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

Hi, everyone. My name is Maury Raycroft, and I'm one of the biotech analysts at Jefferies. With great pleasure, I'd like to welcome Helen Thackray, the Chief R&D Officer from BioCryst. Thanks so much for joining us today, Helen.

Thanks very much, Maury.

And we're going to do a fireside chat discussion. So maybe to start off, for those who are unfamiliar with BioCryst, if you can set the stage and talk about ORLADEYO and your pipeline.

Yes, sure. So BioCryst is focused on rare disease, and ORLADEYO is in its fifth year of launch for treatment of HAE, prophylaxis of HAE and growing really well. We're very, very pleased with performance and what it's doing for patients. We have a pipeline as well with 2 programs in the clinic with milestones, regulatory milestones and trial milestones already this year and data for both before the end of the year. And we're a company with financial strength. We expect to be profitable this year. We've paid down debt already this year, and we are capital markets-independent.

Got it. And with your lead drug, ORLADEYO, it's been commercial, it's doing really well commercially. First quarter, you guys beat expectations again, and you raised the guidance for the year to $580 million to $600 million versus the prior $535 million to $550 million. Can you talk about the drivers that led to the increased guidance? And what are some of the key variables that investors should consider when determining whether you're going to hit the upper or lower end of guidance this year?

Yes. So driver is demand. There's strong demand for ORLADEYO amongst patients and with physicians wanting to give it to their patients, and for first quarter, also getting patients to paid therapy. So in particular, the Medicare population but also commercial population getting to paid therapy was a big driver. In terms of variables going forward for the rest of the year, if we have continued strong growth and keep maintaining that paid rate, then we would -- we are going to see similar performance this year.

Got it. Okay. Makes sense. And also wanted to ask just about thinking about the expansion of the opportunity, and you guys have talked about the pediatric opportunity, and FDA has accepted the supplemental NDA with priority review, and you've got a PDUFA scheduled for September 12 of this year. Wondering what data you included in the data package, and do you expect FDA to ask for longer-term data? Have you gotten any feedback from FDA and also payers as well?

So we have had the NDA accepted, as you said, with the PDUFA date mid-September and priority review. The data package is -- it's the data that's needed to extend what we know for adolescents and adults into the pediatric population, so safety and PK as well as we have data on attack rate that's submitted. This is to meet the pediatric requirements. And so it's fairly straightforward to submit a dataset like that and have it reviewed by the regulators.

Got it. Okay. So wouldn't expect any surprises as it stands there based on some of the conversations. Same thing with payers as well, they'll be on board with this population of patients with pediatric?

We certainly hope so.

Yes. Okay. And wanted to dive into the pipeline where you do have 2 data updates later this year where there's a lot of interest. So you've got Netherton syndrome and DME. Maybe starting with Netherton syndrome, just remind us what the mechanism of action is for 17725 and what data that you've seen so far that supports your confidence in pursuing this indication.

So 17725 is a KLK5 inhibitor. We're pursuing this for the treatment of Netherton syndrome, as you said. In terms of the mechanism, the data is -- this is a genetic disorder, and it is actually pretty clear that faulty gene leads to faulty protein function, which leads to no control of KLK5. And so the missing piece is the KLK5 inhibition. And that is now in the clinic. It's in the clinic for evaluation. We've had healthy volunteer evaluation so far and expecting to go into patients.

Got it. And we've seen a few prior attempts for targeting KLK5 for Netherton. Maybe talk about those approaches where we haven't seen a lot of success. And how does your drug differentiate versus these prior attempts as well as the current competitors as well?

So this is an opportunity to inhibit at the top of a cascade. Let's talk about KLK5 as the target for this drug. There have been other programs that have looked at KLKs, KLK5 and others. There are also other programs that have looked at some of the inflammatory cytokines and the programs that look at topical therapy. For this disease, we believe that systemic therapy is appropriate in order to be able to get exposure throughout the body. It's a disease of severe skin disease, and it affects the skin body-wide, so you really need to be able to get something that is going to treat the whole person. It also is a disease where KLK5 is the driver, as I've said, but it activates subsequent kallikreins, and it also activates other inflammatory molecules. If you stop that cascade at KLK5 with inhibition there, you would see then, this is what we expect, you don't need to stop anything further down the cascade because it will have been stopped at that top of the cascade. So it's really KLK5 inhibition. It's one more piece I'll add, and that is for our program, this is a very potent drug. It also has very high affinity, which means that it sticks to the target and it sticks for the life of the target being in the skin. And that means we can give a dose, we think, every 2 weeks in order to give that effect of KLK5 inhibition throughout the turnover of the skin. And so this will be a subcutaneous dose of potent medicine about every 2 weeks.

