Welcome. Thrilled to have you all here at the Goldman Healthcare Conference for 2025. We are early in the conference. It is my great pleasure to be here with BioCryst, with Jon Stonehouse, President and CEO of BioCryst. I'm Ryan Fisk, Managing Director in the Healthcare Investment Banking Group at Goldman Sachs. Thank you for joining us today. Jon, thank you for joining us today. How are you?
Yeah, thanks for having us. I'm doing great.
Okay, wonderful. Why don't we jump in? I'd like to spend some time on ORLADEYO, which has been doing very well commercially in recent quarters. I would also like to make sure that we spend some time on the pipeline today and just talk about some of the programs that are going to produce data this year. Maybe to set the stage, can you share a high-level overview of how you think about BioCryst's strategy, particularly as you approach rare diseases and how that thus far has translated into commercial success for BioCryst?
Yeah, great. Before I get started, I'll be making some forward-looking statements, say, of risks. You can find our risk factors on our website. We chose rare disease, and it started that we believed if you could bring oral drugs to patients with rare disease, you had a real disruptor because the vast, vast majority of any therapies were injectable. We've evolved that, and we're actually starting our first protein therapeutic program with BCX-17725 in Netherton. It's gone beyond just oral and a program injectable in the back of the eye. What we're trying to do is build a rare disease company with the engine of ORLADEYO as the revenue source and cash source. It's a disruptor. We can talk more about why, but it's definitely a disruptor in the HAE market.
Followed by, we believe there's another ORLADEYO that comes out of our discovery group. We've got two programs that are going to be starting to generate data by the end of this year. We're excited about that as evidence that there's another ORLADEYO in there. Third, financially, we are in a fantastic spot. We had laid out a couple of years ago our path to profitability, and we accelerated by a year. This year, we will be net income and cash flow positive for the full year. That just puts us in a different position. We're capital markets independent. We want to pay down our debt and clean up our balance sheet. We started that in April. We're really excited about where the company is.
Yeah. Okay. All right. That is a great setup. Let's dive into each of those subcategories as we get into this. Starting with ORLADEYO, as you said, it has done remarkably well in a competitive HAE space. What do you really think of as the core drivers behind the strong launch and what is continuing to fuel the growth today?
Yeah, I think, one, you've got to have a good drug. I think when we first put out the pivotal data, some people questioned whether it was an effective drug and could be competitive or not. The key, if I can leave investors with one thing that's really important to remember, it's this drug, when it works in some HAE patients, the majority of HAE patients, it works as well as any other drug, as well as injectables. We've been able to show that in real-world evidence data and studies that we've been running since launch. That has allowed us to start to have conversations with physicians about switching. What you've got to remember also is patients, because they're controlled now in this marketplace, they don't see their doctor much more than once or maybe twice a year.
You can bet that the first time the doctor brings it up, they're not going to say, "Oh, yeah, I want to switch." It's usually, "If I'm controlled, why would I bother?" Chipping away at that and getting them to understand that if they're one of the majority of people that try ORLADEYO and are controlled, you could be controlled on a once-daily capsule to manage your disease, which is a game changer for patients.
Yeah. Yeah, that's interesting. What specifically do you hear from those patients once they have switched to ORLADEYO?
Yeah, life-changing. We've gotten to know patients really well. One of the coolest things we hear is they forget they're sick, right? When you stick yourself with a needle, when you see your medicine in the refrigerator, it's a reminder that you have a disease that you need therapy for. When you're taking a capsule once a day, it's like your daily vitamin. Stress is a trigger for HAE attacks. It kind of all builds together where you're less stressed, you don't feel like you've got the disease anymore, and they're doing things that they never thought they would be able to do, which is wonderful to hear.
Yeah. Yeah, that's great. Maybe let's flip the lens to the physician-prescriber side of it. You've shared very interesting market research on patient preference, orals versus injectables. What do you hear from the physicians? What do you think is driving increased confidence in prescription?
