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

Okay. Good morning, everyone. I'm Jason Russell from the Morgan Stanley banking team. It's a pleasure to welcome Charlie Gayer here from BioCryst, newly appointed CEO of BioCryst. I think you took the job on January 1 of this year. We're excited to have BioCryst here. It's obviously very topical given some of the recent news, and I think we'll get into that. So Charlie, thanks for being here.

Thanks, Jason.

Maybe just to set the stage for a minute. So as I mentioned, you started as the CEO a long time with BioCryst, started as CEO at the beginning of this year. Kind of feels like BioCryst is entering a new chapter. Obviously, ORLADEYO, which is the underpinning of the business is a scaled commercial franchise, generating operating profit. You took the step to bring in another asset with navinabart just a bit ago, which adds a second modality in HAE. We'll get to -- you have another data point coming towards the end of this year with BCX17725. And you also just took moves on your own perspective on how you're going to drive the pipeline forward from here. So maybe with all of that set the stage, let's think about your vision. How is the vision for BioCryst potentially evolved? And is that the result of kind of the maturity of the business or other things on your mind? Maybe just set the stage for us to start.

Sure. Absolutely. And before I start, I'll be making obviously some forward-looking statements, and those statements have risks, which you can learn about at our website. For those of you who are not as familiar with BioCryst or who maybe were at some point in the past, BioCryst has been around for 40 years, but we're at a very different stage right now. So it's a different company. For most of that time, we did everything internally, in-house discovery, and we always had some good science and that got us our drug ORLADEYO. But this year, we made a decision to pivot away from internal discovery because we've become a profitable company. And we think the best way to go forward is through external innovation to build on the success that we have with ORLADEYO, which we'll talk about more and to build a broader rare disease company. So as we look forward a few years, say, to the end of 2030, 4 years from now, we see us with not just ORLADEYO and navinabart on the market, but probably a third product, well over $1 billion in revenue on a very stable cost basis, growing profitability significantly, which we can then plow back into building a broader pipeline through external innovation. So we're really excited about where we're at, the strength of our business and what we've got going in front of us.

Great. And there's so much to unpack here. So maybe just to hit the evolution on the planned pipeline point first. You made a decision to shut down some long-standing capabilities around internal discovery. You just mentioned, it sounds like you're not retreating from building the pipeline. What changed in your thinking to make that decision? You mentioned the profitability aspect. And which capabilities do you think are core to keeping at BioCryst that do make you differentiate?

The big reason we made that shift is despite our past success, we realized we can just do more by looking at the broader opportunities out there in rare disease when we just weren't big enough to do enough internal programs. And so balancing the cost, balancing the probability of success, we can do more externally. And so this year, I've been able to build a really strong team. Dr. Sandeep Menon, who's here in the audience, joined as Chief R&D Officer earlier this year with this shared vision of building a pipeline through external innovation. We added [ David Jenkins ] as our Chief Scientific Officer, came over from Ipsen over the summer. And we're building other scientific leaders. So we are not pivoting away from science at all. The science we want now is to help us look at this broad set of opportunities out there and find things that we really believe in, limit our risk in what we acquire and build a pipeline that way on our growing cash flow.

Great. So pull the thread, you've already taken a step. You acquired Astria, which brought in-house the navinabart. I assume you would agree that, that's a case study for how you want to think about building out the franchise going forward.

I mean Astria was, I would say, a, a perfect example, not necessarily the example of what we'll do every time. I mean to find something in a space where we know so well in HAE, we probably never will find something exactly like that again. But the benefit of Astria and navinabart, you've got a late-stage asset there. So we're well set on the late-stage side. And the next things that we want to do are balancing our pipeline going earlier. So kind of Phase I, Phase II assets to complement what we already have. And in the near term, I think that's going to be much more affordable for us as well.

Okay. Great. So let's get into ORLADEYO. It's a franchise that launched over 5 years ago. I believe 2025 was your strongest year as far as new patient adds. And so far this year, you've seen similar trends. It's kind of an unusual trajectory in some sense. And for rare disease, you often see these more hockey stick kind of launches. HAE is obviously a very unique market, a competitive market as well. And so I guess what is -- what are the factors at a high level, and we'll pull the onion back here a bit. But what are the factors that have continued to drive demand and allowed you to grow the franchise sitting here almost 6 years post launch?

