Okay, everybody. Good morning. Thanks for joining us. I am Tazeen Ahmad. I'm one of the Senior SMID biotech analysts here at Bank of America. It is a pleasure to welcome you to the B of A Healthcare Conference, back live after three years.
Yay.
It's been forever. I've covered BioCryst for probably the longest time I've covered any company, so I think it's fitting that BioCryst be first on the agenda for us. Gentlemen, good morning.
Good morning.
Jon and Charlie, I think everybody knows you, but I'll let you guys introduce yourselves and maybe Jon, you could give us a two-minute overview of the company, and then we can go into general Q&A, if that works.
You go first.
Sure. Good morning. I'm Charlie Gayer. I'm the Chief Commercial Officer.
I'm Jon Stonehouse, the CEO. We're a company that works on oral drugs for rare diseases and when we first made a decision to make that move, I think some of us, including me, thought it was some incremental convenience improvement. Then we started talking to patients that suffered from HAE, and we found out that it was a shot at them forgetting they were sick. If they could take a capsule a day, like their daily vitamin, it was much, much more than some incremental convenience improvement over a twice a week or once a month injection. That really drives us at BioCryst. We've got our first drug on the market, ORLADEYO. It's off to a great start. I think there were, weren't many people that thought this would be a commercial success.
We did, Charlie and his team have done a spectacular job in the first year and in the first quarter of the second year. We're on a trajectory for no less than $250 million this year in revenue and $1 billion at peak sales. Something that we think is really valuable, something that not many biotech companies have these days, and something that we're gonna build our company around. Beyond that, you know, all our molecules have come from our discovery engine.
We've got a really interesting platform called structure-guided drug design that looks at the target enzyme active site based on shape and charge, and builds molecules, builds drugs, chemically segment by segment based on that shape and charge to build potent, specific and bioavailable small molecules. That allows us to go after validated targets, but tough targets like serine proteases in the case of plasma kallikrein, where there's 300 in the human genome. You've got to get it to be potent, but you also have to get it to be specific and bioavailable, and that's the tricky part. We've got a full pipeline and quite a bit of cash on the balance sheet.
It's great to be here after I don't know 15 years or so to be in the spot that we're in 'cause it's a very different company.
Had a great move with the HAE launch. I was gonna ask about ORLADEYO in a second, but since you started with that, let's maybe stay on that as topic and then we can move on. As you mentioned, the launch has been, you know, extraordinarily great. I mean, it's beat everybody's expectations. When you came up with the $250 million or better number for this year, can you go into a little bit of detail on how you got comfortable? Because there are moving parts, obviously, that will start to look a certain way at the beginning of the year and can evolve as the year progresses. We started off with an Omicron wave at the beginning of the year. Apparently we now have another wave. Hopefully it won't be as traumatic.
There's also, you know, other factors that come into play. How do you get everybody comfortable that $250 is in fact the floor?
Yeah. I mean, maybe I'll start and then you can get into more detail. We ended the year at, what was it? $46.2 million for the fourth quarter. You know, just do the math and draw a line from there and you're on a path that's getting you close. As you said, we've launched throughout the pandemic. I mean, we don't know anything different than the pandemic. One of the things that's really impressive about Charlie and the commercial team is they've never made excuses about it. They just figured it out, right? Figured out how to get to doctors, figured out how to, you know, launch this drug in a situation where you had to do it by Zoom instead of seeing people face-to-face.
Is that still the case?
No, I.
It's mostly back, yeah.
Yeah, access is much better, but some of the big symposia are still, you know, a mix of virtual. Like, I think EAACI, the European meeting, is a hybrid, and the first patient summit in the United States won't take place until 2023. Last one was in 2019. So there's just things that we would really get nice tailwinds from that we aren't getting. But I'll let you describe more about the 250.
