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. It's with great pleasure that I'd like to welcome the BioCryst's management team. We've got Jon Stonehouse, CEO; Charles Gayer, Chief Commercial Officer; and Babar Ghias, the CFO. Thanks so much for joining us today.

Yes. Thanks for having us.

And we're going to do a fireside chat format. So for those who are new to the story, if you can give a brief intro to BioCryst.

Sure. So Maury, first off, thanks for inviting us to this year's conference. We're all going to be making forward-looking statements. Those statements have risks. Risk factors can be found in our most recent filings. BioCryst is a pretty interesting company. I've been in it for almost 19 years. And today, BioCryst is a company with revenue from ORLADEYO, somewhere between $590 million and $600 million and growing to a peak of $1 billion. So really good trajectory of growth and patent protection out to 2040. So that's the growth engine. Next is we've got a pipeline of internal stuff, the one that's in the clinic -- 2 in the clinic, [ 17725 ] for Netherton and then avoralstat for DME. And then third, we're in a financial situation where we were able to do a proposed acquisition with Astria, and that's in the process of going through the closing process. And so now we have a late-stage asset with navenibart and in a spot where we know the space very well with HAE. And so we're really excited. So -- and we'll continue to be profitable. This is our first year of profitability, a year ahead of schedule when we first said we would move towards profitability, and we'll continue that even with the absorption of Astria. So really exciting story.

Got it. Yes, it's a great intro. And I wanted to ask about ORLADEYO. It's pretty soon since you just had your earnings, but maybe you can comment on how fourth quarter sales are looking and how you're setting expectations for the quarter and drivers that could lead to beat or surprise?

Yes, Maury, maybe I'll reiterate something that we said at the Q3 earnings call, which is in the third quarter, we had -- despite the launch of 3 new competitors in the space over the summer, we actually had slightly more new patient starts this year than we did in Q3 of last year. So this is what we expected because ORLADEYO is the most differentiated drug, it's the only oral drug in the market. And what the prescribers and patients are showing is the demand is still there in our fifth year of launch. And so we expect that same consistent demand and consistent patient retention. And we'll -- so we'll have continued steady growth throughout the fourth quarter, getting to what Jon said, $590 million to $600 million for the year.

Got it. Okay. And maybe just talk about the EU divestiture and just the rationale and the impact there as well.

Yes. The rationale is we built a really strong EU business, but it was generally loss-making or breakeven. So we were generating about $50 million in 12-month -- trailing 12-month revenue, but the costs were also about $50 million. And our new partners, Neopharmed Gentili, came to us with a really attractive offer with about a 5x multiple on the revenue. So for $250 million, they wanted to buy the product in Europe, but also very importantly, the team that could be the base of a new rare disease consolidator strategy for them. So it really fit, and then it allowed us to clean up our balance sheet and contributed directly into the proposed acquisition of Astria.

Got it. Okay. That makes sense. And I guess did you know about the Astria acquisition before the divestiture? I guess, was that...

No, the divestiture started last year at some point. The Astria thing was more recent. But what it allowed us to do, it gave us different levers such as retiring our existing debt, which we've done. So it just made our position stronger.

But the ability to be able to pull off that sale put us in the acquisitive mode for sure.

Right. Yes. Okay. Makes sense. And you're maintaining 2029 potential $1 billion peak sales guidance for ORLADEYO, which now includes pediatric sales and excludes EU sales. You mentioned that as the [ prophy ] market continues to evolve that you're maintaining steady growth there with commercials. But just how do you see the drivers behind that $1 billion peak sales changing over time or staying the same over time?

Yes. We -- it was a few years ago that we first said that we saw ORLADEYO as reaching $1 billion. And at the time, we said that would be $800 million from U.S. revenues for the capsules, the age 12 and up indication and then $200 million ex U.S., with about half of that being Europe, half being everywhere else. So even with taking out the $100 million from Europe, as you said, the reason we think we're still at $1 billion in 2029 is the U.S. business has grown more strongly than we anticipated when we set $1 billion a few years ago. And then we're adding in the pediatric indication, the -- what we hope to be aged 2 to under 12, with a PDUFA date on December 12, so right around the corner. And the combination of those two things puts us on a path to $1 billion in 2029.