Have you disclosed the half-life for what it is yet?

I don't believe we have. But here, what may be more relevant is the skin turnover. With the high affinity and the drug sticks to that KLK5 target that the skin is going to turn over about every 2 weeks, that means you shed, and you would want to dose skin about every 2 weeks.

Got it. Okay. Makes sense. And in the initial clinical experience, wondering if there's anything you can comment on on what you're seeing there. I think in the past, we've talked about whether you're seeing ADAs or any GI or respiratory tox. And is there anything else you're focused on as it relates to safety?

So we haven't seen anything that we've specifically disclosed, but what we have seen so far in the healthy volunteers is sufficient information and supportive data to allow us to move forward into patients. So you could expect that we've been looking at PK, we've been looking at safety. I don't have any data today on ADA, but we have what we need in order to be able to dose patients more than once.

Got it. And what can you say about the PK? Is it tracking so far with your expectations? And you disclosed you're going to start dosing at 6 mg subcu. How many more dose levels do you expect to explore in Netherton patients?

So what -- we have PK in healthy volunteers looking at plasma exposure. It's in line with what we expected it to be, which allows us to move forward into patients, as I said. We're dosing in patients at 6 mg per kg as the preliminary dose, and we'll have 3 doses over 4 weeks for those first patients. What we -- the difference in healthy volunteers and patients is that with -- what matters is going to be exposure in the skin, which is where the target KLK5 is. We can't measure that in healthy volunteers because KLK5 is not active. The blood -- drug won't bind to it. But in patients, we'll be able to measure that. So we'll be looking for PK as measured by the presence of the drug in the skin in patients.

Got it. Okay. Makes sense. And how often are you measuring drug activity with KLK5 suppression? And how long do you need to follow the patients to understand the healing effect with biomarker, IgA or IASA measures?

So in order to measure the drug in the skin, we have to have samples of the skin. So we're doing skin biopsy. And we're also doing an assessment of skin as a sort of shed. So there's something called skin taping. That, we'll do at baseline, and then we'll do a skin biopsy at least once and then the skin taping multiple times after. So we'll have several different time points to look at drug in the skin. In terms of what else we'll see this year, so we are looking at the outcomes in the clinical setting, clinical sense, meaning we're looking for how the skin improves. We're looking at scaling, and is it decreasing? We're looking at redness. Is that improving? We're looking at itching. Is that improving? And so it will be a physician score measuring the quality of the skin scaling and itching. It will be a patient score also on how much does it itch.

Got it. And for the skin biopsies in your initial data update, is there more you can say on just how frequently you're getting those biopsies? I'm guessing at baseline and then how many times...

One additional skin biopsy, but we'll be following patients for a number of weeks. We'll be following in the Part 3 part of our study. We'll be dosing for 4 weeks and then following for about another 2 months after that. And we'll have periodic looks at the skin through the skin taping piece. It's like putting a piece of tape on the skin and taking off a few cells. The skin biopsy is more invasive. So we'll just do that once after dosing.

Got it. Makes sense. And anything else you're looking for and just based on blood biomarkers that are downstream from the KLK5 pathway?

We will look at -- in the skin, we'll look at PD markers, and that would be sort of downstream activity from the enzyme activity from KLK5. What I'm most interested in here is looking at the skin outcomes that -- what you can actually see in the skin and then matching it back to what we see on PK exposure in the skin and on that PD activity in the skin because it's going to be what do we see visually on our observation of the skin that really matters and tells us if we're at a dose that is having the effect we want to see.

Got it. And these patients, maybe talk about just the amount of surface area that's covered -- that's affected by the disease.

So this is a disease that affects head to toe. And one of the diagnostic findings of the disease is something called bamboo hair, so it affects the head as well. And the bamboo hair, just it's the term describing how it looks under the microscope. It's sort of broken in pieces. And so it's head to toe. It's the entire surface area. There can be some patches of skin that are worse than others, but patients generally exhibit this body-wide unlike some of the other skin diseases.

Got it. And so just based on like how quickly you think you'd be able to see -- detect some improvement in skin based on some of the accepted measures, I guess how do you think about just the rate of improvement and benefit for patients?

