As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. John Bluth, Senior Vice President of Investor Relations and Corporate Communications. Sir, you may begin.
Thank you, Ashley. Good morning, and welcome to BioCryst's first quarter 2019 corporate update and financial results conference call. Today's press release and accompanying slides are available on our website. Participating with me today are CEO Jon Stonehouse, Chief Medical Officer Dr. William Sheridan, CFO Thomas Staab, and Chief Commercial Officer Lynne Powell. Following our remarks, we'll answer your questions. Before we begin, I want to direct your attention to slide two, which discusses our use of forward-looking statements and potential risk factors regarding an investment in BioCryst. As detailed on the slide, 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 Jon Stonehouse.
Thank you, John. Thanks to all of you for joining us this morning. 2019 continues to be an exciting year of progress for BioCryst, and we know you're looking forward to seeing the 24-week safety and efficacy results from the APEX-2 study of oral BCX7353 for the prevention of hereditary angioedema attacks. We are too. We remain very confident that we will report these results this quarter. We're also on track to file our new drug application for the United States by the end of the year and our marketing authorization application for Europe in the first quarter of 2020. We meet regularly with HAE patients, as we did a couple of weeks ago. The anticipation and demand we hear from them for an oral therapy is consistent and resounding.
Many of these patients want the opportunity to live a normal life without the burden and discomfort of injections and infusions. As a company, we're working every day to deliver this important new treatment option to them because we know they're waiting. This focus on driving our programs forward also extends to our other oral treatment programs for acute HAE, complement-mediated diseases, and FOP. Following the successful completion of our ZENITH-1 trial of 7353 for the acute treatment of HAE attacks in the first quarter, we are in the process of preparing for and conducting our discussions on the phase III study with regulators and expect to commence the phase III ZENITH-2 trial this summer. On our earnings call last quarter, we announced that we were moving BCX9930, an oral Factor D inhibitor for complement-mediated diseases, into a phase I trial.
That trial is on track to begin this quarter. We expect to have the results at the end of the year. We hope to get important PK and PD data from healthy subjects that will be very informative in guiding us through the remainder of the program. Our oral ALK-2 inhibitor for FOP is also on schedule to move into phase I clinical trials in the second half of this year. When you add it all up, we see an attractive pipeline with a number of important milestones that we believe have potential to create significant value for patients and shareholders. Layer on top of that our first launch of a highly differentiated product in 7353 into the marketplace, we see a very different and exciting BioCryst.
Even though we believe the oral profile of 7353 will lead to a high number of HAE patients wanting to try it, we are taking nothing for granted as we prepare to commercialize 7353. As we build out our team in key areas, our company profile is attracting exceptional candidates with proven rare disease experience. We have added some extraordinary talent to the company across medical affairs, market access, marketing, clinical, and regulatory. Positive data from APEX-2 will only strengthen this and will be a catalyst for us to continue building out the team in anticipation of a U.S. product launch next year. Now I'd like to turn the call over to Bill, who will walk us through our plan for analyzing and reporting APEX-2 results.
Thank you, John. As we await the data readout from APEX-2 this quarter, we thought it would be helpful to review with you how we will approach the data analysis around the primary endpoint and the secondary endpoints in this trial. APEX-2 is a randomized, double-blind, placebo-controlled, 3-arm trial testing 2 dose levels of orally administered once-daily BCX7353, 110 milligrams and 150 milligrams, for prevention of angioedema attacks. 121 patients with type 1 and type 2 HAE were randomized from centers in the U.S., Canada, and Europe. As a reminder, the trial enrolled very quickly. In fact, it over-enrolled, with 121 subjects, is powered at 99% to detect a 50% reduction in attack rate versus placebo.
To qualify for the trial, patients were required to have two investigator-confirmed HAE attacks during the run-in period of between 14 and 56 days from the screening visit, i.e., a minimum rate of 1 per 28 days. In previous trials, the mean baseline attack rate was always much higher than the minimum requirement. We expect this will also be the case in APEX-2, and that the mean baseline attack rate should be in the range of 2 to 4 per 28 days. The primary efficacy endpoint of APEX-2 is the rate of investigator-confirmed angioedema attacks over 24 weeks of study drug administration. The analysis will compare the on-study attack rate for patients receiving BCX7353 at each dose level to the on-study attack rates of patients receiving placebo.
