BioCryst Pharmaceuticals, Inc. ($BCRX)

Okay. Great. So good afternoon, everyone. Welcome back to the Bank of America Healthcare Conference. I'm Tazeen Ahmad. I'm one of the biotech analysts here at the bank. It's my pleasure to have with me our next presenting company, BioCryst Pharmaceuticals. Sitting up here on stage with me are 2 members from the management team. We've got Babar Ghias who is the Chief Financial Officer; and Sandeep Menon, who is Chief Research and Development Officer. Gentlemen, thank you for making the trip out West.

Thank you, Tazeen, and thanks for having us.

So maybe as an overview, just give us a quick description of BioCryst as it stands today. Some people know it in various different forms, but talk to us about what you found appealing about it because you're one of the newer members to join the company, and we could talk about some of the important drivers of the stock after that.

Fantastic. Well, thanks again for having us. Before I begin, I'll just remind that we will be making some forward-looking statements. So I encourage you all to look at our SEC financials for the GAAP to non-GAAP reconciliations as well as risk factors. With that behind us, what's attracting me to BioCryst, it's a company at a phenomenal inflection point. [indiscernible] it's in sixth year of launch and continues to do extremely well in terms of how we're building that market, especially in the face of several approved products in the space. So that naturally the safety of a growth engine behind a lead product that really excited me, and then what happens after that? And I think if you look about the decisions that we have made in the last 9 months that are pretty reflective of how the strategy is evolving behind [indiscernible] our vision really is to build a high-growth in rare disease biotech with multiple products on the market by 2030. And now that we are very fortunate to have [indiscernible] which is a Phase III program in our pipeline. And then back in Wennberg, we have another very interesting and promising program in methadone syndrome, no approved therapy, highly, highly devastating rare disease. So I think all of that -- and then basically with Sandeep, just very recently joining us, and hopefully, he shares the same enthusiasm in terms of the inflection point. We are at a very interesting and position now to take all the momentum that we have behind from ORLADEYO to channel that into building like next product candidates and then also converge them with our internal discovery pipeline. Because historically, BioCryst used to only rely on internal engine. Now we're in such a strong financial position based on ORLADEYO's momentum that we can be much more creative in terms of building a really diversified real disease biotech.

Okay. So you guys have also really been busy with business development. How do you make a decision that some asset is worth bringing inside the company. So we can start off with the Austria acquisition. We can also talk about some of the partnering decisions that have been made recently as well.

Yes. So I'll just give you -- you're absolutely right in the 9 months that I've been here, we've been really busy. I'll start with what sort of started this, what was the catalyst? So we, as a small biotech company had built a really good team in Europe. And what we soon realized that one product was not going to be enough to build scale basically as a single product company, right? And we were very fortunate that based on the stuff that we were doing over there and the momentum that we also had in the ORLADEYO in Europe, we were approached by NG to divest that business at very attractive terms. What that enabled us was to actually clean up our balance sheet and improve our financial profile because Europe, even though top line was increasing, like I said, we were not at scale yet that we could make profit out from there. So that kind of free that space on our U.S. financials to become much more profitable than we already were. That enabled us to bring in Astria Therapeutics therapeutics. And like I said, at this point, it's with the vision of having multiple products by 2030, it was not going to come from an internal pipeline given that's early in nature. So we knew that we had to do something. Astria was something that we had actually been looking for many years because there was such a natural synergy of having the only oral in the market and potentially the best-in-class injectable product with the same commercial organization that made a ton of strategic sense as well as financial sense to bring those 2 together, and we were very lucky to have that in our portfolio. Moving on to what happens, we were never going to build in another European thing, and we went through a process where we had a lot of interest because of how promising that program is from European buyers and after a careful evaluation analysis, we thought that it made sense to actually put it back in NG's hands because you don't want 2 brands to be competing against each other and it's harmony around the brand promotion strategy. And then most importantly, it is a team that we had curated over many years. So we had a very high conviction in the NPV value of that deal. So that's kind of how it came about. To your next question, I think I would say that how we think about the decision. We are -- while our first and second assets are in HAE, we are not an HAE centric in the sense only an HAE company. We view ourselves as a broad rare disease company. Naturally, the first product is in HAE. The second one is coming in HAE because we didn't want to take that risk. Methadone syndrome is a classic rare derm disease. And when we think about business development strategy, we are looking at a broad portfolio. But at this time, it would -- it makes sense for us in terms of the infrastructure that we have built and the leverage that we have in business to look at more later-stage opportunities because I think we don't want to take like early development risk on something new because there's also a balance sheet perspective that we have to think about. So as we think about our BD strategy and think about what comes next, it work then to be late stage. It will tend to be with a potential product candidate that gives us an opportunity to bring more stuff into the 2030 time frame.