Got it. Okay. And kind of another question just around the evolving HAE landscape. Just, I guess, what are the key leading indicators that you're tracking to give you confidence around the continued cadence of new patients going on to drug?

We do a lot of market research. That's been one of the keys to our success in the launch so far because we really want to understand what the future looks like and what we've done has been very predictive of where we've gone. So what we see again is with ORLADEYO being the only oral on the market right now, the only oral prophy on the market, the forward-looking intent to prescribe from physicians is just as strong as it's ever been. The desire from patients to be on an oral therapy has actually increased over the last few years. And so there's still a lot of opportunity. At this point, a little over 3,000 U.S. patients have tried ORLADEYO. But that means that there's up to 8,000 left who have not. So there's a lot of opportunity in front of us.

Yes. And I think a really important point for investors to understand is one, the market has changed dramatically in the last decade or so where everybody is controlled now, right? Everybody -- most -- as Charlie has said in the past, 80% of the market is prophy. Most people are on prophylactic therapy, and they're under control. So they only see their doctor maybe once or twice a year. And so the frequency that they get back is very limited. And so that affects the trajectory of growth of any new entrant. That's point number one. Point number two is ORLADEYO really works in the patients that -- as well as an injectable therapy when it works. And so people aren't sacrificing efficacy or willing to not be controlled because they get to take a capsule a day, they'll go on to something else. They'll go back to what they were on before or they'll go on to something else. And so with that, if you don't have something that works as well as ORLADEYO in these patients that's better than a 1 pill once a day, why on God's earth would you switch? And that is the fundamental premise of why the market share is so sticky.

Yes. Makes sense. Okay. And for those 8,000 patients that haven't tried ORLADEYO, I guess, what's the strategy there to eventually get to those patients?

The main strategy -- well, two things. One, we -- our team has been excellent at reaching prescribers. So we're constantly expanding our prescriber base. We had 63 new prescribers in the third quarter. And the way I like to say it is if it looks like you might have an HAE patient, we will find you. So it's getting -- it's going beyond the KOLs and getting into allergist immunologists mainly who might not even realize that they have an HAE patient. And so we're really good at finding that. And then the other piece is we continue to generate more evidence in the real world on ORLADEYO. And so what this does is it builds the story around the efficacy. So for example, earlier this year, we released data in over 350 patients with HAE with normal C1 inhibitor. And nobody has ever released this kind of data before, and it opened up or further strengthened a segment that's now about 30% of the patients on ORLADEYO and giving prescribers, patients and importantly, payers more confidence in ORLADEYO that it should be used and it should be reimbursed for those patients with normal C1 inhibitor.

Got it. Okay. Yes. All helpful. And let's shift gears to the Astria acquisition. Maybe just checking if there's any update on the closing of the deal, if you've gotten FTC clearance, any update there?

Everything is on track. So for Q1 closing, and you'll see updates in the coming weeks in terms of proxy statements and all that, but it's on track for Q1.

Got it. Okay. And maybe talk a little bit about the reason why you're doing this acquisition and bringing in this injectable into an HAE franchise that's been focused on an oral prophy. And so yes, maybe just kind of talk about the purpose of it.

Well, Jon talked upfront about our financial position and our ability to now expand our portfolio. Right now, we have one product on the market. So the question is always what's next. And what's next we said needed to be something that is later stage, it needs to be something that has very low risk and make really clear strategic sense. And I think with Astria and Navenibart, we really nail all three of those points. Astria is a company we've been following with great interest. We actually started talking to them a few years ago because when we first saw what they had and some of their early data, we thought this is going to work. And then when we talked to physicians, do research with physicians and patients, they see the profile of every 3 or every 6-month kallikrein inhibitor. And what comes out of their mouth is, "Oh, yes, this looks like TAKHZYRO," the market leader, "but I can do it every 3 to 6 months and without injection site pain." So it's going to be a very differentiated product. And so we think it complements what we already have in the oral space with ORLADEYO.

