Good morning. I'm Serge Belanjer, one of the healthcare analysts at Needham. I want to welcome everybody to day three of Needham's 24th annual healthcare conference. For our next fireside chat, we're happy to have the BioCryst Pharmaceuticals team with us. We have the CEO, Jon Stonehouse, Company's Chief Commercial Officer, Charlie Gayer, and the Chief R&D Officer, Helen Thackray, with us this morning. Before we move on to questions, just want to provide details on how participants can submit questions. For those listening in on the portal, that's where you can submit questions. We'll take those as they come in. With that being said, I'll hand it over to the management team, who will give us an overview of the company for those who may not be familiar with BioCryst, and then we'll jump to Q&A.
Yeah, thanks, Serge. Thanks for having us. Charlie, myself, and Helen are going to make forward-looking statements. Those statements have risks, and risk factors can be found on our website. I think BioCryst is a pretty interesting company for investors to take a look at, especially in this environment. The reasons for that are, one, we've got a growing product in ORLADEYO that is just growing at a beautiful trajectory, over $500,000,000 this year, and on its way to $1,000,000,000 at peak, with IP protection on two composition of matter patents out to 2035 and 2039. Just really nice, steady revenue growth over the years. The second is we've got a pipeline.
What's exciting about our pipeline is we have two programs in the clinic that we expect will have patient data by the end of the year that can start to give us a sense of activity and dose. We believe we've got something beyond ORLADEYO that can, again, create sustainable revenue for the company and create value. Third, we're on a really nice path to profitability. We had an operating profit of over $60 million last year. The second half of this year, we're going to be at or approaching cash flow positivity. Next year, for the full year, we'll be cash flow positive. There aren't many companies like that in our space that have all three of those. I think in these uncertain times, it's even more important.
Great. One of the topics you're currently is tariffs. So far, pharmaceutical products have been exempted, but I think most people think that's only temporary. Just curious, if we were going to see tariffs, what would be the impact to ORLADEYO and the company?
Charlie, you want to?
Sure. Obviously, it's an evolving situation that we're monitoring. What we understand now, though, is it will have very little impact on ORLADEYO. Our current cost of goods are less than 3% of revenue. The parts of the tariffs that could impact us would be on the active ingredient, the API. That's a small component of that 3%. Even with the impact of tariffs, it's not a material difference.
Got it. Okay. Let's talk about ORLADEYO. I think 2024 was a pretty exciting year for the product, kind of the fourth or fifth year of the launch, depending on when you start counting. You saw growth acceleration, which is not that common for that stage of a launch. Maybe just highlight what drove that acceleration and how that sets up 2025.
Yeah, we had over $437 million in sales last year. It was over 36% year-over-year growth. The number one thing that drove that is just physicians and patients have learned through experience. They've seen our long-term data. They've experienced how ORLADEYO works in the real world. They realize it's not just a convenient pill. That's obvious. It's also a really effective product for most patients. Patients should expect to have competitive efficacy on ORLADEYO. That's what the doctors and patients are seeing. We had more start forms, more new prescriptions in 2024 than we did in each of the previous years. That rarely happens. That's a sign of acceleration. The other piece, Serge, is we're just every year we're doing a better job getting more patients to paid therapy.
We made some nice strides forward last year in getting just more paid shipments throughout the year. That also drove some of that revenue acceleration.
Okay. You provided guidance for 2025, and I believe it was in early January. I think you're one of the few companies that has increased their guidance so far this year. Maybe just talk about why the guidance was increased, what drove it.
Yeah. We started the year guiding to $550 million to $535 million. We said the possible tailwind, if it happens, is whether the Inflation Reduction Act being implemented would allow more Medicare patients on ORLADEYO to reach paid therapy because their co-payments would become more affordable. At the start of the year when we guided, we did not know whether that would happen or not. By the time we did our Q4 earnings in February, we had early signs that that was starting to happen. Medicare patients were able to afford their co-pays thanks to the IRA. That is what caused us to raise guidance to $535 million-$550 million. In the early part of the year, we saw the same really strong demand that we saw last year. All that together gave us confidence to raise guidance.
