Good afternoon, everybody. Thanks for joining us at the Bank of America Healthcare Conference. I'm Tazeen Ahmad, I'm one of the SMID biotech analysts here at the bank. It's my pleasure to have with me for the next half hour members from the management team of BioCryst. I'll turn the stage over to Jon Stonehouse, who is, of course, President and CEO, to do a quick introduction of the company.
Well, thank you, Tazeen, for once again having us at your annual healthcare conference. With me is Charlie Gayer, our Chief Commercial Officer, and we're both going to be making some forward-looking statements, so to find the risks with that, just look on our website on our filings. If you're not familiar with us, I think there's a few things that you should know. One, we've got a product in the market, and a rare disease called HAE, that is an oral and an injectable market, and it's growing at a very steady, consistent rate on its way to $1 billion at peak. Second, we have a platform that produced ORLADEYO, a discovery platform that produced ORLADEYO, and has produced a number of other rare disease small molecules and large molecules that we believe will produce another ORLADEYO or better. Third, we're accelerating our path to profitability.
So we expect we were only a little less than $1 million off operating profit in the first quarter, and we expect that we will be there this year. We expect in the second half of next year we'll either be at or close to cash flow positive and in 2026 cash flow positive. So you add those three things together and a company with a market cap our size, and you can see real upside value here.
Okay. So you're one of the management teams that's putting your money where your mouth is, it seems. So can you just talk about the purchases that several members of the management team made? I think that's having an effect on share price today.
Yeah. I'll start, and then Charlie, you can give your rationale. But clearly we're in an open window, and we had the opportunity to buy, and personally, I felt that the stock is undervalued and is a good purchase in my portfolio. So put my money where my mouth is.
I think that we.
I think that we also just have real confidence in what we're seeing from ORLADEYO, how well the drug works, how well physicians are receiving it, patients are receiving it, and then our pipeline is really exciting, as Jon was talking about. So great value.
Okay. So maybe let's delve into a little bit more about ORLADEYO. So the thing that makes it differentiated a lot of people when I pitch the stock will immediately say, "Oh, HAE. It's one of those rare diseases, but there's so many options for patients." But in terms of oral options for prophylaxis, if a doctor is looking for that, he or she would be looking for ORLADEYO. So can you just remind us about what the clinical trial efficacy had shown? Because there's some conversations about what's real-world efficacy actually mean, and we can go into more questions from there.
Yeah. I think the clinical trial actually showed something similar to what we're seeing play out in the marketplace, which is investors have a tendency to focus on the primary endpoint and the 44% reduction in attacks. But what really happened in the study, ORLADEYO worked really well in about half the patients, and it didn't work very well in the other half of the patients. And so what are we seeing in the marketplace? About 60% of the patients that try ORLADEYO are doing really well. And when I say really well, I mean efficacy similar to any other therapy, injectable, 90% reduction in baseline attack rates. And in others, it's not. And so to get a drug that is a one capsule once a day that you have a shot at that kind of control, why wouldn't you try it?
Listen, these people are well controlled on the therapies that they're at. I mean, one of the benefits of being in the HAE space is there's a lot of competitors, and so patients have choice. And if they're controlled, you've got to give them something that is a difference from what they're currently on to get them to switch. And we're finding that when it works really well and it's a once-a-day capsule, you can convince them to switch.
Just based on the profile of patients you've treated so far in the few years that the drug has been on the market, have you been able to get a sense of, right from the get-go, what patients are more likely to respond than not?
I like that question because it gives me the chance to say no. What we saw in our clinical trials was that there was no way to predict who would respond well to ORLADEYO. And so what we're seeing in the real world is if you come in and your HAE is well controlled, you have zero attacks, you switch to ORLADEYO, most of those patients stay at zero attacks. If not, they'll switch back. If they come in at higher levels of attacks, most of them are getting better. So it's irrespective of what drug they're switching from, what their background attack rate is. So what we really talk to physicians about is you just need to give it a try, and then we try to make that as easy as possible for them.
When the physician gives it a try with a patient, how long does the patient stay on the drug before they realize if it's working or not?
You might want to talk about what we learned. We learned a lot from the start of the launch to today.
