follow them for another 4 weeks. And we're probably going to get a handful of patient data out of the study because it's an ultra-rare disease. But what we're looking for, we're starting at 6 milligrams dose is to see what 6 milligrams a dose does in these patients. And if we have to go up, we will go up in that study. And really, what we're looking for is do we see the drug getting to the skin, so we'll do biopsies there. It will tell us what effect is it having on KLK5. And then are there any clinical symptoms? And we don't know if in a 4-week treatment study, if we'll see that or not. We don't know if 6 milligrams is the right dose. But we think we'll start to get a sense of dose and activity in that study. And then the next part, which we also expect to start this year, we don't know how much data we'll have, is Part 4, where we have 12 weeks of treatment, a longer duration where we expect that we should start to see some real clinical benefit. And the combination of all of this if it does what we think it will do, will give us something, I think, really exciting to take to the regulators in a disease where there's nothing to treat these patients.

Yes. So let's do a deeper dive into a couple of things that you just mentioned. So is there a minimal threshold of impact on KLK5 that you need to see?

Yes. Without going into too much, we want to restore normal skin turnover. So it's got to be inhibition that is similar to what you and I have. And so that means you're not going to be flaking, you're not going to have the redness, you're not going to have the itching. And so that's what we're shooting for. So this isn't some little incremental patient reported, physician reported. We're looking for restoration of normal skin turnover.

And Tazeen, I think we -- part of the answer to it is we don't know if there's a minimal threshold, but we'll find out with the dosing schedule and the fact that for these patients, their skin turns over on about every 2 weeks -- that's why these short studies with the replacing -- essentially replacing the missing -- the controlling protein or controlling enzyme is -- it's plausible that we could actually discover what that minimum dose is in these short studies.

Even like when you get to the 12 weeks, that would be you think sufficient to get...

Might find it out in the 4-week study.

Okay. Yes, you've listed some other markers there outside of KLK5, which I'm not familiar with, but can you talk us through the importance of those?

Yes. I mean there's -- just in general, there are patient-reported outcomes and physician-reported outcomes of how much of the body do you see an improvement? How much of the area do you see an improvement? Those kinds of standard ichthyosis atopic dermatitis type measurements will be using. And those probably will be the endpoints that will be used in a pivotal study. And again, if we achieve the restoration of normal skin turnover, they should be dramatic differences from what patients are experiencing.

Right. So it seems to me like you'll be able to -- and again, we don't know how many doses are going to be in Part 4, but you'd be able to know pretty early when -- is this going to work? Or is this not going to work, right? So I would say the investment that you're making in this is not something that's multiyear and super expensive.

Yes. And a handful of -- it's probably handful of patients in Part 3 and maybe 2 in Part 4. It's an investment that either the drug gets to the skin or it doesn't, and it's having the intended effect. Because remember, BCX17725 is 1 million times more potent than the natural ligand, and it has a high affinity for the site. And so we think that, that tends well to -- or gives us the confidence that we're going to have a drug.

How many patients are there again for another 10?

We've -- there is no ICD-10 code. So this is a critical thing to figure out. We've gotten a good start on it because there's a unique feature that many patients have called bamboo hair, where their hair literally looks like bamboo under a microscope. And we've done U.S. claims data analysis and found about 1,600 patients that have a mention of bamboo hair. Then what we know from talking to patients is many of them because there's no therapy out there, they kind of retreat from care, and they're not asking their doctors anymore. So what our belief is if there's a targeted therapy out there on the market, like we've seen in other rare diseases like HAE, that the market could grow. We have people who launched CINRYZE on our team back in the day back in 2009. They used to think there were 2,000 to 3,000 HAE patients in the U.S. Now we know that there's over 10,000. And so a similar kind of growth could happen in Nethertons, and we're doing more work to gain more confidence around that kind of hidden undiagnosed population size.

We got a really good question today from an investor about what role does this drug play for BioCryst and for an investor? And the answer is sustainable growth, both in revenue and profit about the time this comes to market, and we'll be at, we think, a pretty good trajectory. ORLADEYO will be starting to hit its peak and flattening out. And profitability, spreading another product across the infrastructure and investment that we've made improves profitability and then validation of our discovery engine. How many companies do you know that actually do this twice, right? And so we have a high degree of confidence for that. So that's the role that we play.

Sure. So if everything that you're looking for in this study goes in the direction that you would hope, I guess, first of all, are we going to see the 12-week results this calendar year? Or would that flow into next year?

Yes, I think that's going to flow into next year. We may start enrolling Part 4 this year. We may have some early data out of Part 4, but I think Part 3 is where you -- like I said, a handful of patients.

Got it.

Treated for 4 weeks.

That Part 3 is when again?

We're going to start it towards the end of the summer and have data by the end of the year. By the end of the year for that.

Yes, yes. Okay. So what would be the next steps if this turns out to be what you wanted?

It all depends on what we see. But let's assume that Part 4 gives us a real indication of clinical improvement that we're talking about, and we have a dose. We're going to go to the regulators. There's nothing to treat these patients. And I can't predict with certainty that we'll be able to go right into a pivotal study, but we're going to make an argument for that and see what happens. And I think the other piece that will turn on at that part is what Charlie was talking about, how big is this market? Can we start to get a program where we're getting more dermatologists that have big ichthyosis patient populations to start doing the genetic testing and to start helping with advocacy for patients and the like and really start to find the patient. So that would be very exciting. And we think that could happen as early as sometime next year.

