...Welcome to the Cantor Global Healthcare Conference. I'm Pete Stavropoulos, a biotech analyst at Cantor. With us, we have BioCryst Pharmaceuticals. A pleasure to introduce our CEO, Jon Stonehouse, and CCO, John Bluth. Welcome.
Yeah, thank you for having us, Pete.
Hi, Pete.
I guess, let's start off, you know, brief introductions of yourselves and an overview of the company for those who are not familiar with the story.
Yeah, so before John and I start, we're likely to say some forward-looking statements, and those statements have risks, and they can be found on our website. I'm, as you said, Jon Stonehouse, CEO of the company. Actually approaching my 18th anniversary at the company.
Wow.
John Bluth, Chief Communications Officer with the company, and been with the company about six years.
Yeah, so for those that aren't familiar with the company, we're at a really interesting point in the nearly 40-year history of the company, where we have Orladeyo for preventing HAE attacks. That is a growing product. It's gonna do over $400 million in revenue this year, and we believe it's on a path to $1 billion. We're gonna start getting some of our pipeline back into the clinic, and we're really excited with 17-725 for Netherton syndrome and avoralstat for DME, and then we've got a series of other earlier stage programs, and then we're heading towards profitability, so we're in a really strong financial position. So, a very interesting point in the evolution of our company.
Very nice. So, you know, let's start with your approved therapeutic, Orladeyo, for the prophylactic treatment of HAE or hereditary angioedema. You know, just give us a synopsis of HAE and, you know, the importance of actually treating it, for those who, again, are not familiar.
Yeah, it's a genetic disease, usually passed down from one family member to the next. It can have spontaneous mutations, but it's typically a family disease. It affects a pathway of contact activation that causes leakiness of vessels and swelling, and the swelling can be in the abdomen and cause pain that's, you know, I've been told is equivalent to bowel obstruction. It can be in the hands and feet, where you can't, you know, do normal daily activities, and it can be lethal if it's in the throat area, where you have a laryngeal attack that cuts off the airway. What's interesting is, up until about 15 years ago, there was really nothing to treat these patients. Since then, we are the eighth product to come to market.
There's a number of products behind us, but the life of an HAE patient is dramatically different than it was 15 years ago.
All right, you know, there are two different markets, you know, for HAE. As I mentioned, Orladeyo's-
Mm
... prophylaxis, and there's also on-demand. Just, you know, give us a, an overview of your perspective on the dynamics of those markets.
Yeah, I think the general statement is, a person would much rather be preventing an attack.
Mm
... than treating an attack. Because while the therapies to treat attacks are good and effective, you're still dealing with that, and so, the market has evolved as there have been more prophylactic therapies. And in the United States right now, it's about 70% prophylactic, 30% on-demand, and we expect that that's gonna go into the 80s and possibly beyond.
Okay. You know, Orladeyo's key differentiator is that it's an approved oral prophylactic option. You know, often when we're discussing the HAE space, you know, I hear that it's crowded. But if a doc patient wants an oral prophy, Orladeyo is the only choice. So to get those not familiar with your program up to speed, just, you know, again, provide a quick recap of Orladeyo's efficacy shown in the clinical trials, and how efficacy observed translated into the real world.
Yeah, and I think your point about what we saw in the clinical trial and what we see in the real world is an important one for investors. Because what we saw, the measure for a clinical trial is reduction in attacks base compared to placebo, and we saw a 44% reduction in attacks, which was honestly underwhelming to us. But what we saw further in the data was a responder analysis that said that 50% of the patients had a 70% or greater attack reduction, and 20% of patients had a 90% or greater. And since then, we've run an extension of our long-term safety study up to 96 weeks, and we see that patients get a 91% reduction in attacks, and that's really the real-world evidence. All of these prophylactic therapies work.
They all work about the same. As John says, there's not a lot of headroom for additional improvements in efficacy, and in the case of Orladeyo, for those that it works in, it works really well, and then there's some patients that it doesn't work in.
Okay, so you have the efficacy standpoint, but how about, you know, attack severity?