Okay. Maybe it'd be useful to talk about where paid rates currently are across the various segments of coverage, commercial, Medicare, and Medicaid.
Sure. We ended last year with an overall paid rate of 73.5% of our patients on therapy. It's high in our commercial segment, which is about 60% of the patients. Commercial ended the year close to 80% paid. Medicare, which is 20% of our patients, ended last year at 55% paid. Based on what I said earlier, it's not that plans were saying no for Medicare patients. It's just that the patients couldn't afford their co-pay. That is where the IRA kicks in. We're still in the process that the early reauthorization process really goes through April into early May. It is too soon to give you an exact paid rate. With the tailwind of more Medicare patients getting paid, we expect to be approaching 80% paid overall as we come out of the reauthorization season. Big step forward.
That makes obviously a big difference in revenue this year and in coming years.
Okay. I know in prior years, there was a significant step down from Q4 to Q1, and then a big bounce back as you got into Q2. With this level of paid rate, should we expect that difference to be much less than what we've seen in prior years?
What we've guided to for this year is in past years, like you said, it was definitely down. The reason it's down is as we're going through reauthorization, some of the patients have to temporarily go to free product while going through reauthorization. We also have a bigger hit on gross to net, particularly in the commercial space, where we pick up all the co-payments. And so many patients' co-payments are maxed out during the first quarter. With the tailwind that I described, this year, we could be closer to flat rather than down. Down a little bit, closer to flat versus definitely down the last couple of years.
Got it. I think in the last couple of years, in terms of new patient growth, you were hitting about 300 patients a year on average, a little higher than what you, I think, had guided us to. Should we expect that to continue going forward?
Yeah. Just to remind everyone, what we guided to is peak sales, we expect for the U.S. to be $800 million. Coming out of 2023, what we needed to average was at least 200 net patients per year in the U.S. through 2028. In 2023, to your point, we were well above that. We're above that again in 2024. It only needs to be an average over that five-year period. We're well on track. Well above 200 each of these early years. In the later years, maybe it goes below 200, but we're very much on track for $800 million in 2029 in the U.S. and peak sales globally of $1 billion in 2029.
Okay. Does the ease of access and this higher paid rate, can that influence the rate of new patients?
I think it can always help, particularly on the Medicare side, where physicians and patients, they want to get to paid. We've been very generous with free product because we want patients to have the good clinical experience. For patients, confidence is really important. Knowing that their insurer will pay for ORLADEYO or any HAE therapy is very important to them. I think this is just another thing that's going to increase the already strong high confidence in the product.
I'd also say, remember that this is a space where people are controlled, right? It's not like people are desperate for a new therapy. That kind of steady ad is going to continue for some period of time until we start to hit a saturation point and getting of the 10,000 patients, some percentage that have tried ORLADEYO. It's not a hockey stick. It's a steady climb like we've been seeing.
Got it. From our discussions with KOL, it seems like ORLADEYO is now kind of the de facto prophy treatment for any new diagnosed treatment. I'm curious, from the new patient ads that you've seen, are they newly diagnosed, or are they still switching from other treatments? Just curious what the source of new patients is.
Yeah. I mean, we've been thrilled all throughout the launch, and the percentages have stayed very consistent. We're getting patients from all three segments where we'd want to get them. Launch to date, 52% of the patients that have started ORLADEYO have switched from another prophy product. That's great. Patients on prophy is the biggest segment, and we continue to get patients to switch. 32% switch to ORLADEYO from acute only. They're coming to prophylaxis, this being their first prophylaxis product, adding it on top of acute only. The remaining 16%-17% is patients, best we can tell, are either newly diagnosed or just newly treated with an HAE therapy starting with ORLADEYO. We're getting new patients. We're getting experienced patients. It's all because of the profile of the drug, one pill once a day with really good efficacy for most patients.