Well, so Jon mentioned that patients, when they do try, we get 60% of them to a year. And what we learned is that if anything happens, any bumps in the road, they're likely to happen in the first three months or so. So what could happen? You could have a breakthrough attack. If you have a breakthrough attack, that's actually pretty normal. And so what we want physicians to do is to set expectations. Say, "This could happen. I want you to try it for at least three or six months." The other thing that could happen is you could have a side effect, and the most common side effect for ORLADEYO is gastrointestinal. It doesn't happen to most people, but when it does, it tends to go away pretty quickly. So set expectations about that as well.
What we hear from physicians is some of them didn't do this well in the first year of launch, and they tell us now, "I didn't do a very good job. Now I'm doing that more. My patients are doing really well when I set expectations." Give it a three to six-month try. It's likely to be a good drug for you. If it's not, you can move on.
Okay. So of the reasons why patients would drop out, do you have a sense for what percent is because of the GI discomfort that they experience versus the drug is not as efficacious for them?
The top two specific reasons are the efficacy and then the GI. It used to be that the two were about even. Now it's become clear. Efficacy is the most common. GI is number two, and then everything else is kind of number three.
Okay. And is there, in the mild versus moderate to severe patients, a correlation between the severity of their disease or the severity of their attack and the ability of ORLADEYO to provide protection?
Yeah. The concept of mild, moderate, severe in HAE really doesn't exist anymore because everybody is on therapy, or most everybody is on therapy, and they're controlled. And so very few attacks are happening, especially for prophy patients. And if you're on demand, you're typically having fewer attacks, and you're catching them early enough, and they're not that severe. So that idea of mild, moderate, severe is gone with better therapies on the market.
Yeah. I asked the question because if a person has a breakthrough attack, if it's a relatively minor attack, does that still motivate them to want to go back to what they were on?
It depends. It depends on how quickly it happens. I mean, so here's a really important piece to remember about HAE. You have to have two things. You have to have low C1 inhibitor or kallikrein activity, and you have to have a trigger. And stress and anxiety is a trigger, and switching from a therapy that you were controlled on to a therapy you're not sure about yet is a stressor. And so we've actually had patients where the doctor had them stay on their TAKHZYRO monoclonal antibody for kallikrein and ORLADEYO, a small molecule for kallikrein, and have a breakthrough attack. So that's clearly not the control of kallikrein that's causing that. It's probably the trigger that's taking what little bit of kallikrein activity is there and making it into a swelling event. So you shouldn't give up after the first attack.
Some might, and that's why setting expectations by the healthcare professional is key.
Because this is a rare disease, I guess doctors have a lot of flexibility in deciding what drugs they want to recommend for their patients. You just brought up a point where I thought maybe we should get some color, which is, are there patients in HAE that are on polypharmacy?
Well, first of all, all patients should be if they're on prophylaxis, they're on polypharmacy because they also have a backup therapy. They have a rescue medicine if they do have breakthrough attacks. We do see that some physicians experiment with, if one prophylaxis therapy isn't working adequately, trying another one. I think the jury is still out on that. And as you can imagine, these are expensive therapies, so payers don't really appreciate that. But it does happen for a small percentage of patients.
Okay. And on that point of payers, it's a relatively mature launch now. What can you say about ease of getting this drug covered?
Payers, particularly in this space, never make it easy. And so we've put a lot of investment in our people, in our teams, to help as much as we can help patients and healthcare providers through that process. If the prescription is complete, if all information that the payers require about the patient's diagnosis, their background history, how they've done on previous therapies, if that's complete, we're going to get them more likely to paid therapy. So it's really about the diligence in telling the story to the payers. And so that's a big part of our strategy in getting our paid rate from sort of the low 70s% where it was 70% end of last year up to 85% over the next few years.
I think a question that I often get, which is probably good to discuss right now, is if a patient is switching from another expensive HAE therapy, what is it that the insurance provider is trying to verify with you before approving your drug?
There really shouldn't be anything. They will take that opportunity to make things a little bit difficult. But if a patient got approved for another therapy before and we're doing well on that therapy, they are highly likely to get approved to be on ORLADEYO.
Okay. Now let's look at the longer-term prospects for the drug. Jon, you've talked about getting to at least $800 million in sales by the end of the decade, 2029. What's going into that assumption right now based on what you're seeing here?
Yeah. And that's just in the U.S. So there'd be another $200 million coming ex-U.S. that would get us to the peak globally of $1 billion. Yeah. So the first part is how did we exit last year? We exited with, Charlie, I think it's 1,100 patients in about that equates to about $310 million as a base. And then on top of that, we're expecting, on average, 200 net patients per year. Last year, we had 321. We're off to a really good start this year.