Okay. So on Astria, this is an injectable. So when this drug launched before you were a member of the team, the main distinction was that this is an oral. Everything else is an injectable and HAE for Prof. And this was something that's going to be differentiated, which has proven to be how did the thinking evolve that if you needed a second asset that an injectable, less frequently injected of course, but nonetheless, one that was an injectable would be complementary to what you already have.

Yes, absolutely. And I think we are in, obviously, in many ways, the pioneers of the switch market in HAE because it is predominantly a switch market as you've had experience as well. Now if you go back in time and say that like if the first approved therapy was an oral therapy, there will be more people on oral today than they are on injectables. I think the way the market has evolved, you had recombinant therapies, you had CNH replacement therapies, plasma kallikrein inhibitors. So the way it has evolved, the way we see the market today, there is a structural segmentation. There are patients who don't mind basically taking in a daily pill, and there are patients -- who you know who basically are okay with an injectable. I mean -- the proof is -- goes back to the stickiness as well to some extent. There are still patients who are taking Cinryze as inconvenient therapy as that is. It's an IV that you have to go through. So I think the way we see the market, there are patients who want the oral and are okay, and then injectable, where by our count, there's about 5,000 patients on injectables and several approved therapies, but there is an incredible amount of demand for an injectable that is dosed less frequently. I think that's where the value proposition we see of [indiscernible]. And [indiscernible], in terms of our work that we've done and we've -- if you show it to docs, and they look at lanadelumab, they look at [indiscernible] blinded profile and they're like, yes, this is a fast-acting enidelumab with less injection site pain. So we feel that with -- right now, we are the only oral in the market. And by the way, for peds, I know Forveros is upcoming with the thing. But in the ped, as you saw last year, we got the peds approval as well. So we're the only product, oral formulation with 2 approval, so that we will have for many peers. And then we will also have the best-in-class injectable product when potential event gets approved. So we see that as complementary based on how the market has evolved over time.

Okay. So as ORLADEYO continues to mature, what's your view of what peak sales could be by the end of the decade?

Yes. So I think we have laid this out very clearly or at least I hope you've laid this out clearly in our investor deck that before we had sold it to -- we sold our European business we were -- we had said that it is on a $1 billion peak potential and Europe's contributing. At that point in time, we did not have pedriatric in our portfolio. We got rid of the European business, but now we have pediatric, which is an incredibly interesting market dynamics in terms of how it is doing that. So from this point onwards, we feel that we need to be doing about 150 patients, net patients on average between now and 2029 to get to that $1 billion mark. To put things in context, historically, we've been doing over 200 net patient adds every year. And we feel that it's not going to be linear, but it's very achievable. Like I'll give you a stat that most recent -- in the most recent quarter, we continue to not just see like high prescription demand, but sixth year of launch, we're still adding new prescribers, which is pretty impressive when you think about -- because historically, we used to give that stat and it is in line with the historical numbers. But we're very excited that we're still adding new prescribers and kind of like how we're growing that market. And so I think we're still maintaining that long term, it's -- that $1 billion path is highly achievable.

Okay. So as you think about the evolution of the competitive landscape for prophylaxis, you mentioned [indiscernible]. So how do you think about the market with another potential oral that can come on?

Yes. And again, going back to the evolution of the market, this is not a winner take all market. I think it's like you understanding your patient base. Naturally, the one thing that I would say, people that take or they are extremely well controlled. So either it works for them or they move on because there are so many approved therapies that are already there. So we are not -- nobody is insulated from more competition. But as we see it and you know it that we do extensive market research, and we do every competitor, the best product profile and we do this sort of Monte-Carlo simulation analysis. We feel that when we -- when [indiscernible] gets approved, we will -- for new patient adds, we will see competition. But if you're already very well controlled on a once-a-day pills I don't know what more that another once-a-day pill acts because our data, and we generated this long-term data that there's one thing is a regulatory end point or regulatory marker that we had of efficacy, but the real-world experience of patients and the data that we've generated, these patients get over 90% attack rate reduction and then also mid-95 -- mid-90s percent compliance because it's working very well for them. So we feel that the base business is very well projected. The new patient adds, yes, we will be competing for sure. But the other thing is we'll have 8 years of launch by that launch experience by that time. So knowing our patient audience really, really well will matter a lot.

Can I add something here.

Sure.