Okay. As we mentioned before, you're now in the fifth year of launch. Just curious, what has changed in terms of the targeting or messaging for ORLADEYO? If you've changed your tactics on which tiers of doctors to target now to continue expanding the prescriber base for the product?
From a targeting perspective, it's been really consistent. We've got two tiers of physicians. There's roughly 600 physicians now that treat about 50% of HAE patients. That's tier one. At this point, around 80% of those physicians have prescribed ORLADEYO. We still have room to grow. Certainly, the average doctor in that tier one has a lot more HAE patients. There's opportunity to go deeper into their patient base. The bigger tier two is patients or doctors who have even one or two patients. We call on everybody. Launch to date, we've had over 1,200 physicians prescribe. It's been really steady. Every quarter, roughly 60 new prescribers of ORLADEYO come on board. Great from that perspective. We'll continue that.
From a messaging perspective, the messaging has been very consistent the last few years about convenience of a pill, but the long-term efficacy in our clinical data and now our real-world evidence, we're building a huge volume of real-world evidence that we build into our messaging to increase healthcare provider and patient confidence. As we develop new evidence, it's just reinforcing what they're already seeing, that this is a really effective product for patients.
Hey, Serge, I'd say one other thing. The commercial team has done a fabulous job of interpreting data along those five years or going into the fifth year of what's working and what's not. There are these adjustments that Charlie's team has made along the way that just have gotten us better and better and better. The easiest example for me to describe is that free drug to pay drug, right? There were adjustments around people, responsibility, internal, external. We just got smarter because we understood the data. We made the changes. Now we're seeing the results. It might look simple to the outside world. I can tell you it's a lot of work.
Stability of team and improving the team are all things that go into making this execution what it is, which is, I think, one of the best launches in a crowded market in the history of rare disease.
Regarding awareness of ORLADEYO, is it at a point now where patients are going into their doctors and requesting the product, or it's still kind of a physician-driven decision to put patients on ORLADEYO?
Some patients do request it, but that's more of the minority. Most of this is the conversations tend to be more physician-driven. Physicians have a very high awareness of ORLADEYO now, well into the 90%. What we try to do, though, is it still is a joint decision between the physicians and the patients. What we know is most patients would prefer to be on prophylaxis. They'd prefer to be on oral prophylaxis. Patients in HAE, as in any condition, patients tend to be a little more hesitant to demand things from their physician on average. If the physician brings up options, brings up ORLADEYO, the patient is likely to respond favorably. That's what creates a good conversation and a decision to switch to ORLADEYO.
Okay. Are retention rates stable now as we get into the fifth year? I mean.
Yeah, retention has been really strong the last several years. Patients who start on ORLADEYO, 60+% of them get to 12 months. Once they get to 12 months, they're there because they're doing really well. Most of them stay on then long-term. We've actually put out some data from claims evidence showing that ORLADEYO is statistically equal in terms of retention to Takhzyro, although numerically, ORLADEYO is actually slightly better. Very competitive retention. It's because of the profile of the product.
Got it. Okay. How do you view the outlook for competition? As John mentioned, this is a very competitive market. It looks like it's going to get more competitive. There's more entrance. How do you view the competition?
Yeah, let me start. I think one thing that I think is really important for people to understand is what we're seeing in a competitive market already is only going to be worse for the people that follow us. It's not going to be better, right? People are controlled. They're seeing their doctor once a year. That's not going to get any easier. I'll let Charlie describe the rest.
Yeah. That is what I have been describing with the efficacy that we are seeing with ORLADEYO. If you are doing really well with your attack control on one pill once a day, what else do you need? You are basically living your life where you can just about forget that you have HAE. That is what patients are looking for. Some patients will move on to other therapies if ORLADEYO turns out not to be the drug for them. The patients who stay on is because this is solving their problem with HAE. Intuitively, we are going to hold on to those patients. We do not just take our intuition and rely on that. We do a really big study every year.
