Good day, ladies and gentlemen, and welcome to the BioCryst Second Quarter 2019 Earnings Call. At this time, all participants are in a listen only mode. As a reminder, today's conference is being recorded. I would now like to turn the call over to John Bluth, at BioCryst. Sir, you may begin.
Thank you, Sydney. Good morning and welcome to BioCryst's second quarter 20 Corporate Update and Financial Results Conference Call. Today's press release is available on our website. Participating with me today are CEO, John Stonehouse, Chief Medical Officer, Doctor. Bill Sheridan CFO, Tom Stobbs and Chief Business Officer, Megan Skiedzinski.
Following our remarks, we will answer your question. Before we begin, please note that today's conference call will contain forward looking statements, including those statements regarding future results, unaudited and forward looking financial information, as well as the company's future performance and or achievements. These statements are subject to known and unknown risks and uncertainties, which may cause our actual results performance or achievements to be materially different from any future results or performance expressed or implied in this presentation. You should not place undue reliance on these forward looking statements. For additional information, including a detailed discussion of our risk factors, please refer to the company's documents filed with the Securities And Exchange Commission, which can be accessed on our website.
I'd now like to turn the call over to John Stonehouse.
Thank you, John, and thank you all for joining us this morning. We're excited to update you on our progress since announcing our positive phase 3 results for our HAE prophylaxis program and share some important advancements in our pipeline. Since May, we've been engaging directly with treating physicians and HAE patients to gather important insights to build out our commercialization strategy. The demand and excitement they are expressing for our once daily oral prophylactic therapy, BCX7353, has been resounding and consistent. 10 days ago, we had the privilege of attending the HAA patient summit in Atlanta which gathered over 1000 attendees from the community.
Over the course of the summit weekend, we had one on one interactions with hundreds of patients So what did we learn? Many patients are doing better preventing or treating their attacks, but they want more. Patients are tired of sticking themselves with needles. During the conference, patients were pulling BioCryst team members aside to remind us they're waiting for our oral therapy and we need to go fast. Some are experiencing challenges with access It causes stress and anxiety for these patients which is a known trigger for HAE attacks.
Access is an important topic we are in the process planning for and we will be prepared when we launch so that we are able to knock down as many of these barriers as we can. There is a strong desire for our products profile and the benefits it can provide, an oral drug that reduces attacks and brings the convenience and lifestyle patients want. Patients told us they're excited. Their wait for a once daily oral prophylact therapy is nearly over and they want our product. And they wanted approved.
This is a direct quote from a mother of a teenager in our clinical trial. They want more than they have now with injectables being controlled is not enough for many. While there are new treatment options available to them, patients tell us they are still having breakthrough attacks. No drug is perfect. With the finish line now on-site, the excitement building among patients is amazing.
The enthusiasm for 7353 is not confined to the U. S. Representatives from outside the U. S. Attended as well and their response was the same.
No real prophylactic market exists outside the U. S. And they want to build it with 7353. And oral therapy in Europe, Japan, Latin America, and across Asia Pacific. This global commercial opportunity is one of the many reasons we're happy to add Megan Sneinski, our Chief Business Officer, to our leadership team.
In her leadership role at PTC Therapeutics Megan helped drive significant global revenue for multiple products through a mix of their own commercialization, partnerships. And she will add tremendous value to BioCryst as we evaluate and then execute a similar strategy. Our patient and physician interactions including our ongoing market research are aligning. Overall, 7350 3 represents a significant market opportunity and we are actively preparing for the launch next year. So what's next?
We're in the process of completing patient physician and payer market research to refine our go to market strategy. Bill's making great strides in filling out his medical affairs team that's holding regional advisory boards to build physician relationships and gather their feedback much more broadly than we've been able to do in the past. We are also developing and are filling critical roles to support a successful launch. We look forward to sharing more Let me now move to our oral Factor D program which is another exciting priority for us. We are just months away from reporting clinical data from our phase 1 trial for our oral Factor D inhibitor, BCX9930.
