Okay, it's still the morning, so good morning. Welcome to the 44th annual healthcare conference. My name is Stacy Ku. I'm one of the biotech analysts here at TD Cowen, and I'm here with my colleague Vish. So we'd like to welcome Jon Stonehouse, CEO; Charlie Gayer, CCO; John Bluth, and Nick Wilder from IR to our Fireside Chat. Thank you so much, all, for joining today. So we'd like to just start with some overview comments. The ORLADEYO launch has had a really nice trajectory in the last few years, and our clinician conversations have been very consistent. They've been very positive and indicate that we're gonna continue to see adoption. However, we're seeing a little bit of evaluation disconnect. So we'd like to start off with just some brief questions before we dive into ORLADEYO.
What do you think is most underappreciated these days? And also, can you talk through the strategic decision to separate out BCX10013? Obviously not an easy choice, but just talk through that rationale, and, and we'll walk into and we'll start with the ORLADEYO questions.
Sure. So is it on? Yes? Okay.
Not very sensitive.
So, first, thanks for inviting us to your conference. Always great to be here in Boston. Charlie and I are gonna be making some forward-looking statements, and they have risks, and our risk factors can be found on our website. What, what's the disconnect? I think while people appreciate it, there's almost nobody that we talk to that doesn't believe that the launch of ORLADEYO has gone well, better than most expected. But I think what people don't appreciate is how well the drug works, the why behind what's going on in the marketplace, and then the dynamics in the marketplace around decision-making of patients and physicians and the psychology that's involved in, "Do I switch? Don't I switch?" So first off, the drug really works well in a meaningful chunk of patients that try it.
The data that we presented at AI reinforces that, that you're seeing, you know, reductions in attacks, attack-free patients, just like the best of any other drug that's on the market. So, honestly, I don't think you can do any better than that. Yeah, every drug has some breakthrough attacks. So in those patients, then nobody is sacrificing efficacy for convenience. That's just false. Absolutely false. The second part is that the psychology of this disease and how it affects treatment is when something really works for you, you are so loyal, and you're afraid that if you go off it, that you'll go back to the way life was before. Even if you go back and try it again, like, "It won't work for me the second time." Those are the kinds of things that go through people's heads.
And so, getting people to switch is not easy, and you have to have something incrementally better. And it can't be efficacy because they're controlled, right? It cannot be efficacy. So what is it, is the question that I'd have for investors that's gonna cause people to leave ORLADEYO and try something else? And then I think the last thing that people don't completely appreciate is, "This is homegrown," right? It came. You were there in Birmingham, Alabama. Met with our scientists, saw what we do, put the goggles on, and saw what we do. And what we go after is hard, you know, given the failure rate of others and ourselves. You know, it's hard. But when you're successful, you got something that's a disruptor, and we believe we have that in our pipeline beyond ORLADEYO.
Those, I think, are the things that people don't get. What was the second part of your question?
Talk through the strategic decision around BCX10013.
Oh. Yeah. That was pretty straightforward. We're at a point where Novartis has got a good head start. It's an oral drug, twice a day. If we hit the profile that we believe would make it a once-a-day drug and, and be competitive with the Novartis drug, you gotta go fast. You gotta go broad. And that's just not good capital allocation for BioCryst, honestly. And we think it's more important to drive towards profitability, put it in the hands of somebody who can really invest in it, and then focus on the rest of our pipeline.
Okay. Wonderful. So, back to ORLADEYO. So just walk through you've provided some recent long-term guidance on the ORLADEYO, growth. We're expecting kind of steady, continued growth. But just remind us, how many patients have touched ORLADEYO in the U.S.? You've talked through kind of those patient growth assumptions, but obviously, right now, a little bit of outperformance versus expectations. So just walk us through, your view there.
Sure. Make sure that mine's okay, mine's working. What we, we said late last year is that if we average 200 net patient growth for about the next five years through 2028 in the US, that's what's gonna get us to $800 million in, in peak sales in the US. What we announced last week is we are we are very much on that track. So we had a net increase in 2023 of 321 patients. And that's what we expected. In the in the early years, we'll be a little ahead of that 200 patient net; in later years as we start reaching peak, a, a little bit less. What we're seeing now is that, that physicians and patients are really gaining confidence in this.