Yeah. I think that increased confidence is the key to what we're seeing in the marketplace. It really comes down to when they try it and they have success with the drug, they start using it more. I think there was this perception, "Oh, it doesn't work as well." People will trade efficacy for convenience. No way. The table stakes for patients and physicians is you've got to have control of the disease first. If you can have that and be on a really convenient once-daily oral, it's great. Physicians that maybe the first time they tried it, they had a patient that it didn't work in, and so they kind of backed off and didn't want to switch.
When we started putting out the real-world evidence, they gave it another shot and they started having success with the drug and then started using more of it. That is why they say forward-looking that they see more and more of their patients will be trying ORLADEYO.
Yeah. Yeah, got it. Okay. An important metric that you've always forecasted is the idea of patients moving from free drug to paid. That transition has been accelerated relative to how you've guided the street over the course of the last quarters and years. What tactics have really helped accelerate that?
Yeah. Maybe what I'll do is explain what we're shooting for. In this path to a billion dollars, a key element and driver of that value is getting about 85% of the patients on ORLADEYO on paid therapy. Honestly, when we first introduced the drug, the idea was to get patients onto drug fast. We put them on free drug quickly. What that led to is some payers saying, "Oh, they're on free drug. We'll make it a little bit more difficult." We ended up with people that were on longer-term free drug that had insurance and should have been paid.
We built an apparatus around patient support and helping offices with the process of getting through the insurance review and making sure that they had all the tools and information that they needed to have the best shot at getting the insurance to cover it. I think the other piece that's really helpful with the plans is this real-world evidence again. They see that the drug works and their confidence in ORLADEYO has gone up. Their willingness to pay has improved as well. Really, this kind of basket of services we call empowered patient services has played a big role in the improvement. That being said, we're at 84% right now. We had a huge jump in the first quarter of this year, largely for Medicare.
A couple of years ago, the charities had run out of money to help with copay assistance for patients on Medicare. A senior can't afford a big copay for a rare disease drug. We ended up having, I think we were in the high to mid-80s in terms of paid rate, snapped to high 40s. In the tail end of this year, I think we were at 56%. In April, we're up to 89% with Medicare. We are one of the few that says the Inflation Reduction Act has actually been really helpful because that $2,000 copay has made it more affordable and allowed charities to spread the money out further.
Got it. Okay. That's great color. Thank you for that. You recently submitted a pediatric NDA. How do you think about the opportunity in younger patients? Is that going to be a meaningful market for you all?
Yeah.
[audio distortion] , I think it's huge, right? You think about a three or four-year-old and giving an injection every two weeks. The treatment might be worse than the actual disease, honestly. This idea of sprinkling these mini tabs, either in a glass of water that they can drink down or some soft food that they can eat it with, is just a game changer. We've heard that from patients and the community really being supportive. The enrollment, my experience in my 30-plus years of being involved in clinical trials is when enrollment goes faster than expected, you've got something that patients want. That's exactly what happened here. Size-wise, it's not huge. It's about 500 patients in the US in terms of potential population, of which about 200 are treated that we think are available.
We also think that patients are sicker than previously thought through the data we've collected in our study. We think having a more convenient therapy that isn't as challenging as an injectable may expand the universe of who gets treated on prophylaxis earlier and longer, number one. There is a halo effect that we've seen with adolescents where the child has success with ORLADEYO. This is a hereditary disease. The mother or father likely has the disease, and they're on Takhzyro, for example. They're like, "Wow, I see my kid doing really well. Maybe I should ask my doctor about it as well." We think there will be a halo effect. We're not ready to predict what it will do. It's not in the forecast. It's not in the billion dollars.
I think once we get about 12 months-ish under our belt, we'll have a better idea of what the potential is here.
Yeah. Yeah, got it. Okay, great. Maybe you've been very forthright in your public commentary about what the path to a billion dollars is over the next four to five years. Maybe just thinking about that lens of a five-year lens, what do you see as the most important levers to expand ORLADEYO's market share over that period? What are you learning about HAE market dynamics that inform that view?