Yeah. I think there are a number of things that give us confidence, but some of the biggest things is just the underlying trends we saw in 2021 that continued into the first quarter of this year. The remarkably consistent new patient starts each quarter of last year, the number of patients starting on ORLADEYO, and that shows no sign of slowing down. The source of those patients has been really consistent, so half or more each quarter have been switching from other prophylaxis therapies, injectable prophylaxis, and then the other mostly coming from patients treated with acute only. We're in a really good spot with payers. At the end of last year, we signed up the final major PBM.
What that means is now about 80% of patients in the HAE market would have access to coverage for ORLADEYO. That's what we're seeing with the patients on ORLADEYO. About 80% are on paid therapy now. Patients are doing really well. That's what we're seeing is the patients, particularly those who are switching, who were well controlled before on another prophy, switching to ORLADEYO, they're doing really well. We're very market research data-based, and we do these consistent quarterly surveys with patients and doctors. With the doctors every quarter, and again, in our most recent one, the doctors anticipate prescribing more. They told us 60 allergists told us they're treating about 13% of their patients already on ORLADEYO. They see that going to 23% over the next 12 months.
That may be getting a little ahead of themselves. They always are a little rosy, but it shows where we're headed. All of these things give us great confidence that no less than $250 for this year.
Can you give us, Charlie, some color on how the process goes for a patient? The patient goes to his or her doctor, and the doctor provides a prescription for ORLADEYO. From the time that it initially launched to maybe now, can you talk about the turnaround time from writing the prescription to actually the patient having it in his or her hand? How long does a script last? 'Cause I think I get that question a lot.
Sure. Yeah. That's a really good question, and it's important thing for both patients and doctors because their history in the past is these are expensive therapies for a rare disease and the access process has been challenging and that's stressful for the patients. In a disease where actually the number one reason for HAE attacks is stress, we wanted to make that as easy as possible for patients. One thing we did right from the beginning is we've got this quick start program. As soon as the script goes into the specialty pharmacy, once that clinical decision is made, within 24 hours usually, we will ship out that first 28-day shipment while helping the patient through the market access process. The prior authorization.
The PA process has been getting better and better, and now typically a patient will move to paid product within the first 30 days. They get this product right away. They get to paid therapy quickly, and that gives both the patients and doctors confidence. As far as how long does the prescription last? The teams had really good success getting one year. The predominant is one year scripts. It's always gonna require a reauthorization. For some patients, it's going to be the number one time is at the beginning of the calendar year. Sometimes it'll end up being less than a year. The typical is about a year. Then we help them through the reauthorization process.
Okay. Basically, for the first year that a person's on ORLADEYO, your specialty pharmacy is mailing them their monthly supply.
Exactly.
In that time period, do the patients go and see their doctors?
It depends. What we know is patients have access to so many more therapies than they used to. What it means is they're doing better than they were, say, 10, 15 years ago. The typical patient only goes in to see a doctor once or twice a year. As long as they're doing well, they follow up with their doctors, often on the phone or even via email. You know, they typically will not go in more frequently than about once or twice a year.
Okay. You've talked about discontinuation rates being close to what you saw in the study, around 30% or so. Is that right?
Through the end of last year, 70% of patients who had started remained on.
Yeah.
ORLADEYO. Through the first quarter, it's about two-thirds now.
Gotcha.
Going all the way back to the beginning of launch.
One question that we get is: If the script lasts for a year, how do doctors get comfortable or confirm that a patient is being compliant with taking their daily doses and not skipping or something like that?
Yeah, 'cause it's an oral drug, right?
Yeah.
That is, you know, that's something we put a lot of emphasis on. The service model that we created, it's called Empower Patient Services. There's a sole source specialty pharmacy, and we chose them because their expertise is working with rare disease patients like HAE patients. We wanted to provide excellent service on the access process like we just discussed, but then the ongoing care. We've seen great patient compliance. It's been north of 90% compliance rate for patients. That's something we communicate to doctors is that this is something that our care coordinators, the pharmacists there will really focus on. Then they'll let the physicians know if there's a problem.