As specified in the protocol and agreed with the regulators, the analysis will use a well-established statistical approach called the Hochberg step-up procedure. This controls family-wise type 1 error associated with multiplicity of study arms and does not require specification of order of testing of the doses. In this procedure, each of the 2 dose levels of BCX7353 is tested against placebo for the primary endpoint. Statistical significance is met for both arms if both P values are less than 0.05. If the largest P value is more than 0.05, in the other arm, statistical significance is declared if its P value is less than 0.025. In addition, hierarchical testing is used to control the type 1 error rate for multiple endpoints. Testing may only proceed to the secondary endpoints if statistical significance is met for at least one dose for the primary endpoint.
The secondary endpoints for the 24-week analysis of APEX-2 are in hierarchical order of testing, change from baseline in the Angioedema Quality of Life score at week 24, proportion of days with angioedema symptoms through 24 weeks, rate of investigator-confirmed HAE attacks during dosing in the effective treatment period beginning on day 8 through 24 weeks. The secondary endpoints for each dose level that meet the primary endpoint are tested in the order I just mentioned. Statistical significance at each step allows testing of the next secondary endpoint. If a single dose proceeds to the next level in the hierarchy, statistical significance at the next level in the hierarchy is declared if P is less than 0.025. In the absence of statistical significance, subsequent endpoints for that dose level are not tested.
Following completion of the 24-week blinded placebo-controlled study period in APEX-2, subjects continue in an ongoing extension phase through 48 weeks. Patients initially randomized to placebo are re-randomized to receive one of the two BCX7353 doses in the extension phase, and patients initially randomized to BCX7353 continue on the same dose. Subjects in APEX-2 who complete 48 weeks of BCX7353 will contribute to the NDA long-term safety database of 100 patients. Our APEX-S long-term safety study also contributes to this total. Both of these studies continue to progress well. We are on target for an NDA filing by the end of the year and an MAA filing in the first quarter of 2020.
As Jon mentioned, we are also on schedule to begin a phase III study with our acute program this summer, and I would note that data from our phase II ZENITH-1 trial will be presented at the upcoming C1-INH Deficiency & Angioedema Workshop in Budapest in May and also at the EAACI Congress in Lisbon in June. Now I'd like to turn the call over to Tom.
Thank you, Bill. Our detailed first quarter 2019 financial results can be found in the press release we issued this morning and are summarized on slide eight. I'd like to highlight some information to help you assess and understand our future operations and financial statements for the remainder of 2019. From a financial perspective, the first quarter was relatively quiet and uneventful, with the notable exception of extending our cash runway and enhancing our financial flexibility by closing a $100 million secured credit facility in February. This closing represented an enhancement of an existing credit facility, and thereby provided us $20 million of immediate additional non-dilutive capital and the ability to draw another $50 million of milestone-based, non-dilutive capital at our option. As a reminder, $30 million of this additional 50 is available following positive APEX-2 data, which we consider sufficient to file a new drug application.
This modified credit facility provides us optionality and flexibility from a liquidity standpoint. In regards to cash and investments, we ended the first quarter of 2019 with $121.6 million. We have a strong cash position that provides the resources to fund our development programs and continue our commercial preparation into 2020. Importantly, our cash runway extends beyond our APEX-2 readout later this quarter, as well as our NDA filing and phase I readout for BCX9930, which are both expected to occur in the fourth quarter. As you can see on slide eight, revenue for the first quarter of 2019 increased $1.9 million to $5.9 million. This increase was largely due to the recognition of $1.7 million of peramivir product sales to one of our collaborative partners. These transactions are based on inventory management by our partners and each partner's overall forecasted demand for the underlying peramivir product.
Importantly, these transactions do not recur routinely and are difficult to predict in regard to timing and magnitude. Accordingly, you should not assume these product sales will recur in future 2019 quarters. Regarding operating guidance, as noted on slide nine, we continue to expect net operating cash use to be in the range of $105 million-$130 million, and 2019 operating expenses to be in the range of $120 million-$145 million. As mentioned in our fourth quarter 2018 results conference call in March of this year. We continue to expect our R&D and G&A expenses to increase from 2018 levels due to the continued progression of all of our programs.
Consistent with prior quarters, the company's operating expense range excludes equity-based compensation expense due to the difficulty in reliably projecting this expense, as it is impacted by the volatility in price of the company's stock, as well as by the vesting of the company's outstanding performance-based stock options. Lastly, with the modification of our secured credit facility, you should expect higher interest expense for 2019 because of higher debt balances than those in 2018. We have had an excellent start to 2019 and look forward to sharing the 24-week safety and efficacy results from APEX-2 with you later this quarter. That concludes our prepared remarks, and we'll now take your questions. Ashley?