HAE is, it is kind of a unique space. I think it's an incredible rare disease success story. The fact that you've got for a patient population of roughly 10,000 patients in the U.S., there have already been 11 branded products approved and I think another 5 or 6 in late-stage development, which is amazing. It comes down first to the product, so to have a differentiated product. ORLADEYO is the only oral prophylactic product in the market and has been for the last 6 years. And so started there, but then it really comes down to the evidence around the product. And with all the options that patients and physicians have, the #1 thing that they want is to control HAE attacks, as you can imagine. So efficacy is super important. And what we've been able to show over time is how well ORLADEYO works for most patients. And so when patients start on ORLADEYO, 60% of them make it to a year. And that's because they're getting really good efficacy. So it's not a drug for everybody, but it's one that works really well for the majority of patients. And then the last piece is just how our team operates. We -- from the very beginning prior to launch, we knew we were the small guys coming into -- coming up against some really big competitors. And so we put a lot of emphasis on the skill sets of the team, the data that we collect and the need to generate long-term real-world evidence, which is what's shown how -- shown to the market, shown to physicians, to patients, very importantly, to payers, how well ORLADEYO has behaved in the real world. And that's been a big part of our continued growth and success.

So let's pull on that further. So what is it that the physician -- what are the specifics of the physician observations, behavior as they've gotten more experience prescribing ORLADEYO to their patients. What are those tangible things that they see that perhaps are different than what we knew 6 years ago?

Physicians start with -- it's nice to have data, but what's really important to them is their personal experience. And what I always say about HAE treaters is the great majority of HAE treaters in the U.S. are allergists and immunologists, but the majority of allergists and immunologists don't treat HAE. It's a special group who've decided to do this. And so you end up with physicians who are expert in their area. They may have 5 HAE patients, they may have 20 HAE patients. A few of them have even more than that. But they develop experience within their patient population. And as they've gotten used to prescribing ORLADEYO, they've seen what I described. They see that it works really well for most of their patients, not every one of their patients. And then we've been able to feed back the real-world evidence on hundreds and now thousands of other patients to them that confirms their experience. And then they also see how we, as a company, work with their patients to make sure they have access to make sure that, that is never a problem for patients. And all of that leads to confidence in the drug and the company. And I think that's why we're still having our best demand ever this late post launch.

So that's helpful color. I mean, back to the demand side. I mean, HAE, I assume you would agree with the statement that if you have HAE you know it. Is that a fair -- I mean, do you have to go find these patients?

Somewhat. HAE is a pretty mature market. It's still growing though. And you would think that the first HAE product launched at the U.S. back in, I think, late 2008. It's changed a lot since then. A lot of patients have come out of the woodwork because of the availability of therapy. And you're still hearing stories about even classic type 1 and 2 patients being diagnosed even as adults. Another big area -- 2 big areas of growth in the market. One is patients with normal C1 inhibitor, which in the United States was a large population searching for answers and they didn't really have the evidence. A lot of doctors didn't believe in it. We've been able to provide the evidence in the real world again, how well these patients are doing, and that's been a big part of growth. It's over 1/3 of patients on ORLADEYO at this point. And then I think the next frontier of growth is talking about kids with HAE. So we recently got the indication for HAE for patients 2 to up to 12 years old with a different formulation, a pellets formulation versus the capsule. And having an oral for these kids, you can imagine, is huge because injections and kids don't mix well. And what we believe is it may lead to a transformation of how kids are treated. Classically, it was thought that maybe -- kids with HAE didn't become symptomatic until puberty. I think what the experts are learning is more of these kids were symptomatic than they realized. And an oral therapy may help unlock that. And it's early days. We just launched at the beginning of -- launched the product at the beginning of August, but we're seeing demand that's ahead of our expectations. And we're excited about how that's going to help kids grow up differently and also the halo effect beyond that because, of course, it's a genetic disease.