Which represents an even larger commercial opportunity for our company. $4,000,000,000, double that of HAE and could double again as treatments in development target more indications. A well established development path and widely available and accepted biomarkers enable rapid advancement of 9930. And allow us to show meaningful The timeline to show progress is very attractive with this program. Bill will go into more detail here, but the takeaway is that you get to a much faster answer to understand if you have a drug and we will get an important answer soon when we report out the PK and PD results.
The phase 1. Following our phase 1 readout, we will move to a proof of concept trial in a small number of PNH patients. This patient data will provide further proof And finally, another important piece to the puzzle is the capital to fund all of this. The good news is we have roughly $100,000,000 on the balance sheet and a number of different options to bring in more capital.
Tom?
Thank you, John. With the upcoming commercial launch of 7353 and the predictive clinical data coming from our oral Factor D program. We are evaluating the best approach to fund these opportunities and have a range of options to consider These options cover both equity and debt approaches as well as global business development opportunities. We are pleased that we have multiple alternatives to support our progress. And enhanced our financial flexibility by closing $100,000,000 secured credit facility.
Based on our successful APeX-two trial, we currently have the as well as an additional 20,000,000 I am thrilled to have Megan's experience on the team to help us evaluate the global market opportunities for 7353 in order to assess where we want to commercialize it ourselves and where we want to explore partnerships that provide non dilutive capital. In order to gauge our future capital requirements to support and understand BCX9930 phase 1 data. We can then pair that information with our commercial investment clinical development and partnership plans to develop the right financing mix. We look forward to sharing more details on our capital plans with you in the fall. Our detailed second quarter 2019 financial results can be found in the press release we issued this morning.
But there are a few items I need to highlight. We incurred a non cash charge of $2,000,000 in the second quarter of 2019 associated with realizing compensation expense on 2 performance based tranches of stock options. Although a cashless event and outside our guidance ranges, it is important to note there will be a continuing charge of approximately $3,500,000 as these options continue to vest throughout the remainder of the year. And thus, these continuing charges will increase our loss per share in the 3rd And Fourth quarters of 2019 beyond our normal run rate. This charge has no impact on our cash utilization or our operating expense guidance for future quarters and the year.
With two quarters under our belt, I also wanted to call your attention approximately $98,000,000 in cash. Our and is annualizing at the lower end of our projected range of $105,000,000 to $130,000,000. Additionally, We continue to expect our 2019 operating expenses will be comfortably in the previously guided range of 120 to $145,000,000. As we consider strong patient and physician enthusiasm for 7353 and the rapid advancement of our oral Factor D inhibitor program. Now I'd like to turn the call over to Bill.
Thanks, Tom. Like John, I attended the HAE Association patient's summer in Atlanta. And it was wonderful to see the engagement of patients and caregivers with our team and the tremendous encouragement that they gave to all of us in launching our oral once a day color crone inhibitor. They came up to our booth or found us in the halls to tell us just how much this treatment option means to them and their families. After years of IV and subcutaneous injections, many patients, even patients who are well controlled on these therapies, told us that an oral drug is a dream come true.
Since we announced APeX-two data and first shared it with our clinical trial investigators, in the United States, Canada and Europe. The response to the data has been very positive with growing momentum. In the last few months, our medical team has conducted a series of regional advisory boards comprised of U. S. Allergists and immunologists who treat patients with HAE.
Conversely, these physicians have responded enthusiastically to the efficacy safety profile and approvability of 7353 based on the APeX-two results and tell us that the patient experience on study with 50% of patients experiencing at least a 7% reduction in attack frequency with a once daily oral drug will absolutely translate into patients using this medicine. Last week, I also had the opportunity to visit with staff of an experienced HE clinical trial site that has been a major contributor to trials of every new treatment introduced for HAE and was told this drug will be life changing for the HAE community. So I'm very happy to report that all the activities needed to wrap up the 48 week dosing and analyses in APeX-two and APeXS are on track and we are very confident in our Q4 target to submit the US NDA and Q1 2020 target to submit both the Moving on to our oral Factor D inhibitor program for complement mediated diseases, I'm very pleased to say that we have also had strong support from U. S. And international experts physicians for progressing 9930 in the clinic as fast as possible because of the medical need across multiple different disease indications where the alternative pathway of complement is the dominant bad actor because they've been hoping for effective D inhibitor and especially an oral complement inhibitor drug.