We've done it four years now. That's been very predictive of the growth of ORLADEYO, where we show 100 patients, 175 HAE treaters, and over 50 payers the profile of every product on the market today, plus everything that's coming in the future. We give those future products their best-case scenario. If they have good data in phase two, we assume that that's what they look like on the market. We get patient and physician preference share and then run it through a 6,000-simulation Monte Carlo analysis to predict, as Jon said, patients typically come in one time a year now for their HAE. What happens in that one visit? What happens this year, next year, five years from now as more products come onto the market? What this simulation predicts is that ORLADEYO will grow to about 25% share in the market.
We will maintain that share even as new products, even new oral product comes to the market. We will maintain that share so that by 2029 into the 2030s, when ORLADEYO is at a peak of about $1 billion, we may be growing more slowly, but we will be maintaining that share long-term. We will keep doing this research every year. It has given us confidence that our intuition is right. What we are hearing from our customers is right. We have a very bright future.
Okay. It looks like you're going to get some company in terms of on the oral treatment side. We are expecting non-demand treatment to get approval, I think, late June.
Looks like June, yeah.
Yeah. Do you view that product as a potential competitor or one that could provide some tailwinds for more adoption of all-oral HAE treatment?
Yeah, really the latter. We're looking forward to it. We think it'll be great for patients to have an all-oral option. As I said earlier, what we know from patients and doctors is prophylaxis is the backbone of therapy. Patients want to prevent their attacks. Nearly every patient, whether you're on ORLADEYO, Takhzyro, any other product, you have occasional breakthrough attacks. You need a rescue medicine. To be able to do that with another oral could be a great benefit for patients. We look forward to that.
Okay. I think you've been running a trial with a pediatric formulation of ORLADEYO. I think it's fully enrolled now. Just tell us when we could see data. I guess there's some IP implication with this trial, but also kind of a small expansion of the market opportunity.
Helen, you want to talk about the trial, and I'll talk about the opportunity.
Yeah. Think about an oral option and the difference that an oral option can make. This is an oral option for pediatric patients instead of injectable prophylaxis. What we have is oral granules that are simple for parents to use to sprinkle on food or put in a drink. That makes dosing easy for pediatric patients and prophylaxis, therefore easy for parents to give to their kids. In terms of the trial, we have completed the initial portion of the trial. We've actually reported the interim analysis for the trial. That is the data set that's necessary to take this for registration. That analysis reported at Quad AI recently. This is a look at safety, a look at PK exposure, and those are the parameters needed for registration. It's also a look at efficacy.
What we saw was 29 patients enrolled, 25 patients still on drug at the interim analysis, doing really well. The safety profile is not only consistent with adults, but looks really good in pediatrics. Pediatric patients are doing well in terms of their attack rates, having excellent control of attacks while using this oral formulation for prophylaxis. We are really excited about this program filing this year to be able to bring this oral option for prophylaxis to kids.
Serge, as far as the opportunity in the U.S., Helen talked about the need for patients, but we've identified about 500 diagnosed HAE patients under age 12. We think that at least, well, a growing portion of those could be appropriate for prophylaxis. A couple hundred patients could be the opportunity here. An oral therapy is going to be the market leader for kids. It is a great opportunity for those kids and also families because it is a genetic disease. It is another way that families can get exposed to ORLADEYO and another way that some physicians who maybe have not adopted ORLADEYO yet can get a first experience with the product. We are really looking forward to it. We are on track to file with the FDA this year. We are looking forward to bringing that to market.
Okay. Maybe just to finish off our conversation on ORLADEYO, if we can talk about the ex-U.S. commercialization efforts. I forget how many countries you're in now, but we're really seeing some growth there. Maybe you can just give us an update. I guess if you're seeing the same level, if you're retaining the same level of market share, ex-U.S. than in the U.S.