Yeah. I think we said it. I do not know. It was a couple of years ago that we actually laid out the path. We are ahead of schedule on almost everything that we said we needed to achieve to get there. What are the components? An average of 200 new patients, net new patients per year. We have been above that for the last, well, since launch. We have been significantly above that. The demand, surprisingly, fifth year into launch, continues to be really strong. I think it is this increased confidence we talked about before, both with doctors and patients. Keeping that going another year or a year after that, it has to be an average of 200. As you get closer to 2028, 2029, we think it will slow down, but we are well ahead of schedule on that front.
The second piece we talked about is paid. We did not think we would get there until 2029, 2028. We are there now basically at 84%. I think we can do better than 85%. That is our side. The last piece is price increases. We said very minimal price increases to add to that value. We have been doing that on an annual basis. Again, a little bit higher than the minimal increase. Yeah, it is all ahead of schedule. Our confidence in that. This year, we are going to be somewhere between $580 million and $600 million. We are well on our way to a billion dollars of peak.
Yeah. Yeah, absolutely. Okay. All right, cool. You've been very fulsome in the market research that you've shared in your public statements, which is interesting just to watch the evolution year over year on consistent views. Could you expand a little bit on that of just how you think about key insights that I suppose you observe in the market research and how it's led to some of the performance in recent quarters?
Yeah. It's core to what we do. We chose a model where we use a sole-source specialty pharmacy. As a result of that, we get a lot of really rich data and insights about patients, both those that have success on ORLADEYO and those that do not. It just makes us smarter about what's going on in the marketplace. One of the things you use market research for is friction points. What's going to prevent somebody from making a decision to switch? Our goal is we want to get at the truth. A lot of times in companies I have been in the past, a senior leader says, "Find me the data that makes this believable." Here, we're like, "Tell us what's true and we'll follow that." It has been really helpful.
I think the best place that we've used this is we put out our market research on competitors and ourselves and patient share over a 10-year period. We showed you the robustness, 175 docs, 100 patients, over 50 payers. We get preference shares. We then put it into a Monte Carlo simulation that simulates patients only see their doctor once a year. It spits out an answer. The answer is the early disruptors are the ones that are going to be market leaders come 2033. That is Takhzyro and ORLADEYO. It is because it is really sticky, right? If you're controlled on a drug that is once a day and that control is similar to anything else you could go on, what is going to be the benefit of switching to something else? There is nothing.
Losing patients to other drugs when you have patients controlled on ORLADEYO is just not something that we see in the data.
Yeah. Yeah. Interesting. Maybe with that concept of picking up at the idea of Takhzyro, you had mentioned you've referenced a couple of times in this conversation the difficulty in getting patients to switch. With the comparison to Takhzyro or C1 inhibitors or just any injectable prophylactic treatment for HAE beyond the oral, talk a little bit more, please, about the benefits of ORLADEYO, which is ultimately getting these patients to switch off the injectable.
Yeah. Yeah. I mean, it all comes, the biggest obstacle we get, Ryan, is my patient's controlled. Why on earth would I mess that up? If you think about it from the patient perspective too, if they're on Takhzyro or Haegarda and they had attacks before and now they're controlled on a prophylaxis, they're scared to switch from something like that. What we've done, and it probably sounds like a broken record, but our real-world evidence has really given physicians large patient sample sizes, right? 450 patients in types one and two HAE and 350 patients in normal C1 and shows that the reduction in attacks matches injectables. That has opened the door for people to say, "Hey, maybe I should consider trying this." When they have a great experience with it, they want to try it in more patients.
That's been the big win, generating that data, sharing it with physicians, and then chipping away at, "Hey, now it's time to try." Back to the pediatric, we still have about 20% of our top potential prescribers, about five to six, not prescribed ORLADEYO yet, but they have pediatric patients. We're going to go into those offices and say, "Come on now." There is no reason that you wouldn't switch a kid that's on injectable prophylaxis to ORLADEYO. If they have great success, they may consider using it for their adult patients as well.
Yeah. Yeah. Great. Let's transition. As mentioned, we want to spend time on ORLADEYO, want to spend time on the pipeline, want to spend time on the financial profile of the company. Let's transition a little bit to the pipeline assets. Maybe one more word on the pediatric opportunity for ORLADEYO. Remind us, please, the timeline so NDA is submitted, timeline for potential approval.
