BridgeBio Pharma, Inc. (BBIO) Earnings Call Transcript & Summary

Good morning, everyone. I'm Sean Laaman Head of U.S. mid-cap biotech equity research here at Morgan Stanley, and welcome to the Morgan Stanley Global Healthcare Conference. Before we commence, I'll make you aware of some important disclosures for those disclosures, please visit the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales representative. For this session, we have the pleasure of hosting BridgeBio Pharma with Julie Everett, COO of Bridge bioskeletal dysplasias and Chief Business Officer, Chinmay Shukla, welcome to the both of you, and thank you for your time today. I've got some macro considerations. We're just talking about interest rates offline, but just some macro considerations to discuss before we really dig in on Bridge. But how was the rise of China originated innovation, changing your competitive positioning, if at all? And does it influence your BD and R&D playbooks.

Yes. Happy to talk about that. And Sean, first of all, thank you for hosting us, and thank you to all the investors for joining us today and across their day as we try to tell our story. So in terms of China, we see that as an opportunity, and there are some risks, but we do see it mainly as an opportunity. I think the speed of innovation is much faster. We do have active relationships with investigators and universities in China. A lot of it is done through our sister company, Gondola Bio, which focuses more on the early stage part of the genetic disease R&D playbook. So I think that for us, in terms of opportunities, I would say, the ability to quickly set up trials and run trials. The ability to partner with an even broader number of academics as well as get sort of genetic data from a much broader population. Those are all opportunities. I do think that there are some threats in terms of protecting our IP. And we do think about that. We think about the fact that any time we publish a structure, someone can easily then make the molecule. So we are thoughtful about that, but on balance, we view more people trying to help patients with genetic diseases as better for patients in America and patients globally as well as for our business.

Sure. And next question on the macro. So are you implementing AI across your business? And has it already changed the decision, a timeline, a cost or even a POS?

Yes. So we view AI in 2 different buckets. AI in terms of increasing probability of success or telling us kind of what's the next big cancer drug is not something which we think is going to be that helpful. But I think that there is a ton of operational details in terms of running a biotech company, which I can definitely make better and that even in our own company, we see AI improving. I think the 3 examples that I can give you are number one. In the commercial setting, whether it's in terms of making it easier for folks to write letters of medical necessity, whether it's analyzing data as well as if we think about overall surfacing information to our reps in a more insightful manner, those are all areas where AI is helping in terms of biostats it does help a lot in terms of just core generation. That's obviously a big use of AI and probably the most validated use of AI. And then I think that we're also looking at other steps in the business whether it's sort of site activation enrolling trials, how can we use AI to speed up those elements. Those are a little bit earlier stage but I would definitely say it's having an impact now, and I think it's going to have a bigger impact in the future.

Wonderful. And I'm going to get your next answer to this next question probably all of the above but which policy variable? Is it FDA Medicare negotiation, MFN, tariff global pricing matters most to Bridge's economics. And have you changed anything because of it?

Yes. So the answer to that is all of the above right I think we've -- we announced a partnership with the U.S. government recently. So for us, we've been working closely with the regulators, whether it's on the FDA side. We're very pleased to say that the FDA considered their decision on [ Encaleret ] and gave a priority review whether it's on the pricing side, we announced a partnership with the U.S. government on that. We think that we are able to find ways to both help patients as well as preserve our ability to do innovation, and that is very exciting to us.

Sure. Thank you. Now we'll go to Bridge specific. So I have a series of questions on Attruby because I think that's sort of the dominating investment date, and then I'll move on to some questions on the skeletal if that's okay. So Attruby very strong numbers, up 23% sequentially with growth led by treatment naive starts and the switch pool is normalized. The total revenue beat was largely driven by royalty rather than U.S. Attruby. Is the U.S. line growing faster as you had expected?

Yes. So we are with how Attruby's launch has gone thus far. And actually, we are even more thrilled about what's to come in the future, given all the data sets which have come out. In terms of what we think is driving that growth, let me break it down sort of near term and longer term. The biggest driver of Attruby's growth is, number one, increasing first-line market as well as increasing share of Attruby in that first-line setting. I think both of those things are big tailwinds for us. And I do think that the kidney protective data, the ESC data as well as the real-world evidence, which is starting to come out, will all help Attruby gain more share in the future. And the drumbeat of data from all companies will expand the first-line market in the future. So I think that it will take, as we mentioned on our second quarter earnings call, it will take about 12 months or so for all of this data to percolate in the community and then start to change prescribing habits. And so in the near term, we do see steady sort of expansion of Attruby of somewhere around $25 million to $30 million quarter-over-quarter in terms of sales growth. And I think that longer term, we do expect -- we've never been more confident that we will get to $4 billion in peak year sales, and maybe there is even some upside beyond that.