Thank you. Ladies and gentlemen, if you have a question at this time, please press the star then the number 1 key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Again, that's star then 1 to ask a question. To prevent any background noise, we ask that you please place your line on mute once your question has been stated. Our first question comes from the line of Brian Abrahams with RBC Capital Markets. Your line is now open.
Hi, this is Bert on for Brian. Thanks for taking our question. Can you give us any further clarity on when we might see the APEX-2 data in second quarter? Then also, you've previously cited 50% as the bar for attack reduction. How does your market research, prior data, PK/PD mapping, and OLE observations all shape your expectations for the readout and/or the threshold to try and meet? Thank you.
Sure, Bert, I'll take that. No, we're not giving any further granularity on timing other than to say it's coming this quarter, so soon. Then with regard to your question around 50%, the market research is really interesting. The preference for an oral drug is so strong that you can vary the efficacy up to 85% all the way down to 55% and see small changes in preference share. The point we're trying to make is there's just a really, really strong demand for an oral drug.
Great. Thank you.
You're welcome.
Thank you. Our next question comes from the line of Jessica Fye with J.P. Morgan. Your line is now open.
Hi, this is Danielle for Jessica. Thanks for taking our question. You mentioned in the prepared remarks, mean baseline attacks rates of two to four for 28 days in APEX-2. Is that lower than what was observed in APEX-1? Given what sounds like less sick patients in Phase C versus phase II, how should we think about the on-treatment placebo response? Thanks.
Yes, hi. This is Bill. Thanks for the question. This study is 24 weeks long. APEX-1 was four weeks long. The way the statistics work in studies where you're counting events is you have to have a certain number of events to count in order to show a difference to placebo. We have six times longer opportunity. Even if the attack rate was much lower than the baseline attack rate that I mentioned, there's a very high probability that we'll see more than four events in 224 weeks. I'm not worried about that at all. It's impossible to handicap the likelihood of placebo response in these studies. It seems to vary a lot depending on the conditions of the type of run-in and where the patients came from, what treatment they were on previously, and so on.
The analysis that matters, of course, is the on-study attack rate in placebo compared to the on-study attack rate in active. That's the way we've structured the study and the pairing.
All right, thanks. What are some of the endpoints that you're considering for ZENITH-2 that could highlight differentiation of the product in contrast to currently available therapies in the acute setting?
As John mentioned, we're in the process of meeting with regulators on the design of the phase III for the acute program. It's competitive, so there's no advantage for us to advertise what we might or might not be selecting for the primary endpoint of our phase III at the moment. We're very, very pleased with the results of ZENITH-1. We're very happy that it's been accepted for presentation at the biannual C1 inhibitor workshop in Budapest and also at the huge European allergy meeting, the EAACI, that's coming up. There's tons of interest in it. This is a groundbreaking study in the context of acute treatment at home as early as possible after the onset of symptoms. We're thrilled with the results.
I would add, without going into the detail of what the endpoints are, since we haven't agreed on them with the regulators yet, what matters is, does it go to work quickly? I think that's table stakes for any acute treatment. How long does it last? The problem with the short half-life drug is that there's data that's come out recently that says that you've got to redose. With a really long half-life like we have with BCX7353, we have a high degree of confidence that a single dose will manage an attack. We think that's a fantastic profile and very competitive.
All right. Thank you very much.
Thank you. Our next question comes from the line of Liisa Bayko with JMP Securities. Your line is now open.
Hi. Thanks for the review of the statistical plan and all that. Can you maybe also just further comment on the adjudication of the attacks? How will they be adjudicated to ensure that they are truly attacks versus other factor, what have you?
Sure. Hi, Liisa. In the phase III trial, APEX-2, the procedure is that the patient every day records in their electronic diary whether or not they've had an angioedema attack within the last 24 hours. If the answer is yes, that information is notified automatically to the relevant site that is looking after that patient. The investigator is charged with contacting the patient by telephone within approximately 2 business days, to have a dialogue and make an assessment and record the investigator assessment in the case record. That is what gets analyzed as the primary endpoint.
Because of that process, the investigator has the ability to understand the symptoms, the onset, the treatment, if it was given, whether or not the treatment had any effect, whether the symptoms were similar or not to past experiences of the subject, and make an assessment that takes into account a conversation and all of that information. In our phase II study, we had a panel of experts who were reviewing paper information in batches often months after the event. Obviously, there's no possibility of interacting with the subject at all under those circumstances, it's more difficult to make nuanced judgments when you can't do that.
Okay, that's great. That's helpful. Thank you. Can you comment at all on proportion of rollover onto the open label?