So number one, I don't know. Number two, with the rapid turnover in skin in patients with this disease about every 2 weeks, it may be fairly quickly that we see a response. And so we'll be looking at 4 weeks, 8 weeks, 12 weeks. What we know in the field is that there's been recent testing of a topical serine protease inhibitor in patients with Netherton syndrome and a response seen relatively quickly, I think, in under 6 weeks. And so we may see it that fast as well.

Got it. And maybe talk more about the study design and just the rationale behind the Phase I design. Why did you pick the 4-week treatment in Part 3 and 12-week treatment in Part 4? And do you expect to roll over Part 3 patients into Part 4?

So the study is designed so we can get an incremental look first in a few patients. Our target with the patients is to understand, one, is the drug getting to the skin in the quantity that we want it to do? Two, are we seeing healing in the skin as a result? And so 4 weeks of treatment will give us an opportunity to look at both of those and a glimpse that we'll get, is this drug getting to the skin, and then is it starting to heal? What we need to know is, are we at the right dose? If we see skin healing with 4 weeks, then we know we're at the right dose or close to it. If we don't, then we'll go up in dose to take the data that we have from skin penetration but also dose up to be able to get to affect what we see in the skin. We may need to dose up before we get to the 12-week portion in Part 4 of the study. And if we do, then we'll dose up. Part 4, our goal is to confirm that we're seeing the findings in the skin, how long they last and confirm the dose. And what would happen next is that we may then move to a pivotal program or a confirmatory trial.

Got it. And for patients that roll over -- I guess, when patients roll over from Part 3 to -- or...

Yes. So patients can complete Part 3 and then be eligible for Part 4. It's not quite a rollover, but they could still participate in Part 4, yes. This is an ultra-rare disease, so every patient matters in your clinical trial program. And it's relatively short term to see something in the skin, and then we would have patients available to go into the next study.

Got it. And for an approvable endpoint, for how long do you think you would need to treat patients and see improvement? What are your thoughts on that and what just that duration would have to be?

Yes. So we'll have to have that conversation with the FDA and regulatory agencies, of course. I expect that we'll be seeing it within a month or 2. It may improve over time as well. As we treat and inhibit KLK5 at the top of that cascade I was describing, we would expect to see the inflammatory markers further down the cascade start to respond. And that may take a little more time. So we may see some skin change and less scaling of the skin, but the deeper inflammation could take longer. And so for how long you need to study for a pivotal program, I don't know, but I would imagine it's at least a few months. Typically, the agency wants to see 6 or 12 months' data, and so it'll be somewhere in that time frame.

Got it. And for the Phase I, just in deciding whether to move forward to a pivotal, what do you want to see for biomarker and clinical healing data by the end of this year? I guess what's your expectation? And is there a good benchmark out there for reference?

Yes. So we're looking for a really big change. So this is a targeted treatment potent drug, a disease with no targeted therapies available and a very severe disease. We're looking for a dramatic difference. So what I would want to see is improvement in the skin and match it with what we're seeing in the PK/PD in the skin in order to then inform moving to a pivotal program. If we don't see that this year, then we'll dose up, as I said, until we do. But the information that we're looking for then is, are we at a dose? And with that dose, are we seeing that dramatic change in the skin with healing?

Got it. And a lot of Netherton syndrome patients are infants and young children. What safety and efficacy data must be seen in this population to derisk the program?

This gives us an opportunity to include pediatric patients earlier in the program. We don't have to wait until registration. It's with a biologic therapy where the class is generally safer. It means that we may have an opportunity to dose down in age as part of our development program and to include in our registration dataset. So we'll need to have PK data so we can judge the exposure that we need. And if the dose has to decrease, we'll also need to have some exposure and safety in adolescents and adults before we go lower in age. But we may be able to dose down to age 6 or so in this program and part of the development program before we eventually go for registration.

Got it. And so you have the data at the end of this year. Would you meet with FDA after that then to decide on what a pivotal would look like and then potentially start that pivotal study next year or...

Yes. I would expect the next step with the FDA would be to bring the data that we obtain in this study and then have a conversation about the path to registration.

Got it. Okay. Have you guys said if we're going to start the study next year? I don't think you've disclosed...

A pivotal study?

Yes, a pivotal study.

We have not, no. Yes, and so -- and it will depend on the data. If we need to dose up and dose range a bit, it will take a little bit longer. If we've hit the dose, which is not usually the case, then we could go sooner.

Got it. Okay. And for an accelerated approval path here, there's not clear precedent out there from our understanding. What do KOLs want you to do for this type of study?