Yeah. In general, and in the case of Orladeyo, there's a 76% reduction in attack severity, and I think in general, when you're on prophylaxis therapy, you've got a certain level of control of contact activation, and so you see that those attacks are less severe. What's that... What does that mean? Less grabbing for rescue medicine, shorter in duration, less part swell.
All right. I'm just gonna go back for a second. You know, and you said you were underwhelmed with the efficacy, but-
... you're on-
On the clinical trial.
Yeah, I said, but you're on the way to 400 million, right?
Yeah.
And so-
Because it works,
and it works.
420 to 435.
Yeah, I mean, because it works, right? So this, this is the big difference that everybody needs to know, is that in patients, and it's, you know, around 60% of the patients that try this therapy, in these patients, they see injectable-like control. They're not having attacks. If you're having attacks on Orladeyo, you go back to what you were on before.
Yeah.
That is a super important point, and I think as investors have understood. Certainly, as doctors have had more experience.
Yeah
... the enthusiasm to treat more patients and give it a try is going up and up and up.
Yeah, we've seen a real progression, I think, in the last year, year and a half, from doctors seeing the evidence we've been providing on the real-world efficacy to actually having their own experience with patients having that exact type of response, and that's building the momentum and enthusiasm and confidence doctors have to give their patients a chance to have that experience with Orladeyo.
Okay, we'll just continue a little bit. Is there data that can actually guide which patients will respond well or not?
Yeah, no. The answer is no. There's no phenotype. So really what you have to do is you have to try it, and what our job is, is why wouldn't you try to be on a once daily oral that controls your disease? You know, what's the downside? You go back to what you were on before. So that's what we've really been pushing, and we've been pretty successful.
You know, so you had the APeX- 2 study. GI-related treatment-emergent AEs were observed. You know, some of the debate was that this may hinder uptake. You know, can you just talk about these events and have they impacted uptake?
Yeah, I think doctors have figured out how to manage that, honestly. It's a mild GI adverse events, and it goes away within, you know, a couple months. So what you'll see doctors do, they. It's not really even an issue for them anymore because they'll tell, you know, take it with a different meal. You know, if somebody's taking it with a cup of coffee and a croissant in the morning, that's probably not enough. Maybe they take it in the evening, and then they adjust, and it's no longer an issue. What we're pushing for is making sure that the offices and the healthcare professionals set the expectations properly, so we don't have somebody quit too early. We've actually had 10% of the start forms as patients coming back to Orladeyo to try it a second time.
Okay. You know, I guess a key question, you know, for you is, is around the demographic of patients that you've captured, you know, since launch. You know, for the new Orladeyo users, you know, just describe the characteristics of the patients, and prior experience with other prophylactic treatments, on-demand and treatment-naive.
Yeah, so, about 52%, since the launch or approval, are patients that are on prior prophylactic therapy. You know, and it's mostly Takhzyro patients that-
Mm-hmm
... that we're getting switches. 32% are coming from on-demand therapy. I think that's gonna shift as fewer and fewer people are on on-demand, and it's gonna be a bigger percentage going to prophy switches, and then there's about a 17-ish%, treatment-naive.
You may have the data, you may not, but I'm just curious, you know, you're encouraging people to stay on, or the physicians are encouraging the patients to stay on, who may have, you know, transient GI. Just curious, you know, if you look at, you know, prior prophy users, you know, and the experience that they had, are they more likely or not likely to sort of stop because of a GI, or-
The GI-
... they're gonna buck through it? Like, you know.
The GI adverse events is a tiny part of the discontinuation at this point in the launch of the drug. The bigger portion of discontinuation is lack of efficacy.
Okay.
So of that 40% that no longer take therapy, it used to be 50/50 GI, and now it's way overwhelmingly lack of efficacy because we've managed the GI adverse.
That split of 60% retention, 40% discontinuation, has been extremely stable now.
Yeah
... you know, into the fourth year of launch. So I think we have a good picture of how the patient profile is gonna-
Shift
... emerge, yeah.
Yeah.
Right. And those that switch, you know, sort of what are their reasons switch to Orladeyo? What are their attack severity levels, you know, before prophylactic, you know, and then while on prior prophylactic?