The nonclinical profile of $99.30 is extremely promising. The key findings We're absolutely dosed proportional exposure over a big range human equivalent doses of the no well dose level of 5 grams per day. Prompt and sustained suppression of the alternative pathway of complement after oral dosing at a fraction of the no oral dose in non human primates. What these findings mean is that we should have a very wide margin of safe dosing in the clinic to achieve our therapeutic goals in complement inhibition. The Phase I clinical trial and healthy subjects is off to a great start and is progressing rapidly.
We look forward to sharing the safety, tolerability PK and PD results at the study in the fourth quarter. As you've seen with other programs in the field, phase 1 healthy subjects studies with complement providers provide vastly more information than the usual Phase 1 clinical trial because we can measure suppression of this pathway in healthy subjects using alternative pathway biomarkers that are predictive of clinical effects. And because this greatly facilitates those selection for trials in the target diseases, Also very important and unlike many other disease areas, there are commercially available standardized assays like Wyclab A PSA that enable comparison across programs. Progression of 9930 from discovery project nonclinical development to phase 1 in the clinic has gone very fast concept in patients with PNH in 2020. That will be very exciting as we can easily measure multiple biomarkers like LDH, particular sites bilirubin, that are both predictive of clinical benefit and very quick to obtain after very brief durations of dosing.
You can look forward to seeing data on 9930 PNH subject in 2020. Now I'd like to turn the call over to Megan.
Thanks, Bill. For all the reasons John Tom and Bill have laid out, I'm really excited to be here at the pivotal stage for biocryst. It's a privilege to be part of a company that's fully dedicated to bring life changing oral treatments to patients with rare diseases. Looking at what's ahead, I'm eager to bring my experience and energy to building the capabilities and infrastructure we need to commercialize 7353 and to advance our pipeline with the ultimate goal to create value for our patients. In this role, execution across 3 key areas: launch readiness, advancing our development programs and exploring BD opportunities that fit with our strategy.
First, for launch readiness, these activities include finalizing our launch plans based on the physician, patient and market insights John mentioned earlier, actively building out our supply and distribution channel, both in the U. S. And ex U. S. To be well positioned to support to support a highly successful launch.
The regulatory submissions are also the teams top priority and we remain on track the FDA submission in the fourth quarter and the EMA and Japanese submissions in the first quarter of 2020. Knowing everyday matters to the patients we serve, we will be fully focused on ways to rapidly advance our HAE programs as well as our early stage assets. Like 9930. Lastly, on the BD front, as Tom noted, we're actively exploring potential partnering opportunities to maximize the value of presents a real opportunity to consider a local partner, one who has the capabilities and strengths to bring our product to a market in BioCryst received at the recent HAA patient summit. This is a highly engaged, aligned and driven patient organization.
And I'm very excited to be here and to partner with this amazing community to bring our product to patients in need. Now let me turn it back over to
stronger position. We are hearing extraordinary customer demand for BCX7353. Next year we will launch the first oral prophy HAE treatment and a proof of concept data on a potential blockbuster oral Factor D inhibitor is coming soon. And finally we have the financial flexibility to get the capital we need to get there. That concludes our prepared remarks.
Operator, we're now ready to
to prevent any background noise And our first question comes from Jessica Fye with JP Morgan. Your line is open.
Hi, this is Daniel for Jessica. Thanks for taking our question. A couple of questions here. 1st, have you met the FDA to discuss the results of FX 2? 2nd, Given that EPIX S is an open label trial, can you speak at a high level to whether the safety in that study is consistent with or meaningfully different from what you have described in FX 2.
And last, with the Phase III acute study now postponed to 2020, for initiation, is it possible that it goes on the back burner for a period of time to preserve cash and focus on the filing for prophylactic?
Hi, Danielle. I'll take the first couple. With regard to regulatory interactions, on the NDA plan. We've had our pre NDA meeting that went fine. So all of the elements that we need to admit for the NDA are on track in the fourth quarter, including the rate limiting elements, which are the long term safety from APeXS and APeX-two.