Got it. And what's the roadmap to capture the approximate 5,000-plus injectable experience patients with Navenibart? And what parts of the launch strategy will be similar or different versus your ORLADEYO launch? And which type of patients are you going to target?

One of the things that's going to be very different is that we're going to be able to launch Navenibart with basically a running start because we've got our commercial model built, we've got our team in the field, the relationships are there. I'll give another example, which is by the time Navenibart launches, we'll probably have about 3,000 U.S. patients who've tried ORLADEYO, turned out not to be the drug for them, but we have approval, we have permission to market to them. And so we're building a base of potential future customers for Navenibart. Most of these patients now have moved on. They're on TAKHZYRO or ANDEMBRY or another injectable product. But back to my point of they -- when they see this profile of Navenibart, this is something that we think is really going to motivate switch. And so we know the customers. We've got the data. We've got levers to pull on the marketing front and the sales front. And so it gives us opportunities that we had to build with ORLADEYO, we're going to have that right from the start.

Yes. And I think one other thing is there's no "winner take all" in this market. And so there'll still be over 5,000 patients on injectable prophy therapy, which in the turn of the decade, which is a huge opportunity for Navenibart. And we kind of get to the plateau of ORLADEYO. So we'll continue to have that beautiful revenue growth of approximately 15% compound annual revenue growth into the next decade.

Got it. And which types of patients are going to target initially, this launch?

I think the biggest opportunity is those patients who will be on TAKHZYRO. It's the market leader today, we actually think it will be -- it's a really good drug, and patients are going to stick with it, many of them. But the ability to have a drug that they can very clearly understand, but offers them something better for them in terms of the dosing while still being very high efficacy makes that a really important target segment.

Great. And just thinking about allocating resources internally, how do you make those decisions on what you want to allocate towards ORLADEYO versus Navenibart so there's no conflict and you can maximize value?

Well, first of all, it's a near-perfect synergy from a cost perspective because we don't need more salespeople, we don't need significantly more marketing dollars. So if you think about it, in 2029, as Jon said, ORLADEYO is going to be reaching a peak. There are going to be over 2,000 patients who are doing really well on one pill once a day, and they're likely to stick with it. We may not be attracting as many new patients at that point, but we won't need as many resources to maintain the business that we have. So the sales force, while they're now 100% focused on ORLADEYO, maybe in the future, it's 80% on Navenibart and 20% maintaining on ORLADEYO. It's all the same customer base. So it's -- we're really enthusiastic about it.

Got it. And for the Navenibart clinical development plan, is there anything that you would do differently with that? Is there a way that you can potentially accelerate it?

I mean we've been really impressed with the Astria team and what they've done so far and the -- where they should be, they've guided to Q1 of 2027 for top line pivotal data. What we'll do, first of all, is once the acquisition closes; is do no harm to that. So we want to make sure that we continue to do the great things that they're doing. But then we have a very experienced team as well, who's done this before with ORLADEYO. So we will try to -- anything we can do to help without getting in the way will be part of our strategy.

The synergy story here is that you don't have to build a new sales force and all the supporting G&A to launch Navenibart, which is what Astria would have had to do on their own. So that's -- we have that. So that -- I mean, that is massively synergistic.

Yes. Makes sense. And for that Phase III study, so they're testing Q3 and Q6 dosing. Do they have to hit [indiscernible] on both? How do you view that just the benefits of every 3 months or every 6 months?

Yes, they would -- first of all, we have a lot of confidence that both doses will hit statistical significance, not relative to each other, but versus placebo. That's what you need to get into the label. So we have high confidence that it will be a product with the option of 3- and 6-month dosing. And that flexibility to have one or the other is what patients and doctors want.

Right. Okay. And anything more you could say on just expected timing for the regulatory path to get the drug approved?

I mean I'll just say again, what Astria has said is data -- top line data Q1 of 2027. And then if you look at the analogs from ORLADEYO, other prophy products that have been approved in the last several years, it's usually 18 to 24 months from top line data to launch, depending on how a company puts together the package. We'll look to do that as quickly as possible. So launch in the latter part of 2028.