And at this point, there have been a little over 2,500 prescriptions for ORLADEYO, not quite 2,500 U.S. patients who've tried it, but 2,500 new prescriptions, over 1,000 doctors who've tried it. And they're really starting to understand this point that John was making, which is, "It's really effective. This is much more than convenience. It is convenience and efficacy, and it's not a trade-off between the two." So the patterns that we're seeing, you know, at the end of the third year, heading into the fourth year of launch, it is as strong as ever. And so we're very confident in this trajectory towards the peak sales.
Okay. Wonderful. Where are the new patients coming from this time? Talk through the split between the switches, and maybe some of the new patient additions from just on-demand therapy. And then you've talked about kind of the injectable segment overall, but where do you expect the continued to grow share?
The patients coming in, the source of business has been very consistent. So I think two things that are important there. One, on just what are the patient types? We've been since the beginning of launch, it's been very consistent, about 50% of patients switching from other prophy therapies, 50% coming mostly from on-demand only. And we've seen that growth towards prophylaxis, that right now, we think it's about 70% of the U.S. market is on prophylaxis. We see that growing to 80%, at least. And then I think the other important part of this is kind of the source of physicians, who is actually prescribing ORLADEYO. And we've talked before about the roughly 500 physicians who cover 50% of the market. And we're getting a little more than 50% of our business consistently every quarter from that group.
And more and more of them are prescribing. So at this point, about 70% of them have prescribed, and they indicate that they're gonna do more. And then the other almost 50% comes from a much wider base, mostly of community allergists who may have one, two, three, four HAE patients. And we're reaching all of these different targets, and we're getting that consistent growth from all segments.
Okay. Where do you expect in the past, you said around two-thirds are gonna be injectable. So do you expect that to be kind of a steady shift over time, or?
Yeah. So.
What are your views there?
Yeah, the question about two-thirds of the future-looking growth. We do a lot of market research. In fact, every quarter, we do a big survey with allergist-immunologists. And what they told us consistently throughout 2023 is they expected about 30% growth in ORLADEYO prescribing. And actually, that's exactly what we saw in 2023. And then looking forward over the next 12 months, they see two-thirds of the patients who are they're gonna put on ORLADEYO switching from other prophylaxis therapy. So do we expect that to happen exactly? Sometimes they overstate a bit, but I think that what that means is that at least 50% of our business going forward and probably then increasing over time will continue to be from prophy switches.
Okay. Wonderful. We talked about the clinician, let's say, broadening, but also you've been targeting the patients as well, which seems to be a more relatively new kind of action given the pandemic. So just help us understand, where are you with patient summits? Where are you with patient activation? Is that really important as we look to kind of those providers that only really treat a few patients?
Patient activation is very important. It's so and we put a lot of focus on this. It was great last summer. July of 2023 was the first U.S. HAEA summit since the pandemic, the first live one in person. We had patients coming up to us and say, "Oh, I hadn't realized that this drug was on the market," and it was just an example of how much, how important these in-person meetings are. Over 1,000 patients and family members were there. And the HAEA is starting to do more live events, walks and such. So we're at those events. We run our own branded patient meetings, and those have gone very well. And what we see in our research is ORLADEYO. When a patient starts the conversation, ORLADEYO is the number one thing that they're requesting.
But what's really important is it's a two-way conversation with the doctors and the patients. And so that physician confidence too that they're seeing makes that a productive conversation. So if the patients are interested in this, the physician is confident, that's the activation that we're looking for.
Okay. Do you wanna talk about expectation setting then, I guess, from the clinician perspective? 'Cause obviously, now as you're activating the patients, the clinicians have some experience. They, they're able to kind of walk through the potential kind of, let's say, path or experience of ORLADEYO. So just, just walk through that.
Physicians have so much more confidence now because they've seen. They have the experience prescribing the drug. They've seen how it's working. They've seen our long-term clinical data and now real-world data. And so what we ask them to do, and we do within our patient services as well, is to set expectation for patients. The patients should try this for at least three months to start. And if they have a breakthrough attack, for example, or even a couple attacks, that's common. That's normal. It's not because the drug is not working. You need to give it at least a three-month try. And so we're really seeing that settling in as a practice and a message.
And we've had physicians tell us, back early in the launch, "I don't think I gave this quite a long enough try." And so last year, we actually 10% of our prescriptions were patients restarting on, on ORLADEYO because the patients and the physicians realized, "We probably didn't give this enough of a chance early on. So let's, let's give it another, another go.
Okay. Is that helping with maybe some of the earlier, let's say, initial tolerability potential issues that you could see?