We will know that coming up soon, obviously, this quarter when we have the analysis, then we'll be happy to comment on that. I think that what I previously guided in terms of persistence on study through 24 weeks, these are demanding studies for patients. There are clinic visits, blood samples, ECGs, what have you. That's not normal life, and an expectation of a 10%-15% dropout rate under those circumstances is reasonable.
Okay. You're not commenting on how many people, despite that, rolled over onto the open label.
Yeah, because this study is still ongoing.
Okay.
Until we have the final results, that's a really good time to tell you that information. It will be an interesting statistic. Yeah. Sure, yeah.
How important do you see the secondary endpoint?
Say that again? How important are the secondary endpoints? Well, I think that we carefully select secondary endpoints in pivotal studies because the objective here is to get information that helps physicians and other healthcare providers assess the drug into the label and help in selection of therapy. For example, we had a very strong signal for improved quality of life in our phase II study. If that could get into the label because it was successful in a secondary endpoint analysis, that would be very important.
This is Lynne here. Commercially, we'd be very excited if the quality-of-life data could get in the label. What we saw in phase II was incredibly impressive, and we're looking that that would be replicated in this next study.
Okay, great. Thanks a lot, guys.
You're welcome.
Our next question comes from the line of Gena Wang with Barclays. Your line is now open.
Thank you for taking my questions. I also have one question regarding APEX-2 trial. In Europe, there will be more patients had a prior androgen use. Just wondering, do you stratify patients based on the androgen use? Any restriction in terms of the duration of the usage and the washout period?
Thanks, Gena, for the question. It'll be an interesting analysis as to whether or not the prior experience with androgens is different for subjects entering this study in North America versus Europe. Quite a lot of people in the United States are actually still on androgens. Obviously it doesn't appear in the market because it's a generic drug. Our estimates are that probably between 10% and 20% of patients with HAE in the U.S. are currently on androgens, and many patients have had prior experiences because that was all that was available some years ago. It'll be interesting to see whether there's a difference. I think that the other main part of your question was what are our entry criteria? There are no restrictions on prior therapies.
There is a restriction on washout periods for prior therapies, and for androgens, it's 28 days prior to screening. She also had a question around stratification. Do we do any? No, there's no stratification on that basis. Our practice consistently in our prophylactic HAE studies has been to stratify on the basis of baseline attack rate. That's the case here.
Okay. I see. That's very helpful. Just want to confirm, so the washout period will be 28 days, right?
Prior to screening. As I mentioned in my-
Prior to screening.
-remarks, yes. Prior to screening. In my remarks, then there's a prospective run-in that's compulsory. Every single patient has to go through that, and that can vary from 2 weeks to 2 months. They have to make an appointment to come for randomization. The actual duration, if somebody stopped androgens a month before screening, the actual duration prior to getting our drug could be up to 3 months, 4 months. 5 months, maybe.
I see. What's the purpose for running phase had 14-56 days, such wide range?
We chose the minimum period because we wanted to see some sort of consistency. You have to put some maximum period on it, otherwise you're waiting forever to see what the attack rate is, and you need to finish the study. Giving people the opportunity to have two attacks within 56 days establishes a minimum of one per 28 days as a rate.
Okay. Very helpful. Thank you.
You're welcome.
Thank you. As a reminder, ladies and gentlemen, that star then one to ask a question. Our next question comes from the line of Maury Raycroft with Jefferies. Your line is now open.
Hi. Good morning, everyone, and thanks for taking my questions. First question is just on 7353. As patients continue on drug and cross over to the open label extension, what's the longest duration patients have been on the drug?
Across both studies, we have people now out past a year.
Got it. Okay. Then, as far as your statistical plan and the powering assumptions for the phase III primary endpoint go, can you say what the lowest the attack rate reduction could be? And I guess what your decision tree would be based on something dropping lower than 50%?
To answer your first question, we haven't done any formal explorations. Obviously, it depends on the actual observed standard deviation in the data that we get. Certainly, it may well be possible to show statistical significance for a lower % reduction in attack rate.
On the second half of your question around how low could you go, I think we're kind of setting ourselves around the 50%. If it was 48%, would we say no? Probably not. I think that 50%, that's a meaningful reduction in attacks for people. Somewhere in that area.
Got it. Even if it's at around 50%, if it goes below 50%, then you may not move forward at that point or come up with a different game plan.
I reserve the right to see the data and make that decision. Again, we'd like to get the input of KOLs and the patient association and things like that. The conversations we've had thus far have been incredibly encouraging down below 50% from those groups. That's not our expectation. Your question, I think because it's oral, the efficacy doesn't have to be as high.