If there's a patient who seems to be drifting away, then we can go back to the providers and let them know that they may need to intervene.
Okay. Now, as we look beyond this year, going to Jon, your view that you'll be able to get to $1 billion in sales, and also more importantly, that does not require you to own the entire market. When you do your math, what percent of the HAE market does BioCryst need to have in order to get to that $1 billion? And do you think that once you get to that $1 billion, it's sustainable over, you know, multiple years? Just given that, you know, HAE is pretty crowded already, might get more crowded. How do you think about that?
The math is both simple and realistic. To get to $1 billion, we think we need about 2,000 patients in the U.S. To put that in context, we did some work about three years ago, really detailed work with U.S. Healthcare claims that showed about 7,500 diagnosed and treated patients in the U.S. To get to 2,000, that's just 25%-30% of the U.S. market at the current ASP and I assume a 15%-20% gross to net, that gets us to about $800 million at peak sales. Then the other $200+ would come from Europe and the rest of the world. We think it's realistic.
Patients, if they're doing really well on one pill a day, if they're well controlled. One thing we learned in all of our research and preparation, and then we're learning in the market, is for a patient to switch, there has to be a real benefit to a new drug. If you're controlled on one pill once a day, what can a new drug offer? That's a real key. We think, yes, it is. When we get 2,000 in the U.S., 2,000 patients who are stable, doing well on ORLADEYO, what's required for them to switch to another drug? It's a pretty high bar.
Yeah. There's plenty of room for other competitors, right? 25%-30% market share. It's not like we need 60% market share to get to $1 billion. I wanna add one more thing that people might not pick up. Drugs don't sell themselves. We have a good drug, but they don't sell themselves. The market research is a really good example. I mean, getting inside the heads of doctors and patients, you know, 'cause in the last 12 years, there have been eight new drugs, so there's a lot of switching going on.
We learned what a good switch looked like, what a bad switch looked like. We got really, really smart about how to create the message and the plan on working with doctors and patients to have successful switches. This whole Empower Patient Services, making sure that the drug gets there fast when the decision is made, making sure that there's a lot of follow-up, so patients are taking their drug, making sure that there's a bit of hand-holding through this, was just absolutely critical. Hiring the right team, right? I mean, these are small sales forces. You get that wrong, you're in deep, deep trouble. Getting people with, you know, 20 years of industry experience selling, 10 years of rare disease experience selling.
I mean, all those little things add up to $122 million in the first year when people thought it'd be $30 million.
Mm-hmm.
I think will lead to $1 billion in peak sales because we keep making those adjustments. We're not sitting back going, "Oh, this is easy. This drug's gonna sell itself." We're working our butts off every day, and they're doing the little things that I think make a real difference in a launch.
Well, what are some of the little things that you're working on now, since you mentioned that?
Yeah. I think patient engagement and patient activation is a big one now that Charlie described that. That to me is a big piece of upside. Then the other piece is getting to the docs that haven't prescribed it yet. There's still a decent chunk out there.
Yeah. The patients are really key in this phase because, you know, again, as Jon mentioned, there have been eight drugs launched, so some of these patients are doing very well on other therapies. They need to be able to hear about this new drug and hearing from their peers, you know, other patients who are doing really well is important. This is something they've been missing the last couple of years with COVID, those in-person patient meetings. We're doing a lot of local patient meetings, and then we've added to our team as well, a patient-facing team out there in the regions to really work with patients early on in therapy, to make sure that the right expectations are set.
To make sure that they understand what to look for in this drug and what could happen, you know, from an AE perspective, but that you need to give it several months, to see if this is gonna be the right drug for you. Those are kind of the tweaks that we're putting in place to make sure that we keep all the patients. No one gives up on anything too early because they could do great over the long term.
For doctors who haven't prescribed, what's the main reason they give?