Yeah. It is. I mean, it's common knowledge. The main adverse event when it happens is gastrointestinal effects. It doesn't affect all patients. When it does, it usually goes away. If you take it with a meal, it goes away after a few weeks of therapy. And so setting that expectation too, the physicians are not worried about it. The patients aren't worried about it either as long as they know that this could happen. And so that's critical. And we've really seen our retention rate settle out very, very steadily at about 60% of patients stay on drug through 12 months.
Wonderful. I think we have a question here.
Sure. So the question was, what is our percentage of our market share in newly diagnosed patients? What I'd say is, first of all, in the U.S., the newly diagnosed portion, it happens, but it's small, because HAE has been, fortunately for patients with all the therapies that have come on the market over the last 10, 15 years, it's been a really well-diagnosed. We do think that ORLADEYO is when a patient is newly put on prophylaxis, ORLADEYO is the number one prophylaxis chosen up front. We've been very careful, though, to make sure that that's not the only place where physicians and patients think about it. So I don't have an exact percentage, but I will say we are leading that portion of the market.
But our biggest growth is just in existing patients who are switching.
Okay. So back to your comment, Charlie, about retention. It's something that I know, John, you've spoken about, and we're probably gonna touch on it a few more times today. But help us understand how sticky this drug is after a year. Is this kind of once you get the patient on, they've walked through the tolerability kinks, they've walked through kind of the efficacy, are you a responder or not? What happens then? What happens in the long term?
Yeah. So the long term, what we're seeing is once patients get to a year of therapy, they're very sticky because they're doing really well. I mean, that's John was mentioning the data that we presented at QuadAI. Patients are getting to a median attack rate overall by their own report of half an attack per month. And that meets their expectations. That meets their experience on other products. And if they can do that with an oral once-daily therapy, why would they switch to anything else at that point? So they're very sticky.
Okay. Wonderful. Charlie, one more question for you. You've talked about the different initiatives that you'd like to pursue, with continued investments, in the ORLADEYO infrastructure. So just walk through those, different potential places to improve on this year.
Sure. I think the first point to make is we've made the vast majority of the commercial investments that we need to make both in the U.S. and in the rest of the world. We've built our teams. We've got the marketing resources that we need. What we did do at the beginning of last year in the U.S. is we added a few territories, small number of territories. We added to our patient services team and our market access team just to make sure we were helping with all the insurance process, patient retention, all of that. What we saw is by the end of last year, the team that we'd put in place, everyone's was really comfortable in their roles and really executing very strongly.
So that is, that's what gives me confidence in this idea that we're gonna grow at 200+ net patients for several more years, as we head forward. I don't see us needing to make any other major investments. We just need to keep bringing out more evidence like what we did at QuadAI. And we will continue to do that.
The patient services group is another one that we invested in, and that was to help with the free drug to pay drug. And I think our understanding of what's going on in that space now is 100 times better than it was before this group went in and was put into place. So we just have a grasp of information about our patients. We have a grasp about where they are in the free drug to pay drug continuum. And that's gonna pay off in the long run.
Okay. Can we drill down a little bit into the kind of transition to paid drug? What are we seeing this year? What are your expectations, obviously? And then also remind us what you've guided to long term.
Sure. A couple key metrics is, first of all, our patient base in the U.S. is 60% commercially insured, 20% Medicare, and the other 20% is mostly Medicaid. We've seen in the commercial part of the business last year, we improved our rate of paid, from about 72% at the end of 2022 to 79%, almost 80%, in by the end of 2023. And we see further improvement coming. And most of that, that's not a contracting issue. That is just about making sure that all new prescriptions are really complete with the full evidence that payers want to see. And our team's been doing a nice job working with providers to make that happen.
In the Medicare space, we've talked about the headwinds that we faced last year, and the headwinds are still there to an extent, the plans are paying or they're agreeing to pay, but the patients can't afford their copayment assistance, and they haven't had access, sufficient access to outside help. We don't think that problem has been completely solved, but we see that being solved much more effectively in 2025. And so last year was about a 50% paid rate in Medicare. We see that bouncing back to over 80%, starting next year and beyond. So we're making progress. And the long term expectations is to get to 85%+, of our U.S. patients on paid therapy.
Okay. And realize this is a hyperfocus, obviously, from the investment community, but something that the clinicians have highlighted is really helpful for their patients to get on drug and really helpful for, I think, the ORLADEYO launch overall. So moving to guidance for 2024, just walk through the different assumptions for the low and high end of guidance. Obviously, we talked about the paid drug portion of things, but just walk through that as a natural transition.