So there are 2 other -- 2 or 3 things that Bob a nicely summarized, right? One is based on the real-world data, what we are seeing is it's almost like a functionally mean attack rate of 0, right? So functionally, patients are fine. You take the medicine. Second thing as a physician as a prescriber, why would you change something just for some point estimate when you have got history with 7 years or 6 years of data and such a big safety database, right? So that would be the -- at least the 2 trigger points for us basically that this is going to be for us, an increasing market. And these are the -- there's always so many physicians that are prescribers. So for them to try things new on a new patient I'm not saying that it will not happen. That will also happen, but it may not be as much as what it's made out to be. at least based on my experience as both as a prescriber and a clinical developer here yes.

Okay. So what about other mechanisms of action, for example, there's gene editing that's being explored for HAE? How would you consider that falling into the competitive landscape?

Yes. So gene editing, to me, when I'm thinking about gene editing here, [indiscernible], is basically, you just have to wipe up and almost get to a full core right, not only just functionally, but the mutations are out of picture in terms in terms of the treatment. So at least, again, I don't want to comment on Intellia data, but the expectation of a gene editing on a gene therapy would be that it is full not only functional cure, but a full pathological player. I don't see that yet in terms of the data. So from -- for a prescriber and also for an insurance to pay that money for something that with the pill or others that are fully controlled and many of these gene editing or gene therapy will have a longer commitment for safety database because we still don't know what's happening in the system. So that's some -- and especially in a therapeutic area where you have got so many different options. It's not an option. It's not like Huntington's disease or somewhere where you don't have much options, right? Yes, people have got a lot of options. So to me, I'm still pretty mixed about gene editing and gene therapy at least for this indication.

Okay. Well, let's talk about your own pipeline product with Austria. So how do you think a less frequently dosed injection could compete against orals. And maybe how are you thinking to the point that you made unless it's curative for gene editing, -- how do you think that argument could change with an infrequently dosed injection? And just remind us what the dosing frequency is going to be.

Yes. So it is basically -- and Barbar, you have to add more.

Sure.

Just to remind people, it's my fifth week here. So I guess -- so from a perspective of what you get from the injectables, right, I think at least the injectables that are in the market, it's much more frequent. That's number one. The second one is also they have got high ISRs, injection site reactions are much higher. So what we are bringing is once in 3 months, therapy number one. in terms of convenience. The second one is a tried-and-tested mechanism that we already have been very successful. The third one and the mechanism actually implicated in the disease. And thirdly, we are bringing in less ISRs based on whatever data we have. We don't have a lot of site injection site reaction. So we are bringing in that profile for convenience, safety, and also mechanistically much more closer to the site of action.

Yes. The only thing I would add is when we do a lot of market research, the tipping point is 3 months with 6 months kind of like another add-on on top. I think going from 12 injections a year to 24 injections that are currently with like different things versus 4 or possibly 2 is a game changer. And you're seeing some of that same analogs and call it myaseniagravis, where there's a lot of incumbent therapies, and the newer ones are like more longer dated.

Yes.

So our market research showed that, that is a huge game changer. And like I said, this market is such -- there's such a segmentation that it's not just an oral or it's not just an injectable. It's based on real-world experience and patients are okay with taking injectable. I think the benefit and the beauty of Novanabad is you get and forget. And that's really what we're really excited about in this space.

Okay. Just remind us when the next data set is to?

Data set for...

[indiscernible]

Yes. So it's going to be end of year next year is when we are going to do the BLA filing.

BLA filing at the end of next year. But in terms of guidance of when top line data happened?

So top line data would be around that time. Basically, it all depends upon, so we are also discussing with the FDA in terms of what should be the right time to diverse the data. So we want to make sure we are absolutely compliant regulatory to disclose any data outside because this is a Phase III pivotal study.

So as you know, we have said that by middle of this year, we will be enrolled and what we have been extremely pleased with that even with this acquisition, there was -- we did not skip a beat in terms of execution. It is the largest HAE study. Naturally, it's the first one of its kind in the sense there's a 3-month dosing and a 6-month dosing. So prior to that, when Astria had been guiding basically was Q1 of 2027. I think we're still working with the FDA because of this dynamic of 6 months and 12 months. But what it doesn't change is our BLA time line. I think what we want to make sure is that we are compliant with FDA's requirement for this 6-month dosing, and we're able to do the right thing for the trial. So I think that's something that we're working on.

Yes. So it's a unique data package where you have got in the 6 months, which everybody has done, we have got 12 months. So we are in a real advantage. It's not only to Babar's point, not only the largest study, but also the longer study in HAE.

So what would be good data in terms of attack prevention?