If it ain't broke, don't fix it is the biggest thing. You know, my patient's already stable on one of the injectable therapies, which again is great for patients. It's our job to convince them, you know, the likelihood is they're gonna do great on oral ORLADEYO. We started this in Q4 with the 96-week data from our pivotal trial, showing that patients in the last sixteen out of the last seventeen months of that trial, the median attack rate was zero. For many doctors that caused them to kind of look again because they felt, well, an oral drug maybe doesn't work as well. This drug works really well and patients won't take less efficacy. We're starting to show that, you know, there are reasons to give this a try. We help them with the access process.
Why wouldn't you give your patient a chance to try ORLADEYO?
How do you reach the patient? You're deep selling to the physicians, but how important are HAE patients well-informed about options even before they're talking to their doctor?
They're pretty well-informed. Yeah. But that's where these, some of these patient meetings are key too, is to get the word out there more, because they wanna hear, you know, they may hear different bits, through the grapevine or.
Mm-hmm.
On the Internet or what have you, but they wanna look in the eyes of other patients and say, "How are you doing on this drug?
The advocacy group in this disease is amazing.
Mm-hmm.
There's one in the whole world that manages the advocacy for the whole world for these patients, which is unheard of. I just go back to eight new drugs in 12 years. These guys played a big role in helping make that happen. We've had a relationship with them, a deep relationship with them since 2013. Again, these are the little things that we did that really helped us in the relationship with the patient community and continue to help us.
Maybe just to round off this particular topic. When you say 2,000 patients is what you're gonna need, is that 2,000 patients continuously on drug or does that include people who try it and then drop off?
No. That would be, excuse me, a stable base of patients who are doing great on the product. The drug's not gonna be for everybody. We're trying to get physicians and patients to get to this point of like, why wouldn't I try it? It won't be for some people, but those 2,000 patients are gonna do really well and we think stay on long-term.
Here's one more piece of simple math. Even if only 50% of the patients stayed on the drug, you only need slightly more than half of the 7,500-
Mm-hmm.
To try it to get there. His goal is to get everybody to try it. Why wouldn't you? If you had a shot at being controlled on one capsule once a day, what's the downside risk? You know, we're super helpful with the insurance process. You know, there's rescue medicine. It's not like you're gonna have an attack that you could die from, right? These patients know how to manage their disease. If you had a shot at that kind of control, why wouldn't you try it?
What about treatment-naive patients? Can you just talk a little bit about how that penetration profile is going?
Naive patients, there are always gonna be some, but the U.S. is a pretty mature market from an HAE perspective. We think that that's a small percentage. It's a natural, you know. If a patient's newly diagnosed, they need to be on prophy. The oral drug is the natural place to start. But the biggest chunk of our business is coming from prophy switchers, a little over 50%, and then most of the rest is coming from acute only. Now switching over to prophy.
Other parts of the world, though, there'll be work there, like Japan, for example.
Yes.
It's a place where the diagnosis is still pretty poor. Newly diagnosed patients, you know, getting the word out. Actually, that's actually where competition is helpful.
Yeah.
Because more companies getting the word out, I think, gets more patients diagnosed and treated.
For the acute patient population, that subgroup that you just talked about, do they tend to have, relatively speaking, fewer attacks that they felt historically comfortable just having, you know, on-demand therapy available for them?
To some extent, but not as much as you might think. Some of these are patients who've just resisted going on prophylaxis because their options before were twice a week IV infusions or Sub-Q infusions or even every two-week injections. They just didn't wanna deal with that. They said, "I'd rather just gut it out, take care of my attacks when they happen." They see things differently with an oral.
Here's something that's also, I think, a myth that is really interesting, all the prophy patients are pretty well controlled.
Mm-hmm.
Right? They're not having attacks. The fact that they're switching to our oral drug is amazing, honestly. Because normally they'd be really sticky and loyal to their therapy. You know, it's not like they're having tons of attacks. They're controlled and they're switching.
Does the doctor have to provide any kind of meaningful paperwork, you know, office hours, like an assistant, do a lot of the legwork in order to get a patient on to therapy, even though you are being reimbursed more now than you were before?