On that front, there's no use really. We haven't learned anything new that we haven't seen previously. In the phase 2 and the phase 3 program. As I have mentioned on previous calls, we have independent data monitoring me that meets regularly to review cumulative data and they have not suggested any changes to the protocol. So that's ongoing and we look forward to completing that work later this year.
And then with regard to your question about HAE priorities, the prophy program and the filing and the approval is absolutely the number one priority. You heard Megan talk about her. One of her main priorities and focus is launch and execution, successful execution of the launch. So that takes the resources. That takes the focus that is the priority.
The acute program has been delayed a bit due to continued regulatory interactions and figuring through the CMC pieces to get to our phase 3. And as you said, we plan to get that started sometime in 2020.
And
our next question comes from the line of Maury Raycroft with Jefferies. Your line is open.
Hi, this is Swapnil on for Maury. Thank you for taking our questions. So just one for 7353. So do you like anticipate any unique with the approval process, especially due to available of such strong potent, prophylactic therapies out there. And then I have a follow-up.
I didn't completely catch your question. I think it was a market competition question, but could you just could you restate it?
Yes. So do you like to think there are like any unique risks with the approval process for this or 7 353 especially given availability of potent prophylactic therapies?
None. So no, we don't anticipate paid any unique regulatory assessments with regard to competition. It's all about this drug. In front of the regulators and its safety and efficacy profile and the accumulated database that we have in phase 1, phase 2 and phase 3 studies. So no, I don't think competition will play into that at all.
Yeah. And I'll point you to, I can't remember if it was 2018 or 2017, 2018, I guess, the FDA had their patient meeting with the HAE patient association And it was crystal clear from the audience response when they were asked a question. What's your number or what's your top priorities with regard to new therapies? And convenience was number 1. So they've heard loud and clear that patients want more convenient therapies.
Okay, thank you. And I have one follow-up question on other programs. So for, FOP molecule, which is especially targeting L2 do you see any like off target preclinical signals, especially because of closely related targets such as TGF beta or active in pipeline receptors?
Thanks for the question. So the FOP program is on track to enter the clinic in coming months this year. As you may recall, just to manage regulatory and clinical resources, earlier in the year, we made the decision to prioritize 9930. So that's going great. FOPs on track.
All kinase inhibitors are multi kinase inhibitors as if you're familiar with the field, it's been very interesting to see how that's evolved. There's no such thing as a monokinase inhibitor. So at some dose level, all kinase inhibitors will have off target effects. We're very comfortable with the non clinical profile of the drug supporting entry into the clinic and I don't anticipate that that'll be an issue. Obviously, all of our phase 1 studies have done very carefully with single ascending dose and multiple ascending dose components.
And the phase 1 trial for this particular drug will be conducted in healthy subjects.
Thank you. Our next question comes from Brian Abrahams with RBC Capital Markets. Your line is open.
Hi. This is Bert on for Brian. Thanks for taking our question. Just wanted to get kind of an update on your current thoughts on the 7353 pricing. In terms of what you may be able to charge compared to the competitors in the space to capture share and or to be tried in earlier lines?
Yes. So, we're still conducting the payer research and doing the pricing analysis. The key and I've said this before is to be able to price it at a point where you knock down the barriers, but you don't leave a lot of money on the table. And we haven't gotten the data to make those decisions at this point in time. But what I will tell you is with our competitors having drugs of upwards of $600,000 per patient per year.
We have a lot of flexibility and a lot of room, especially with a small molecule cost of goods. So, we'll know more about that later. The key here and I think this is really important is with some of the early market research that we're getting showing that the majority of patients want to use an oral medicine with our profile, the feedback we got from hundreds of patients at the HAE patient summit, there is a significant opportunity with this drug.
Great. Thank you.
You're welcome.
Thank you. And our next question comes from Lisa Bayko with JMP Securities. Your line is open. Hi,
great. Thanks for taking the question. Can you maybe eliminate us as to when we might see, presentation of the data and, a little bit more on quality of life and those kind of metrics. And I guess, how important is that latter point?
Sure. Hi, Lisa. It's Bill. We're working hard on producing materials to present at scientific meetings and also publication planning for the main manuscript for APeX-two. But it's always a bit hard to predict when those things are coming out, but our objective is of course to support our launch with high quality publication in a great journal and the data is terrific, so we feel pretty confident that we can do that.