Got it. Okay. Last question is just based on APEX-J starting, and I was wondering if any data from that study would be included in the U.S. filing. I know you've guided to having about 100 patients on each dose for BCX7353 included in your NDA filing. Should we assume that you're going to have about 200 patients total, or do you anticipate more patients than that?
Just to be clear, all of the data on safety that we currently have at the time we cut the data later this year will be included in the NDA. There'll be a minimum of 100 patients' worth of data through 48 weeks. APEX-J will be still blinded, so that won't contribute to any efficacy analysis for the NDA. That study was negotiated with Japan's PMDA to complete the Japan development program and support a JNDA.
I think with regard to your question of how many patients worth of data will we submit, what we need is 100 patients at 48 weeks. If the high dose looks clean and we believe we're going to file both doses, that's enough for the filing. We'll just file the high dose. We have lots of options.
Got it. Okay. Thank you very much.
You're welcome.
Thank you. Our next question comes from the line of Serge Belanger with Needham. Your line is now open.
Hey, thanks, guys. This is Tian on for Serge. I just have a question about APEX-2. Is the safety extension portion of that trial, is that also to be read out in 2Q 2019? Also the APEX-S trial, is that also part of the NDA submission for the 4Q 2019?
Yeah. You want to take it?
Yeah, I'll take it. The analysis in the second quarter is the 24-week analysis of APEX-2. The answer to your first question is no. That's the pivotal placebo control efficacy and safety that is going to support the submission. The long-term safety follow-up will be ready later this year and from both studies, from APEX-S and APEX-2, and that'll be compiled to submit in the NDA.
Okay, great. Thanks.
Thank you. Our last question comes from the line of Tyler Van Buren with Piper Jaffray. Your line is now open.
Hey, good morning, guys. Thanks for the additional detail and the statistical analysis. I guess I just had a point of clarification. Is the Hochberg step-up procedure the analysis that was used in the Takhzyro and Haegarda pivotal trials?
I'd have to look it up. The Hochberg is simply a way of controlling for multiplicity, of having two arms instead of one versus placebo. We've utilized it in that way. The type of analysis of the data is, you can read this in the publication from the Takhzyro study, it'll be very similar to that in terms of how you do the analysis. You're counting events and statistical approaches to how to analyze and compare counts of events that turn into rates. In phase III trials, this may be a bit too technical, but it depends on whether or not the distribution is over-dispersed or not. If it's over-dispersed, it's binomial, and if it's not, then it's Poisson. I hope that helps you, and all of that, of course, agrees with regulators and totally standard.
Yeah. That does. That's great. Your updated thoughts on acceptable discontinuation rates for a trial of this sort and this design?
The fact that we over-enrolled gives us quite a bit of flexibility here. 10%-15% dropout rate during the placebo control period is quite acceptable.
Okay. That's helpful. A final question is, you guys have spoken about commercial preparations. Assuming the trial's positive, clearly coming in with an oral, you have a chance to disrupt a space that's really been dominated by a couple players at a very high price, and I think there's a level of physician frustration because of those market dynamics. Can you, again, assuming the trial's successful, can you speak towards the commercial preparations and how you guys plan to approach the market with a product of this profile?
It's Lynne here. We have, as John said earlier, been actively recruiting in marketing, market access, medical affairs. We have been doing multiple pieces of market research to understand the market. What we're really prepping for is to really give patients and physicians what they want in terms of service and have the opportunity to try an oral therapy, which is what they tell us they want. In terms of pricing, what's really important in pricing is to understand what our profile of drug is, we are certainly entering into a situation with very high-priced competitors. We will be looking at all options in terms of what we do with pricing.
Lynne's being modest. She's put a lot of energy and resource towards gathering data to be smarter than anybody in this space, there's a lot of switching going on right now with the other therapies that are being introduced. Her team is analyzing the behaviors and what drives people to switch successfully and unsuccessfully, we'll apply that learning to our launch plans. What's great about this drug is that we are hearing from patients and physicians that the trial usage of this drug is going to be really high. The other thing Lynne's team is doing is how do we keep them on the drug. We're getting really smart about that and putting in plans in place to be successful with that.
Great. Thanks for taking the questions.
You're welcome.
Thank you. Ladies and gentlemen, this concludes today's Q&A session. I would now like to turn the call back over to management for any closing remarks.
Yeah. As I said at the beginning, this is a really exciting time for BioCryst. We're preparing for a very important filing of 7353 for prophylaxis. We're preparing for the launch in the U.S., in Europe as well, and we'll have the data soon, and we look forward to reporting it out to you. Have a great day.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program, and you may all disconnect. Everyone, have a wonderful day.