So for something like this, do you think that it's worth trying to pursue an accelerated path? Or just based on what you said, you'll be able to know like in a short amount of time in a -- even in a bigger study if it's going to work or if it's not going to work. So does it make sense to even think about -- and I'm jumping way ahead of whether or not it makes sense to try to pursue an accelerated path.

Yes. I think that's -- everything is on the table, again, just based on what we see in terms of the results of these early studies. So because -- and I think the agency in general is pretty amenable to accelerated pathways if there's nothing, and you have a big treatment effect. So I don't think that's off the table.

Okay. Great. So we look forward to that. And then I did also want to talk about DME.

Sure.

So I think some people are intrigued by it because the DME market is seemingly pretty saturated with the big players, the VEGFs -- can you just talk to us, in particular, why DME might be more amenable relative to some of the, I guess, let's say, wet AMD to an alternative treatment form?

Yes. I think part of it is, while VEGF inhibitors are really good therapies. There -- in some patients, they're not good enough is number one. And number 2, the biology of the disease is such that plasma kallikrein likely plays a role in patients. And there's a slide, it's #15 in this deck, but it's addressing unmet need in diabetic macular edema. And it's pulling data that, one, shows that upwards of 40% of patients on VEGF inhibitors continue to have a decrease in their visual acuity. So it's just not working. And then the other part of the slide is a graph that shows from a study that was run in the vitreous, do you see VEGF or plasma kallikrein in the vitreous of DME patients. And you see it in almost every patient that they took samples of with plasma kallikrein and in some, no VEGF. So -- and this makes sense, right? While it's diabetic driven, it's contact activation, just like we see in HAE, where plasma kallikrein plays a role in leaky vessels that causes swelling that causes enlargement of the retina and ultimately decrease in visual acuity and blindness in patients.

So, what type of data would you think is encouraging and worthy of moving forward?

Yes. Let me say first that we're not the first to try this, and there have been failures with plasma kallikrein inhibitors in the past. And so what we're trying to do is do a study where we get a sense of is our drug getting to the right spot, staying there long enough and having an effect on the disease. And so really, the thickness of the retina will be the first. We're going to look at visual acuity and some of these other things. But what I love about this study is in a simple SAD study where we're not looking at healthy volunteers. We're actually looking at patients with DME. We can give a single injection and see what happens to the thickness of the retina over time and what is the durability of that single injection. And so we're starting -- again, we're going to start that study sometime towards the tail end of the summer in the third quarter. And we believe we're going to get some data.

How many patients are there?

Yes. So the design was in our recent deck as well. I believe we've got it here, avoralstat Phase I patients with DME. And so there'll be a low dose, mid-dose and high dose, 3 patients per cohort. So again, it's a small number of patients, but we're going to get some sense of what's happening in these patients in terms of the thickness of the retina. And we should have some data by the end of this year. So back to your point about a reasonable investment to get an answer. If we start to show some sort of activity, let's say we don't find the dose yet. We have to go higher. We don't have the duration that we want. We'll keep going and pushing the dose until we find a dose that we feel is right to control over a long period of time.

Mechanistically, would you expect to see a different result in newly diagnosed patients versus those that have already been using VEGFs?

I think that is a question. It's going to be -- it depends. In this study, we're going to be studying both newly diagnosed patients as well as some who have tried VEGF. As Don Fong, our Chief Medical Officer, will always say, patients can fail on a drug for a number of different reasons. And so that's the -- it depends part of it. But if it works in newly treated patients as well as some who have experience with VEGF, we're looking for that range of experience.

Yes. And I think back to that slide I talked about looking at the vitreous and plasma kallikrein versus VEGF that you can see in these samples that some patients have a pretty large VEGF component and some have a smaller kallikrein component. We may enroll some of those. We don't know what the effect is going to be in those patients. So in a small study, what we're looking for is are there signs of activity of shrinking the swelling of the retina and what's the durability of a single injection.

I mean this is all potentially really exciting and could be transformative for BioCryst. Would this be -- the size of this opportunity be something that BioCryst would feel comfortable taking on, on its own? Or do you think that this would benefit from large companies that have done big ophthalmology launches before?

I'll say yes and yes. Right now, we feel and one of the things that made it attractive, it's not rare, right? And these trials are big, and we can talk about the investment in these trials, but we can afford it based on the compound annual growth rate that we've shown in the past and our path to profitability. But the commercial footprint is very similar to HAE treaters. And because there's these retinal centers that are about the size of the population of treaters of HAE, we have a 40-ish person sales force in the U.S. We could do that. And so -- but I could also -- and I say yes and yes, I could also see companies being very interested in this program. And I've always said, if somebody could do it bigger, faster, better than us, we're open to that. So...

Yes. I mean just given the dynamics of certain drugs coming off of protection and all of that, I was curious as to how you're -- I mean, are you getting inbound interest for -- from people wanting to learn more?

I think there's a bit of cynicism about kallikrein inhibitors, just to be honest, with the failures that we've seen in the clinic before. And so people want to see, is this approach going to be different? And I think if we show that, there could be real interest.

Okay. Cool. With that, we're out of time. So thanks so much for joining us on stage for the last 30 minutes, and thanks, everybody, for listening. We'll stay in touch, Jon, and we'll talk soon.

Yes. Great. Thanks, Tazeen.

Thanks, Tazeen.