Yeah. ORLADEYO is now commercialized in over 30 countries. We're really excited in Europe. We've gotten market access in every country in Western Europe, short of the Netherlands, which we expect this month or in May. We will have a complete set, which is phenomenal for a rare disease product like this. What we're seeing is the same trajectory of growth. The big difference is that it takes about 5 XUS patients on average from a pricing perspective to equal one US patient. Of course, price does not go up at XUS. It tends to go down. The growth XUS is about volume. We're seeing really great uptake. At peak, we expect similar to what we do in the US, peak shares in the mid 20%, depending on the given countries. The same trend towards prophylaxis being the backbone of therapy. We're seeing in Europe.
We're seeing it in Japan. We're seeing it in Canada. We expect to see it in other countries around the world.
Right. Okay. I'll ask Helen to talk about the pipeline. I feel it's an underappreciated part of the BioCryst story, but one that I think will increase in focus as, probably starting this year as we get data from the first pipeline asset. So BCX17725, I believe, is the first one for Netherton syndrome. Not sure everybody's familiar with that indication. So Helen, if you can just give us an overview and what we should expect from the first trial later this year.
Yeah, sure. Our pipeline has two products that are or will be in the clinic this year. Both of those will have data coming this year. We are really excited that our pipeline is in the clinic and moving forward. The Netherton Syndrome program is one that could be transformative for patients with Netherton Syndrome. This is a disease that is a serious skin disorder. It is one that has a mortality rate associated in infancy from the results of dehydration through the skin. It affects patients through life. It is very serious. There is no disease-targeted therapy available. It is one in which patients live with skin that is red, inflamed, itchy, and peeling in large pieces from head to toe. It also affects hair, and they have very brittle hair. It affects the GI system when they have food allergies.
They also can have asthma. It is a really serious disease. Patients with Netherton syndrome are generally treated with supportive care used for the larger category of ichthyosis, which is bad skin disorders. This is an opportunity to bring a targeted therapy forward in trials to patients and potentially really transform how they live with their disease and move their skin towards being more normal so that they can live with normal skin and normal hair in a way that the rest of us take for granted and these patients just do not have. This program is we have a protein therapeutic. It is a fusion protein. It is a KLK5 inhibitor. It is a very potent molecule, and it has very high affinity. What that means is that this molecule can be delivered in a small concentration. We believe it could be subcutaneously delivered.
Once it hits the target, it sticks there for a long time. We think that means it could be dosed about every two weeks or longer. For this drug, we are anticipating and our goal is several different things. One, bring a functional cure for the disease with a targeted treatment to replace the missing protein function. Two, do it in a simple package, a subcutaneous treatment that could be dosed every two weeks. Three, do it in a way that patients really experience tremendous difference in their disease and near normalization of their skin. The program today is in the clinic. We are in phase one. That phase one trial includes both healthy volunteers and patients. At the moment, we're dosing in healthy volunteers. We started this last year, SAD, MAD, single ascending, multiple ascending dose study.
That needed to initiate to get the initial data to show that we are translating exposure levels from preclinical to humans as we expected. As that continues, we're also moving to enroll patients now in this phase one study. This year, we'll be enrolling patients while in parallel continuing the SAD, MAD program. We'll be looking in patients for all the signs of the drug working in the ways that I'm describing. One, we're looking for basic outcomes like getting to the skin. Drug can penetrate the skin, which we expect to see. Drug that then has on-target activity in the skin, biomarkers. More importantly, we are also looking for the drug to have the effect. We believe we're dosing in a range where we can see that this year.
We're dosing in patients, and we will be giving patients a small number of doses over a period of about a month so that we can then observe for their skin to see if we are observing those changes, that healing of the skin as measured by the physician, as measured by the patient and their experience, using endpoints that could become our pivotal endpoints. In the course of this year, having a small number of patients for whom we have data on all three of those: drug in the skin, drug activity on target, the biomarker, and then clinical observation of healing on outcomes that could be the same as the pivotal endpoints. With that data this year, we'll be in a good position then to move next year into continued exposure of more patients and trials settling on the dose and preparing for a pivotal program.
As a program in a rare disease with no targeted therapy, this is one that could have a streamlined path to registration.