Yeah. PDUFA is September 12. So we're working with the agency now as they go through the review and responding to questions. But we're hopeful that there could be a launch yet this year.
Yeah. Is there substantive expansion of the commercial footprint needed for that?
None. None, which is wonderful. The sales force size is where it needs to be. It is a highly profitable segment.
Yep. Yep. Okay. All right. Turning to the pipeline. You've got two new programs coming into focus, BCX-17725 and Avoralstat. Let's talk about these two. Firstly, can you walk us through the rationale behind pursuing Netherton syndrome with the 17725 asset? What's the unmet need? How does your KLK5 inhibitor uniquely address it?
Yeah. It's a horrible disease. It's basically a fault that leads to a missing protein that you lose the kind of brake that you need for normal skin turnover. You have this just rapid skin turnover because you don't have the brake. It can at birth be lethal, right? Think of how important skin is to protecting against infection, hydration, a bunch of other things. There is a decent mortality rate with young children, but you can have it for lifelong. It's one of these diseases, as we've gotten to know patients better, that there's nothing to treat them. They use lotions and creams to keep their skin moist. They cover themselves up. Sometimes they wear wigs because it affects your hair as well. There's hair loss. It's just very sad, honestly.
These patients haven't had a whole lot of hope. To bring something, what we hope to bring is something that will restore that break that I talked about in terms of our KLK5 inhibitor, BCX-17725, and restore normal skin turnover. The idea is, I mean, these patients could potentially have normal skin again. This is a disease that affects you from head to toe. It's not like you can spot treat and things like that. You need something that works systemically.
Yeah. Yeah. Okay. What are the next clinical catalysts here? What should we be watching?
Yeah. It's pretty interesting. We're in a phase one study. It has its normal healthy volunteer, SAD, MAD portion that we're well along the way. Now we've chosen a dose to start to study patients, Netherton syndrome patients. Because the key to this program and the biggest risk in the program is, does the drug get to the skin? When it gets to the skin, does it act the way we hope it does, which is restore the normal turnover and bind to the site? You can only do that in patients and do the skin biopsies and the like. We're going to get a bunch of really interesting biomarker data in addition to clinical data of looking at the skin.
We hope to have a handful of patients in this, what we call part three of the phase one study by the end of the year. If it has the kind of effect we hope it will, we hope to start to see some level of activity and get some sense of dose.
Yep. Yep. Understood. I guess if you think about market size, unmet need, I mean, these patients, as you said, there's no standard of care now. They're using lotions. What is the patient population, the prevalence in the U.S. and globally?
Yeah. There is no diagnostic code. The way we kind of got an estimate of the population is there is one clinical effect called bamboo hair, where you actually have to look at a strand of hair under a microscope, and it looks like bamboo. We found about 1,600 patients in the U.S. If there is no diagnostic code, there is no treatment. There is really, what can a doctor do for a patient? We believe this is like a lot of other rare diseases, maybe even like HAE back 10-15 years ago, where the folks at ViroPharma thought there were 2,000 patients, and now there are 11,000, right?
When you start to have therapies in a population in a dermatology practice that has a group of ichthyosis patients, and you do a genetic test and you screen for it, and now you have a drug, we suspect that could be two, three, four times the size of the 1,600. We are really excited to get the data and then to start to see if we can get a better handle on what the true population is.
Yep. Yeah. Understood. Yeah. It's very interesting. Okay. Transitioning to the eye. You were developing Avoralstat for DME. Talk a little bit, please, about the use of a plasma kallikrein inhibitor. Is it well suited for the space? How do you think about potential treatment in the eye?
Yeah. I mean, an investor might say, "You just said you guys are a rare disease company. What the heck are you doing in an eye disease?" The answer is, opportunistically, we think it's worth studying this drug because DME, while VEGF inhibitors work really well in a lot of people, there's still 40% that continue to progress and have decay in their visual acuity. Why is that? There's some pretty deep scientific evidence that says there's an alternative pathway other than VEGF, and that's plasma kallikrein. Similar to what you see with HAE, where contact activation ultimately leads to the swelling, you get the same thing with diabetic patients in the back of the eye and this release of fluid that causes the swelling in the back of the eye and effect on the retina.