Sure. Thank you. I guess you've reiterated blockbuster worldwide sales for this product in 2026, including the partner recorded Beyonttra sales. What U.S. number does [Audio Gap]

The levels of placebo-adjusted knockdowns, we also saw that the knockdowns take a very, very long time to show an effect. It takes about 18 months to 20 months for the curves to separate. And so we put all of that data together, and we do think that knockdowns will remain an important part of this market. But increasingly, even in the second line, we're going to see physicians think about if you have a patient who is progressing on a weak stabilizer, do you just put them on a near-complete stabilizer -- or do you try to have a different modality. So I think that put together, we do think that all the data sets indicate that a true we should keep taking share in the first-line setting and should also have a small benefit in the second-line setting, although the second line is a much smaller market than the first line.

Sure. I guess on the second line, so Alnylam recently reset their 2026 TTR guidance lower on the same second line slowing. Is the switch market shrinking for everyone or just shifting?

Yes. So I think what we have said and we've been saying this for almost 9 months now. We do -- we have always expected that the second-line market would stabilize because if you think about it last year when both us and Amvuttra came on the market, you had a large number of [ Wyndamax ] patients who were progressing and who did not have a choice other than to stay on [ Wyndawmax ] at the time. So we knew that there would be more switching earlier on. It's very hard to predict quarter-to-quarter how these dynamics work. And so our expectation was that, that elevated switch would last probably for about 2 years or so. And we did see -- we have seen that kind of happen where the second-line market is stabilizing. There was further fuel added to the fire because last year, Pfizer Borden Quell off the market. And so all the -- about high teens of TAF patients around wind equality all had to be switched to [ Wyndamax. ] And so that further made it such that everyone had a chance to get some of those patients, right? So Q4 of last year, Q1 of this year, the second line market was further elevated because of that. So have started to see that normalize a lot in Q2 and beyond. And we also -- we've always expected the second line market to be smaller. We've always incorporated that into our thinking, into our remarks. And so -- we were not surprised by it in any way. And what I would say is because Attruby positioned so well in the first-line setting and the first-line market has continued to grow despite the second-line market being much smaller in Q3 compared to Q1 of this year, if you look at the total volume, if you look at the net patients added in Q1, in Q2. And our expectation in Q3 is that, that net patient added volume is very, very similar and hasn't really gone down for us. The first line strength has overcome the smaller second-line market.

Moving on slightly, talk about the post-hoc renal data. And maybe just for the audience who may be unfamiliar, just give us a snapshot on the data and what is the mechanism by which post-hoc renal data could change prescribing?

Yes. So actually, I want to let Julie comment on how it might change prescribing because these are she's close to the commercial story at both Attruby and [ MFi. ] But let me just recap their data. It's really exciting data. When we got the Phase III results for Attruby, we saw the dose in acute EGFR in the early few weeks after starting therapy. Initially, that was concerning to us because normally an ETF is concerning, However, we looked into it a lot more closely. And what we saw is that the effect actually mimics what you see with SGLT2 inhibitors and ARBs, that is actually a kidney protective effect. If you look at the UACR albumin ratios and other markers of kidney health and you look at the overall nephro profile, what you see is that the kidney which was in stress after the initiation of Attruby rapidly to basically rest. And that confers a kidney protective benefit similar to what you see with SGLT2s and ARBs we've investigated this in a lot of detail. We're very excited that now there's a peer-reviewed manuscript which is out there, so we can go and educate on this. And we have also now started to look and survey KOLs, we had a kidney summit a few months ago. Physicians are getting more and more excited about it, the more they learn about this profile. It's a content profile, so it does take a little bit of time to educate on it. But once they get it, they actually have been super excited about it, which is why we announced that we're going to go into a rare kidney indication with a true V just to further expand upon the benefit there. But in terms of how that changes the common.

Yes. No, I'll give a very quick answer. So I think we've got very positive feedback from prescribers that this is just one more data point that continues to build that clinical differentiated story for Attruby. And what's interesting is that when you look at tafamidis data, they saw a very muted impact, a very muted trend like this, and there was nothing demonstrated with the silence or therapies. This is truly a point of differentiation, whether we think it will inflect prescribing in the near term versus more the medium or long term, I think it's the latter because it's going to take our MSLs and our sales representatives a little bit of time to get in and educate prescribers on this data. And as Chinmay said, it's not a simple story. You really have to understand how this is tying to outcomes. I think it will be more like a 1- to 2-, 3-year time frame that we'll see some inflection, but it just increases our confidence in the ability to execute on that 30% to 40% peak market share.

Wonderful. Thank you. Next couple of questions. A lot of my inbound is around pricing and spot pricing outlook. So I'll try and wrap these questions into one. So Pfizer has reportedly been discounting and you said you will not chase price. Does holding price cost you share in the near term? And how would you know? And the second part is Tivamdis generics arrive around 2031. So what protects Attruby's pricing share against a generic stabilizer in the class?