So I want to make sure that we don't -- we are not hung up in like point estimates. What our current point estimate is 90% to 92% is basically what we got in the Phase II study, obviously, between Phase II, Phase III, there is always going to be some translation that happens and it is going to be a randomized trial and everything. But Tazneed, what I mentioned before, it's the whole totality of the data. It's not just the point estimate as a physician and a prescriber. People will not care whether it is between 90% or 80%, 85%, people will care about what you bring to the table in terms of the convenience? Is my injection site reactions basically going down. And at the end of the day, whether patients are telling the patients are not. So that would be the way we look at it. It's a high probability that we will be hitting the clinical meaningfulness in terms of what we have already seen, right, so.

And I think just to add on to that, what the industry is a regulatory benchmark, 90%, 92%, which, by the way, we were really, really excited that third and 3 months and 6 months is not differentiating. The other stat is noting is the attack 0.16 [indiscernible], which is basically going to that. I think that's becoming more and more relevant at how well-controlled IM that equates to less than 2 attacks a year. And I think that's kind of like the durability of the -- of the potential drug candidate with the long-term dosing profile. I think that's what we're really excited about.

So as it relates to breakthrough attacks for patients that are on prophylaxis, do just tend to be heterogeneous and like can you what does an average number really mean of a tax per year?

So it all depends on the patient population, basically, what we have started, at least our trial, the way it is designed, is making sure it is absolutely contemporary in terms of the average attack rates have gone down over the year, right? So our screening period or the running period, we have got a criteria to screen in the right set of patients so that we are not -- first of all, it's much more of a precision approach in terms of having the right population in the study because obviously, to your question about heterogeneity, there's always going to be a heterogeneity response, but we are trying to do our best in terms of enrolling the right set of patients in terms of filtering through our running period.

Okay. On the pediatric front, can you talk to us about the granule supply disruption....

Absolutely.

And where that stands?

Absolutely. And just to clarify, it's not a safety or efficacy issue or any FDA issue it's a very isolated quality batch lease issue that we found a little bit late in the process as we were getting ready to ship product. And just out of prudence and you just get one chance to get your launch right. We want to make sure that the patient experience has been -- is really, really good because I'll talk a little bit about where we stand overall. We are still working on that food cart analysis, root cause analysis, and we will have more information in Q2, but it's not something that requires like a engagement with the agency or anything like that. I think it's just a quality specs issue that we were just trying to solve for, which will have more information. Having said that, as you know, we have 4 strengths, and we have been receiving prescriptions for all 4 strengths, which is very good, and there's a lot of excitement for this product. And what we are able to do in the meantime is collect the prescriptions and then our really, really strong patient services team can actually start the background process with respect to insurance verification and all of that. So once we actually have product supply, we're ready to go. So scripts are still coming in, and they are coming in at like a really nice clip.

Okay. So how should we be thinking about nuancing second quarter versus third and fourth as it relates to this issue?

Absolutely. And just to remind you, when we provided guidance at the beginning of this year, $625 million to $645 million. Peds was actually not a meaningful part of the -- of that guidance and allow me to explain why because there's a paradigm shift that we have to go through in peds. And I just want to make sure that we were a little bit conservative on that because we haven't seen that paradigm ship when we put the guidance. And what that means is -- there's about 500 diagnosed patients in peds. I think ours made show that they could be double that population that could -- as you know, this quite well, you get 1 drug approved and all of a sudden the net widens. So there's about 500 patients. It's more tilted towards acute than prophylactic, which again, going back to the HAE origin days, you had more acute versus less prophylactic and now it's flipped over. So I think there's 2 opportunities: a, more increasing the size of the patient population because these are our APEX peds trial showed that the onset of symptoms starts as young as like 2.5 to 3 years of age and parents actually delay the decision because they don't want to find out. So I think while there -- and then they come back and they say, "Yes, my kids were showing the symptoms of HAE, but I was delaying that decision." So I think there's a huge opportunity to increase that. And then naturally, this basically the split from acute to more LTP therapy. And the fact that we will -- we are the only right now for 2 and up, there's only DEXYROpro, which is obviously has a lot of ISRs. So this convenient dosing formulation will be a huge advantage. Again, 2026 is not going to be a big contributor, but it is part of our plan as we go to that $1 billion potential. So -- and to your point on Q3, Q4, we can't wait to the other on the other side of it because the demand is good, and we'd love to see that those patients get converted into paid patients.

Okay. So maybe let's spend a few minutes just talking about pipeline. You've got another [indiscernible] program. Just to remind us where you are on that? And why mechanistically it makes sense to look at it?