There have been a number of kallikrein inhibitors that have failed. We believe it's because you didn't get a potent drug in the right space for a long enough period of time. We've taken the characteristics of Avoralstat that we studied in HAE, where it wasn't a really good oral drug. It was poorly soluble and poorly permeable. We now deliver it through a device from Clearside, suprachoroidal device in the back of the eye. It acts like a depot. It just sits there. We've seen in animals nine times EC90 drug concentrations at six months.
We're really excited to see, with a small study, a phase one SAD study in patients, because you don't want to inject healthy volunteers, what this drug could do in terms of the swelling of the eye and even visual acuity over time in a single dose, right? You give one dose, and if you see an effect, duration between three and six months, and you see VEGF-like effect, you've got a real drug. It's a small study. If we're successful, it was a great investment. If it was unsuccessful, it was a small investment that was worth the risk.
Yeah. Yeah. Absolutely. An efficient use of capital. Remind us, please, on exact timelines on when we're going to.
Yeah. We hope to get this thing started sometime between summer and the early part of the fall. We hope to start to get some patient data by the end of the year, where, again, like in the Netherton program, we have some sense of activity and some sense of dose.
Yep. Yep. Understood. Okay. Interesting. As you think about the market, like you said, it's a large market. It's a crowded market. The biological rationale and just the differentiated approach relative to VEGF treatments is all well reasoned. How do you forecast the potential placement of Avoralstat in the ultimate commercial treatment paradigm? How do you think about that differentiation?
Yeah. I think the simplest way to say it is it's a huge market. If there's close to 50% of patients continue to have visual acuity decay, then if we can bring something forward that addresses that population, it might even be used first line then. Why would you go to something else that you're not 100% sure is going to work, or you got to switch from one VEGF to the next? I don't know until we see the data what the application is going to be and what kind of efficacy we will see. It could be huge. One of the things that's really interesting is from a commercial perspective, the number of retinal specialists in the United States is about the size of the HAE prescriber population. From a commercial footprint perspective, it's not too much different than a rare disease.
The clinical trials are much more expensive and bigger, but the commercial effort is not.
Yeah. Yeah. Understood. Okay. That's great. Thank you for that. Let's talk about the financial side of the business. You are a commercial stage rare disease company who has demonstrated strong financial discipline. Revenue is growing, profitable, growing profitability. Maybe to get into that, you've said that you expect to be profitable in 2025 now. That was previously 2026. The guidance has been brought up. Tell us about what's driving that shift and that balance. It gets into comments that you just made around DME as well, how you are balancing profitability with pipeline investment.
Yeah. So what's driving the acceleration is ORLADEYO, plain and simple. The expenses are going up slightly because of the revenue going up, ORLADEYO revenue-related expenses like distributor, incentive comp, and things like that. It is growing so fast that we were able to pull forward the profitability by a year. We put out guidance that basically shows 2025, 2026, 2027, the compound annual growth rate of revenue around 20% and expense around 5%. What that leads to is at the end of 2027, about $600 million in cash. We want to not only be profitable, but we want to give you a sense of the magnitude of that profit. We have Pharmakon debt that is now down to $249 million left to be paid off.
Our goal is to get that thing paid down and not wait for the bullet payment that's due in April of 2028. With that $600 million, we can easily pay that loan off and still have a good chunk of cash on the balance sheet.
Yeah. Yeah. Absolutely. With that Pharmakon debt, it was in April, you paid down $75 million, which is beneficial from an interest expense profile perspective, as you said, a capital structure perspective. The view is to pay that down over time. Any sense of how you're going to approach that in the coming quarters and years?