Okay. Vorelstad is now going back into the clinic, or maybe it's already in the clinic at this point?
Avoralstat is going back into the clinic this year. This is now for treatment of patients with diabetic macular edema, where we understand from previous experience and our own data now that plasma kallikrein is an alternative mechanism of action for treatment of diabetic macular edema. The preclinical evidence suggests that we'll be moving into the clinic to test that. We'll be doing that with the Avoralstat, which we believe is really ideally suited for use in this indication, and I'll explain how. Avoralstat is a drug for which we know from a systemic perspective, we know that it has a good safety profile because it has been evaluated in randomized phase III for oral administration. Here, we'll be using one of its physical properties, which is poor solubility, to deliver it into the back of the eye using suprachoroidal injections.
To deliver a suspension of Avoralstat into the back of the eye, and that will slowly solubilize over time to deliver Avoralstat in its soluble form to the retina. What we're looking for here, we're looking for improvement of retinal vascular leakage. That is the source of edema in the eye. That is the source of the retinal edema that leads to poor visual acuity and loss of visual acuity in patients with diabetic macular edema. What we want to do with this program is evaluate Avoralstat's ability to both deliver exposure over a long period of time with few injections for patients and then an alternative mechanism of action to treat retinal vascular leakage and to improve diabetic macular edema and improve visual acuity. This year, we'll be dosing in patients. We'll have our first few patients on drug this year.
It's a trial that will go into next year, but we are going to be looking at patients one by one to observe for safety and tolerability in the eye, of course, that's standard. Also, on scan of the retina, are we seeing a reduction in retinal thickness that indicates a reduction in edema in our first few patients this year? Then continuing enrollment and dosing next year to increase the sample size before making decisions about later trials.
Great. Maybe to finish off, if we can talk about financials, where you are in terms of cash and your profitability timelines, and also maybe address, I think it was about a month ago, it was announced that your CFO was departing. Just kind of an update on where the search is at this point?
Yeah, search is going great. Anthony gave us a nice transition period and actually is going to be helping us sporadically even in the coming month or two, which is great. He's been really wonderful about helping us in the transition, and the search is well underway. Confident we'll find a very qualified, excited CFO to join the company. Financially, we ended the quarter with $343 million or end of the year, I should say, last year with $343 million on the balance sheet. The guidance we've talked about with revenue already of $535 million-$550 million and then expense of $425 million-$435 million. What's most important is where are we going to end up profitability-wise?
If you put this compound annual growth rate that we gave at the beginning of the year on revenue of 20% and 5% on expense, you end up with generating cash after interest and royalty of $200 million in 2027, positive cash flow. That ends up giving you a balance of over $600 million on the balance sheet and puts us in a really solid financial position, especially in times where you don't want to be dependent on your shares for bringing in more capital.
No, not in this environment. Maybe just to wrap things up, John, I'll ask you, what do you feel is the aspect of the story that remains the most misunderstood or underappreciated by investors? We only have a couple of minutes.
Yeah. Listen, I think it's ORLADEYO, right? I mean, here's a drug that's going to do over $500 million in revenue this year, and it's fifth-year launch. It's growing at a steady rate. That's undeniable what we've done so far, and all the indicators we've given you have been spot on in terms of where it's going. It's on its way to a billion dollars. Yeah, there's competition coming, but we've explained to you in the most robust way I think anybody has explained it of how we see the market unfolding with new competition. IP, as we had talked about before, between 2035 with one patent and 2039 with another. The value of that alone is significant. We're happy if investors are spooked by, "Oh, there's more competition." There was competition ahead of us that made it challenging.
Look at what we've done. Sit down with us and let us walk you through how we see the future with the robust analysis that we do and see if you come to a different conclusion because you might be missing out.
Yeah. All right. I think on that note, we'll end our session here. I want to thank you all for joining us this morning. Appreciate your presence at Needham's healthcare conference and find the BioCryst story pretty appealing in these times right now.
Thanks, Serge. Thanks for.