Yes. So I think the first place to start on all these questions is the fact that TV is a second-generation near complete, better molecule, better stabilizer, more effective stabilizer than the first-generation molecule. And that's how pharmaceutical companies evolve the world, right? We make the first-generation molecule then we improved pant in our second-generation molecule. Attruby is that improved upon second-generation molecule. It is clinically differentiated across numerous axes, whether it's the near complete stabilization, whether it's really strong effects on key subgroups like [ AFib ] as well as variants, whether it's this unique nephro protective effect that we have seen. And now what we're starting to see is in the real world, right? People are starting to compare these drugs. And we've already seen some early evidence that Attruby outperforms [ Wyndamax. ] And we know that there's going to be more real world evidence coming out at HFSA we're very excited to see what that shows and whether that continues this trend. So you have a drug which is clinically differentiated, and it's a -- what we think is that it has unique and superior properties than the first generation product. I think that as we think about that, that really flows to how we think about our pricing strategy. And what we think is that the way to win in this market for Attruby is to win on clinical differentiation. We want to go -- we want to have parity access. And if we can't have parity access, we want to at least have parity process. Currently, even when [ Wyndamax ] is on formulary, the process is very similar between the 2 drugs. One requires a prior [indiscernible] one requires a letter of medical necessity. So yes, of course, Pfizer is rebating. Of course, we are working through it, and that's part of why over the next 3 to 4 quarters, we've said we're going to grow -- we're going to grow steady even though our share is increasing. However, we do think that we've been able to work through it quite nicely to date. The way you asked me how we know that is last year, Pfizer put up a rebate with United Healthcare. And so that's now been in the channel for almost 15 months, and we have seen appeal when there is, first of all, most scripts go through just normally. But even when there is a denial, the appeal rates are not -- success is north of 90% there. And the most important thing and the most heartening thing for us is even in the United accounts, our share has grown, right? And so I'm sure it is having some effect. We have not run the -- as I always say, we've not run the control trial, which is without rebate, how much would we have grown. But we've been able to grow through it just because we are clinically differentiated. And by the way, that is also what has given us a lot of confidence that post generic tap entry in 2032, early 2032, we should still be able to grow pretty nicely part of it is because the channel dynamics here do favor higher-priced drugs with specialty pharmacies being a key component of in the channel. Part of it is because of clinical differentiation, which we've expanded upon quite a bit today and the fact that we are -- we're not just another stabilizer, we're better second-generation stabilizer. And then the last thing is, if you look at every single analog when a second-to-market product is branded, better product is on the market. The first market going generic doesn't impact the second to market sales.

Sure. Thank you for a complete answer. Moving on from Attruby. Oral [indiscernible] and chondroplasia I've got a series of questions here. So I believe you've described infigratinib is probably the most underappreciated of the 3 launches. And U.S. is roughly 25% and a trade at about 75% in Europe. Is your thesis upon launch more about expanding the market rather than share gains.

Yes, great question. So we believe at launch that there's 3 distinct patient populations and our clinical data is resonating very well with prescribers and families across all 3. So the first is those who are currently on a CNP product today, whether that is Voxogo or UV Well, the second is those who are previously treated and have discontinued. And the third and largest category in the U.S. is those who have not yet sought treatment. That's the vast majority of patients in the U.S. to understand how we can unlock that population, you really have to interrogate why they're not on treatment today, and there's 2 primary reasons. The first is just that the CNP products are limited mechanistically and by route of administration. It's really a molecule limitation, not a category limitation. And if you think about daily injections, again I don't know how many of you have children but to have to actually sit down and restrain your child, try to give them an injection, whether it's daily or weekly for something that is not acutely symptomatic, the child does not feel any different, right? So the injection, the route of administration being an injection is very limited. The second element, again, infigratinib being an oral. The second element is the clinical data. Infigratinib, is the only asset of the 3 to show benefits beyond height. So pause for a moment, it also showed the greatest benefit on height, right? The primary endpoint being annualized height velocity 1.74 centimeters per year versus 1.57 and 1.49. Right? On primary outcome alone, the most efficacious product, but also the only agent to show within 52 weeks benefits on proportionality arm span, and just last week at the European Society for Pediatric Endocrinology, we released data showing within 52 weeks, benefits on sleep apnea and otitis media. So these are very debilitating childhood complications that can be resolved with infigratinib therapy. I can walk through the data more later. But those reasons we feel can allow us to expand in the U.S., that 25% treatment penetration to a much, much larger number, not just compete within those who are treated today but expand the pie. Outside of the U.S., to your question, it's much more penetrated today, depending on the country, about 60% to 75% treatment penetration in Europe and elsewhere. So the good news is the data resonates with both the switch population, the discontinued population and the naive population. So source of business may differ slightly by geography, but those proof points of clinical differentiation are consistent across geography.

Thank you. BioMarin says under 10% of Voxogo patients switched to UV well. Your colleagues read that as evidence of low brand stickiness rather than high, which interpretation does the data support?