The 200 net includes patients that will drop off there?
Yeah. So it's net. Yep. And so in the early years, we're going to do better than that. In the later years, we're going to do less than that, but the average is $200 million, and we think that's a reasonable number. The third is the PAP to paid, so free drug to paid. And Charlie can talk more about this, but we're at about 70-ish%, high 70% in commercial patients. We're at 50% with Medicare. We can talk more about that, but we expect that to be improved significantly next year and the years beyond. But to get to 85% is another $100 million, and then a very modest price increase each year. This year, we did 5%, a net 3.5%, and you could do less than that, and that's another $100 million that gets you to $800 million.
Okay. Now, what is the split among payers right now?
Our payer mix has been very consistent since launch, so 60% commercial, 20% Medicare, and most of the last 20% is Medicaid, a little bit of VA, and other government payers.
Jon mentioned just now one thing that you're focused on is to improve your Medicare status. What's been the deterrent up until now for Medicare to be allowing more coverage?
The Medicare itself has actually not been the deterrent. So going back to 2022, that 20% of our patients who are Medicare actually had the best coverage. We had about 80% of them getting paid. Last year in 2023, the Copay Assistance Fund charities that help patients afford their coinsurance ran short of funds. They had to put a lot of people on waitlists. And these are Medicare patients on fixed incomes, and paying a big out-of-pocket copayment was difficult for them. And so rather than have them drop off drug, we chose to provide free product for the year to help the patient and hope that we could get them back in the future.
Next year, with the full implementation of the IRA and the max out-of-pocket goes to $2,000 per patient, we think that may help the charities have more money to spread further, and it'll also just generally make it more affordable for patients. The other piece of it is that $2,000, they can, of course, spread out over a 12-month payment. So it just makes it easier for patients to afford. And that can get us back closer to 80% payment rate in that segment.
Do you expect any negative impact from IRA?
Over the long term, we anticipate that the payers that administer the plans, they're picking up a bigger portion of the payment by the rules of the IRA. So we expect them to contract more in the future. That's all built into our gross to net may go closer to 20% versus the 15%-20% where we've been. But that's all built into our long-term projections.
Okay. So the impact of that would be in the discounting that you might have to offer?
Correct.
Okay. Got it. What about reauthorization dynamics? Can you just talk about what it started off with and what it's evolved to now?
Yeah. I have to applaud Charlie and his team to start because this is not easy. Every company in the first quarter faces reauthorization. And while offices are going through that process for their patients, you have to offer free drug. And we highlighted it as an area that we could improve upon. Charlie made changes over a year ago in adding certain people to certain areas that could help with this, and the result was fantastic in the first quarter.
Thanks, Jon. I think the big metric that we point to for Q1 this year is that we did as many benefits investigations in January as we did in the whole first quarter of last year. And so that's just the first step. But if that goes quickly and the payer goes to paid therapy, it gets us on paid sooner, so less free drug. If it's going to be a more difficult process, then we know that sooner, and we can act with a healthcare provider to provide that information I was talking about earlier. And so it gives us the ability to, again, get back to paid with a higher probability and sooner. So the team did a great job. I think for next year, we even learned some more things. So I think next year we'll do even better based on what we learned this first quarter.
Okay. Got it. Now, in terms of the types of patients that you expect to onboard on a go-forward basis, let's say treatment naive versus switch patients. Like you said, most patients are on something at some point before they see ORLADEYO. But for those that are caught early in the cycle of getting diagnosed with physicians, where do you think ORLADEYO will fall in the repertoire of offerings that doctors make?
First choice?
Yeah. I think we're certainly much closer. We're the number one choice. So I think we probably get close to 50% of those patients. And we know this just from the market research we do with doctors. If it's a prophy-naive patient, they're much more likely and increasingly likely to prescribe ORLADEYO. And so that's been about 50% of the patients coming to ORLADEYO. Then the other 50% are switching from other prophy therapies. And that ratio.
Has that mechanism or that split stayed the same?
It's been really consistent since launch. So I love that split because that gives us more predictability in our future growth.
Is there a reason why that can't continue to grow in terms of taking a pill every day might seem easier when being pitched? I guess what makes a patient not choose that?