We've got complete engagement from the principal investigator and their other key investigators on the study to help us get those publications out. The upcoming meetings of the College allergy meeting later this year and, quite ai early next year in the EAACI and we'll be trying to have materials at all of those meetings. On the last point, with regard to other elements, I think that one of the interesting sets of conversations or a theme of conversation at the patient summit was also over the long term what happens and improvement in patient well-being after months of therapy and that's probably true for all of these drugs. So I think that story is still evolving and it'll be interesting to see what type of quality of life data we get out of our long term safety study as well as APAC2.
Okay, great. Thanks. And then for the Factor D program, can you maybe comment on recent data from the competitive land I know there was some data released recently from a Killeon. And then, how your comp, how you enter pay your content like compare and contrast, what are the key differences even from a kind of chemistry perspective, just to help us understand where you see kind of the, the net chapter, what you've seen and what we've seen so far with that, Jillian's program?
Sure. So a lot of respect of course for all of our competition. The data presented I think is encouraging for the field and indicates that they're making some progress on their programs. I think it's very difficult at this stage to give you a direct answer in terms of head to head comparisons we'll have more information that everybody will be able to assess once we have our safety PKAN PD profile from the phase 1. Just in general, it's worth pointing out that the serine protease field and serine protease inhibitors are difficult targets That's why there are only 2 companies that we know of most likely actually entering the space of oral Factor D inhibitors we're really thrilled with our preclinical data and we're closing the gap on our competition.
So given the market size, are not worried that there's more than one player.
Thank you. And our following question comes from Serge Belanger with Needham And Co. Your line is open.
Hi, good morning. First, a question on the prophylactic program. I think the last time you talked to us back in May, you talked about a potential marketing strategy that would emphasize sampling in a lower price product. So after the patient summit and some of these other HAE meetings and the feedbacks you've had with patients and physicians. Is that still the marketing strategy going forward or has that evolved
Yes, I think, well, the strategy is the same that we want to position ourselves by making it easy for patients to get our drug and to move to the front of the line. I think what's different is the opportunity here is much, much, much bigger. Price discounts, I'm not going to talk about that until we get pricing research done, but we really see the demand for this drug to be huge. And so I think the opportunity is very big.
Okay. And how would you compare, I guess, the European opportunity and how that market has evolved over the last few years with some of these new products?
Yes. So there really isn't a prophylaxis market, to be honest with you. I think that's the key difference. Pricing pressure as we know in any therapeutic area is harder and heavier in Europe. But our goal is to build prophylactic market.
And so as I've mentioned before, the drugs that have been successful in this space had 90% of their sales come from U. S. And 10% from abroad. I see a real opportunity to build value outside the U. S.
As well. So I think it's not that the U. S. Won't bring us great value. We think there's significant value in the U.
S, but think there's significant value abroad as well. And the feedback, our experience with patients and the KOLs in Europe, I mean, remember we've done a lot of our trials in Europe and we've gotten a lot of excitement. We were approached by people from Brazil, Europe, other parts of South America, Japan, and just a lot of enthusiasm from around the world to get access to our drug.
A couple of questions for the acute HAD program. Any feedback, I guess, from your meetings that these at these recent meetings about the appetite for an oral product? And then can you also talk about how extensive the additional CMC formulation work that is, that needs to be done before you undertake the phase 3 trial?
So in terms of the feedback, I don't think I got a single question from a patient on acute. It was all about prophylaxis and you can understand that that they'd much rather prevent attacks than treated tax. So that answers your first question. On your second question, we just, we want to have a formulation that's in phase 3. That's better than what we had in phase 2 and we're still working through that.
We're confident we'll get there, but we're still working through it.
Thanks for taking my questions.
Our next question comes from Gena Wang with Barclays. Your line is now open.
That's not too quickly?
We can't hear you.
Hi. Can you hear me?
Yes, better.
Thank you.
Hi. Hi. This is Peter Regina. Thanks for taking our question. Just two quick ones from us.
One is for BCR-seven thousand three hundred and fifty three program, do you expect to have any Adcom meeting? And my and our second question is, on the, the CMC formulation for those in it too, was that a request by FDA or was that more initiated on your end? Thank you.
