Pleased to be chatting today with BioCryst. We've known each other for a long time, and you've come a long way and done an amazing job with ORLADEYOs. Congratulations.
Thank you.
So I think with that, should we do some introductions?
Yeah, I can. So with me today is our Head of R&D, Helen Thackray, and our Head of Communications and IR, John Bluth.
You are.
I am Jon Stonehouse, CEO. We will be making some forward-looking statements, so statements have risk, and you can look them up on our website.
Okay. So with that, just, you want to provide a quick company overview so we're on the same page, and then we can dig in?
Yeah. Like you said, we've known each other for a long time, and it's been an interesting journey at BioCryst. But today we're in a spectacular spot, and that's because we have a product on the market that fills an important unmet medical need and is steadily growing quarter-over-q uarter - or I'm sorry, year-over-year for the third quarter. It was almost 36% in the fourth year since approval. That's pretty remarkable and a rare disease, and we see compound annual growth of about 20% all the way out to 2030, so on its way to $1 billion. So that's our anchor in the company, and beyond that, we have a pipeline. This was a drug that was discovered internally at BioCryst.
What's exciting about the pipeline, and Helen can talk more about this, is we have one product already moving into the clinic for Netherton syndrome and another one that'll move into the clinic next year for DME. So we have what we believe is another ORLADEYO in those two products and a pipeline, I'm sorry, platform that supports it. And then lastly, we're moving towards profitability. We should have an operating profit somewhere north of $40 million this year. EPS cash flow positive. We're approaching it in the second half of next year and full year EPS positive in 2026. So that's a place where very few companies get to, and we're pretty excited that we're there.
Excellent. Well, good. That's great. Are you going to (just to get this out of the way and maybe this question for Jon) do you plan to pre-announce in January?
I think so.
Yeah.
Yeah. We haven't said yet, but the last couple of years we have done that.
Okay. Good. Just want to get that expectation out there. Okay. Let's talk about ORLADEYO trends. So you've sort of described your path to $1 billion. Maybe you can articulate that again. And what are some of the, oh, here we go. He's all ready for the question. And what's the timing? Oh, it's 2029. Okay.
Yeah, but it's worth walking through. Because I think what you should take away from this is these aren't unreasonable expectations or assumptions that get you to the billion dollars, so it's driven by $800 million in the U.S. revenue in 2029, so we exited last year at $310 million. So that's the base. We expect from 2024, so this year through 2029, a net add of patients of about 200. Last year was 320-something, Jon. So we're well above it, and at some point, we'll be at it, and then eventually, closer to 2029, we'll be below it. But the average will be a net of 200, and we think that's very doable. We are working on improving the free drug to paid drug rate and to get it to 85%, and we think that's another incremental $100 million.
And then a very modest price increase over the 2024- 2029 time period gets you another $100 million. So add it all up, and you get to the $800 million.
Let's sort of break down some of these components. One of the things is patients coming on to treatment and kind of getting that average of 200. And I agree, it doesn't sound unreasonable, and you're well above that right now. But if patients haven't tried it yet and the four years it's been on the market, what is holding them back? How many patients are out there that have really not tried it? Because some have tried it and decided not to proceed forward, right? And then some people are just really happy with what they're on, which is the same thing you're going to experience when other competitors come, right?
That's right.
Happy where they're at. So can you-
Happy on ORLADEYO.
Right. Or happy on Takhzyro, Haegarda, or even Cinryze, if you can believe it. Or steroids, I guess, to some extent, too. So how do you know that you can get these additional patients?
Yeah. I think it's really important that you understand the dynamic in the market because it's probably different from assumptions you may have of other markets that you've seen. So when we entered the market, there were seven competitors in the marketplace in advance of us. And the days of running to the emergency room, having swollen attacks, calling your doctor, gone. People are controlled on their therapies. And so they're living relatively normal lives, maybe other than the burden of their therapy. And so they don't see their doctor much more than once a year. So if they don't see their doctor more than once a year, that conversation can only happen once a year. And the likelihood that you're going to convince them to switch off to something that's controlling them in that one conversation is zero.
And so what we've seen, and this is why you have that kind of steady state curve and the adds of around 200 per year, is it can take three, four, five, six, maybe ten conversations before you get to a point where somebody's ready to make that switch. And what we've been trying to do is say, what's the downside risk and what's the upside opportunity? The downside risk is if it doesn't work for you, go back to what you were on before that you were controlled on, and you'll still have control. What's the upside opportunity? You're taking a capsule a day. You don't have to carry refrigerated medicine on the airplane with you. You're not injecting yourself every two weeks, right? It's a freedom that patients tell us they forget they're sick. And that takes time. And it's taking time for us.
I think we're a great analog for the people that come behind us. It's going to take time for them, too.
Okay. And then the next thing I wanted to sort of ask about, just to drill into this further, is I think some of the kind of concerns some people have, just talking to a lot of investors about you guys, is can you kind of continue to sustain this when other new players come to market? And Pharvaris, with an oral option, is one, but there are other kind of less frequently injectable products as well. And so that's, I guess, kind of the key question. Can you sustain it through that period of time?