Yeah, I mean, people that are on prophylactic therapy, they'll have an occasional breakthrough attack, but they're controlled. And, and if they switch to Orladeyo and they have success, they continue to be controlled. Some of our best switches are patients from-
Yeah
... that were on Takhzyro.
Okay, you know, and are you seeing on treatment-naive patients being prescribed Orladeyo, and sort of what proportion do you expect will change with time?
Yeah, like I said, it's about 17% of the patients that we have on therapy are coming from treatment-naive, and I think the market share that we have there is probably higher than switches because, if you're gonna... you're new to prophylactic treatment, why wouldn't you try an oral first, right?
I agree. Yeah.
Yeah.
That's what I would go for. But, you know, with a more real-world experience, you know, do you expect retention rates to sort of increase?
Yeah, I think we've made some small, incremental improvements, but I think the key that John said is, when you look at discontinuations, the bulk of them come within the first three months, then a little bit less than three months to 12 months, and once you get out to 12 months, we have very little drop-off-
Yeah
... of patients. So and why is that? Because they're controlled, and they're taking, one capsule once a day.
And what's interesting is when you look at the retention rate that we have around 60%, and you also look at the injectable prophy's retention rates at a year.
Mm-hmm
... it's also right around 60%. So, not every drug works for every patient, but when a drug works well for a patient, they're pretty sticky.
Mm-hmm. All right. And so, like, you know, there is competition coming on the horizon, most likely, and it's, it's all about the frequency of dosing. So we're going back to IV, possibly sub-Q. Frequency and dosing, so, you know, there's one agent being developed every three to six months, is sort of their target product profile. You know, how do you think that may impact oral daily demand?
Yeah, I think if you're controlled on a once-daily oral medicine to prevent your attacks, what incremental benefit are you gonna get from another therapy? Injectable, less frequent? No. You know, if it goes out to three to six months... By the way, that's a long way from here.
Yeah.
And there's plenty of risk between here and there, but I think that gives us more opportunity to get more people to try Orladeyo and get people that have success and see the great control of their disease in one capsule. So we don't expect that those changes in profile will cause somebody to say, "Yeah, that I wanna go on that because it's massively different than what I'm doing today.
All right, you know, you have mentioned, I guess as I was going through or listening to some of your presentations, that 52% of allergists and immunologists are likely to prescribe Orladeyo to more patients, up from 29% in early 2022 and 2023. You know, I can guess what the driving factors are, but I do wanna hear you say what you think they are.
Yeah, I mean, one of the things we've started to see towards the tail end of last year, and certainly throughout this year, is more confidence by healthcare providers in the drug. And so, you know, when you have about a 60% success rate with patients, they may try the first or second patient, and it may not work, and they may be less enthusiastic to try another one. And we've, with the real-world evidence that we've shared and the long-term data that we've shared, gotten physicians to try more. And now, all of a sudden, they see injectable-like efficacy with a once-daily drug, and so that enthusiasm is causing them to prescribe it more, and I think that's what you're seeing in the market research.
Right. And then, when you do look at the initial demographics of physicians, you know, who did prescribe, Orladeyo, versus, the current type of physician, you know, is there a difference, you know, in terms of like, you know, are we looking at the HAE specialty centers, or centers of excellence, versus, your community immunologist?
No, I think, I think it's across the board. You know, we've said that 50% of all the prescribing comes from 500 physicians that are either at big institutions or big community practices, and then there's 1,200 physicians that cover the other 50%. And that we're getting prescribing from both of those populations at a pretty good rate.
All right, and then, you know, what strategies are you gonna use to grow Orladeyo's market among increasing competition? You know, what are the commercial efforts being placed to activate patients who are candidates for Orladeyo?
Yeah, our current campaign right now is efficacy and convenience, and really stressing that it's both. This idea that you're willing to sacrifice efficacy 'cause it's convenient is just not a true statement in this population. Efficacy is paramount, and so we're gonna continue to produce real-world evidence. We're gonna continue to produce health, economic, and outcomes research data, and I think the confidence level that I described before is gonna continue to go up.