I don't want Charlie to lose his voice, so I'll jump in on this one. And Charlie, if I get it wrong, you can correct me. So it's 380-400. And kind of the toggle between the low end and the high end is where we end up with free drug to paid drug. And Charlie had said that while we made great progress on the commercial side, the Medicare situation's pretty similar to what we had seen last year. It's not better. It's not worse. So, you know, I think it's still in that range. And I don't think we're at a point where we have enough information to say that it'll change outside of that range or it's leaning towards one direction or the other.
Okay. And you've all been always very helpful around guidance quarter to quarter. So just remind us expectations there, seasonality.
Yeah. So definitely Q1 will be down from Q4 of last year. And that's because more about half or more of the patients in the US are going through reauthorization. It's also where in the with the commercial segment, we pay the largest portion of copayment assistance that we're able to provide. And so that drives things down. Meanwhile, we would expect the patient growth to be beyond pace. And so what we've said is you should expect around $85 million for first quarter sales. Then that'll bounce back strongly like it did last year in Q2 and then steady growth in Q3 and Q4.
Yeah. And I think another important milestone that maybe people aren't paying attention to on the sales front is this year, we will hit a quarter where we have $100 million or more in net revenue. And for any launch in rare disease, if you've been in the space before, you know that's a pretty important milestone. And we will hit that this year.
Okay. Remind us, it's gonna be $85 million global Q1.
That is correct. It is global sales. And, you know, the ex-US, we've seen. We're very pleased with the growth that we've seen. It takes longer to really build those markets because of market access. But what we're seeing is that steady, consistent growth in patients in Europe and other markets where we've launched.
What's the split that you expect for U.S. versus ex-U.S. for 2024?
It's still gonna be, roughly 90/10. You know, it'll be maybe a little bit more than 10% ex-US. The ex-US revenue, the percentage can wobble a bit quarter by quarter. Some of that is through distributors. So there can be a little bit of lumpiness. So it may go up and down, a little bit. But it's roughly speaking, it's gonna be 90/10. Long term, though, we do expect ex-US to be about 20% of the peak at $1 billion.
Okay. Wonderful. So let's just talk about Europe for a second. Just remind us the value per patient and how it corresponds to the US value. What do you expect in terms of, let's say, adoption in Europe? Talk about the market. And, and obviously, you all we talked about retention. We're gonna touch on it again. Do you think you could improve there as well?
Sure. So in Europe, first of all, the prices are just lower. They're lower ex-U.S. overall. So it takes 4-5 patients ex-U.S. to add up to 1 U.S. patient. So the long-term strategy is about volume, to get that market access, the best market access that we can get for patients, and then to drive volume. And I think we're off to a really good start with that. In some markets in Europe and other places, depending on the market dynamics and the payer, the national payer, they may put on certain restrictions. You may have a minimum number of background attacks before they can go on prophylaxis, whereas in the U.S., that is very much less the case.
So what that means is I would expect most European markets to be in the 50%-60% range of modern prophylaxis therapies like ORLADEYO, over the next several years. What we're also seeing is that, and the distinction here is older therapies like androgens are becoming less and less popular. So physicians and patients where they used to accept androgens because it was all they had, they are now moving away from that because they realize there's some real health risks to using androgen steroids. And they have modern prophylactic therapies like ORLADEYO that they can choose. And so it's driving a change in therapy more towards prophylaxis, modern prophylaxis than in the past.
The DC rate isn't any different, really, in Europe than it is in the U.S. I think the one thing that the Europeans have been able to do is learn from what we've learned over, you know, don't give up too early, that kind of thing in Europe. And that's been somewhat helpful, but for the most part, they're the same.
Okay. Our view is, the most updated view is 4-5 patients in Europe corresponds to one patient in the U.S.?
That's correct. Yeah.
Okay. Wonderful. So moving on to the competitive landscape, I'm sure it's a lot of questions you've been getting recently. What's your thoughts around the patient preference? Let's start first with injectables versus orals. Obviously, we have a lot of clinician commentary, but what are you hearing? And then within the oral segment, there's been some new data, potential competitive entrant in the oral space. So what are your views there? And again, obviously, this is now maybe the fourth time we've touched upon it, but talk about your retention.