It's always hard to handicap whether or not you're going to have an adcom, but you always need to be prepared. So we'll be prepared. Yeah.
On the formulation front, it was ours, not FDA. We just, as I said before, we want a better formulation in phase 3 than phase 2 and so was ours. And our
following question comes from Tazeen Ahmed with Bofa Merrill Lynch.
John, just want me to follow-up on your plans for commercial organization. So, you've got your application underway and almost ready to submit. How are you thinking about the size of the sales force that you might need? Obviously, you're disease focused company, so you won't need a large infrastructure, but have you started the interview process? Do you think that might be open to hiring, folks from competing companies?
And, can I also ask what your current cash runway is?
Sure. So with regard to the commercial infrastructure, we're hiring we're filling jobs as we speak. So in fact, we're and I think it's posted. We've got ahead of sales that we're currently recruiting. In terms of the size of the sales force, you rightly pointed out that these are really small sales forces in rare disease.
We haven't nailed down exactly what that is until we complete the market research and have a better idea what the segments are, what the physician population is. We've got a pretty good idea now, but we haven't completed it. And we'll share more of that in the fall.
And then on cash runway?
Hey, Tazeen, it's Tom. Thanks for the question. So on cash runway, it continues to be into 2020. And like I said in my prepared remarks, we have a lot of financial flexibility. Obviously, our cash runway is largely the and then on the commercial outlay and some of the research that John mentioned as well as our plans with the 9930 program.
And so It continues to be
structure build out, correct?
Yes, it does. Mhmm.
Thank you. And the last question comes from Tyler Van Buren with Piper Jaffray.
I had a question on 9930 in the initial data at year end. Kind of interesting, that you guys mentioned that it influences financing options given how early it is. Obviously safety is important, but can you just you spoke about PKPD suppression of the pathway and standardize assays. So could you give a little bit more specificity on what type of PKPD measurements you'll be looking at to measure suppression of the pathway and what magnitude of suppression would be promising as you guys think about moving into PNH patients?
Sure. So I would frame it up as follows. And a lot of this you can get from the literature on complement and the development of other products and investigational drugs in the field of complement inhibitors. So, there are some commercial standardized assays that interrogate the alternative pathway. Is Factor D is the critical enzyme in the alternative pathway.
And one of those is the Weiss Lab A PSA. So that's the first thing. And the reason that's important is because you can buy the kit and follow the instructions. So if everybody buys the kit and follows the instructions, that makes the data a bit more interpretable one program to the next to the next. The remaining assays are more bespoke, but they're well published and there are a whole range of them including AP hemolysis assays, Factor BV assays and the like and a lot of that is in the literature.
So we have a comprehensive set in healthy subjects that you can measure. And you might ask how can you measure things in healthy people. They don't have a disease. The reason is the alternative pathway is always switched on. It's always ticking over.
So you can measure suppression of that in healthy people. So that's a very comprehensive set. And what we're really looking for here is very strong impression of the alternative pathway. If we don't get very strong suppression with our drug, that would be a big surprise on the basis of that would be a big surprise on the basis of the data we've shown with oral dosing in the monkey that's in our public slide decks. We're looking forward to seeing very strong suppression of the alternative pathway.
And that'll be the that'll be a key element in interpreting the phase 1.
Great. Thanks so much.
You're welcome.
Thank you. And I'm showing no further questions at this time. I would now turn the call back to John Stonehouse for closing remarks.
Yes, thank you. So as I said in the prepared remarks, I don't think we've been in a stronger position at BioCryst. We're about to file and launch a drug that I can tell you having been at the HAE patients, Summit patients really want the demand is extremely high and that leaves us conclude that the opportunity here is significant. And the great news is filing the end of this year and launch next year. On top of that, we've got a oral Factor D inhibitor with 9930 that's a pipeline in a molecule.
As I said, the current market doubles out of HAE and it could double from there with additional indications. And so advancing that and advancing that quickly so that we get another great oral drug out to patients, many patients with different rare diseases as another great opportunity. And we look forward to starting to update you on all the progress that we make this fall. So thanks again for your interest in BioCrystin. Have a great day.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day.