We're gonna bring the product to children.
Yeah.
That's the next place we're gonna go with Orladeyo.
I have a question for that, though. I do have a question about, how, you know, KalVista is developing an oral plasma kallikrein inhibitor for on-demand HAE. You know, it has shown, you know, efficacy. I don't think there's any doubt about that. In the phase III, NDA is currently under review. You know, how could an efficacious oral acute HAE agent sort of increase the demand for Orladeyo?
Yeah, an all-oral option sounds pretty attractive to me, right? You're taking an oral prophylaxis. You have a breakthrough attack, you take an oral acute medicine. Just makes a lot of sense to me.
All right. To the pediatric population, treatment paradigm, what, what's the treatment paradigm for this population currently? And I know that you do have actually a pediatric study on the way. Where are you with that, and timelines for filing in the pediatric population?
Yeah, we're gonna submit the application in the U.S. next year. Right now, children in the U.S. have the opportunity to take Takhzyro, which is an injectable that was recently approved for children down to 12 months of age, I believe, and we are going to submit the application next year with an oral granule formulation. So these are like sprinkles you can put in water or milk. It's just much easier for a child to take, so that's exciting for parents of kids with HAE, and it's a hereditary disease, so parents who may not be on Orladeyo, but may be on another prophylactic medicine, who get their children on Orladeyo, if their children have a good experience, may be encouraged to expand into Orladeyo. So we're excited to bring that solution to parents, kids, and families.
And you know, how many pediatric patients are there in the U.S.? You know, so what's the opportunity to actually grow that franchise?
Yeah, the addressable population is probably about 500 in the U.S., so it's not huge. But to John's point, we think there's this halo effect that's a potential where it's a family disease, as I said at the beginning, and so if a child's doing really well on the drug, and the parent hasn't, you know, made a decision to switch from an injectable, they may, and I, you know, anybody that has children that you've had to give, you know, vaccinations or any kind of injections, knows that being able to have sprinkles on soft food or water or milk and take it that way, versus having to give an injection every two weeks or once a month is a game changer. So we're really excited about bringing this to the HAE community.
So you said about five hundred in the U.S., so is that, you know, the addressable market? Or, you know, what percentage is of that population, needs a prophylactic?
That's the addressable market.
That is the addressable market.
Yeah, yeah. Kids that are having... normally, you don't see HAE attacks until puberty, but there are some families and some children that you start seeing it at a couple years of age.
Okay.
It's really serious.
Yeah, I couldn't imagine. So, you know, thinking about reimbursement and reauthorizations, you know, how's the process going for both Medicare and Medicaid, and will it be impacted by the IRA?
Yeah, I think in general, we're making significant improvements-
Mm
... in getting patients to paid therapy. We've put in the infrastructure and increased the size of our teams to help with that. And just an example, we've moved from 71% of patients being paid last year to 74% this year. So we're making some really good progress on that front. Specifically to Medicare and the IRA, you know, we're really curious about what the effect of going down to the out-of-pocket $2,000 spread out over the course of the year for Medicare patients will do to getting more patients onto paid therapy for Medicare. So we'll see how that plays out next year, but we're pretty optimistic that that'll be helpful.
Can you make a forward-looking statement?
No. I think there's real opportunity. We started out at 80% paid when in the first couple of years of launch with Medicare, and then there were shortages in the charities, and it went down to 50%. We're now at 55%, and so it's a meaningful chunk of the business if we see an improvement.
Yeah. Then, you know, briefly touch on your ex-U.S. commercialization accomplishments and efforts for Orladeyo.
Yeah, I mean, the goal is to get Orladeyo to patients around the globe. We have a team in Europe, we have a team in Canada, we have a team in Japan that are doing a fantastic job, and then we've got distributors helping us in other parts of the world. Right now, the ex-U.S. contribution is about 11% of global sales, and we see that growing to 20% over time.
Right. Was there recent news out of Canada, or am I confusing here?
Oh, the appro-
Other-
... the provincial approval. Yeah, pricing.