Yeah. And the answer is yes. But it's based, I think, in some very objective data that I'd like to walk you through. So every year, and this started in 2019 before we actually launched the drug, we run a really extensive market research analysis of the market. And basically, what we do is we survey 175 docs, and we turn over docs, so it's not the same group every year, 100 patients, same thing, turnover new every year, and over 50 payers. And we do a preference survey. And we put the best possible profile of our competitors. So for example, if something is once a month or once every two months, we'll give them both as an option, not knowing if it is once a month or once every two months. We give them the best timing.
So for example, garadacimab, we have it as in the market now, and it's been delayed. So best possible profile. And then we get their preferences from each of these different groups. Preference surveys have some bias in them. Even with these robust numbers, they have some bias. And so a lot of times, companies will just give it a haircut. We don't. We put it into a Monte Carlo simulation, and we show the interactions between these three groups and the timing. Once every 12 months, you see your doctor. And we simulate that. And we do 6,000 simulations to remove bias. And then we have an output. And the output is what we recently showed from this Monte Carlo analysis in our third quarter earnings call.
I don't know how many companies have ever shown this kind of detailed data before, but we basically show you the market at the bottom and how it grows from 7,200 to 9,300 patients in the 2024- 2033 time frame. We show the current patient share in 2024 based on the preferences, and it's pretty close to what we see in the market. And then we see the new entrants. And so what do you conclude from that? What I conclude is where the new players are going to get most of the share is from Takhzyro. And that makes sense because most of them are injectable. There's only one oral prophy, and it doesn't come for three to four years. The other thing that you see is the two market leaders, even with that, the two market leaders at 2033 are Takhzyro and ORLADEYO.
What does that tell you? Very sticky. And so the whole point is, and we hear this constantly in the marketplace, why would I switch if I'm controlled? If it isn't broke, why do I need to fix it? And so we're chipping away at that. But everybody that comes in after us is going to have to do the same thing. And if you're controlled on ORLADEYO, and we can talk about control, too, and I can have Helen talk about some of the data around control, why would you switch from a once a two?
Yeah. I mean, we face the same thing. It's very interesting with Vertex with CF. We're just really surprised with a new drug, just as an example. There's not a lot of motivation for people. In fact, people are really conservative, and they're somewhat afraid of switching. Because if you're good on what you're on, there has to be an unmet medical need, in other words. And then you're willing to kind of take the risk of doing something new.
Yeah.
If there's not, then you sort of don't. It's been very interesting to learn. I think there's a lot of kind of learnings there for others like yourself.
Yeah. And I think there's a misconception in the marketplace that ORLADEYO doesn't work well. It really works well. It doesn't work in everybody, but it works in the vast majority of people. And Helen, you might want to talk a little bit about the data that we put out at the college meeting because there were two really large studies that we had posters this past fall that I think are worth pointing to.
Yeah. Everywhere we've looked, every time we've looked, we've seen very consistently how well patients are doing on ORLADEYO. And so the most recent data is real-world evidence. It's from our sole source, Pharma. And it's in type 1 and type 2 HAE. We had 450 patients who we identified and followed. That's a huge data set for a very rare disease. And in that data set, we saw just very consistently patients do really well from baseline to control. And we have patients who are decreasing to about a third of attack a month. Third of attack a month means four a year. So very consistent reduction and sustained reduction in attacks. That's just one place we've seen it. We also had a large study of patients with C1 normal HAE at 350 patients, same source. And we saw the same thing.
They did really well with a significant reduction in attacks and sustained reduction in attacks over time. So we're seeing that. That's just the most recent example. But we've seen that starting with the clinical trial through all of the real-world evidence that we've collected, now most recently with this large sample size.
So when you start talking to physicians in the marketplace and they get exposed to this data, their confidence in the drug working goes up a lot. And that's what we're seeing in the marketplace.
Okay. So a couple of things I want to drill down on. If you go back to the slide on how you built to $1 billion. Another lever is kind of reducing the amount of free drug that's been given out. And I know you've had this kind of issue with the Medicare population specifically. Can you talk through, I guess, that issue? What's going on for this January coming up and one quarter, and how can you control for that? And what else goes in? What can you do to kind of extract that extra $100 million out of that?
Yeah. Well, I will say that we've made some great progress on the commercial side. So I'll come to Medicare in a second. But on the commercial side, I think, John, we were in the 70% a little over a year ago. And now we're at 82% on the commercial side. And that's.
In terms of.
In terms of free drug to paid drug. So paid drug now is at 82% on the commercial side. And Charlie's built a team now that really is working with offices and patients to make sure that there's not a delay in getting payment when they have insurance, commercial insurance. And so that's working. We're really proud of that. There's more room to go there. And so that's really exciting. On the Medicare side, what happened is the charities ran out of money. And so we ended up having to put a big chunk of patients. So we had about 80% paid, and we went down to 48%. Now, this year, at the end of the third quarter, we're at about 55%.
Next year, with the Inflation Reduction Act putting a cap on the copay of $2,000 spread over the course of a year, we believe that the charity money should go further. Will it all swing back in the first quarter?