What they perceive, and this is really key, is they perceive from past experience that there is a lot between the physician and their staff. A lot of paperwork. They've done most of this paperwork before. It's things like lab tests. It's clinical histories. You know, that's where our service model really helps them, which is, here's the checklist of things you need. You've already got it. You just provide that to Empower Patient Services, and they'll help you do the rest. It's not as much work as they think it's gonna be. There's always a key person in the office who you need to convince of that as well, that we're gonna help make this easier for you.
Yeah. I'm amazed at how the insurance companies, "Oh, you forgot this, you forgot.
Right.
It just stretches the process out further and further and further.
Right. Going back to a few minutes ago, is that part of the reason why doctors who have not tried it yet talk about?
It is.
In that conversation?
It actually is a you know, it's as big a factor or almost as big a factor as drug profiles themselves. It's like, I got this. You know, I've got this patient stable. I don't wanna go through that process again. That's part of our job is to say, "Don't worry about the process. We'll really help you with that. Let's focus on the clinical value to patients.
Okay. All right. Let's transition maybe to your next product, 99-30, which is focused on PNH. Maybe just to back up a little bit, why did you think PNH would be a good second indication to pursue? That's also, relatively speaking, a crowded space.
Mm-hmm.
Maybe just kinda give us a summary of where you've been so far with BCX9930, and then what the next steps are just following the update that you had a couple weeks back.
Yeah. It was speed, honestly, with PNH, 'cause it's not the biggest disease for complement-mediated rare diseases that were a factor D inhibitor.
Mm-hmm.
The alternative pathway play a role, and really good biomarkers, right? And really clear objective endpoints, you know, hemoglobin levels or decreased need for transfusions, things like that. It was a really good first place to go, and that's why we chose it. But we always felt that for this to be a real commercial success, we had to go into many more-
Mm-hmm.
Complement-mediated diseases with a factor D inhibitor.
You started out of the gate with strong data for PNH, and it gave you confidence to move into an expanded study with patients, and you had just started enrollment. You had a safety observation observed, whereby you voluntarily decided to stop enrolling. Kind of just walk us through what you saw, why it was concerning enough that you wanted to voluntarily stop enrollment and why it wasn't serious enough that you didn't need to, like, take patients off therapy.
Right.
Kind of how you're thinking about it just after the update.
Yeah. In the REDEEM-1 and REDEEM-2 studies, these are the two pivotal studies for PNH. We had three patients that had pretty high elevations in their serum creatinine.
Mm-hmm.
2-4x the upper limit of normal. It happened pretty early on in the treatment, so a pretty big spike pretty early on. You know, that could lead to kidney injury.
Mm-hmm.
Obviously it was concerning to us to pause the enrollment. When we got into digging into the study a bit further, we had this cohort in the rollover study from our proof of concept study. We looked more closely at that data, and you could see a slow kind of gradual increase, much more mild to moderate increases in serum creatinine, but rises nonetheless.
Mm-hmm.
That was concerning to us as well. I think this drug has pretty remarkable efficacy so far. You're seeing really nice increases in hemoglobin. In one of the populations we saw zero transfusions, you know, in the treatment period. We got a lot of feedback from patients and physicians that or patients through their physicians that this drug was really working and people didn't want to stop. Even, you know, one of the three people that had the two to four times the upper limit of normal is actually still on drug because they're doing so well on the drug. There's this benefit risk.
Mm-hmm.
Challenge that we have with this drug. One of the, you know, one question we get from investors is why did we go to 500 if 400 looked like a good dose?
Yeah.
The reason was in PNH, if you look at the PK, we got a longer tail with the 500 mg, in terms of drug coverage. At that time, we didn't have a safety signal. We just felt like if patients had skipped a couple of doses, having a little bit more drug on board would have been a good thing because you can get breakthrough hemolysis if you don't control their PNH. Now we have a safety signal and we haven't seen that same elevation, albeit for a shorter period of time in a smaller number of patients at 400 mg. We think it's a plausible hypothesis to test.