Sure. So let me tell you what physicians have been telling us. We talked to a physician recently who gave a very kind of clear and eloquent view of what it takes for a patient to switch. So first of all, patients would like on average, they would like to be able to treat with an oral. But what this physician described is patients coming in and patients only come in once or twice a year now because they're mostly under control. And so they'll come in and say, "You know, I really wanna try that oral, but I'm not quite ready to do it yet. Maybe next time, maybe six months from now." And so that's what we're seeing is it takes a long time to get a patient to really switch.
But then once they do, at least 60% of these patients are getting really great efficacy on ORLADEYO. So at that point, why would you go off of a drug? You've got one pill once a day. You're doing really well. Why would you switch in the future? You wouldn't, because you're already really well controlled on a low burden therapy. And so that's, you know, this switching dynamic takes time. But once we get them to ORLADEYO and doing well at a year, we see them staying on.
Yeah. What Charlie said is super important for investors to just think about, which is that if you're only seeing your doctor once or twice a year and you only have one shot to convince them that they should switch, good luck, right? It's not gonna happen in the first go. You know, there'll probably be some population of, let's say ORLADEYO failures that went back to TAKHZYRO that might be interested in trying an oral again to see if it works for them. But this idea that it's gonna be this hockey stick growth is just not what happens. The best evidence of that is look at our trajectory. We have a disruptor, a disruptor in the marketplace, an oral drug that works, and it's steady, steady growth. It's it that takes time. So what disruption is coming next?
You know, like I said before, it can't be efficacy 'cause these people are controlled. So it's gonna take longer. And anybody that thinks differently on that doesn't understand the marketplace.
We'd add our thoughts that, for us, the clinicians really believe, the competitive landscape within the injectables is really one area and kind of separate than the oral kind of competitive landscape. They've never really thought that the two are gonna coincide.
We would agree. That's what we see in our research. And ORLADEYO is not only the first, but it's gonna be the only oral prophy on the market for we think at least about four years. So we've got a long time to really get to that peak and get patients on high efficacy steady therapy.
Okay. Remind us, your expectations for long-term growth to what to what year?
in terms of peak?
in terms of not to a peak, but in terms of the runway of growth for ORLADEYO long-term.
Oh, yeah. We've got patent expiry in 2039, so forever in my book.
Okay. Wonderful. So in the last few moments, we do want to make sure we talk about the pipeline. Just walk through. There's a really long, intriguing list of targets, things that I think are very interesting but very early. So just walk through, help us focus our energy on which different pieces that we should look at today, what are the next updates that we should expect, and what's your current thinking?
Yeah. So we've already talked about BCX10013, and we're gonna get an answer by the middle of the year. The program will either, you know, move forward in the hands of a partner or it'll, it'll stop because we didn't hit the profile that, that we seek. Beyond that, the, the closest to, you know, generating interesting data are BCX17725, you know, our fusion protein for KLK5, for Netherton's disease. We're getting that in the clinic this year. And I hope we have some interesting data next year in, in patients. That's the goal. And then the next one is avoralstat in DME. And I'm, I'm, I'm really excited about this program because I think the risk of the program is does kallikrein play a role in contact activation and causing the leaking and swelling that affects the, the retina? And I think we're getting it in the right place.
I think we have the right drug to show that it could work there. I think it's gonna stick around, you know, the data we have now is six months, which I think is fantastic. And so if we show by the end of next year a decrease in the swelling in the back of the eye, you know, it'll take us a lot a bit longer to show visual acuity changes. But if we show that decrease in swelling, we've got a drug. And that's super exciting. And then beyond that, we could be the complement company. I mean, think of the players that are in complement right now. We've got a bispecific fusion protein to go after things like IgAN and lupus nephritis. We've got a C5 that could be an oral that could be another major disruptor in diseases like myasthenia gravis.
We've got a C2 inhibitor that's oral. So we very well could be the complement company.
Wonderful. In the last few seconds, just remind us your current focus on profitability and expectations you set for the street.
Yeah. So, this is really exciting for us because we can. It's the key. There was a time at BioCryst where we weren't able to get to profitability. Now we can and we will. And so this year, operating income will be positive. Next year, in the second half of the year, we'll either be at or very close to cash flow positive. In 2026, full year will be cash flow positive. So how many biotech companies at our market cap that have a growing marketed product and a pipeline can say that.
Okay. Pause for some questions. Okay. Wonderful. Well, thank you so much for the time today.
Yeah. Thank you, Stacy.
Pleasure. Thanks, Stacy.
Yep. Bye.