Yes. So there's no regulatory precedent. There's no targeted drugs, nothing approved yet for Netherton syndrome. And that means that we have some negotiating to do around the endpoints. It's clear when we talk to physicians that they want to see skin healing. That's what matters to them and what they -- in their discussions with patients, what matters to patients. When we've spoken with patients and I've had that conversation with the patient, they are most concerned about the skin scaling and the itching. And so I would expect those to be part of our pivotal endpoint, and those are the kinds of scores that we're building in early, but we'll need to understand with the agency if they agree with that. In terms of accelerated program, this is a severe disease and ultra-rare. We expect a big difference. That's what we'll be looking for. And that means it could be a relatively efficient streamlined program. Whether it's accelerated or full approval, that will depend on discussions with the agency.

Are you bookending the number of patients that you could need for a pivotal study at this point? Or is it too early?

It's too early. But I think we can safely say that it would be relatively fewer than you'd see in other diseases. This is a targeted therapy, big difference is what I'm looking for, as I said. And so I would expect it's going to be smaller numbers.

Got it. And for enrolling a pivotal study, maybe just talk about some of the challenges there and how that could work within -- because it's a smaller patient population. What are you doing to plan for enrolling a pivotal study?

Yes. Ultra-rare populations are always something you have to think about carefully as you want to enroll in a clinical trial. Patients are few and far between. We are -- we've been working with a number of sites and experts and the experts who treat patients and have more than one, several patients. And the sites that we're opening are those that have patients already in their patient base and may be relatively straightforward to find those who participate in the trial. It is absolutely necessary to be talking to the investigators, the KOLs early and be working with the ones who know the disease best. They'll also have the biggest patient base.

Makes sense. Is there a good reference study out there for investors to get a sense of what enrollment time lines could look like?

So they're always going to be different. I don't think I can point to a reference study for this. But it is -- just one more point on that, Maury. This is what we do. We are -- we work in rare disease and have for years. And we're very familiar with what you need to do to be able to understand with investigators how best to enroll patients in the trial.

Got it. Makes sense. And for the market opportunity, you've estimated about 1,600 Netherton patients in the United States based on the bamboo hair phenotype. And there may be up to 5,000 patients if we consider a subset with the ichthyosis patients. Based on your research, how big is the Netherton syndrome market in the United States? And what percent can 17725 address?

So with targeted therapy, we would expect it to be something that maybe many patients would be interested in. I can't give you a percent, but this would be the opportunity for them to have something that actually treats the source of the disease. In terms of the market size, it's -- I mean, it's hard to say. That 1,600 that you mentioned, that's taken from claims data looking at a clinical symptom. And it's hard to know how many patients didn't present with that complaint, didn't get tested by their physician and yet still have the disease. And so we do expect that the recognized patient population may grow as a targeted therapy becomes available and physicians do the genetic test and identify that a patient who's perhaps known as having ichthyosis, in fact, has Netherton syndrome as a cause of the ichthyosis.

Got it. And can you talk just a little bit about the spectrum of severity for the disease and what the drivers are there?

Yes. There is a range of severity. We understand that the most likely patients to be diagnosed are those who are most severe and may spend time in sub-subspecialist office. The reason behind it is the genetic variability. There's a mutation that can be in different places in 2 genes or a pair of genes that any patient has and something called a compound heterozygote, which means mutations in different places, and you may get different expression of SPINK5 protein. And so that translates into patients who may have quite severe disease and patients who may have less severe disease but still look like they have bad eczema. So they're seeing a dermatologist but not necessarily tested and identified as having Netherton syndrome.

Are -- the initial patients that you're going to enroll, are they the compound heterozygotes?

So we're looking -- maybe, and I'm sure it will include some who are. We're not enrolling based on their genetics. We're enrolling based on their skin disease and having had severe and recognizable skin disease.

Got it. Okay. That's helpful. And for patients that have this, especially kids, they'd likely be on therapy for their whole life, right? It's genetic-based disease.

Yes, it would be continuous treatment.

Right. Makes sense. And so I want to shift gears and talk about -- well, actually, one other question, too. For 17725, are there other indications you could pursue with the drug?

That's an interesting question that I'm not prepared to answer at this point. KLK5 is expressed in other tissues. The reason we chose Netherton syndrome is because it is solely KLK5 that is the source of the disease. But if we are able to demonstrate that this drug is safe, we identify a dose that's effective in Netherton syndrome, then we may move to other diseases as well.