I think the biggest thing that makes a patient not choose it is that, fortunately for patients, because they have more therapies, more of them are under control than they used to be. So they are not looking as much as they used to for another option. But still underlying that, most patients would prefer to be controlled with an oral drug if they could. So the key is getting physicians and patients to have that conversation in the once or twice a year that a patient comes in is to have that conversation. And as physicians get more confidence in the drug, they describe ORLADEYO with more confidence, and that leads to a greater likelihood of switch. So that's a big piece of our confidence going forward towards $1 billion.
You're on to something, though, Tazeen, in terms of the dynamic of the market. The fact that we're getting 50% of newly diagnosed patients to try our drug and a smaller percentage than that but growing of the people that are on therapy tells you exactly that an oral is your best first choice and why wouldn't you try that. But if you're controlled, maybe I'm not ready for that yet is the dynamic that we face. And quite frankly, the dynamic everybody walking into this space will face.
Now, in terms of the physicians that you've been able to convince to write a script for ORLADEYO, are they sticky? Is it that they try it on one or two patients, and if they like it, they're trying it on as many patients as they can? Or is it still early enough where you're just trying to get sort of a broad reach in terms of awareness and getting docs to try it, if you know what I'm asking?
Yeah. You might want to talk about how that's changed since the start of the launch.
Yeah. I would say, first of all, we have a really broad and broadening prescriber base. And so the first part of your question, the number of doctors, a big HAE treater probably has 10 HAE patients. And that's about half the, I should say that's about 500-600 physicians in the country. We've had really good penetration in that group, and increasingly, they are going to that second, third, fourth patient. But then there's this long tail of other physicians. And our prescriptions have been really evenly split between those two groups. So about 60% have come from those top 500 docs, and 40% are coming from the rest. And the way I like to say it is, if you have an HAE patient, our team will find you, and they will talk about ORLADEYO. And I think that's been a big part of our success.
So one other point that I think is really important or a couple of other points to make is, one, the cycle time of a doc seeing a patient has dramatically changed in the last decade. So a patient could be showing up in the emergency room every month or even more frequently. Now they see their doctor who manages their HAE maybe once, maybe twice a year. So you don't get them to have that conversation. You got to wait another year or six months to get there. And I think that the idea that patients continue to learn more about the opportunity to go on this drug and start hearing from other patients or doctors, maybe even more importantly, doctors tried it in a couple of patients. Maybe it didn't work in the first two, and then they tried it again later in a few more.
When they get that patient that it really works in, you start to see the expansion of the prescribing from that doctor.
What would you say is the general physician awareness about ORLADEYO? Has every targeted doctor been visited by your sales rep?
Pretty much. What I would say is it's second to none in the space. I mean, we are really topping out in terms of awareness. As Jon was alluding to, I think where we have an opportunity is more patient awareness. And so we love, for example, last summer was the first HAEA Patient Summit that happens every two years. It was the first one that happened live since ORLADEYO launched. The next one is the summer of 2025. So those events where over 1,000 patients and family members get together, those are great opportunities for us to kind of catch up on some of the awareness.
Is there an opportunity, you think, to do DTC to this population?
DTC is not DTC in terms of TV commercials, right? But we do a lot of digital work, and our team's really creative around that. And we're seeing some really good results in terms of reaching patients and being able to track that through to start forms. And so as our marketing team has learned more, they pivot and really focus on what is working. And yeah, as we see more of that, we'll do more of that. But it's not like the $10s of millions that we see from much larger brands.
Charlie's team has done a really good job, too, of prospecting and scanning all the data sets that we can get out of, "Hey, there's somebody who prescribed HAE medicine in this part of the country we didn't know about." So we're getting better and better at that each year.
Yeah. And what is your conversion rate between the time a patient's on the Quick Start and flipping them to fully paid?
It's kind of bimodal. So the great majority will flip within a month. So most of our patients do start on Quick Start, but then they'll flip to paid within a month. And then maybe 20% or 30% of the patients are going to take longer. And they may be on for several months, and then some of them are even longer. And we're happy to do that because it gets the patient experience, physician's experience, and eventually will break through to the payers.
Is the idea behind it that as soon as you find a patient, you just want them to have the product as soon as possible?
We do, and that was a big part of the strategy at launch. Now we will sometimes slow it down just a little bit, and it's back to that expectation setting. We want to make sure that everything is ready to go. Don't rush it too fast. Get the drug to the patient before all the conversations have happened, before all the information needed for the payers has been collected. So we're willing to slow it down a little bit to improve the outcome.