Yes, I'll start with the mechanism first, right? The mechanism here is KLK5 is implicated in Netherton syndrome, number one. The second one is whether this is still a severe skin condition. We need to make sure that the drug is reaching the skin. And what we have shown in terms of our healthy volunteer study that it is reaching the areas of interest, where the target actually is. The third one is now we are testing it on the patients. We have completed a small client form kind of a dosing study kind of a thing, which is our part 3. And now we are starting to do our POC trial where we will be actually measuring the real clinical end point up to 12 weeks. So that's the 12-patient study, and it's on track to deliver the end of the year. It's the POC results basic. So we will stay tuned. Hopefully, we will have some good news to share.

Okay. Just remind us of what the data needs to look like in order for you to move forward with it? And also, was this an expensive study to run? Just trying to get a sense of the type of investment the company wants to be taking on internal pipeline right now?

Sure. So what good looks like, there is nothing in there for these patients. And if you look at these patients and you talk to them, they have got such an unmet need for them, even any improvement is supposed to be very, very clinically meaningful. So that's -- I'm not to say that we will not be aspiring for more. We'll definitely look for a meaningful change that is clinically impactful for the patient, helping the patient quality of life. So -- and in terms of your -- what was your next question, Tazeen...

The investment...

The investment that you...

I think you can I don't -- I think it's not a very expensive study. I mean, naturally, it's a fusion protein. So there is some -- the other thing is there's nothing approved for this patient population. So you also want to be making sure that you have proof of clinical activity before you take the next round of high investment. I think to Sandeep's point, by the end of the year, one way or other, we'll know if we have a product. What gets us excited is if there is clear signals, naturally, as you've seen more of the recent rare derm there is residents that things can move pretty quickly. And I think that's when we feel that like if we actually have a product, then we can naturally extend because we'll have potentially another product candidate that could get that could hit our profile before 2030.

So I've...

It's really underdiagnosed as well [indiscernible] under diagnosed population.

So outside of Netherton, would you consider looking at other derm indications.

Yes. And I think this goes back to the overall strategy. I think the we have built this engine, people think that it's just a commercial update, right? I think launching a drug is just an entire organizational uplift. We've already built that an enormous phenomenal patient-centric commercial organization. So this is a classic rare disease, much like how HAE was people thought 2,000 patients what not market continue improve. Are there other adjacencies, whether it's rare derm or other rare auto immune diseases or inflammatory pathways. I think we're open to looking at that. And now with Sandeep, who just joined us, we'll basically try to just define our strategy a little bit more crisply.

Okay. And so if we think about the rest of the pipeline for the company, what other things do you think investors should be looking out for?

I think as you know that in terms of like how our new evolution, the one thing that we want to emphasize for investors is we want to make quick decisions. As you saw, avoralstat, I'm not saying [indiscernible] was quick or not, but we decided that, hey, this is not a viable path forward.

You mean in diabetic macular.

Exactly. It's not a rare disease indication. And this is not something for BioCryst to basically develop and especially in light of the landscape development landscape. I think what we are very excited about the 2 programs right now. What we will be going forward doing is just being very disciplined about what we bring to the market next, whether there's a white space or there's a product differentiation and be very crisp about like what we can actually deliver from our pipeline. So I think for now, I would encourage to you focus on our 2 programs that we have. And then naturally, as we evolve our pipeline, we'll provide more updates.

Okay. And then last question, what's your view on external business development, bringing in assets?

It's -- if you think about [indiscernible] if you think about our 3-leg strategy that we have, -- just to remind everybody, ORLADEYO has a very long durational IP. The composition of matter is September 2035 and the composition of matter on this solve is up to 2040. And we're not adding a lot of we're not actually -- our commercial infrastructure is steady state. Add on to that in Netherton, it's the same commercial infrastructure and that IP goes until 2042. So over the next several years, we will be generating a lot of cash. We are already a cash flow generating business today. We are progressing these assets. And then the third is like what do we do for cash every capital allocation strategy, whether it's new business development, late-stage assets and either even potentially like buybacks of shares could be on the table in terms of how we deliver that. So I think BD will be a core part of our strategy to complement some of the internal and external. But the one thing that I would say is like in the short term, we are not adding risk from a BD strategy because I don't think that will sit well at the stage of the company that we are at.

You were going to say something?

No, completely aligned. Usual R&D leaders are not.

Good to know. All right. Well, we're out of time now. So thank you for joining us, and I appreciate you making the trip over, and Again, we're looking forward to continuing to working with BioCryst and looking for the next data updates and launch trajectory continued. Thanks, everybody, for joining.

Thank you so much for having us.