Got it. Okay. And so for DME with avoralstat, you've got a lot of experience with avoralstat, which this drug has lower solubility than ORLADEYO and could be ideal for the suprachoroidal approach that you're pursuing in DME. What evidence either from literature or ideally from clinical kallikrein inhibition experience gives you confidence in the mechanism for DME?

So there's actually a fair amount of evidence. We're looking for the clinical evidence of this program. There is literature that supports that plasma kallikrein is expressed in the fluid inside the eye in a number of patients with DME, in fact, a wide range of patients with DME. And VEGF is also expressed but not in all of those. And there's some overlap between the 2 but then also patients who have one or the other. That suggests that VEGF -- it actually supports why VEGF inhibitors don't work for all patients and suggests that plasma kallikrein may be an alternative mechanism. There's also -- there have been some programs that have assessed plasma kallikrein inhibition in the clinic, and they've had some initial results that are really interesting. They're just not sustained. And so it's more durable exposure at the site of the retina that's probably what's needed, and we think we can bring that with avoralstat.

Because that's what you're doing with your approach. You're getting that durable exposure at the retina versus the other approaches, which could have been systemic or...

Yes. I think there's been oral delivery and there's been intravitreal delivery. The suprachoroidal space is right around the back of the retina. And putting avoralstat, which is poorly soluble, as you said, in a suspension into the suprachoroidal space and allowing it to slowly solubilize over time, that would give, we think, a sustained slow release of the drug, almost like a depot, and deliver exposure right to the retina so that you have sufficient exposure in the right place for the right amount of time for a long duration so that one injection could get to the level of improvement that we want to see in the edema.

Got it. And talk about the preclinical data you have so far? And how does that derisk translatability to humans in terms of dose, efficacy and then safety and durability?

So we're really excited about the preclinical data because it is so very clear. We have data that's been in some of our presentations on our website showing that suprachoroidal dosing with avoralstat in an animal model, in a VEGF-dependent animal model has a fairly rapid and significant decrease in leakage in the retinal vasculature. So what that means is in a VEGF model, plasma kallikrein inhibition alone with avoralstat delivered to the suprachoroidal space, the same route that we're talking about in humans, has a clear definitive reduction in retinal vascular leakage. And that's the source of diabetic macular edema, is that leakage in the vasculature. So that gives us confidence going forward. We also have data that shows exposure can last past 6 months with one injection in a similar model. And that puts us in a position to go into the clinic then and assess for the same thing. If we give avoralstat with an injection in the eye and the suprachoroidal space, does that one injection have exposure and durability of exposure out to maybe 6 months? And does it also have that effect that we want to see in retinal thickness, retinal edema, which is easy to measure in the clinic?

Got it. All makes sense. And that's a good segue to the clinical study that you're running. So maybe talk a little bit more about the Phase I study design. And what do you want to see in this study in the first few patients that you show at the end of the year? What's the bar for success? And what do you want to be there?

So we have -- this will be a relatively small study. It's a first look, it's a small investment, but it is looking at 9 patients at 3 different dose levels, so dose escalation, dose ranging. And we are looking for safety and tolerability first, but we are also within 4, 8, 12 weeks looking for changes in retinal thickness. That's easy to measure. It's noninvasive. It's just an assessment of the thickness on scan. And that thickness, if it starts to change in that 4-, 8-, 12-week time frame, that tells us we have a drug. And it becomes a drug then that we'll want to think about investing more to do further evaluation. So this is a first look, a small look, but it will give us an idea of, are we seeing a difference in the retinal thickness?

Got it. And how many time points will you be assessing that then and...

So pretty regularly, about once a month. And we'll actually -- we have the opportunity to assess for a number of different months. So if we start to see something, we'll continue watching and then think about our next trial.

Got it. And maybe just going back to kind of the financials and operations, you guys paid down $75 million in Pharmakon debt this year, and you expect to be EPS-positive this year. Can you remind just on what the cash position is and talk about -- what else you guys could do having a strong balance sheet potentially on the BD front?

Yes. So we expect to be net income and cash flow positive this year. Cash at the end of Q1 was $317 million. Now it's about $240 million, and debt remaining, since we had the ability to pay some down, is $249 million. Our plan would be to continue to pay down debt and clean up the balance sheet, get us into a sound financial position and then continue to invest in our pipeline, both internal and perhaps through BD external.

Got it. And for the 2 pipeline data updates later this year, are they going to happen at different times, at the same time? Any more clarity on just -- or granularity on the timing of these events?

I don't -- I can't say that. I think by the end of the year, we'll have both.

Got it. Okay. Well, Helen, thanks so much for joining us today.