What is your Medicare exposure?
About 20%.
Okay.
If we move that from 55 to 80, it's almost $40 million of annual revenue.
Okay.
And I don't expect it to all swing back in one year. Will it be $5 million, $10 million, $20 million? We don't know. But we'll have a pretty good idea by the end of the first quarter of where we stand.
What are you thinking about with the new sort of rules coming into play next year where the payers have to kind of, they have to pay 60%, they have to cover 60% of the catastrophic coverage, which for a drug of your price, I think that's a lot, so are you going to be kind of forced? I've heard and I've talked to payers that some of that is going to have to come from the manufacturers, and how do we think about the implications to gross-to-net as a result?
Yeah. I think first off, we have the small company exemption. So it's 1% next year, and it builds to 20%. And so that'll happen over time. But you're right, the payers will transfer some of that burden onto the manufacturers. And right now, our gross-to-net is between 15% and 20%, much closer to 15%. Our guess is over time, that's going to get closer to 20%.
Okay. We've just actually heard from another company that the small company exemption only applies prior to 2021 or something, so I don't know.
We qualify.
Okay. You do qualify. You've confirmed that.
Yes.
Okay. Well, maybe you launch before 2021. Okay. Good. And then, if you could go forward to your, yeah, to this slide here. So you can see there's another oral coming to market and is going to grab some share, not maybe so much from you, but in general. Why not kind of leverage where you are developing a pipeline and really just kind of cement your leadership by having a product like that?
I think we have a really good product. I don't think there's much to improve on, and to get $1 billion by the turn of the decade and have IP that goes out to 2039 is a pretty good spot to be in, and so I think we're better off going to another disease where we're further along, honestly, and so I'd love for Helen to talk about the two programs that we're moving into the clinic.
So we have two programs moving into the clinic. And we're really excited about these. So we're in the clinic now with our KLK-5 inhibitor, BCX17725. That's in healthy volunteers. And it is a potent inhibitor that we're using to treat Netherton syndrome. So this is a disease-modifying agent attempting to get to a functional cure of Netherton syndrome and really change how patients experience that disease. That one, we'll have data. We'll be in patients next year. And we're expecting to have data in skin penetration, pharmacokinetics, but also skin activity, activity on target, and moving towards clinical outcomes, how skin is healing in those patients. And that's end of next year and into 2026. And then our next product after that will also be in the clinic next year. So we're excited to have two products in the clinic next year from the pipeline.
That's avoralstat, which is a plasma kallikrein inhibitor that we are using to treat diabetic macular edema through suprachoroidal injection. And that one has already been through phase three trials as an oral. So it got a head start in terms of systemic safety. And we'll be delivering it then to treat with a potent drug with sustained exposure right at the back of the retina, a great location for exposure to be able to improve diabetic macular edema.
We're going right into patients next year. We don't have to go into a phase one study first, which is great. Something that I really get excited about with Netherton syndrome is so far we've identified about 1,800 patients. There's no diagnostic code in the U.S. How we've identified it is in patient records, sometimes they record bamboo hair, which is a trait of Netherton syndrome. That's about 1,800 patients. There's this larger population that we believe gets pulled into ichthyosis, irritated skin, itchy, flaky skin. There's a genetic test that you can do for Netherton syndrome. If we have a drug that transforms the skin turnover to normal and we have a genetic test, it's like Genzyme all over again. I see us finding multiples of the 1,800 patients. It really gets me excited about what we can do for these patients.
Is this dermatology?
Mostly. Yeah, mostly.
Okay. And are they kind of scattered everywhere? How do you find these people?
They end up going to their primary care. I mean, it's all over the place. So it'll be work.
Okay. They have ichthyosis. They show up with dermatologists, sometimes with pediatricians, and are treated for that. But then those are the ones with Netherton syndrome.
Okay. What is ichthyosis?
Ichthyosis is a general term. So like in HAE, angioedema is a general term. HAE and what we treat with ORLADEYO is one particular subset. Similarly, with Netherton syndrome, ichthyosis is a general term. It's itchy red skin. And a subset of that is patients with Netherton syndrome. But they're probably greatly underestimated, the number of patients right now, because there's no reason to test because there's no disease targeted there.
Okay. So it's a heavy lift, though. You're going to have to go to dermatology and.
But if it's two to three to four.
A lot of people with red, itchy skin.
But if it's a diagnostic test, right, where we can get doctors to treat these or test these people, that could be very quick. And I think there's precedent like Genzyme to do that kind of thing.
We talked about your path of profitability. Maybe just remind us of your current cash position. Then let's just review 2025 catalyst for you.
Yes. We're at $352 million at the end of the third quarter. I don't honestly expect the cash position to get below $300 million. It may get a little bit below it for the rest of our history. But it's going to start going up. I don't think it's going to get any lower than that. And that's because, as you say, we're on a path to profitability. We'll have an operating profit this year, as I said before. Second half of next year, we're either approaching or at EPS positive and full year 2026 EPS positive. So puts us in a different category of small company.
Okay. Great. Well, thank you very much for your time today, guys.
Thanks, Lisa. Thanks for having us.