Yeah, there was some approval in the public health-
Yeah
... space in Canada. Patients in Canada with private insurance had access to Orladeyo, but now we've completed negotiations and can make the drug available province by province, which is great.
Okay.
And should make an impact.
Oh, for sure.
Okay.
Sure.
I guess last question before we get to the earlier stage programs. You know, how does the company think about profitability? You did mention a little bit earlier, but if we go into a little bit more detail. You know, you have an approved agent. It's generating revenue, and you know, how can that translate into the profitability, and what are the timelines? And just touch on the capital structure, including royalty and debt.
Yeah. I'll let John take the royalty and debt, but the goal here is operating profit this year, cash flow positive in the second half of next year, and then full-year cash flow positive in 2026. And we are well on our way to accomplishing that. And the goal is not to be dependent on the capital markets anymore for capital.
Yeah. Our royalty structure with Orladeyo is with Royalty Pharma and with OMERS. They're our two royalty partners, and it's a tiered royalty structure. So, above $350 million in revenue, the royalty steps down to, I think, 7.5%, and above $550 million in revenue, it's zero on the royalty. And the royalty with OMERS will fall away once they are made whole. So on a blended basis, the royalty on Orladeyo, because we've now gotten revenue into that middle tier, is starting to decline, and by the time we hit peak sales and the OMERS royalty falls away, the blended royalty will be in the 4% range on Orladeyo. Separately, we also have a debt, about $320 million of debt with Pharmakon.
Mm
and that's due in 2028, and we can decide what we wanna do with that. As we get closer, we'll have a lot of revenue at that point, opportunity to refinance it, look at other options. That's where we stand on royalty and debt.
Great, great. You know, so I guess let's move to your earlier stage programs. You're expanding your rare disease pipeline, you know, and going through something called Netherton syndrome. Just give us a little color on the syndrome and the unmet need there.
Yeah, it's a horrible disease. So basically, what happens is, it's a genetic disorder where you overactivate skin turnover and basically lose your skin. So babies that are born with this disease, the mortality rate is really high, because, you know, they don't have the... They're dehydrated, they're susceptible to infection, and the like. And so, they can survive and get to adulthood, but they're still, you know, covering their the areas of the skin that are turning over fast with creams and, you know, anti-inflammatory medicine. And this will actually. Our goal is to restate the normal turnover of skin with our KLK5 inhibitor.
All right. So number one, what's the mechanism of action and therapeutic hypothesis?
Yeah, so, so the enzyme is a serine protease, KLK5, and you wanna be able to inhibit that to restore the normal skin turnover. And so we have a fusion protein that is a millionfold more potent than the natural ligand, and it would be a sub- We're hoping that it's a sub-
...cutaneous injection, and we're moving into human studies shortly, and we're really excited about advancing this program. 'Cause we've largely been a small molecule company.
Mm-hmm.
We've taken the same approach to structure-based drug design, only instead of moving chemical segments in an enzyme active site, we're moving amino acids around to build a very potent inhibitor.
Okay, and, what data-
There's nothing available, to your point.
Yeah.
What's the unmet need? There's nothing available to treat the underlying disease.
How many patients are there in the U.S.?
Yeah, this is interesting. It's one of these rare diseases where there's no diagnostic code, and so right now we estimate that there's about 1,700 patients in the United States. But I wouldn't be surprised if that doubles or triples when there's better diagnosis and there are therapies.
Right, and just, you know, what data actually gives you confidence to pursue, what was it, KLK5 inhibition?
Yeah, I mean, the data, the target's validated, and so we're not taking, you know, target risk in this case, and we're really looking forward to generating data later next year to show that this in fact affects the turnover of skin in these patients.
Anything else you'd like to point out about this program?
No
... before we talk about it?
No, we're super excited about it.
Yeah
... 'cause the unmet need is huge. We have, every year we have a patient open house, and we had people representing the FIRST organization and a patient with Netherton syndrome, and it's just such an important patient population with really nothing to treat right now. So we're going fast.