Okay. Now, we've talked about a lot of the benefits of ORLADEYO. As you look at the HAE market and as it continues to evolve, Jon, I was curious about what your thoughts were about the potential for gene editing or gene therapy or even another oral to come into the market and your confidence about your product profile and where it would stand there?
Yeah. I think, first off, we have a massive head start. I mean, it's going to be somewhere, depending on which next product, somewhere between 4 and 8 years, maybe longer for some of the therapies that are being evaluated. So that just allows us to build the brand, get doctors and patients to have experience. And then I think the second piece is the drug really works in some people. And so what we've learned very clearly in this space is what is the incremental benefit that causes you to switch. And if you're controlled, you're not having attacks or very infrequent attacks on a once-daily capsule, what's going to be there that'll cause you to switch? And gene editing, I think what we hear I mean, for some patients, that could be spectacular, especially if nothing else works.
For you, I think what we hear from the patient association and doctors is, what's the long-term risks associated with that? Does the ability to prevent attacks sustain itself with one therapy, and what's the safety?
Then as you think about physician relationships, do you think that doctors will be sticky once they're comfortable prescribing ORLADEYO, let's say another oral option comes along? There are therapeutic areas that we've looked at, for example, in ophthalmology where a doctor will pick a wet AMD drug, and that's the one that he or she uses. Do you think that that could be similar in the HAE space?
Yeah. I think as we continue, I think that confidence piece that we talked about before, as you get more patients that have done really well, that's what causes the stickiness: "Oh, yeah, they have a shot at getting injectable efficacy with a once-a-day pill. So why wouldn't you try that, and why would you switch?" Yeah.
Okay. In the few minutes we have left, I did want to just touch upon the pipeline. Can you talk to us about what your view is about continuing to invest in next-generation assets and what we could expect to see the rest of this year and into next year?
Yeah. I think one that maybe doesn't get enough attention but should is the pediatric submission for ORLADEYO. So most times with a pediatric formulation, you have a horrible-tasting liquid that you put some cherry flavoring into it, and kids still spit it up and taste horrible. And what our team did is this really elegant and it's in other products on the market, but mini tabs that are these coated beads that are tasteless and dissolve into the active product when they get into the acidic environment in the gut. And you can sprinkle it on pudding. You can put it in a glass of water, and they can drink the water down. And so for little kids versus an injection, it's a game changer for parents in particular.
The other thing that we really are excited about with this is doctors have been hesitant to put patients on prophylactic therapy because of the burden of the therapy. And if we could get to a point where doctors and parents are agreeing that they want to treat their kids early with prophylaxis and kids forget they're even having attacks or never experience the life their parents did with attacks, it could be a whole new generation of HAE patients and a different life. So I think that one we're really excited about, and we plan to file next year. And we expect that it'll be a priority review and a six-month review. So we're excited about that. Then beyond that, we've got a KLK5 inhibitor that's going into the clinic in healthy volunteers this year. This is for Netherton syndrome.
It's a horrible skin disease that can be lethal in babies and just cause a lot of morbidity in adults. And there's nothing to treat them right now other than symptoms. And we've got a drug that goes right at the target, and we're really excited about that with this fusion protein that we have. And then we've got an avoralstat for DME. You talked about DME, and there's a decent population that doesn't get controlled by VEGF, anti-VEGF therapy. And so if we get a kallikrein inhibitor in the right space in the back of the eye to stop the swelling like an HAE, could we help with the vision loss of patients with DME that don't get controlled with VEGF? That's super exciting. We expect we could have some patient data by the end of next year.
Then there's a bunch of other complement-mediated programs that we've got on a number of different targets that we're really excited about. I think the last thing is we're doing all this and accelerating the path to profitability. This quarter, we were less than $1 million off of operating profit. We will be at operating profitability this year, second half of next year, cash flow positive in 2026, cash flow positive for the year.
Do you think that the expenses that you've got planned for the company can support advanced development of all of these programs if it ends up the case that they all warrant moving forward?
Yeah. I mean, the chances of all of them moving forward, as we all know in this industry, is low. But God, if it can happen, that would be great. But we'd also look for partnerships. If the financial burden is too much, then we've got more to partner, so.
Okay. Great. With that, I think we're out of time. So thank you very much for joining us today in Las Vegas. And thanks, everybody in the room, for listening to the presentation. I hope everyone has a great rest of the session.
Yeah. Thank you, Tazeen.
Thanks, Tazeen.