Got it. And maybe just to frame it a little bit more, so you effectively have prophy versus on-demand, you have oral versus injectable. Where -- you've obviously pushed the market a lot to a significant share to the oral market. What are the dynamics on acute versus prophylactic today? And how are those evolving?

Over the last -- so I've been in the HAE space for over a decade now. And in that time, I've seen the use of prophylaxis more than double in the patient population. So at this point, it's about 80% of diagnosed and treated patients are being treated with prophylaxis. And despite some advances in acute therapy, what we hear from doctors and patients is the goal, and it makes sense, the goal is to prevent attacks. And then most patients have occasional breakthrough attacks. And so it's -- you always need a rescue medicine. Patients, despite recent introduction of an oral acute therapy, patients aren't moving backwards. They're welcoming that, but they really want to prevent attacks. And I think that, that's going to continue in the future.

Okay. So just to round this out on the patient experience, we talked about kind of the real-world evidence, and I appreciate all of this is tied together. We talked about it from the physician perspective. If you -- I know you gather a ton of evidence from patients directly in surveys. I think there's an annual survey that you do with the patients. What is the kind of rank order #1, 2, 3, you would say, of like preference from a patient of what they're most focused on?

At this point, it does come down to efficacy for patients at this point. I think if the market had evolved differently, if an oral drug were the first thing on the market, then maybe the vast majority would be on an oral. But already, the majority of patients on prophy are on an injectable therapy, and they're doing well. And so what they always worry about is as much as I might like an oral, I don't want to sacrifice anything. You got to have efficacy. #2 is safety is always in there, too, particularly at this point where patients have options and experience. Nobody is going to make a trade-off where they're worried about safety. And then modality becomes important after that. So independently, I think the majority of patients would prefer an oral, but not at the expense of other things. And then another piece is market access. Patients have experienced challenges with market access over time. And so having their product paid for is something that they worry about, and it's something that they think about before they entertain the idea of switching therapies.

Okay. So maybe as a transition, some really good remarks to set the table. There was a big event last week, CHAPTER-3 data from a competitor. I think you've been very clear and transparent on your perspective that you expected this data set to be effectively good and demonstrate that they have a real drug. So rather than debate the nuances of if it will get approved and how that's going to play out, what changes for you? I mean what were you assuming? What were you modeling? Was this a bear case, base case? Like how do you frame that?

Yes. So first of all, congratulations to Pharvaris. I think they did a really nice job with that study. And it was our base case. So Jason, you mentioned -- you alluded to the fact we do a big annual survey. So every year, and this goes back to before launch, we do a study, a big conjoint analysis followed by a market simulation model that involves 100 patients, 175 HAE treaters all in the U.S. and over 50 payers. And we give them the profiles of everything that's on the market today plus what's coming. And so when we did this most recently over the summer, we've been giving deucrictibant the profile basically that they delivered in CHAPTER-3. Actually, we gave them a little bit better efficacy in that. And what the simulation always shows is that, yes, once that drug launches, we expect that drug to start taking some of the new patient starts away from ORLADEYO, not all of them because of the familiarity with ORLADEYO. So maybe it blunt our growth. But patients who are doing well on ORLADEYO are unlikely to switch. And then we back this up with qualitative research, too, with the patients who are on ORLADEYO today, and we show them the profile of everything to come, including this other 1 pill once a day with great efficacy, no side effects. And the answer we get back from patients on ORLADEYO is, well, that just looks like what I'm already on because for them, that's what they're on. They're on 1 pill once a day, great efficacy and no side effects. The ones who didn't get that have already moved on. And so that's what gives us really good confidence about the future is that a new oral therapy could slow our growth, but it's not likely to take away the base that we've built. And then we'll continue growing, particularly in the pediatric indication beyond that.

So would it be fair to say that, okay, I have a -- from a patient, I have a preference for an oral. I tried ORLADEYO, it worked. I'm more likely to stay with that regimen because I'm comfortable with it. Similarly, I tried ORLADEYO, it didn't work. I went to a prophy injectable that's a segment of patients that are likely to come back to try a new oral if they still have that preference. And then to your point, the incident market of new patients, you'll be both competing for. Is that a reasonable way to put it?

From the oral perspective. Yes. And then this is where we're excited to have navinabart for the other part of the market.