Got it. Okay. And then with the EU divestiture, now you're going to have a new drug that could potentially have value potential in the EU. So what are your plans there?

Well, we built a great team. They were super successful. We will not build again in Europe. So we would look to partner it. And that's another thing as we acquire the company and the program, it could be another thing where we out-license that. There'll be a lot of interested partner opportunities in Europe.

Got it. And how do you view evolving competition as it relates to this asset?

So we view this one as the really differentiated injectable product. I'll go back to that point of customers describing this as it's like TAKHZYRO but longer acting. So it's really easy for patients and doctors to understand what Navenibart is. There are some other drugs coming in the future that could be very effective drugs, but may not be as easy for doctors to explain to their patients. And so we think that both the timing of the Navenibart launch, the fact that our team will be doing it and our skill in HAE and then the fact that the story is very easy for customers to understand and very meaningful really sets Navenibart potentially apart from anything else that's coming in the future.

Did you guys do a lot of market research on just how many patients would switch from TAKHZYRO to Navenibart and...

Yes. We definitely do a lot of market -- I mean we do. And again, I'll say they see this as a very attractive product. It's hard to get HAE patients to switch because it's really got to be a meaningful thing to them that "If I switch, what do I get? Am I confident that this drug is going to work as well for me? And then what's going to be the burden? What is going to be my support?" And I think the HAE community has seen that the BioCryst patient support program is second to none. They -- we expect this to be a very highly effective drug. And then like I said, it's easy for them to understand. So I think it checks all the boxes.

Got it. Anything else you could say on just what you would do to get those patients to switch from TAKHZYRO?

Why don't we save that conversation for -- meeting in a couple of years? But look, we've got a lot of tools, and it all starts with the product profile and then the skill and experience of our team.

Maury, I would argue who's done a better job of switching patients from TAKHZYRO than BioCryst, right, at least to this point. So I have a high degree of confidence that they'll be successful.

Got it. Okay. I want to talk briefly about your pediatric opportunity. You've got PDUFA coming up December 12. Can you say if you're in labeling discussions? And maybe comment on how pricing is going to work for this.

Yes. We're in normal discussions that you would have with the FDA at this stage. So we think everything is on track. You can't say anything to 100% until you get there, but we're in the normal discussions at this point. And then what we expect to have is 4 different granule presentations, weight-based for kids and that the pricing will be equivalent to capsules. So each of the granules will be in individual sachets, daily sachets, and the pricing will be equivalent to the capsules.

Got it. And anything more you can comment on just how you expect the label to look and just the ramp-up in the setting?

I mean the label will look pretty -- we would expect to be pretty simple, which is age, HAE, what are the doses for what weight bands. There's not going to be a whole lot of additional -- the study was relatively small, 29 patients, open label. So it's not going to include efficacy data or a lot of differentiating safety data in the label. What I can tell you is of those 29 patients, the retention in the trial, 93% of them made it to 12 months on the trial. And then 83% of them are still on the therapy. And so really good reduction in attacks and a very clean adverse event profile for the kids on the granules.

Got it. Okay. So let's talk about Netherton. So you've got data update first quarter of next year. How are you setting expectations for that? And how would you define success?

So the big thing for next year with Netherton it's a really -- it's a rare but really nasty skin disease cause is overactive skin turnover based on a missing regulatory protein. And by the end of Q1, we expect to have a small handful, maybe a couple of patients of data who have dosed 3. It's going to be an every 2-week injection. What I think is going to be most interesting is by later in the year, we'll have about a dozen patients who have dosed for 3 months, so 6 doses over 3 months. So depending on the size of the effect, the long-term goal is to restore normal skin turnover. Will 1 month of dosing be enough to show that? We don't know. But we think you would see that in the 3-month dosing a little bit later in the year. What we're excited about is we've showed in healthy volunteers that the drug gets to the epidermis. And so that was kind of a critical derisker because that's where the KLK5 is that needs to be inhibited. And so we would expect the drug to get to the skin of patients equally well.