Okay. You do have backup compounds, right? You've shown in the past that you're clearly capable of having multiple backups, and if you need to, you can go to the next gen, you know. Why at this juncture do you still wanna see if 400 is the way to go? Why not just go to the next molecule, which just might be overall cleaner?
Yeah.
Maybe save time in that process.
Yeah. I think the way we look at it and the way we made the decision is we can get to these answers pretty quickly without spending a lot of capital, investing a lot of capital.
Mm-hmm.
Into the programming. One major, you know, milestone that we have to get through is, do the regulators agree with us?
Yeah.
On this? If they don't, then the program, you know, could be stopped. If they do, then there's some sort of benefit risk, that we believe that, you know, the benefit outweighs the risk. It, you know, can be monitored. And so this idea of starting at a lower dose like we did in the proof of concept study and then stepping up to 400 mg might be the dose that's effective and safe. We don't know for sure, but we think it's a plausible hypothesis that's worth running by the regulators. Then if they say yes, it's worth testing, so.
When do you think you'd have resolution on that?
We hope by the end of third quarter, we would have a decision and be able to move forward. Back to your question around backups. We, you know, as you said, we have a history of working on lots of backups.
Yeah.
For those of you that don't remember, we had a drug avoralstat, which was our first generation oral plasma kallikrein inhibitor before ORLADEYO. We got into a phase three study, got through the phase three study, and it was an unsuccessful trial on efficacy, 'cause it was a poorly bioavailable drug. We ultimately stopped that program. You know, shortly before we got the data from the pivotal study, we had phase one data on two backups.
Mm-hmm.
Actually BCX7343 and BCX7353, we decided to move BCX7353, which is now ORLADEYO. Backup is, I guess it's the right term, but we always look for improved versions. Yeah. In the case of plasma kallikrein, we came up with one pill once a day with really good efficacy. I don't know if we'll get there with that. It's a really hard target, but, you know, we're working on improvements on earlier generation programs. We're doing that. It's too early to talk about it at this point in time, but when we're ready to talk about it, get credit for it and not tip our competition too early.
Mm-hmm.
We will tell you more about those.
If you did decide to move to the second next generation molecule, how far away from being able to move that into the clinic with patients would you be?
Yep.
Relative to now?
Yeah, we haven't said so. You know, more on that later.
Okay.
Here's how you should think about it. The more time we have between us and our competition, the better the drug has to be.
Yeah.
I mean, back to Charlie's point. If somebody's gonna switch, it's gotta be better.
Yeah.
There's gotta be a reason for it. That's what we're thinking about, bringing a better molecule, maybe the best molecule forward, that inhibits the alternative pathway for complement-mediated rare diseases.
Yeah. I mean, I guess the reason I ask is, even if you do decide to move forward, let's say with the $400, I just think people being people, it'll still be an overhang until it's not.
Yeah.
How do you balance that?
Yeah.
-decision with-
Yeah.
You know what, we'll just start from scratch with this other two or three.
Yeah. I think it's a reasonable investment to test the hypothesis and if, you know, if we can keep moving forward, then I think it's a good investment.
Yeah.
If we can't, then we'll stop.
Yeah.
The competition is another important piece that we look at. You know, how does the competitive landscape and, you know, Novartis will be having their data from their factor B inhibitor later this year. That'll be an important input.
Yeah.
Onto our decision-making on, do we go forward or not?
Yeah, I was just gonna say, we won't bring a drug forward if we don't think we have the profile that can compete.
Yeah. Okay.
That's an important part.
That's a big difference from BioCryst of the past, right? We were very dependent on one molecule and binary events. We're not now. Now we have a drug that, you know, is on its way to $1 billion, a really solid balance sheet and a really full pipeline with backups and other targets.
Yeah.
Other molecules.
Yeah. Well, we could probably talk for another hour, but we are out of time for today, so.