Yeah. I'm not going to guide to it, Ryan, but the goal is pay as much, if not all of it, down before the bullet payment is due as we can based on the revenue that we have. I mean, with the $75 million payment, I think it was an estimate of close to $23 million in interest savings over the life of the loan. I'd like to do that one or two or three more times to not have to pay the interest. It will be a balance of how much cash do we have on the balance sheet? As you said, what do we need to do to invest? Those compound annual growth rates that I shared with you, that has pivotal study costs for both of Avoralstat and BCX-17725 for Netherton. It is not insignificant investment, but the revenue far outstrips the expense growth rate.
You end up building more and more cash. One of the questions is, once you pay off the debt, then what? My belief is we're going to look to go on offense in terms of looking for things that could, from the outside, that could complement our own pipeline and ORLADEYO. I won't get into any specifics, but there's a number of things that we could take a look at. There's a lot of stuff that we don't want to take on somebody else's risk, whether commercial or clinical. We want to be opportunistic, and we want to be in a financial position where we can do that and not have to use our shares.
Yeah. Yeah. That's very interesting. The company moving to an offensive posture from a corporate development perspective as profitability continues to grow, cash accrues, and the debt profile continues to be addressed. Okay. Maybe with that in mind, the concept of bringing it all together, ORLADEYO performance, pipeline programs that are going to produce data over the course of 2025, the balance sheet being addressed. We're actively seeing you do that. The comments that you made, Jon, just now about potential for corporate development and the what's next are very interesting as something to think about as a next phase. Let's talk about that next phase. Just the idea of who BioCryst will be three to five years from now in the next phase of evolution, what does that look like from your perspective?
Yeah. In my mind's eye, it's becoming very clear as evidenced by our performance. So a billion dollars in ORLADEYO revenue looks very achievable from our perspective. And as I said before, on all the parameters that lead to that, we're ahead of schedule. That's one piece of it. In a phase three program and on our way to filing and getting approval on a second product. I'd love it to be BCX-17725 and Netherton syndrome. We find out that the market, oh no, it's not 1,600, it's 4,000. We're the only drug available for it, and we alter the course and restore normal skin turnover. Third, we've got the capital to be able to look at external things as well. Certainly, there's more in the pipeline as well.
There's a bunch of complement programs that are still way too early to talk about. But this kind of continuous engine that brings out another ORLADEYO and another ORLADEYO onto the marketplace for patients in need and financially supports a company. If you look at companies today that have a product on the market, a promising product in the clinic or the next product, and it's sourced by their own engine or they're really good at BD, the size of those companies are $10 billion, right, in terms of market cap. So I don't see why BioCryst ultimately can't get to that spot with the ingredients that we have to get there.
Yeah. Yeah. Absolutely. Absolutely. So the share price has done well over various periods. Over the last year, the share price has done very well as a result of the strong results from ORLADEYO and just kind of the broader picture of the company pipeline financial profile. Are there areas where you think the street may be underappreciating the story, whether it's commercial durability, pipeline, optionality, anything else?
Yeah. I think there's a number of things that as we execute, we can start to have a counterargument. One might be, hey, you had some programs that you had to stop, like our Factor D program. Why are you confident that you have another one? You know what the attrition rate in our industry is, Ryan. I think we did a good job of making sure that when we saw there was no commercial viability for our programs, we shut them down. We didn't spend good money after bad. While it's painful to stop any program, I think making that decision at the right time is really important. I think we did that. Our confidence, the risk profile of these two pipeline products is very different than our Factor D inhibitors.
A protein therapeutic, the off-target toxicity is just very different than a small molecule for Factor D. I could see people being skeptical of it. As we generate data, the skepticism, I think, is going to decrease. I think there's some people saying the competition, they don't believe our market research. I would argue it has the least bias of anything I've seen out there in terms of predicting the future. There's three competitors coming to the market this year. There's going to be more coming in future years. As we continue to steadily execute on the commercial program, that argument's going to disappear. The only way I know, you said the share price is doing well. It's not doing well enough, in my opinion. I would like to see it do better.
The way that we're addressing that is by executing, saying what we're going to do and then executing and doing it. I think we're well on our way.
Yeah. Absolutely. John, I think that's the time we have. Congrats on recent progress. Looking forward to seeing what the rest of 2025 brings for you all.
Yeah. Thanks for inviting us.
Sure.
Take care.