Got it. And just to clarify, so the data later next year, would that be from Part 4 or Part 3?

That would be Part 4. And in fact, we don't have to wait for any Part 3 data to go into Part 4. So as soon as we can get patients starting to enroll and sites are getting up and running, the investigators are getting very excited about this. We'll really put our focus on Part 4, but we're likely to have data on a small number of patients at the end of Q1.

When would you know when you want to meet with FDA to discuss pivotal and...

Probably after Part 4 data. I mean the data in Part 4, there'll be some dose ranging within that and depending on the size of effect, will allow us to design the proposed clinical study and have good discussions with the FDA and other regulators. So it could be the kind of thing that sets us up to start a pivotal study in 2027.

Got it. And maybe briefly just talk about the market opportunity here for now.

Yes, the market opportunity, huge unmet need. No treatment on the market today for these patients. So we've identified 1,600 patients in health care claims data. But what we know from the experience of diseases like HAE, once you have therapies on the market, these rare diseases tend to grow. So when CINRYZE was launched, the ViroPharma team thought that there were maybe 2,000 or 3,000 patients with HAE in the U.S. Now there are 11,000. And so that 1,600 number is likely to grow. We're doing more work to figure out how big we think that might be, but it's probably going to be a multiple of 1,600.

Got it. Okay. So a decent-sized rare disease opportunity. And for DME, maybe just provide a quick status update on that one. And is that update going to be in a press release or...

The main update for DME that we announced at the end of our Q3 earnings is once we finish the first 9 patients, so it's 3 ascending -- single ascending dose cohorts with that; our plan is to spin that out, license it out. It's -- obviously, it's not a rare disease, and we'd like to find a partner who is willing to pay for those ongoing studies and that maybe we can share in the upside longer term. But we're not going to pursue that past those first 9 patients. We'll have initial data in the first quarter of next year on the initial cohort of patients.

Got it. Okay. So we're out of time. Maybe, Babar, do you want to just comment on just the potential BD activity that you can implement and just how to think about expenses going forward as well?

Yes. I'll address the expenses first. As you are aware that at the recent earnings release, we sharpened our expense guidance. We lowered guidance from $440 million to $450 million to $430 million to $440 million. We're seeing a little bit of improvement in how we're running our businesses. The European divestiture gives us an immense opportunity to clean that operating structure further. So when we come out in January and provide you guidance as a stand-alone business because Astria would not have closed, you will see that the ORLADEYO still continues to grow at a double-digit clip and expenses will be significantly reduced. So our operating profitability and margins will be significantly better. Now Astria is expected, as Charlie mentioned, to close in -- somewhere in Q1 of 2026, and we'll integrate the business, and we'll be ready to share their burn rate and what that additional burn rate that we will encumber somewhere at the end of Q1. But having said that, we are anticipating that we still be profitable. We'll continue our profitability. We'll continue to be cash flow positive. But really, as Charlie mentioned, that we are at steady-state cost structure. So going forward, looking at 2027 and beyond, our operating expenses will actually come down because most of the Astria clinical trial will be done, and we're not rebuilding a commercial team to launch. So the ORLADEYO continues to grow, and expenses are steady state, growing at a very sort of low clip. So 2027, 2028 and beyond, operating profitability is going to be significantly higher. And then naturally, with the anticipated approval of Navenibart in 2029, that's all synergies basically. It's the top line and then gross profit that falls directly to the bottom line. So that comes to the next logical question about BD. I think we have some really important catalysts in Netherton syndrome next year. But we will continue to look at new opportunities. I think not every opportunity we look at has to be a blockbuster potential. With the infrastructure that we have, we could have a peak opportunity of $300 million to $400 million top line and can still deliver a lot of bottom line benefit. So we'll be very capital disciplined in terms of how we go about doing BD from this point onwards.

But rare and high probability of success in later stage.

Yes. Our internal R&D engine is really good at sort of the early stage part, and we'll supplement it with more later stage. So it will be -- we hope that the new BioCryst will be a very emerging product story over the next years to come.

Got it. Thanks so much for joining us today.

Thanks for having us.