All right. So you know, let's talk about one of your other programs. You're repurposing avoralstat. I'll just-
Vorolstat, yeah
... Yeah, you can finish it off for me. A plasma kallikrein inhibitor, you know, from HAE, you know, to DME. You know, there's been a number of programs evaluating plasma kallikrein inhibition for DME, and you know, there's been limited signals of efficacy. So, you know, what gives you confidence to go into this indication with a pKal inhibitor?
Yeah, so first off, I think it's very clear in the scientific literature that kallikrein, plasma kallikrein, plays a role, and it's very similar actually to HAE, only it occurs from diabetes in the back of the eye. So same contact activation, you inhibit kallikrein, you stop the swelling. So we're really excited about that. So why have others failed? I think there's three things that we've learned from the previous trials. You've got to have a potent molecule. You have to get it in the right spot, so get it in the back of the eye. Giving it orally to make it diffuse through the plasma and through the systemic circulation is probably not a good idea. And then it's got to stay there long enough to do its job. And so with avoralstat, it's actually even more potent than Orladeyo.
We're using the Clearside device to get it back through the suprachoroidal space to where it needs to work in the back of the eye. And, you know, in animals right now, we're seeing it stay there for up to six months, so it could be every six-month injections, which is really exciting.
So I think you need to explain exactly what that is. You said Clearside or?
Clearside.
Clearside.
This is an auto-injector company that they have an approved device with Bausch + Lomb for a steroid, and it's instead of giving an intravitreal injection, it injects it into the suprachoroidal space, which basically bathes the back of the eye with the drug.
Okay. And so, you know, when you do think about clinical development, you know, what's sort of the population that do you think that you're gonna see activity and signals of activity? Is it the treatment-naive patients, VEGF refractory? You know, just thinking about how you designed the study. You know, and the reason why I ask is, you know, as you move into VEGF sort of resistant, you know, it may be difficult to see a signal.
Yeah, so we're... The population we're going after is all, everybody. And the reason is that at first we thought it would, it, kallikrein was subsequent to VEGF, but there's a growing body of evidence that says it might be independent of VEGF, and so we're going after all comers in this first study.
When will it initiate?
Yeah, good question. So we're heading into a patient phase I study sometime towards the end of the first half of next year. And we will be able to generate, and we think, you know, towards the end of next year, we'll have at least some sense in a small number of patients of activity. Do we see in ocular CT scans a decrease in swelling? And do we have some sense of what the dose and dose frequency will be? So really excited. With that and the Netherton syndrome data, you know, second half of next year, I think it's-
Exciting time.
Yeah, leading up to a great year. Yeah.
All right, just really quickly, just because I love this class of drugs, complement inhibitors, you know, how are you thinking about that? And, you know, and it's basically, you know, there are a number of complement inhibitors out there. You know, what's the need for another one?
Yeah, it because there are so many different diseases, and there's still a huge unmet need, and it's a really complicated system, right? You've got the alternative pathway. You've got the classical and lectin pathway. You've got the terminal pathway. And so we've got either molecules or small or large molecules that we're pursuing on all of those pathways to address the, you know, the still unmet medical need for patients suffering from complement-mediated diseases.
All right, and you're going after C5 and C2?
Bifunctional, where we actually have a C2 that also binds to the alternative pathway. 'Cause some diseases, a single pathway is not enough to treat, and they still need further treatment.
And the C5 and C2 programs are oral programs also?
Oral. They're oral.
Yeah.
Yeah.
All right, last question. If we're sitting here a year from now, when I ask you, in the last twelve months, what are the key value-creating accomplishments for BioCryst, what would you like to say?
Yeah, I think we will be either approaching at or exceeding the halfway point to $1 billion with Orladeyo. We will have a pediatric indication filed and getting close to launching in pediatric patients for HAE, which is really exciting. We're gonna start to have data from our clinical trials, and I think that opens up the gate to years to come, where we're gonna have a series of data updates and data events coming for the company. And we're gonna be profitable. We're approaching profitability, and so you combine all that, and we think it's a really interesting company.
All right, great. I would like to thank you for coming to the Cantor Global Healthcare Conference. It's great to hear your story, and look forward to keeping in touch-
Yeah
... and having you here next year.
Yeah. Thank you, Pete.
Thanks, Pete. Thank you.